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PRESS STATEMENT ON THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA)

THE REPUBLIC OF UGANDA
MINISTRY OF TRADE, INDUSTRY AND COOPERATIVES

HON. AMELIA KYAMBADDE (MP)
MINISTER

MEDIA CENTRE

28TH MARCH 2018

Introduction
Uganda is a signatory to the Treaty establishing the African Economic Community (the Abuja Treaty), adopted and signed in 1991. One of the major objectives of the Treaty is to promote economic, social and cultural development and the integration of African economies in order to increase economic self reliance.

During the 18th Ordinary Session of Assembly of the African Union (Addis Ababa, Ethiopia, 23-30 January 2012), the summit adopted a “Decision on boosting intra-African trade and fast tracking the Continental Free Trade Area”.

Negotiations were subsequently launched by the Assembly in June 2015 and effective negotiations started in July 2016 after a preparatory phase.  The President of Niger H.E Issofou Mohammadou was selected to champion and spearhead the negotiations on behalf of the Assembly.
Africa has signed an agreement establishing the African Continental Free Trade Area. The signing took place on 21st March 2018 during the 10th Extraordinary Session of the Assembly of AfCFTA in Kigali, Rwanda.

The AfCFTA Agreement and its Protocols was signed by 44 countries, including Uganda, which is 80% of the membership of the African Union. In the history of African integration never before has a legal instrument been signed by that number of countries at a single sitting. This is a testimony to the desire of the African leaders to economically integrate their countries together for the development of the African people for mutual benefit.

We agreed to the principle of variable geometry, which allows those that are ready to proceed while the others will join whenever they are ready. Thus there are 11 countries (including Nigeria, South Africa, Botswana, Lesotho, Burundi, Sierra Leone, Eritrea, Tanzania, Zambia, Namibia and GuineaBissau) that did not sign the Agreement. These countries will sign the Agreements at a convenient time whenever their domestic processes are completed.
The AfCFTA has three protocols;
i.    Protocols on Trade in Goods;
ii.    Trade in Services and Rules and;
iii.    Procedures on the Settlement of Disputes

a.    Protocol on Trade in Goods
This is the instrument that prescribes the modus operandi for the trade in goods. Its key features are the following:

i.    Definitions, objectives and scope (what is to be achieved and what is covered by the protocol).

ii.    Non Discrimination(equal treatment as between domestic products and imported products from the AfCFTA State Parties). This, however, will not affect the government procurement that we are implementing under BUBU.

iii.    Liberalisation of Trade (elimination of tariffs, non-tariff barriers, export taxes and quantitative restrictions).

iv.    Customs cooperation, trade facilitation and transit(for the easier movement of goods).

v.    Trade remedies(to address disadvantages that may be faced by domestic producers in the face of subsidies, dumping by trade partners in the AfCFTA).

vi.    Product standards and regulations- in this section the parties agree to have measures on standards and regulations. There are two annexes detailing the measures and these are on Technical Barriers to Trade (TBT) and on Sanitary and Phyto-Sanitary measures

vii.    Complementary policies(such as protection of infant industries and establishment of special economic zones).
viii.    Exceptions (for the protection of specific national interest and for security reasons). In this section, the parties agree to enforce measures for exceptional areas such as security, protection of human, animal and plant life and health, exhaustible natural resources, precious minerals.
In addition, the agreement permits parties to take measures to address critical balance of payments situations.

ix.    Institutional provisions (for the implementation of the protocol). The Protocol proposes to establish a Committee for Trade in Goods to facilitate the operation thereof.  

x.    Technical assistance and capacity building- the Protocol provides for the cooperation with RECs and the development partners for technical assistance and capacity building.

b.    Protocol on Trade in Services

This will define the regime for trade in services within the African Continental Free Trade Area. It has key elements as follows:

i.    Scope of application covers the trade in services in the four modes of supply namely;
a.     cross border supply (when a consumer is receiving a service in their own country but supplied by a provider in another country such as in business process outsourcing or architectural designs or consultancy services);
b.    consumption abroad (a consumer moves to another country to consume the service such as in tourism or in education or medical treatment);
c.    commercial presence (a company sets up a branch in another country to supply the service such as banks, insurance companies, telecommunication companies) and;
d.    Movement of natural persons (when a citizen of a country moves to another country to supply a service, such as doctors or teachers or nurses who move to serve in other countries).  

ii.    Objectives. In this section the Protocol broadly aims at establishing a free market for trade in services and specifically to promote competitiveness of services, progressively liberalise trade in services, among others.

iii.    General obligations and disciplines. The Protocol puts obligations on parties to extend to the services trade and suppliers same treatment as from one party to another with some exceptions granted.

iv.    Progressive liberalisation
In this section the parties agree to liberalise trade in services in a progressive manner, i.e. in phases, through successive rounds of negotiations. This kind of approach gives the parties flexibility to select sectors and to determine the commitments that they will enter into in liberalising trade in services.
v.    Institutional provisions
The parties have agreed to a Committee for Trade in Services that will carry-out functions as assigned by the Council of Ministers, for the implementation of the Protocol.
vi.    Final provisions
This part relates to annexes that may be developed such as the schedules of specific commitments, which, are to be developed following negotiations.

c.    Protocol on Rules and Procedures on the Settlement of Disputes
This Protocol sets out the procedures for the settlement of disputes that may arise out of the implementation of the Agreement establishing the African Continental Free Trade Area. This is to ensure that disputes are settled transparently and with fairness so that parties may exercise their rights and meet their obligations.
A Dispute Settlement Body is to administer the Protocol.

