Africa Day 2018: Moving Forward with the Implementation of the Africa Continental Free Trade Area – Opportunities and Challenges

On May 24, 2018, the Wilson Center Africa Program hosted a discussion on “Moving Forward with the Implementation of the Africa Continental Free Trade Area – Opportunities and Challenges.” The event, hosted in partnership with the African Ambassadors’ Group, was part of the Africa Day celebrations. H.E. Dr. Arikana Chihombori-Quao, the African Union Ambassador to the United States, offered welcome remarks. The discussion was moderated by Dr. Monde Muyangwa, Director of the Wilson Center Africa Program. Speakers included Dr. Donald Kaberuka, the African Union High Representative for Financing of the Union and Peace Fund and former President of the African Development Bank; Ambassador Stephanie Sanders Sullivan, the Acting Principal Deputy Assistant Secretary at the Bureau of African Affairs at the U.S. Department of State; and, H.E. Dr. Kerfalla Yansane, the Ambassador of Guinea to the United States. The Ambassador of Cameroon to the United States, H.E. Étoundi Essomba, offered closing remarks.

H.E. Dr. Arikana Chihombori-Quao opened the discussion by framing the historical context for the importance of the African Union and the Continental Free Trade Area (CFTA). The African Union is the successor of the Organization of African Unity, which was founded in 1963. Ambassador Chihombori-Quao highlighted recent achievements of the African Union—including the CFTA, the Single Africa Air Transport Market, and the African Passport—which have signaled progress towards the goal of minimizing obstacles that impede African unity, in context to the long history of colonialism and artificial borders. These recent achievements mark important milestones that should be celebrated. As she noted: “Finally, we, the children of Africa, the 55 African leaders, the 1.27 billion people are now getting it and realizing that our strength is in our unity … that which has been dividing us over the years must be destroyed, and that boundaries which are not ours must be destroyed, and that Africa must speak with one voice, one heart, and one mind.”

Dr. Donald Kaberuka added further detail to the importance of the CFTA and the benefits that could accrue from the agreement. He also highlighted potential concerns and obstacles to implementation and the ways forward for overcoming the obstacles and maximizing the benefits of the agreement. He noted that the CFTA was probably the most historic decision that Africa has made since independence. Utilizing lessons from other continents, namely Europe and the founding of the European Union, Dr. Kaberuka argued that the significance of the CFTA does not only lie in promoting trade, but also in advancing security, safety, and prosperity. While acknowledging concerns by some countries regarding dumping, rules origin, and potential loss of jobs, he noted that many of these concerns are addressed directly in the agreement.  For example, the CFTA is 90 percent free trade and not total liberalization, which allows for protection for some infant and sensitive industries. When implemented, the CFTA could help the continent move away from its dependence on commodity exports and towards developing human capital and industrialization. While some sub-regions in Africa are still lagging behind in terms of trade, the Southern African Development Community and East African Community show higher levels of intra-regional trade; the CFTA will help build on and expand current successes of regional cooperation and integration. Notably, the agreement will not only benefit countries that rely on trade in physical goods; half of the benefits of the CFTA will accrue from trade in services. Other key benefits of the agreement will come from reducing both tariff and non-tariff barriers to trade, including burdensome and inefficient customs processes, insufficient infrastructure, excessive paperwork, and security checks. Dr. Kaberuka argued that the CFTA is a significant step in larger African efforts to create jobs, promote development, and capitalize on the demographic dividend by creating jobs and a larger economic space for youth.

Ambassador Stephanie Sanders Sullivan echoed many of the benefits of the CFTA from the perspective of the United States as a key international partner to Africa. She noted that this agreement, which lowers barriers to trade, would make Africa more competitive on the global market, and is, therefore, good for Africa and for the United States. Ambassador Sullivan also stated that the United States is prepared to assist with promoting economic opportunity and trade capacity-building in Africa, as it has done with the Africa Growth and Opportunity Act (AGOA). Between 2000 and 2017, non-oil exports from Africa to the United States have increased from USD 1.3 billion to USD 4.3 billion. Likewise, U.S. exports to Sub-Saharan Africa rose from USD 5 billion to USD 14.1 billion during the same period. The CFTA offers significant promise for the continent and for her international partners. By some estimates, the CFTA can result in a 1 to 6 percent increase in GDP for Africa and increase Africa’s industrial exports by over half by 2022. In addressing a question about the potential conflicts between Africa’s push for a regional and multilateral approach to trade and the United States’ preferred approach of bilateral trade deals, Ambassador Sullivan said the United States was not seeking to undermine Africa but was looking to find a foothold that would induce more interest among American investors and deepen the U.S.-Africa trade relationship,  and also would continue its consultations to figure out how best to move forward in the most mutually beneficial way. Through it all, the United States would continue to stand as a ready partner in advancing economic opportunity, security, and peace in Africa.

