General

The trade growth of African countries has been relatively slow in the past 20 years, and their contribution to the economy has been insufficient. According to the International Monetary Fund (IMF), from 2000 to 2019, the proportion of trade in GDP among African countries only increased from 49% to 53%. The trade participation capacity of different African countries varies significantly, with about 60% of countries experiencing an increase in trade openness during this period, but there are still many countries where the improvement is not significant. The African Free Trade Area (AfCFTA), as an important regional trade agreement that synergistically promotes openness, enhances regional trade freedom, and promotes facilitation, has received widespread attention since its inception. It not only covers a wide range of countries, but also is the first comprehensive free trade agreement on the African continent. In May 2019, AfCFTA officially came into effect after being approved by 22 African countries. As of now, except for Eritrea, all 54 other African countries have signed the agreement, of which 46 have completed domestic procedures and officially approved the agreement. Huacheng Import and Export Data Observation reports.

The goals of AfCFTA include: increasing trade in goods and services between African countries; Enhancing the competitiveness of African countries through economies of scale and decentralization; Promote industrialization, structural reform, and gender equality; Lay the foundation for the future customs union and single market. The agreement has made positive progress and reached binding consensus in areas such as trade in goods and services. According to the AfCFTA signatory's commitment, within 5 years after the agreement takes effect on January 1, 2021, 90% of non sensitive goods will undergo tax reductions (with a tax reduction period of 10 years for least developed countries), while 7% of sensitive goods will undergo tax reductions within 10 years (with a tax reduction period of 13 years for least developed countries). As of July 2022, AfCFTA participants have reached an agreement on 88% of the rules of origin for goods, 46 members have submitted tariff concessions, and the goods that have not yet reached an agreement mainly include automobiles, textiles, and clothing. All parties also agreed to establish specialized agencies to reduce non-tariff trade barriers. In service trade, on the basis of agreeing to promote the liberalization process of all service sectors and models, AfCFTA's contracting parties prioritize national treatment and market access in five areas, including professional services, telecommunications services, transportation services, tourism services, and financial services. So far, 25 African countries have submitted commitment forms in the field of service trade. In addition, AfCFTA participants also discussed topics such as intellectual property rights, investment protection, competition policy, digital trade, and the participation of women and young people in trade. Preliminary texts of the agreement have been formed in the first three issues, and Huacheng Import and Export Data Observation Report.

Due to the relatively weak foundation of African countries in free trade agreements, the advancement of AfCFTA is not fast. According to the AfCFTA Secretariat, although trade guided by the rules of the agreement began in January 2021, trade with substantial commercial value began in October 2022. Eight leading countries representing the five major regions of Africa (Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania, and Tunisia) have started a series of zero tariff trade in goods under the Guided Trade Initiative (GTI). GTI has implemented zero tariffs on 96 commodities, including tiles, batteries, tea, coffee, processed meat products, corn starch, sugar, pasta, glucose syrup, dried fruits, and sisal fiber, which are considered by the AfCFTA secretariat to meet the development needs of Africa's key value chains. GTI provides process support and convenience for trade in goods to member parties, improves customs clearance efficiency, and will conduct annual reviews to continuously expand the list of covered members. It is expected that by 2035, tariffs among GTI members will be reduced by 7 percentage points compared to now, and the entire AfCFTA country will have 30 million people lifted out of extreme poverty. The income of African countries will increase by $470 billion, according to Huacheng Import and Export Data Observation.

According to IMF analysis, AfCFTA's reduction of tariffs on over 90% of goods and the elimination of half of non-tariff trade barriers will significantly enhance the depth and breadth of trade relations between African countries, provide strong support for the development of intermediate trade, and effectively unleash Africa's development potential. Supported by trade growth, the median real per capita GDP of African countries will increase by over 10%, creating a large number of job opportunities. If trade can grow as scheduled, it will drive the rapid iterative optimization of Africa's business environment and promote countries to increase the reform process of their economic and trade systems and environment. Reform will further unleash development momentum, create stable economic and trade market expectations, enhance the willingness and ability of African countries to engage in international trade, and in turn promote trade growth. Huacheng Import and Export Data Observation Report.

In the face of enormous recovery and development pressure on the global economy, the strengthening of internal trade momentum in Africa helps to reduce the impact of external factors and enhance the autonomy and independence of economic development. Chinese enterprises have long maintained close economic and trade ties with African countries and have benefited greatly from the free trade agreements that China has already signed. By leveraging our own advantages, collaborating with African partners, responding to AfCFTA's trade liberalization requirements, extending the length of the industrial chain, enhancing supply chain resilience, and increasing product added value, we will provide stronger support and guarantee for the post epidemic recovery of both sides and even the wider region. Huacheng Import and Export Data Observation Report.