ADDIS ABEBA – Rules of origin – the criteria used to determine the ultimate nationality of a product – will be a major determinant of the effectiveness of the African Continental Free Trade Area (AfCFTA), argues a new UN Report.
UN Conference on Trade and Development or UNCTAD’s report notes that rules of origin could be a game-changer for the continent, as long as they are simple, transparent and business-friendly.
The report entitled Made in Africa: Rules of origin for enhanced intra-African trade was released during a policy dialogue on AfCFTA, which came into force in May.
The meeting participants in Rwanda discussed at length the nature of Rules of Origin, which constitute ‘a passport for goods circulating under any preferential trading regime’.
Claudia Roethlisberger, an Economic Affairs Officer for UNCTAD, said that, compared with Africa’s exports to other parts of the world, intra-African trade is much more centered around manufactured goods, with higher levels of product complexity.
This tends to contribute to higher incomes and faster economic growth over the long-run, according to Claudia.
Intra-African exports were just 16.6 percent of total exports in 2017, compared with 68.1 percent of intra-regional in Europe, according to the UN trade agency estimates that
The report notes, however, that the AfCFTA is expected to boost intra-African trade by around a third once full tariff liberalization is implemented, attracting additional intra-African investments and creating new market opportunities to foster Africa’s industrialization.
“By supporting intra-African trade, the AfCFTA will advance Africa’s industrialization agenda, through regional value-chain development; it will also reduce Africa’s dependence on commodities and generate the jobs needed to harness Africa’s demographic dividend,” said Roethlisberger.
While rules of origin are necessary instruments within any regional block, how they are addressed by the AfCFTA will directly affect the size and distribution of economic benefits among member countries, the report also says.