Trade is as old as human society. It is one of the most common and indispensable human activities. Advancing trade has played a monumental role in the overall development of human society. In appreciation of this truth, governments have been keen to do everything to develop trade relations with their neighbours and further afield. More trade typically means more choice for consumers, often at cheaper prices as producers and suppliers compete for their custom. A proven way to encourage trade across borders is by negotiating and adopting free trade agreements among two or more countries.
As border restrictions are loosened and behind-the-border regulatory differences harmonized through trade agreements, market size increases, leading to gains from economies of scale. This is exactly what African countries have been doing over the past several decades, their latest venture being the African Continental Free Trade Area (AfCFTA), which is one of the African Union’s (AU) flagship projects under its Agenda 2063.
But how would African countries benefit from implementing the AfCFTA? How is the United Nations Economic Commission for Africa (UNECA) helping African countries implement AfCFTA? The Ethiopian Herald has recently discussed these and other related topics with Melaku Geboye Desta (PhD).
Melaku is the Coordinator of the African Trade Policy Centre (ATPC), Regional Integration and Trade Division (RITD), UNECA. Between January 2016 and September 2018, Melaku served as the Senior Technical Advisor to the Chief Executive Officer of the African Peer Review Mechanism (APRM) Secretariat in Johannesburg, South Africa. Melaku was deeply involved in the technical work leading to the conclusion of the African Continental Free Trade Area (AfCFTA) during this period.
Before joining the UN in February 2015, Melaku was a full professor of international economic law at Leicester De Montfort Law School in England, UK (2013-2015), and lecturer/senior lecturer, and reader in international economic law at the University of Dundee, Scotland (2001-2013).
Melaku is a lawyer by training and holds a PhD degree specializing in international economic law. He has published widely in the fields of African and International Economic Law and Policy in general and Agriculture and Natural Resources in particular. Melaku has consulted a number of international organizations and national governments and served as an arbitrator in international disputes.
Now working as a Coordinator of ATPC, Melaku is supporting African countries in the field of trade policy in general and in the context of AfCFTA in particular. Following is an excerpt from his insights:
Could you introduce us to the ATPC, the African Trade Policy Centre that you lead?
ATPC is a unit within the United Nations Economic Commission for Africa (UNECA) that specializes trade policy issues relevant for the continent. ATPC does its work through the three core functions of the ECA itself: the think tank, convening, and operational functions. In supporting African countries in the field of trade policy, the Centre makes use of each of the three functional areas.
As ECA itself is a socioeconomic development think tank for the continent ATPC is also a trade policy think tank for the continent. In other words, we do a lot of analytical research and writing specific to trade policy. We ask very technical questions like, “What kind of trade policies are appropriate for which country, with which partner, at what time, etc.”
African countries trade with each other and with the rest of the world. To do this they have to govern their trade relations with certain types of negotiated agreements, i.e. International Trade Agreements. These trade agreements can be concluded at bilateral, regional, or multilateral or global levels. If you look at the 54 African countries that are members of the United Nations, they are also members of the ECA. Some 45 of them are already members of the World Trade Organization (WTO).
At the continental level, we have the AfCFTA, which has brought together so far about 48 African Union member states as its State Parties. That is also governed by its own set of agreements. The African Continental Free Trade Agreement is what created the AfCFTA. Then we have eight Regional Economic Communities (RECs) recognized by the AU. Each of the African countries is part of one or more of these RECs. If you look at Ethiopia, for example, it is a member of the Common Market for Eastern and Southern Africa, (COMESA) and the Inter-Governmental Authority on Development (IGAD). Several other countries are members of more than two RECs. Each of these countries has bilateral relations with other countries individually.
If we take Ethiopia as an example, we have had a bilateral agreement with Sudan. In terms of a free trade agreement (FTA), Ethiopia was connected only with Sudan. For example, as Ethiopia is not part of the East African Community, it is not connected with Kenya through an FTA. There are border-related agreements but there is no free trade agreement between Ethiopia and Kenya. Several African countries also have agreements with non-African trading powers, such as the European Union (EU) through economic partnership agreements. The United States Government has had what’s called the African Growth and Opportunity Act (AGOA) since 2000, which established unilateral preferential terms of access for products from sub-Saharan African countries to the US market.
So the ATPC comes in to support African countries in terms of the type of trade policies that they can consider and the kind of positions that they can adopt in negotiating among themselves as well as with the rest of the world. So what ATPC does effectively covers almost everything that’s related to trade and trade policy at the cross-border level. In some cases, we even support countries develop national trade policies.
