Business Development Trade

AfCFTA to commence facilitated and guided trade

Participants in an online masterclass for trade journalists

The African Continental Free Trade Area (AfCFTA) has announced that facilitated and guided trade will commence soon with huge rewards expected among traders.

The announcement of the “Launch of trade” was made on 1 Jan 2021 (Decision of 13th Extraordinary Session of AU Assembly – 5 Dec 2020) – under an ‘interim arrangement’ – (trade in terms of tariff offers. This will happen when rules of origin are concluded for the goods, and the offer of the partner country complies with the tariff negotiating modalities. On the other hand, domestic implementation processes must be completed.

In her address during an online masterclass for trade journalists on 8 August 2022, Trudi Hartzenberg, the Executive Director of Trade Law Centre said the Summit of 5/6 Feb 2022 was expected to launch “commercially meaningful trade”.

“This refers to Trade in Goods and the start of trade among the 29 State Parties that had submitted modality compliant tariff offers. The aim was to launch trade for those goods (tariff lines) for which rules of origin are agreed. About 13% of rules of origin were still to be agreed upon, and not all offers of tariff concessions had been tabled.

“The Guided Trade Initiative has a number of objectives. It is meant to allow commercially meaningful trading under the AfCFTA and test the operational, institutional, legal, and trade policy environment under the AfCFTA. It also sends an important positive message to the African economic operators about the AfCFTA amid expectations that real trade opportunities will be created,” Hartzenberg said.

On 27 July 2022, the Council of Ministers announced the launch of the AfCFTA Facilitated and Guided Trade Initiative for a selected number of African States to start trading under the AfCFTA “that will see these States conduct business without being subjected to tariff barriers”.

The countries are Kenya, Tanzania, Tunisia, Cameroon, Egypt, Mauritius, and Ghana.

“The initiative seeks to demonstrate that the AfCFTA is functioning and send a political message to countries that are yet to submit their provisional schedules of tariff concessions in accordance with agreed modalities,” said the AfCFTA Council of Ministers.

According to media reports, the pilot phase means that Kenya will now begin to access markets in West and Central Africa on preferential rates in trading with countries such as Tunisia, Cameroon, and Ghana which are in a different economic blocs.

A committee has been established to coordinate and operationalise the activities of the Guided Trade Initiative. There will be Ad Hoc Committees in the participating State Parties. The aim is to start trade (shipments under the Initiative) by the September Council of Ministers Meeting (26 Sept 2022).

The following products can be traded under the initiative: Ceramic Tiles; Batteries, Horticulture products, Avocados, Flowers, Pharmaceutical; Palm Oil; Tea; Rubber; and Components for Air conditioners to support value chain development.

The Pan-African Payment and Settlement System (PAPSS0 – a cross-border, financial market infrastructure enabling payment transactions across Africa is one of the complementary initiatives. The Afreximbank also supports this initiative at the business-to-business and national levels.

The AfCFTA e-tariff book and Rules of Origin Manual will be launched at the Council of ministers meeting.

About the author

Byron Adonis Mutingwende