May 5th 2018


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Articles from this issue:

COVER STORY HECS: hastening our demographic winter

EDITORIAL Liddell is the 'fly in the ointment' of the NEG

AFRICAN AFFAIRS African Continental Free Trade Area ... in the spirit of GATT

CANBERRA OBSERVED Bernardi foray looks to be fading out of view

ENVIRONMENT Is a prolonged freeze on the way for the earth?

MEDICINE NaProTechnology: an ethical alternative in reproductive health

MEDICAL ETHICS Grounds for objection: a declaration on freedom of conscience

OPINION What a republic would really mean for Australia

LAW AND FREEDOM 'Rule of law' does not support exemptions: a reply to Robin Speed

INTERNATIONAL AFFAIRS Saudi Crown Prince challenges Wahhabists

HIGHER EDUCATION Undoing the dis-education of Millennials

GENDER POLITICS Why are patients being denied freedom of choice?

ASIAN HISTORY Jinmen: the forgotten crisis that brought the world to the brink

HUMOUR

MUSIC Grammy salute to Elton John: Revealing revisit to the 1970s

CINEMA The Isle of Dogs: Man's best friend in exile

BOOK REVIEW Australia, we need to talk about China

BOOK REVIEW Novelised life a vivid drama of survival

POETRY

LETTERS

NATIONAL AFFAIRS Committal hearing dismisses main charges against Cardinal Pell

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AFRICAN AFFAIRS
African Continental Free Trade Area ... in the spirit of GATT


by Patrick J. Byrne

News Weekly, May 5, 2018

While Africa’s Continental Free Trade Area (AfCFTA) aims to eliminate tariffs between African nations by 90 per cent, it also allows member countries to protect their infant industries and certain other industries and apply trade remedies.

Further, the protocol on trade in services allows exemptions for security and other reasons.

  • Continental agreement to eliminate 90 per cent of tariffs
  • Infant and other industries remain protected
  • Sovereignty over domestic
    economic policy is preserved
  • Africa’s population is projected to reach 2.5 billion by 2050

These exemptions for inter-country trade in both goods and services are in the spirit of the 1947 General Agreement on Tariffs and Trade (GATT), which prompted nations to reduce or remove tariff and non-tariff barriers without intruding of any nation’s economic sovereignty.

Notably the AfCFTA has put off any dispute settlement system for future negotiations, while Phase 2 of the negotiations are yet to deal with intellectual property rights, cross-border investment and competition policies.[1]

The AfCFTA rules both encourage tariff-free trade to the full extent possible while allowing nations to pursue their own economic objectives. Such rules are what economist Dani Rodrik has called “shallow globalisation”. Rodrik is Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University.

Rodrik contrasts such rules with those of the WTO, which intrudes into sovereignty by requiring an elaborate system for settling disputes in order to enforce trade agreements. He calls this “deep globalisation”, which encroaches on the freedom of governments to set domestic economic policies in the national interest.

Signatories to the AfCTFA in green;
standouts in grey.

Arguably, the GATT proved more successful in promoting trade and global economic development, which underpins stable democracies. Further, the WTO allows various bilateral and multilateral free trade agreements that are not consistent with WTO rules.

The AfCFTA aims to create a single common market embracing all countries in Africa. It took eight negotiating rounds since 2015 to reach agreement.

It will cover a market of 1.2 billion people and a gross domestic product (GDP) of $2.5 trillion, across all 55 member states of the African Union. In terms of numbers of participating countries, AfCFTA will be the world’s largest trade bloc since the formation of the World Trade Organisation. However, 11 countries are yet to sign the AfCFTA’s establishing framework.

The population of Africa is projected to reach 2.5 billion by 2050, at which point it will comprise 26 per cent of what is projected to be the world’s working-age population, with an economy that is estimated to grow twice as rapidly as that of the developed world.

As Professor Landry Signé, a Distin­guished Fellow at Stanford University’s Center for African Studies, points out: “Industrial development, and with it, more jobs, is desperately needed in Africa. Industry represents one-quarter to one-third of total job creation in other regions of the world.

“And a young person in Africa is twice as likely to be unemployed when he or she becomes an adult. This is a particularly stressful situation given that over 70 per cent of sub-Saharan Africa’s population is below age 30.

“In addition, 70 per cent of Africa’s youth live on less than $US2 per day.”[2]

Currently, only 20 per cent of trade exports from African nations goes to other African countries. About 80 per cent of exports are to other countries and three-quarters of these exports are oil, gas or mining products.

Boosting trade between AfCFTA nations will be important in building the economies of African nations.

Professor Signé, who also wrote the book, Innovating Development Strategies in Africa: The Role of International, Regional and National Actors, says that AfCFTA also faces the difficult task of fostering cooperation among a multitude of national and regional actors with trade interests that will diverge at times.

“The heterogeneous size of African economies, the existence of numerous bilateral trade agreements with the rest of the world, overlapping REC memberships, divergent levels of industrial development and varying degrees of openness also pose challenges to the AfCFTA,” Signé says.[3]

Nigeria has one of the largest African economies. It’s President, Muhammadu Buhari, has not yet agreed to sign the agreement, claiming more time is needed to consult with unions and businesses to consider what such an open market would mean for Nigeria’s manufacturing and small-business sector.

However, the prospects of a continental market of 1.2 billion consumers may prove too irresistible to stay out of the AfCFTA.

Patrick J. Byrne is national president of the National Civic Council.

References

[1] African Continental Free Trade Area: Questions and Answers, UN Economic Commission for Africa.

[2] Professor Landry Signé, “Why Africa’s free trade area offers so much promise,” The Conversation, March 28, 2018.

[3] Professor Landry Signé, “Africa’s big new free trade agreement, explained”, Washington Post, March 29, 2018.




























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