
The AU’s role in advancing the African regional trade agreements is a remarkable one. It promotes economic development that improves the standard of living of the Africans, including Ethiopians. At a time when trade has been questionable in some parts of the continent, African leaders gathered in Kigali on 21 March 2018, and took a courageous step in promoting trade.
Continental trade is a reliable means of economic integration that contributes to growth and development in Africa, including Ethiopia. This trade policy, with relevant programs and projects, meets the expectations of deriving benefits from trading among African countries. Exchange of goods and services produced in African countries is an endeavor that beats the expectations of developed countries. These countries, most of which were former colonial and neocolonial powers, took African countries as sources of raw materials for their manufactured goods and services. In this regard, the role of the AU in advancing regional trade agreements is considered as a declaration of African economic freedom.
The advancing of regional trade agreements among African countries by the AU requires prompt action by African nations for the agreement to deliver on its expectations. The fulfillment of these expectations and anticipations are bound to face challenges that lie ahead. One of these challenges could be the ambitious nature of creating a “single” African market.
Also, African countries, including Ethiopia, have to take measures for achieving the regional trade agreement. One of these measures would be the liberalization and reform commitments that should be implemented to stimulate intra-African trade expansion. These measures may include economic growth and development, welfare improvement and structural transformation of the African economy. Experts have pointed out that some countries and economic sectors face unexpected losses in fiscal revenue, jobs and industry. These incidents have to be analyzed by the AU before member countries enter agreements to deliver on what is expected of them.
The impediments in fulfilling expectations should not discourage African countries, including Ethiopia, from continuing to fulfill their commitments toward economic growth and development through mobilization of resources. These resources should primarily originate from domestic reserves accumulated to meet basic necessities in time of crises.
The AU should encourage African governments to forecast the future socioeconomic developments and act accordingly. They may design flexible policies, strategies and measures that meet the changing needs of the society. These measures may be flexible and realistic means of addressing of the African people, including Ethiopians. African governments have to enter agreement after negotiations and hard work in pursuit of a common vision. These visions have to be addressed by the AU, with realistic instruments of socioeconomic development, including trade. In this respect, the AU has made decision to advance regional trade agreements.
Africa has also embarked on the Continental Free Trade Area which has the potential to unify African markets, nations and peoples. In so doing, it contributes to the improvement and the well-being of the African people, including Ethiopians. Experts think that a strong and united African market will benefit the trading partners of Africa and will promote greater international trade.
However, more effort is needed to ensure greater coordination and harmonization of trade policy measures among African countries. Also, the African regional economic communities have to be coordinated. The objective and aspiration of the African Continental Free Trade Area is constructed on the principles of substantial liberalization and flexibility. It is built on what has been accomplished in the past, especially under the African regional economic communities. A dedicated institutional framework on the Free Trade Area has been set up to manage and administer it.
A few African countries have not signed the agreements but have remained committed to the Free Trade Area. Most AU member states have signed the Protocol on Free Movement of Persons, Right to Residence and Right to Establishment. The agreement on trade in services includes the progressive elimination of barriers to the movement of African services. It also includes removal of barriers to service suppliers by lifting restrictions to the various means of supplying services. The agreement allows for the temporary movement of persons, supply across borders and commercial establishment.
The liberalization of trade is consistent with the General Agreement on Trade in Services of the WTO. It will take place through successive rounds of services negotiations on sector specific obligations. Removing trade barriers would bring further stimulus to intra-African trade and welfare improvement. In this regard, Ethiopia has been involved in shaping the AU’s strategy to enhance intra-African trade by reducing trade barriers.
There are some expected effects of the Free Trade Area during the transition period. It boosts the welfare of the African people, and it facilitates intra-African trade and growth in domestic product. The UNCTAD projects that under a full liberalization of tariffs on trade in goods, Africa would realize full employment and most of these gains will be in the manufacturing and agricultural sectors. But, “full liberalization” of tariffs on trade is just an assumption that would not be realized, except indicating wishful thinking.
However, most African countries, including Ethiopia, may register a certain increase in production, employment and income if the factors of production are engaged in the various sectors of the economy. Of course, the growth rate may not be the same among African countries as their natural endowments vary. As a result, some may experience a slight fall in the absence of strategic measures and built-in flexibilities. In other words the abundant natural resources of the continent, including human resources, have to be guided toward productive employment.
BY GETACHEW MINAS
THE ETHIOPIAN HERALD WEDNESDAY 4 JUNE 2025