General

Given the EU's geographic proximity and historical relevance to Africa, strengthening trade and investment links with Africa is of increasing strategic importance for the EU. The African Continental Free Trade Area Agreement is Africa's first continental cooperation framework on deep integration, covering areas such as services, investment, competition policy, intellectual property and digital trade. The convergence of the regulatory framework set out in the agreement with that of the European Union will have significant implications for European companies operating in Africa. To this end, the EU believes that the changes brought about by the agreement should be dealt with by strengthening multi-sectoral cooperation with Africa.

From the EU's point of view, the establishment of the African Continental Free Trade Area is of great development significance.

First, the African Continental Free Trade Area has diversified trading partners. Launched in January 2021, the African Continental Trade Area is in many ways an amazing free trade area, including more signatories than any other agreement of its kind since the WTO was established. The free trade zone includes 33 of the 46 countries listed as "least developed countries" by the United Nations. In addition, despite being widely referred to as "South-South" trade, AfFTA brings together countries that differ widely in level of development, society, culture and politics, with large asymmetries increasing among AfCFTA members the complexity of its integration process.

Second, despite the difficulties of integrating many heterogeneous partners, the speed of negotiation and ratification of the African Continental Free Trade Area has been astonishing. African countries have pursued continental integration for decades, but their past efforts have been heavily geopolitical. And the African Free Trade Area brings a newer, business-oriented approach. Although negotiations have been complicated and slowed down by the COVID-19 pandemic and intensified deglobalization, the progress of the African Free Trade Area over the past two years has been particularly impressive.

Third, the African Continental Free Trade Area Agreement is the first comprehensive agreement covering deep integration in Africa. The agreement not only provides for the reduction of traditional trade barriers, such as tariffs and quotas, but also proposes to integrate broader domestic regulations. This means the pact will shape the rules for companies operating in Africa, and the more aligned those rules are with EU policies and standards, the easier it will be for European companies to expand their presence in African markets. At the same time, the African Continental Free Trade Negotiation also sets a model for future bilateral negotiations that African countries will carry out and negotiations with European countries under the WTO framework. Negotiations and reforms undertaken by the 54 African countries under the framework of the African continent's trade integration will inevitably affect their future performance in free trade agreements with the EU, as well as with other WTO members under the multilateral trading system.

Nevertheless, the EU has also objectively analyzed the challenges that future economic and trade cooperation on the African continent will face.

First, the policies of the African Continental Free Trade Area lack coherence and consistency. The African Continental Free Trade Agreement emphasizes the coherence of existing and future free trade agreements among African countries. Article 3 of the Agreement discusses the need to address the issue of "overlapping members", but does not provide further guidance and mechanisms. For example, the African Continental Free Trade Agreement does not stipulate whether the African Continental Free Trade Agreement should take precedence in the event of inconsistent commitments and rules.

Second, the EU's trade policy towards Africa is fragmented in its treatment of LDCs and other developing countries. There are currently multiple regional trade agreements in Africa, and there are differences in the EU's approach to these trade agreements that could hinder integration across the region. While these trade agreements may be outdated in terms of economic and geographic divisions and operate differently from the African Continental Free Trade Area and other AU initiatives, these fragmented trade agreements also pose challenges for EU trade policy-making with Africa.

Third, the EU has set different rules of origin for African countries, potentially complicating the expansion of supply chains. Therefore, the EU should revise the rules of origin in its trade agreements to remove barriers to intercontinental integration.

The integration of EU trade policy and the African Continental Free Trade Area process brings new complexities to African trade, but also new opportunities for mutually beneficial economic cooperation between the EU and the continent. At present, the epidemic hinders the flow of trade and capital, but also promotes the diversification and nearshoring of global supply chains. Based on this, the EU needs to pay special attention to the African market. In the future, it will respond to the competition of other economies in Africa from two parallel tracks.

On the one hand, focus on the traditional trade agenda. The EU needs to unify its trade regimes with African countries and ensure they are aligned with the African Continental Free Trade Area. This work should focus on revising the rules of origin, making harmonized rules of origin an important part of the traditional trade agenda. At the same time, the EU should try to standardize economic partnership agreements and deep and comprehensive free trade agreements (DCFTAs), paving the way for a unified trade policy regime on the continent.

On the other hand, focus on the new trade agenda. The challenges facing the African Continental Free Trade Area will increasingly involve deep integration, and many African countries lack the technical expertise and experience in this area. Therefore, the EU can carry out technical cooperation with African countries, support Africa's transformation to services trade and digital economy, and strive to become a unique and valuable development partner of Africa. Strengthening cooperation on new trade issues will help the EU and Africa to form consensus and trust, and coordinate their positions to jointly address the increasingly complex challenges of global trade.