If I use the AfCFTA as an example right now with support from the ECA/ATPC over 40 countries have developed their national AfCFTA implementation strategies. We do technical research on the legal, political, and economic aspects of trade policy and come up with policy proposals that we think are in the best interest of Africa. Once we come up with the policy proposal, we bring the countries together around the table and present our findings or proposals through our convening function.
The countries debate and enrich those proposals. In some cases, and when we are lucky, countries will adopt common positions in their negotiations with other partners. At its best, countries not only adopt common positions, but they also advocate for them speaking as one in their dealings with the rest of the world. This is an area where we need to do more work.
How much has ATPC helped African countries to develop trade policies that allow them to speed up the AfCFTA implementation process?
We believe that we have made significant contributions to the development of sound trade policy across the continent. Let me use the AfCFTA implementation process as an example. The AfCFTA Agreement was adopted on 21 March 2018 in Kigali, Rwanda. The Agreement was ratified at record speed for this kind of agreement, entering into force in May 2019. Now 54 AU member states have signed it while 48 have ratified it. When it was adopted 7 years ago, Ethiopia was one of the 44 countries that signed it on the same day.
A year later, the Ethiopian House of Peoples Representatives ratified the Agreement, which brought the AfCFTA commitments into the national legal system. Today, we can say the AfCFTA Agreement is part of Ethiopian law. Once countries have ratified the Agreement, the hard work of implementing the agreement starts. And it is at this stage of the actual implementation of the rules and obligations that most African countries, ours included, often struggle.
What are the major challenges they mention as hindrances to the implementation of AfCFTA?
A lot of it is related to institutional capacity challenges. To use Ethiopia as an example, once again, the AfCFTA Agreement requires extensive review and reform of pre-existing laws in many areas. This involves undertaking necessary policy, legislative, regulatory and administrative reforms, but also retraining the civil service in order to conduct itself according to the new rules of the game rather than what they were used to before.
And when you talk about trade, many people think it is just about the Ministry of Trade in a country. No, it is not. Trade policy touches everything. The Ministries of Trade in each of our countries are simply coordinators of the other relevant ministries. You cannot talk about trade if you do not talk about the Ministry of Agriculture because we trade agricultural products. You cannot talk about trade if you do not talk about the Ministry of Industry because there are industrial goods. You cannot talk about trade, if you do not talk about the financial or services industry. Therefore, the Ministry of Trade is the central focal institution in every government.
But their job is typically to coordinate the different agencies within government. That is why when we talk about tariffs or customs duties, they are working with the Ministry of Finance. When we talk about roads and railways, and airfreight, you have to be working with the Ministry of Transport. Otherwise, what is the point of producing the product and wanting to sell it in the neighbouring country if you cannot transport it to that country?
So, the Ministry of Trade is very central. Here, when we talk about the institutional challenges, we are talking first about the Ministries of Trade themselves, but it’s also about the entire government.
You talk about education. If you are a medical doctor, trained in Ethiopia, you might be the best kind of doctor in the world. But until your medical qualification degree is recognized by the neighbouring country you are not going to be allowed to give the medical service in that country. The AfCFTA would enable that. Some way of mutual recognition of our academic certificates will be necessary but that is something the AfCFTA can expedite. So when we talk about the AfCFTA or trade in general, there is almost no sector that will be left untouched by the commitments undertaken. As a result, a serious AfCFTA implementation strategy must bring all the different government agencies and institutions together.
But, that is also why it is hard. The AU Assembly of Heads of State understood this early on. In a decision they passed in June 2019, they said that: Look, we do not have a very good track record of implementing our commitments. We are not going to make the mistake of leaving the AfCFTA to business as usual. The AfCFTA can be a transformative instrument, but if it’s not implemented, it will never have that impact.
They said this in Nouakchott in July 2018. They got together and committed themselves to guide the AfCFTA implementation exercise through national “AfCFTA and Boosting Intra-African trade strategies” that are designed to ensure meaningful participation of all stakeholders, and to be overseen by national AfCFTA implementation committees.
At this point, the ECA, working closely with the AU Commission, played a critical role in supporting the development of national AfCFTA implementation strategies. As of today, over 40 countries have developed their national AfCFTA implementation strategies with ECA support. Five regional economic communities (RECs) have also developed their own regional coordination plans for AfCFTA implementation with an ECA support. About five or six other countries, including Ethiopia, are at different stages in the development of their strategies.