H.E. Dr. Kerfalla Yansane re-emphasized the historical and future importance of the CFTA for African unity and prosperity. One key challenge ahead will be remedying the fragmentation of the African market and African infrastructure, which are legacies of colonial rule. However, the demographic dividend is a hopeful piece of the equation. While the African market is already significant at over 1 billion people, it will continue to grow and act as a “life insurance” for the continent against the mounting forces of economic nationalism and protectionism, if Africa is able to unify economically. Free, fair, and equitable trade, and solidarity among the African countries is a key condition for the success of the CFTA. Further areas for future attention include important improvements in communication, and technological and physical infrastructure, which are necessary if the continent hopes to realize the benefits of the agreement. The private sector must be included not only as a source of funding but also as a voice in the negotiation and planning stages. With the cooperation of governments, civil society actors, and the private sector, the challenges can be met and opportunities realized.

H.E. Étoundi Essomba offered closing remarks that drove home the potential benefits of the CFTA for the continent. The Ambassador shared his appreciation for the event, which provided a forum for discussing the potential challenges, benefits, and ways forward for the CFTA. The CFTA will provide a stronger starting-point for Africa’s trade negotiations with partners and could set the stage for more intra-African trade as well as trade with other regions, which could subsequently open the doors for a more prosperous and unified Africa in the future. 

This event was livestreamed and livetweeted. Follow the Africa Program Twitter account @AfricaUpClose and catch up with the conversation using the hashtag #AfricaDay2018. 

Selected Quotes
 

H.E. Dr. Arikana Chihombori-Quao 

"...I can stand here today and say, because of the activities that are going on on the continent -- recently the signing of the CFTA, the discussions having to do with the Single African Air Transport Market, the African Passport -- if our leaders were to be here today, I know they would be looking at the continent with a great big smile on their faces because finally, we, the children of Africa, the 55 African leaders, the 1.27 billion people, are now getting it, and realizing that the strength is in our unity, and that which has been dividing us over the years must be destroyed."

Dr. Monde Muyangwa

“It has taken many years of hard work for the continent to get to this agreement, and this in and of itself, is a cause for celebration. Furthermore, the Continental Free Trade Agreement should not be seen as a standalone initiative, but as a building on the regional economic cooperation and integration efforts that have been built over the years. And so, we have a foundation there on which to implement this agreement.”

“As Dr. Kaberuka said, that perhaps this is the most historic decision that Africa has made since independence and I would tend to agree with that. That if Africa really gets this right, and puts its energies and its forces behind it, this could really transform the continent, and from my perspective, it could be a game changer in terms of the legacy that your generation leaves for Africa’s youth.”

Dr. Donald Kaberuka

“Coming together is not only an economic objective; it has huge implications for security, for safety, and for prosperity….the aim of the CFTA is not to simply increase trade. It increases more than trade. It might be helping greater security.”

"The aim of the CFTA is….to go from exporting oil, exporting coffee, to developing human capital and industrialization."

"For me, it shows the whole reason for the CFTA. If these poor ladies who are making a living were allowed to just ignore that little [border] in between [them], perhaps their prices might go up. But just look at the absurdity of [the trade restrictions across borders]. And this is true for almost every part of Africa. There are formal borders, where trucks have to go through, and then we have this reality of every day."

"For this larger workforce, we need a large economic space. And the only way that we will benefit from the demographic dividend is to ensure that we have the CFTA and non-tariff restrictions out of the way."

Ambassador Stephanie Sanders Sullivan

"The United States has been interested in supporting regional economic integration for a very long time….We see these initiatives as complementary to our own efforts to develop deeper trade and investment relations with Africa."

"...by lowering barriers to regional trade and investment, the African CFTA lays the groundwork for greater competitiveness, trade diversification, and economic growth. It is good for African countries and it is also good for the United States." 

"As the African Union and its members strive to integrate, we stand ready to assist. We want our economic engagement to grow. The United States has sought to play a positive role in achieving greater economic opportunities through our long history of trade capacity-building in Africa, and our almost 23-year provision of benefits under the Africa Growth and Opportunity Act, also known as AGOA."

H.E. Dr. Kerfalla Yansane 

"Today, we are more than 1 billion people. This is a huge market. If we had one market, this could be the size of China, of Germany, and this could be some sort of life insurance for the continent at a time when, around the world, there is a tendency towards nationalism…..this is a matter of survival for Africa. If we can be united, then we can be protected against this protectionism."

"I think that it’s important that we not only have free trade but fair trade and equitable trade. This means that we shouldn’t try to dominate over countries. We should be able to have solidarity among African countries. This is a key condition for the success of this African free trade agreement." 

H.E Étoundi Essomba

"We have every reason to believe that this achievement will benefit the whole continent. So, I think the essence of this message is a positive one and as such we are sitting here as representatives of the continent. We will take this message of yours to make it our lead motive."