ABUJA, Nigeria (CU)_Although trading under the African Continental Free Trade Agreement (AfCFTA) officially began on January 1, sources say commodities are not yet being traded under its zero or reduced tariffs.
According to the deputy director-general for international trade negotiations in South Africa’s Department of Trade, Industry and Competition, Ambassador Xavier Carim, the delays are owing to the fact that Botswana had not yet ratified the Agreement and since Egypt is still finalising its revised tariff reduction offers.
South Africa and Botswana, along with Namibia, Lesotho and Eswatini, are members of the Southern African Customs Union (SACU), which will trade as a single bloc in the AfCFTA. This means all SACU members need to ratify the agreement before any of the members can begin trading.
According to Carim, the same problem is faced by the members of other customs unions such as the East African Community and the Economic Community of West African States (Ecowas), in which, some member states have not yet ratified the AfCFTA.
Therefore, no trading began on January 1, and instead it remains as a historic date since any country or customs union which met three basic conditions had the opportunity to begin trading on the New Year’s Day. These three basic conditions are to ratify the agreement, to make an offer to reduce import tariffs to zero on at least 81 per cent of goods, and to pass domestic legislation which will enable customs authorities to allow imports into the country at the new tariff rates.
The South African official noted that although the countries had originally agreed to eliminate tariffs of 90 per cent of goods, however, they only managed to agree on 81 per cent of tariff lines last year. Therefore, the parties agreed to begin trading on this 81 per cent from January 1 and to negotiating the remainder by June this year.
In circumstances where trade has taken place after January 1, but customs authorities are unable to apply the new zero or reduced tariffs, the countries which have ratified the AfCFTA have agreed to retrospectively credit importers if they had to pay the higher pre-AFCTA import tariffs.
However, some member states have raised concerns that if the new customs procedures are put in place around June, after the negotiations for the remaining rules of origin conclude, in such instances, these countries would have to backdate reimbursements six months, which could have negative fiscal implications.
