The Africa Continental Free Trade Area (AfCFTA) is marking two years with a deal to ride the coat-tails of the US Chamber of Commerce, in a deal seen by enthusiasts as one way of learning from the best in regional trade.
The arrangement is contained in an MoU signed in mid-December with the US-Africa Business Center, an affiliate of the US Chamber of Commerce to advance trade relations with Africa.
The MoU was signed on the sidelines of the US-Africa Leaders’ Summit in December 2022 and has been viewed by its signatories as a big step towards promoting trade and support creation of more conducive environment for businesses to thrive.
Once fully implemented, the Agreement establishing the AfCFTA will create a combined continent-wide market of 1.3 billion people and $3.4 trillion, which would be the fifth-largest economy in the world.
However, critics have questioned whether the MoU was a stumbling block for AfCFTA’s main concern: promoting commerce within Africa, and only favouring the US.
Some of the trade experts such as Olabisi D. Akinkugbe, a Viscount Bennett Professor of Law and Assistant Professor at the Schulich School of Law, Dalhousie University, and who initially was involved in drafting of the AfCFTA; warned that the MoU should not be used to grant undue advantage to the US.
“For the AfCFTA to sign an MoU with the US Chamber of Commerce, there is nothing bad as it were in signing the MoU. The devil is in the details,” said Prof Akinkugbe.
“This kind of technical assistance has a tendency for a donor to skew the terms of whatever agreement they have in their own interest.”
He observed that AfCFTA should safeguard the needs of the African continent by ensuring that trade with other continents favours Africa.
Under the arrangement, the US Chamber of Commerce would provide technical assistance to the AfCFTA secretariat which at the moment is still at an early stage of advancing the AfCFTA agenda.
“The MoU signed at the US-Africa Leaders’ Summit is a big step towards improving trade relations between Africa and the United States,” said Wamkele Mene, Secretary General of the AfCFTA, defending the arrangement.
“The agreement will promote trade and support the creation of more conducive conditions for business environments to thrive.”
Scott Eisner, president of the US-Africa Business Center, who witnessed the signing said the move would unlock trade between the US and Africa.
“Coordination between the private sector and the AfCFTA is key to unlocking Africa’s full economic potential,” said Eisner.
“The creation of today’s working group will provide a key platform for members of the US-Africa Business Center to engage with policy experts and senior government officials on issues critical to the US-Africa trade and investment space, with a particular focus on the digital economy, trade facilitation and customs modernisation, and value chain development.”
She observed that as the world’s leading business organisation, the US Chamber of Commerce is proud to be a strong voice for private sector business, which is a major stakeholder and beneficiary of the AfCFTA.
Since 2021, the US has helped close more than 800 two-way trade and investment deals across 47 African countries for a total estimated value of over $18 billion, and the US private sector has closed investment deals in Africa valued at $8.6 billion.
American goods and services traded with Africa totalled $83.6 billion in 2021.
These investments and programmes are in support of the umbrella initiatives PGII, Prosper Africa, and Power Africa.
“A MoU in itself doesn’t hurt. While it portends certain risks, the responsibility now rests on the shoulders of the AfCFTA secretariat and its negotiators to ensure that the rules of trading within the AfCFTA that they have been negotiating should continue to protect the interests of the African states. That is what it must be,” Prof Akinkugbe of the Afronomics law organisation said.
“It is likely the US Chamber of Commerce would indeed promote its business interests,” said Dr Jan Yves Remy, director of Shridath Ramphal Centre that specialises in trade research and policy in Barbados and one of the participants at the US-African summit.
Since January 2021, the Biden administration has invested and plans to invest more than $1 billion in trade and economic development in Africa.
Source: The East African