African Continental Free Trade Area
The African Continental Free Trade Area (AfCFTA): 10 Basics
1. Sheer Size: The AfCFTA will be world’s largest free trade area in terms of number of member countries, territory, and population. It connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion.
2. Business Opportunities: Even though the United States is not a party to the agreement creating this free trade area, there are concrete business opportunities stemming from this regional integration initiative for U.S. companies that have a creative, strategic vision for doing business on the African continent.
3. Status of ratification: As of January 2022, 41 African countries have signed and ratified the agreement; 14 still need to ratify.
4. Commercially meaningful trade is expected to start soon as African countries finalize rules of origin negotiations on key products. African tariff reductions to zero are generally staged over 5, 10, or 13 years, depending on the development level of the country—and for some products— whether they are deemed to be sensitive.
5. What the AfCFTA covers: trade policy areas such as tariffs, rules of origin, services, customs, standards and conformity assessment, sanitary and phytosanitary measures (SPS), investment, competition, intellectual property rights (IPR), and ecommerce.
6. What the AfCFTA does not cover: areas such as government procurement, state aid (subsidies), labor, and the environment.
7. Good news: Many of the trade principles in the agreement reaffirm World Trade Organization rules that the United States itself negotiated and agreed to in the WTO. This is the case in areas such as standards, SPS, IPR, and customs, for example.
8. Concrete new innovations are already implemented. On January 13, 2022, the landmark Pan-African Payments and Settlements System (PAPSS) was commercially launched. It allows payments among companies operating in Africa to be done in any local currency, facilitating and accelerating trade transactions.
9. Negotiations continue in areas such as tariffs, services, IPR, investment, competition, and ecommerce, among other areas.
10. U.S. Commercial Service can help you understand the latest developments and formulate your strategy for doing business in this evolving African context. The city of Accra, Ghana hosts the Secretariat for AfCTA which oversees the negotiation and implementation of the AfCFTA.