The Coming Into Force Of The Free Trade Agreement On The African Continent Will Give Birth To The Giant Single Market

At the just concluded African Union summit, bozwana and Zambia joined the African continent free trade area (afcfta) agreement. So far, only three of the 55 Au members have not signed. Analysts believe that the African single market process has become the most anticipated event on the continent in 2019.

In March 2018, 44 African countries established the afcfta agreement in kigalida, the capital of Rwanda, taking a big step towards creating a large single market. So far, the membership of the agreement has increased to 52, of which 18 countries' parliaments have approved the agreement, and four more countries' ratification of afcfta will take effect.

African leaders are confident in the future of afcfta. Rwanda's President Kagame, who has just stepped down as the rotating chairman of the African Union, said, "as the pace of ratification has accelerated, afcfta will only have a few weeks to go into effect."

Currently, all countries that approve afcfta come from sub Saharan Africa. In recent months, the AU has repeatedly urged North African countries to pass the domestic approval process as soon as possible.

In terms of the number of members, afcfta will become the largest free trade area in the world since the establishment of the world trade organization. Under the agreement, Africa will create an African market with more than 1.2 billion people and a GDP of 3.3 trillion US dollars. The Au predicts that by gradually abolishing tariffs on 90% of goods and further promoting the liberalization of trade in services, the proportion of intra regional trade will increase from 14% at present to 52% in 2022.

He Wenping, a researcher at the Institute of West Asia and Africa, Chinese Academy of Social Sciences, pointed out to reporters of the 21st century economic report that if the agreement comes into effect, it will greatly reduce tariff barriers and eliminate non-tariff barriers. This will not only greatly promote China Africa trade, but also further ignite the enthusiasm of Chinese enterprises to invest in Africa.

Nigeria has not yet joined

Currently, of the 55 members of the Au, only three countries, namely, Benin, Eritrean and Nigeria, have not joined afcfta. Among them, Nigeria, the "locomotive of Africa's economy", has attracted the most attention. The Nigerian government said it was conducting due diligence on whether to join the agreement to ensure that it would not have a negative impact on local industries.

Adeyemi dipeolu, special adviser to the president on economic affairs in Nigeria's vice president's office, explained that the reason for not joining was because of concerns about Nigeria becoming a dumping ground for foreign goods. Nigeria faces a general election this year, and the administration is wary of joining an agreement that could affect votes.

However, African countries, including Nigeria, dare not ignore the business opportunities brought by afcfta. Jeremy Stevens, economist of standard bank group, once pointed out in an exclusive interview with the 21st century economic report that by 2020, on the basis of the liberalization of trade in goods, the agreement will increase the rules on investment, competition policy and intellectual property rights, so as to promote the coordination of regulatory framework, the free flow of people and goods across the border, and promote economic growth.

According to the African economic outlook 2019 just released by the African Development Bank, under the framework of the agreement, when bilateral tariffs are cancelled, intra African trade will increase by 15%, and real income will increase by about 2.8 billion US dollars. If other barriers are further removed, another 37 billion US dollars of growth will be achieved, and trade growth will exceed 100%. With the implementation of the trade facilitation agreement (TFA) of the World Trade Organization (WTO), the effect of afcfta will be more obvious.

During the winter Davos Forum in January, the prospect of African continent integration was highlighted as a sub forum theme. Asked if Africa would benefit from free trade, Nigerian entrepreneur Tony elumelu said: "if you look at the rest of the world, you can see that FTAs are very helpful to intra regional trade. To promote Africa's development, it must be accepted. "

"Countries engaged in raw material trade are poor countries, and countries engaged in value-added products trade are rich countries." Akinwumi adesina, President of the African Development Bank, said that with the further integration of African markets, raw materials would remain in Africa to support the development of high value-added industries, rather than ceding profits to foreign partners.

David Luke, coordinator of the African trade policy center of the United Nations Economic Commission for Africa, said that afcfta is one of Africa's landmark trade policies, which will change Africa's trade mode and become the driving force for Africa's development and transformation in the future.

China Africa economic and trade cooperation will be greatly promoted

"There is no doubt that Chinese exporters are paying close attention to the afcfta, and when the agreement comes into force, they will have easier access to various markets. It's going to attract more capacity from Africa, and hopefully to China. " Ni told the 21st century economic reporter.

The entry into force of afcfta will have a great impact on China Africa economic and trade cooperation. He Wenping told the 21st century economic reporter that with the improvement of African integration, the potential of African market will be released, which will greatly promote China Africa production capacity cooperation. With the further improvement of the business environment in Africa, the attractiveness of Africa to Chinese investors will further increase.

"The African market is highly fragmented, and the market capacity of many small countries is very limited, which hinders the development of African industrialization and China Africa production capacity cooperation." He Wenping stressed that "both industrial parks and economic and trade cooperation parks must have sufficient market capacity. There is an urgent need for further integration of African markets in order to develop economies of scale. "

According to Africa's economic outlook 2019, Africa has 16 land locked countries, which are far more fragmented than other continents. In 2017, 76% of African countries had a population of less than 30 million, and about half of them had a GDP of less than $10 billion. "Deeper market integration of goods, infrastructure services, and key factors of production (labor and capital) is the key to enhancing the global competitiveness of small African countries."

In addition, the entry into force of afcfta will enable China to play a greater role in infrastructure construction in Africa. He Wenping pointed out that in addition to high trade barriers, backward infrastructure is also an important factor hindering intra regional trade in Africa. "In recent years, Chinese enterprises have carried out a large number of cross-border and cross regional infrastructure projects in Africa, which has effectively promoted the integration of Africa and created conditions for transportation between countries."

According to the statistics of China Customs, in 2018, the total import and export volume between China and Africa reached US $204.19 billion, a year-on-year increase of 19.7%, 7.1 percentage points higher than the overall growth rate of China's foreign trade in the same period. Among them, China's export to Africa was US $104.91 billion, an increase of 10.8%, and the import from Africa was US $99.28 billion, an increase of 30.8%, which was 15% higher than the increase of China's foreign trade import in the same period; the surplus was $5.63 billion, down 70.0% year-on-year.

In September 2018, China and Mauritius concluded the negotiation of China Maoist free trade agreement, which is the first free trade agreement signed between China and African countries. In the next step, the two sides will be ready for the final signing of the agreement. (Editor: Dong Liming)

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