ADDIS ABABA- Rules of origin should be made simple and business friendly to realize the gains expected from the African Continental Free Trade Area (AfCFTA), said Dr Joy Kategekwa, Head, UNCTAD Regional Office for Africa.
The Head said that Rules of origin, the criteria needed to determine the nationality of product could make or break the African Continental Free Trade Area (AfCFTA) that entered into force in May.
Rules of origin are a “passport” enabling goods to circulate duty-free within a Free Trade Area (FTA) as long as these goods qualify as originating within the FTA.The Economic Development in Africa Report 2019 notes that rules of origin could be a game changer for the continent given that they are simple, transparent, business friendly and predictable,
“The AfCFTA is a landmark achievement in the continent’s history of regional integration and is expected to generate significant gains. But it is the rules of origin that will determine whether preferential trade liberalization under the AfCFTA can be a game changer for Africa’s Industrialization”, UNCTAD Secretary-General Mukhisa Kituyi said.
Currently intra-African trade is a mere 15 percent compared to around 47 percent in America, 61 percent in Asia and 67 percent in Europe, according to UNCTAD data for 2015 to 2017, but the AfCFTA could radically change that, UNCTAD report suggests.
If the agreement is fully implemented, the Gross Domestic Product of most African countries could increase by one percent to three percent once all tariffs are eliminated, the report estimates.The AfCFTA is expected to boost intra-African trade by 33 percent once full tariff liberalization is implemented, attracting additional intra-African investments and creating market opportunities to foster Africa’s industrialization through regional value chains.
By granting each
other trade preference, member countries would source more intermediate and
final goods among themselves rather than import from abroad.Through
supporting Intra-African trade, the AfCFTA would also advance Africa’s
industrialization agenda through regional value-chain development, reduce
Africa’s dependence on commodities and generate the jobs needed to harness
Africa’s demographic dividend.On the other hand, if rules of origin are made
too costly or complex to comply with, firms may instead
forego these preferences and choose to trade with partners outside the AfCFTA, the report warns.According to the report countries including Benin, Burkina Faso, the Central African Republic, Djibouti, among others are those that are not able to tap preferential treatment for their export to external partners.
The Ethiopian Herald, July 3/2019
BY BETHLHEM BEDLU
