Friday, October 07, 2022
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AfCFTA e-tariff book, user guide available

The AfCFTA e-tariff book, launched in the end of July 2022 as a key tool for African States to begin trading under the AfCFTA rules, is a digital platform with updated information on tariff concessions that each AfCFTA State Party and Customs Union in Africa has accorded to goods imported from other AfCFTA State Parties. A user guide on how to use the manual has been made available on the e-tariff book website and can be accessed here.

The Annex 1 to the Protocol on Trade in Goods to the AfCFTA Agreement mandates AfCFTA State Parties to develop Schedules of Tariff Concessions in accordance with the approved modalities for tariff liberalisation. Annex 1 just mentions States, but as many African countries are part of Customs Unions (e.g, SACU, EAC, ECOWAS, CEMAC), they do not submit such concessions individually, but as a regional block. Once the schedules of Tariff Concessions are adopted, they must be communicated to the AU Commission. In many African States however, there is an additional step in this process. Once approved, and before being communicated to the AU, tariff concessions need to be published in the national or regional (in case of Customs Unions) Official Gazettes in order to take effect.

Currently, 46 countries and Customs Unions have transmitted their tariff concessions to the AU, so the process is not complete. However, one of the principles of the AfCFTA (art. 5) is the so-called “variable geometry”, which means that State parties that have already upgraded their tariffs by incorporating the AfCFTA preferential tariff rates, can start trading under the AfCFTA even if there are still other countries that have not done so. The latter are in fact free to move at a slower pace.

The reason why such States and Customs Unions have to exchange tariff concessions is because the AfCFTA liberalization (concerning 90% of tariffs on goods exchanged between African countries plus another 7% of sensitive products) is a process that will happen gradually.

This means that customs duties are not brought down to 0% from night to day, but through gradual duty reductions. Middle or high-income African States have 5 years to complete this process (starting from 2021), Less Developed Countries have 10 years, while a small group of countries called “G-6” (Ethiopia, Madagascar, Malawi, Sudan, Zambia and Zimbabwe) are allowed to complete the tariff liberalization process in a longer time-frame of 15 years. Moreover, another 7% of products categorised as sensitive, can be liberalised over a longer period of 13 years for LDCs and 10 years for non-LDCs. Each State or Customs Union choses the products that they consider "sensitive", on condition that they respect a series of parameters listed in a Decision of the Assembly of the African Union adopted on January 2019. These criteria basically refer to products that are deemed essential for: 1) food security, 2) national security, 3) fiscal revenue, 4) livelihood and 5) industrialization. Both LDCs and non-LDCs can exclude 3% of their tariff lines provided that such products do not represent more than 10% of their total foreign trade volume.

Tariff concessions are tables showing year by year the rate of reduction with respect to the ordinary (so called Most Favored Nation) customs duty rate for each product subject to liberalization, up to the year when the liberalization will be total (0% duty).

The example below, for instance, referred to the import in Senegal of crushed or ground vanilla (HS Code: 090520) originating from Madagascar, means that the ordinary customs duty (20% ad valorem rate) will be reduced in 10 years (see the “Time Frame” column), through gradual reductions that start from 2021 until 2030, when the duty rate will be equal zero. The column "AfCFTA category" indicates if the product is a non-sensitive product (A: subject to ordinary liberalisation), a sensitive product (B: subject to a longer liberalisation period) or is one of the products excluded from tariff liberalisation (C). In the example, if the importer from Senegal plans to import his vanilla consignment by this year, the applicable duty will be 16%, while if he plans to carry out the transaction in 2023, the rate will be 14%, in 2024 will be 12% and so on...

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