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AfCFTA preferential rules of origin as a game changer for Africa

A new report released by the UN Conference on Trade and Development (UNCTAD Economic Development in Africa Report 2019), examines the impact of the adoption of common and harmonized rules of origin for the members of the African Continental Free Trade Area (AfCFTA) to determine which goods can be considered as originating from their territories. The report concludes that such rules could be a game changer for the Continent, but on condition that they will be simple, transparent and business-friendly.

The African Continental Free Trade Area (AfCFTA) came officially into force on May 30, i.e. thirty days after the achievement of the minimum threshold of 22 ratifications required by article 23 of the Agreement establishing the AfCFTA (with Sierra Leone and the Sahrawi Arab Democratic Republic both depositing their instruments of accession on 30 April 2019). In the meantime also Zimbabwe, Burkina Faso and Sao Tome & Principe have deposited their instruments of ratification with the African Union Commission (AUC) Chairperson, so bringing the total number of AfCFTA countries to 25.

UNCTAD observes that Africa’s trade is still heavily dependent on imports from outside, estimating that in 2017, intra-African exports were only 16.6 per cent of total Continent's exports. This figure is extremely low, compared with other more integrated trading blocks, like as for instance the European Union, where intra-EU exports were totaling in the same year 68.1 per cent of its total exports.

The adoption of common rules of origin for the AfCFTA members, together with the implementation of full tariff liberalization among such countries, is expected to raise the percentage of intra-African exports to more than 20 per cent, as most barriers to intra-African trade would be eliminated.

Rules of origin are contained in Annex 2 of the Protocol on Trade in Goods annexed to the Agreement establishing the AfCFTA, which defines the concepts of “wholly obtained products” and “sufficiently worked or processed products”, with the list of the operations considered insufficient to confer origin on a product (art.7) and a description of the instruments of proof of origin (certificates of preferential origin and origin declarations submitted by approved exporters or with regard to products whose total value does not exceed USD 5,000). The reality, however, is that to date every Regional Economic Community in Africa (EAC, COMESA, ECOWAS, SADC) has its own preferential origin rules which are not aligned with each other.

Consequently, the adoption of harmonised rules of preferential origin for the AfCFTA members will depend on the promptness of such Regional Economic Communities to revise their various constitutive Agreements, by aligning the preferential origin rules contained therein with those indicated in the Annex 2 of the Protocol on Trade in Goods.







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