African Continental Free Trade Area & Tripartite Free Trade Area: Why East African Businesses Need to Engage
featured brief
African Continental Free Trade Area & Tripartite Free Trade Area: Why East African Businesses Need to Engage
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Produced in partnership with the East African Business Council
May 30, 2019
The planned African Continental Free Trade Area (AfCFTA) and Tripartite Free Trade Area (TFTA) each have the potential to transform the operating and commercial environments for East African businesses. Beyond geographical coverage, the potential agreements are set to have markedly different ramifications. However, political and especially media commentary has failed to interrogate and present what each trade agreement might entail in practice, and when.
With the admirable aspiration to incorporate the entire African continent, the younger AfCFTA agreement has received consistently high media attention, primarily due to the strong political backing which has led to the 22 country ratifications needed for enforcement within only 13 months. However, analysis has tended to overlook AfCFTA’s upcoming negotiation challenges, its potentially lengthy transition periods, and its relatively limited level of ambition regarding liberalisation. By passing over these critical details, existing commentary can be misleading: the impression is often given that a continent-wide comprehensive free trade area, with a markedly positive impact on intra-African trade, will be felt imminently.
By contrast, the more gradual ratification progress for TFTA has resulted in significantly less media attention and analysis, meaning numerous East African companies which would be directly affected by TFTA are unaware even of its existence, let alone its progress and possible impact.
The result is a widespread lack of awareness across the East African private sector – and beyond – of the current state of negotiations and the potential consequences of AfCFTA and TFTA. This knowledge gap represents a critical problem, since businesses should have advance understanding of likely changes, both to engage with their governments for ongoing trade negotiations, and to prepare for the opportunities and risks these agreements might bring.
This brief seeks to address the evident need for sensitisation on the most fundamental AfCFTA and TFTA issues, giving clarity on what each agreement might entail, when, and a snapshot of progress as of the end of May 2019. While drawing attention to a level of uncertainty surrounding AfCFTA which is not currently being acknowledged by its political proponents and the media, it also points to the need for both increased engagement by the East African private sector in ongoing negotiations and industry-by-country analyses following final tariff agreements; importantly, these studies should address not only the more eminent AfCFTA, but also TFTA.
This brief seeks to address the evident need for sensitisation on the most fundamental AfCFTA and TFTA issues, giving clarity on what each agreement might entail.