Ghana: Parliament ratifies the African free trade agreement
Ghana’s parliament held an emergency sitting on Thursday to ratify the African Continental Free Trade Area (ACFTA) agreement that will help African countries carry out trade within their borders without restrictions.
The Minister of Trade and Industry, Mr Alan Kyerematen, presented the agreement to Parliament, after which the Speaker, Professor Aaron Mike Oquaye, referred it to the Joint Committee on Trade, Industry and Tourism and Foreign Affairs on the ACFTA for consideration and report.
The ACFTA is a trade agreement among 44 African Union (AU) member states, with the goal of creating a single market and later be followed by free movement and a single currency union. It was signed in Kigali, Rwanda on March 21, 2018.
In a brief remark, Mr Kyerematen said the ratification of the agreement would help expand opportunities for the export of value-added products by manufacturers and business executives.
The expected increase in exports, would enhance the country’s export earnings, he said.
What is ACFTA?
African heads of government agreed to establish a continental free trade area in 2012 and started negotiations in 2015.
The draft agreement commits countries to removing tariffs on 90 percent of goods, with 10 percent of “sensitive items” to be phased in later.
The agreement will also liberalise services and aims to tackle so-called “non-tariff barriers” which hamper trade between African countries, such as long delays at the borders.
Eventually, free movement of people and even a single currency could become part of the free trade area.
Why a single market for Africa?
By creating a single continental market for goods and services, the member states of the African Union hope to boost trade between African countries.
Intra-African trade is relatively limited; UNCTAD, the main UN body dealing with trade, said it made up only 10.2 percent of the continent’s total trade in 2010.
David Luke, coordinator of the African Trade Policy Centre at UNECA, hopes the free trade area will correct this “historical anomaly”.
“Colonialism created a situation where neighbours stopped trading with each other. The main trading route was between African countries and European countries and between African countries and the US,” he told reporters.
Removing barriers to trade is expected to not just grow trade within Africa, Luke said, but also grow “the kind of trade this continent needs”.
Between 2010 and 2015, fuels represented more than half of Africa’s exports to non-African countries, while manufactured goods made up only 18 percent of exports to the rest of the world, a UNECA report said.
Within Africa, 43 percent of goods traded are manufactured products.
Commodity prices are volatile, making economies that rely on their export vulnerable. Moreover, Luke said, the export of commodities tend to be capital- rather than labour-intensive.
“When you have this kind of economy, your young people cannot find jobs. And when they cannot find jobs, you see them trying to get to Europe and drowning in the Mediterranean,” Luke said.
“If you are making the basic things that everybody consumes, then you are creating jobs.”
Luke hopes the free trade area will also make Africa more competitive outwardly.
“If you can move further up the supply chain, you are better placed in a global context as well,” he said.
Report by Gideon Sarpong | WakeUP Africa