AfCFTA not feasible in July – Scribe
By thereporterethiopia
The African Continental Free Trade Area (AfCFTA) that was meant to commence on July 1, 2020 has been postponed because of the raging global coronavirus pandemic.
Mr Wamekele Mene, the Secretary General of AfCFTA, said: “It is obviously not possible to commence trade as we had intended on 1 July under the current circumstances.”
The global pandemic currently affecting more than 3.1 million people worldwide and has killed more than a quarter of a million people so far.
Also, an official from the Trade and Commerce Department of the African Union in Addis Ababa confirmed that the launching date of the CFTA has been postponed.
While the Department is working along with the Secretariat of the CFTA to decide on the future launching date, according to the official, the possible date for the launching is going to be early next year. The exact date for the launching will be announced within the coming two weeks.
According to the United Nations Economic Commission for Africa’s (UNECA) document published in January 2020 on the CFTA, the launching constituted the dismissal of tariff on selected and negotiated goods traded among the ratifying nations.
The document states that, “Starting from July 1, 2020, tariffs on 90 per cent of goods traded among AfCFTA State Parties are to be reduced in equal annual installments until they are eliminated within 5 years for non-LDCs and 10 years for LDCs.
So, a product facing a tariff of 25 percent being imported into a non-LDC would be tariffed at only 20 per cent from July 2020, then 15 per cent from July 2021, with such reductions each year until it is traded duty-free by July 2025.”
Ethiopia was among the first 22 ratifying countries of the CFTA, the threshold required to enter the agreement into force. Currently 28 countries have ratified the agreement and deposited the same with the African Union; all countries on the continent except for Eritrea, Benin and Nigeria are signatories of the CFTA.
Based on the UNECA analysis, the “CFTA could increase intra-African trade by as much as USD 35 billion per year, or 52 percent above the baseline, by 2022. Imports from outside of the continent would decrease by USD10 billion per year, and agricultural and industrial exports would increase by USD4 billion (7 percent) and USD 21 billion (5 percent) above the baseline, respectively.”
While the global economy is gravely hit by the pandemic, the developing world is going to receive the heaviest blow from the virus.
According to the assessment made by the African Union about the economic impacts of the virus on the continent, it is indicated that there will be a multi-faceted effect on the economy.
The assessment points out that, there will be both exogenous and endogenous effects of the pandemic.
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