In the case of Ethiopia, ECA is working with the Policy Studies Institute (PSI), a prominent policy think tank in the country, to support the Government develop its national AfCFTA implementation strategy. The draft strategy has already undergone rounds of technical reviews and is now close to completion.
Once these national strategies are completed do you hope the AfCFTA will be implemented?
It is hard to be sure but our hope is that they will be implemented. The fact that the strategies are developed means something. ECA does not just go and provide support to countries. Countries send requests, typically through their ministries of trade. It is only based on such request that we go and support them. So the fact that, governments come to ECA asking for help to develop a strategy already provides evidence of their seriousness about AfCFTA implementation.
In supporting the development of the strategy, we follow a highly structured approach supported by a set of guidelines that were developed jointly with the AU Commission back in 2019. The process is designed to be participatory, with the media invited so that they can inform themselves about the AfCFTA and help their readers/audiences learn about it. The process also adopts an integrated approach in the sense, for example, that the Ethiopian cannot be developed without looking at its macroeconomic policies, its industrial policy, its agricultural policy, its sectoral policies, and the like.
So the technical team that helps governments to come up with AfCFTA implementation strategies will have to dig through all existing policy documents and ensure that prior policies inconsistent with AfCFTA are brought into alignment with the requirements of the AfCFTA Agreement because it is binding on every country that has ratified the Agreement.
Once completed, national AfCFTA implementation strategies typically contain gaps in policy, law and regulation that need to be bridged, priority sectors identified for special support to maximize the benefits from the AfCFTA, and institutions that need to be reformed or even newly established to ensure the AfCFTA is implemented fully, inclusively, sustainably and expeditiously. In many cases, countries establish AfCFTA implementation committees mandated to coordinate the implementation process across the whole of government and with the involvement of the private sector and civil society organizations.
While ECA has the mandate and the technical capacity to support its member states in this area, ECA also mobilizes additional resources from development partners to provide such support across the continent. For example, the Government of Canada has been a long-standing partner of the ECA in establishing the African Trade Policy Centre (ATPC) that I lead. When the whole idea of guiding AfCFTA implementation with deliberate national strategies came up in 2018 and 2019, the European Union was a pioneer in supporting the initiative through ECA. Canada and Denmark are other examples actively supporting our work in this area today.
Since the AU Assembly declared the AfCFTA to be operational as of 1 January 2021, how has implementation progressed so far?
The AfCFTA was created by a legal agreement: “The Agreement Establishing the African Continental Free Trade Area”. That Agreement was signed, i.e. politically endorsed, by 44 countries on the very day it was adopted in Kigali, Rwanda, on 21 March 2018. Ethiopia was one of the 44 signatories on the first day. But that political endorsement, while highly significant, was not sufficient to create legal obligation amongst the 44 countries. In order for the Agreement to enter into force, i.e. to become binding law, it needed to be ratified by a minimum of 22 countries.
About fourteen months later, by 30 May 2019, 24 States had ratified the Agreement, surpassing the minimum threshold of 22 ratifications required for it to enter into force. Today, out of the 55 AU member states, 54 have signed the Agreement; 48 of these have gone a step further and ratified the Agreement. In other words, the AfCFTA Agreement today is part of the national law in all but seven AU member States. This is a big deal. Indeed, I also expect the remaining seven countries to ratify the AfCFTA Agreement in the near future, making AfCFTA participation completely Africa-wide.
But one may also describe the AfCFTA as a rather unlucky baby. Barely six months after the AfCFTA Agreement entered into force, the COVID-19 pandemic broke out. As a result, while AfCFTA was designed to help us open our borders to each other’s goods and services, COVID literally forced us to avoid physical contact even with family and friends who live nearby. That is why the African Heads of State and Government came had to declare 1 January 2021 as the date for the start of trading under the AfCFTA despite the fact that the Agreement had entered into force back in May 2019.
This was then followed by the launch of the AfCFTA Guided Trade Initiative among eight pioneer countries in October 2022 as a pilot project to test the capacity of AfCFTA to support preferential trade. The lessons learnt from that pilot exercise have been quite important. Today, we can confidently say the system can – and does – work; it can – and does – support preferential trading. This means members or parties to the AfCFTA will be able to access markets more freely than those who are not.
Continues in next week’s edition
BY ZEKARIAS WOLDEMARIAM
THE ETHIOPIAN HERALD SATURDAY 29 MARCH 2025