I wish to give you a few highlights of what is embedded in the Framework Agreement.

d.    Agreement Establishing the African Continental Free Trade Area

This is the Framework instrument that sets up the African Continental Free Trade Area. As such it sets out a broad agenda for trade in goods, trade in services and rules and procedures for the settlement of disputes and, for the negotiation in the second phase, of Intellectual Property, Investment and Competition Policy.
The Agreement contains the following key elements:
i)    Establishment, Objectives, Principles and Scope(the set-up, what it sets out to do, the key pillars and what it covers).
ii)    Administration and Organisation (implementation framework, decision making and financing). This part sets up the institutional structure for implementation;
    The Assembly;  
    The Council of African Ministers responsible for Trade or Council of Ministers;
    Committee of Senior Trade Officials and;
    Secretariat.
iii)    Transparency (to ensure notification of applicable laws, rules and regulations).

iv)    Continental Preferences (how we should treat each other’s products and services).

v)    Dispute Settlement(rules and criteria to settle trade conflicts when they arise).

vi)    Final Provisions (signature, ratification, depository, entry into force, amendment, withdrawal). After signature and ratification, the instrument is to be deposited with the Chairperson of the AU Commission. It comes into force 30 days after the 22nd Member has deposited their instrument of ratification. This is in accordance with the AU procedures.

What does the Agreement mean for Africa and for Uganda?

The AfCFTA involves the 55 Member States of Africa, and the world’s largest free-trade area, by number of countries. It establishesa single market of 1.2 billion people, with a combined Gross Domestic Product $3.4 trillion.

In the case of Uganda and, indeed, most African countries, large markets support more trade in goods, services and assets produced by job-creating enterprises, generate income and create jobs. The AfCFTA will contribute to meeting public policy objectives and national aspirations in NDPII and Vision 2040. Large open markets support the exploitation of economic gains along the value chain, lead to specialisation and efficiency.

The AfCFTA is one of the vehicles to catalyse the development of African countries. Few countries in history, if any, have achieved significant economic development without trade. In order to develop, African countries will need to trade more, both with one another and with the rest of the world. By breaking down trade barriers between African countries, the AfCFTA would significantly boost trade on the continent.

Africa is the continent with the largest arable land, 874 million hectares of which only 274 million hectares is under cultivation, while 600 million is idle or underutilised. In addition, there are large reserve of strategic minerals, abundant aquatic resources, and the youngest population, 60%- 70% of the population.  However, Africa, is the continent with the lowest level of development (35 of the world’s poorest countries are in Africa); Africa is the least industrialised, and has the highest rates of unemployment between 50%-80% youth unemployment.

African nations need this to boost trade as an engine for economic growth and development. Currently, trade among African Nations accounts for just over 14 percent of their total trade, a considerably lower figure than trade within many of the world’s more developed regions, including Europe and North America — both of which have intraregional trade rates at over 60 percent. The intra-Asian trade is about 50%, while Intra- Latin American trade is about 45%

Infrastructure Development:
Thesuccess of the implementation of the AfCFTAwill require accompanying measures such as the Plan for Infrastructure Development of Africa (PIDA). This will enable the increase in the stock of infrastructure in terms of land, air and maritime transport, energy and ICT, which will improve interconnectivity and reduce the cost of doing business.   
Protocol on Movement of Persons, Right of Residence and Right of Establishment:
This will enable nationals of the African continent to freely cross borders and conduct trade in goods and services.  
What Uganda stands to gain from the Agreement
For Uganda, our objectives in African economic integration is driven by the need for expanded markets for our growing economic operations; attracting cross-border investment; creating employment opportunities for our young populations domestically through expansion in production of goods and services that will be demanded by the expanded markets; improving the interstate infrastructure interconnectivity to enable us harness our productive capacities; enhancing peace and security in the continent through engaging people in gainful economic activities.

What we have achieved in trade in the EAC and in COMESA following our regional economic integration policy, is a testimony to the success of our regional integration policy. As a result of this policy, our exports to the region have grown significantly from less than $100 million in 1993 to a high of $1.49 billion in 2012 before reducing to $1.23 billion in 2016. The reduction is attributed to a number of factors including the instability in South Sudan and the Eastern DRC and climate change that occasionally affects agricultural production.

Uganda’s imports from the EAC and COMESA increased from $97 million in 1993 to a high of $760.2 million in 2012. This reduced to $609.8 million in 2016.

It is in the EAC and COMESA regions where we have recorded a positive trade balance since 2007. Our trade balance was $383.9 million in 2007, rising to $806.8 million in 2008. It reduced to $792.8 million in 2012 and to $615.7 million in 2016.

Cabinet Committee: Government has put in place a Cabinet sub-committee to fast track Uganda’s penetration into the broader market and to ensure our competitiveness in the market.

Conclusion
With the integration of the African continent, Uganda stands to benefit from expanded trade, to increase production capacity and creation of employment. We are immediately targeting livestock products notably dairy and beef, coffee, tea, iron and steel, among others. Services will include education, tourism, business services and infrastructure services. The key focus markets are West Africa in particular Nigeria, Ghana and Cameroon. In North Africa we are targeting Morocco, Algeria and Tunisia. The others in the COMESA we will continue to nurture using the regional instruments.