Tanzania has ratified the agreement establishing the African Continental Free Trade Area (AfCFTA), joining a pact connecting countries with a total gross domestic product of $3.4 trillion.
AFCTA was first opened for signing in April 2018 but came into application in 2019 after the requisite minimum of 21 of the 55 member states ratified it. Tanzania had not formally joined although former President John Magufuli signed on the agreement in 2019.
After signing, parliamentary approval is required for ratification of the agreement. In East Africa, Kenya, Uganda, Rwanda, and Burundi already ratified the agreement.
The deal, signed by 54 of the African Union’s (AU) 55 member states, commits countries to 90% tariff cuts within a five-year period.
Eritrea is the only country yet to join the AfCFTA.
Of the 54 countries that signed the deal, only 38 countries including Tanzania have ratified the treaty.
Intra-African trade under the AfCFTA is expected to grow by over 50%, integrating the African market beyond national economies through promoting the free movement of labour and investments.
The AfCFTA drastically relaxes rules of origin and non-tariff barriers, allowing traders of all sizes to explore the 1.3 billion people market across the continent. Henceforth, Africa can trade on over 81% of products on preferential terms, after 41 countries submitted their tariff offers. Further negotiations on terms and tariffs will close by July 2021.
The AfCFTA is expected to improve intra-African trade which currently stands at between 16% and 18%. Further, it is expected to champion value addition, reducing the continent’s exposure to volatility emanating from trading in raw materials, as well as cutting Africa’s overreliance in global supply chains proven unsustainable by the COVID-19 pandemic.
The AfCFTA is the World largest free trade area since the formation of the World Trade Organization.
See Also:
