General

New trends in international trade! At the recently concluded 36th Summit of the African Union (AU), the "Free Trade Area" became a hot topic among all participants. With the theme of "The Year of Free Trade Agreement on the African Continent: Accelerating the Implementation of the Free Trade Area on the African Continent", this session highlighted the determination of the African continent to promote economic integration.

Achievements are commendable

According to the implementation of the first ten-year plan of the African Union's 2063 Agenda (2014-2023), Africa has made progress in accelerating the construction of free trade zones on the African continent and promoting sustainable economic and social development. At present, 54 AU member countries have signed the Agreement on the Free Trade Area of the African continent. By November 2022, 44 member States had deposited their instruments of ratification. Since the establishment of the World Trade Organization, the agreement has become the largest number of participating countries.

The free trade zone of the African continent was officially established in July 2019 and started operation in January 2021. Against the background of the delay of the COVID-19 epidemic and the fragile recovery of the world economy, the achievements of the construction of the free trade zone on the African continent are still remarkable:

New trends in international trade! The first two stages of negotiations on the FTA agreement have been basically completed. Among them, the second stage of negotiations involves intellectual property, investment and competition policy. The third stage of negotiations is being intensified, including the review of the Digital Trade Protocol and the Women and Youth Trade Protocol.

Transaction costs are expected to decrease. In January 2022, the secretariat of the African Free Trade Zone, together with the African Export-Import Bank and other institutions, released the Pan-African Payment and Settlement System in Accra, the capital of Ghana. The system supports African countries to use their own currencies to make timely, safe and rapid payments on the African continent, reducing their dependence on third-party currencies, and is expected to save $5 billion in payment costs for the African continent each year.

Trade connectivity has made positive progress. In July 2022, under the framework of the Free Trade Area Agreement on the African continent, seven countries including Rwanda, Cameroon, Egypt, Ghana, Kenya, Mauritius and Tanzania were selected to carry out trade pilot projects. The secretariat of the African Free Trade Area said that the move was aimed at testing the environmental, legal and trade policy basis of intra-African trade. In addition, some African countries have also actively responded to the call and implemented relevant policies. For example, Nigeria has launched the Anyeba Economic City, a free trade zone. Products processed or assembled in the city can be sold to the entire African market duty-free.

New trends in international trade! The World Bank and the secretariat of the African Free Trade Area previously released a report that, with the full implementation of the Free Trade Area Agreement and the standardization of investment and competition, Africa is expected to increase its income by $571 billion, create 18 million new jobs, and promote 2.5% of the labor force to enter emerging industries, thus lifting 50 million people out of extreme poverty by 2035.

In an interview with our reporter, Yang Baorong, director of the Economic Research Office of the Chinese Academy of African Studies, pointed out that the promotion of the construction of free trade zones on the African continent marks the return of the vast majority of African countries to the key issue of achieving independent development through joint self-improvement. At the same time, it also strengthens the recognition and practice of the African continent to build a unified market to make up for the shortcomings of development. From a global perspective, as a market with a large population and a huge scale, the African continent is committed to promoting the construction of free trade zones, which is a positive signal for economic globalization and global economic and trade cooperation, and a response to the advocacy of "decoupling" and "chain breaking" by some countries. At the same time, the construction of free trade zones in the African continent has also learned some useful experience from regional cooperation after World War II, which is conducive to promoting regional and global development.

Challenges cannot be ignored

New trends in international trade! As the continent with the largest concentration of developing countries in the world, the construction of free trade zones in the African continent still faces many challenges. At the 36th Summit of the African Union, the Chairman of the African Union Commission Faki stressed that the international situation is full of uncertainty, the geopolitical conflicts are intensifying, and the global economic governance system is facing challenges and other factors that have a profound impact on Africa. He called on African leaders to focus on the main objectives to be achieved in Africa, including accelerating the construction of the free trade area on the African continent, promoting African integration and the African Union's 2063 Agenda.

Yang Baorong pointed out that at present, the construction of the free trade zone on the African continent needs to continue from both internal and external aspects——

Internally, the first is to solve the problem of homogeneity of industrial structure among countries. Most African countries have underdeveloped industries, highly dependent on raw material exports and labor-intensive industries, and low value-added products. The construction of the free trade zone depends on the high degree of synergy among the countries in the region in terms of production, trade, logistics and human flow. The AU needs to strengthen institutional arrangements in this regard and increase the synergy and complementarity of industries among member countries. Second, continue to improve the level of infrastructure and business environment. The construction of the free trade zone in the African continent is carried out under the development trend of industrial informatization, networking and intelligence in the 21st century. It is necessary to keep up with the trend of the times, constantly improve the level of infrastructure and business environment, and then improve the convenience of economic and trade cooperation within and outside the region.

From the external perspective, the first is to avoid the interference of the trend of "deglobalization" and "anti-globalization". From being a supplier of cheap labor and mineral resources in the past to playing an increasingly important role in the global consumer market and economic recovery, Africa has always been an important link in the global industrial chain supply chain. African countries need to further consolidate the consensus of promoting development through cooperation, accelerate the process of integration and integrate into the wave of economic globalization. The second is to improve its competitiveness in the global market. From the perspective of international cooperation, African countries are relatively less attractive to foreign investment. Under the general trend of accelerated development of new technologies and new industries, the African Free Trade Zone needs to improve its capacity to undertake technology, capital and market in order to attract more capital and technology inflows.

New trends in international trade! The African Union and African countries are also making efforts to address the weaknesses faced by the Free Trade Area of the African continent. For example, in 2022, the African Free Trade Area Adjustment Fund was established to support the parties to adapt to the new liberalization and integrated trade environment, and to reduce the income loss and competitive pressure that may be caused by reducing tariffs and improving market freedom. In recent years, the African Union and many African countries have attached great importance to infrastructure construction. In 2021, African countries adopted 71 priority projects in the second phase of the African Infrastructure Development Plan 2021-2030 at the AU Summit, covering transportation, communications, energy, water conservancy, agriculture and other fields, involving more than 40 African Union countries.

China-Africa cooperation can be expected

In recent years, under the guidance of the Forum on China Africa Cooperation and the mechanism of jointly building the "the Belt and Road", China and Africa have carried out all-round cooperation in infrastructure, health, education, agriculture, environmental protection and other fields, which has greatly improved the level of infrastructure and trade facilitation in African countries and provided assistance for the construction of free trade zones in the African continent. As Charles Onunaiju, director of the Nigerian China Research Center, said, the formal establishment of the Free Trade Area on the African continent is a milestone in the process of African integration. In recent years, China has promoted China Africa production capacity cooperation and the construction of the "the Belt and Road", which fully conforms to Africa's development vision. Africa expects China to continue to invest in infrastructure construction and improve regional connectivity.

Data show that China has been the largest trading partner of Africa for 13 consecutive years since 2009. Since the establishment of the Forum on China-Africa Cooperation, China has helped African countries add and upgrade more than 10000 kilometers of railways, nearly 100000 kilometers of roads, nearly 1000 bridges, nearly 100 ports, and 66000 kilometers of power transmission and transformation lines. At present, 52 African countries and the AU Commission have signed the "the Belt and Road" cooperation document with China. The AU Conference Center, the headquarters of the African Center for Disease Control and Prevention, the Mombasa Nairobi Railway, the Addis Ababa Djibouti Railway and other landmark projects continue to emerge.

Li Xinji, Director of the Energy, Infrastructure and Services Division of the United Nations Economic Commission for Africa, said that the cooperation achievements of the joint construction of the "the Belt and Road" have brought many benefits to the construction of the African Free Trade Area and the process of economic integration. Dennis Mwaba, an engineering expert at the University of Zambia, said that China's help has further improved Africa's connectivity, cross-border and cross-regional infrastructure construction, greatly promoted Africa's trade and investment facilitation and economic integration, and brought industrialization development opportunities to African countries.

Yang Baorong pointed out that as China and Africa enter a new stage of development, China will promote the construction of a new development pattern, which will bring more Chinese opportunities for Africa's development; The accelerated construction of the Free Trade Area on the African continent will promote African economic integration and regional economic integration, and expand the development space of China-Africa cooperation. In the future, the complementarity of China-Africa cooperation will become more prominent, the ability to jointly make up for the shortcomings of development will be stronger, and there will be more consensus to meet the challenges in various fields through development. Under the new situation, China and Africa should seize the opportunities brought by the new round of technological revolution, promote industrial and technological cooperation, innovate development methods, enhance the position of developing countries in the global economy and industrial division of labor, and benefit the people of China and Africa.