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Africa officially becomes world’s largest free trade zone

Africa officially becomes world’s largest free trade zone
The African Continental Free Trade Area (AfCFTA) finally came into being on Thursday, opening the way for a continent-wide market of 1.2 billion people worth $2.5 trillion.

Fifty-two of the African Union’s (AU) 55 member states have signed the deal, which is expected to boost regional and international trade. It will be the largest free trade agreement by population that the world has seen since the 1995 creation of the World Trade Organization.

“This is a historic milestone!” the AU’s commissioner for trade and industry Albert Muchanga proclaimed on Twitter.

“We celebrate the triumph of bold, pragmatic and continent-wide commitment to economic integration,” he tweeted.

The agreement’s operational phase will be launched on July 7 at an AU summit in Niger, and there are still some issues to be resolved.

Chinese ambassador to the African Union Liu Yuxi welcomed the agreement, saying it will help forge closer economic and trade ties with China.

“It is a milestone in Africa which has in recent years been upholding the banner of unity and promoting economic integration,” Liu said, adding that the sides are expected to “build closer economic and trade ties by developing the free trade area and promoting the Belt and Road cooperation.”

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Lifting trade barriers across Africa should “increase the value of intra-African trade by between 15 percent (or $50 billion) and 25 percent (or $70 billion),” by 2040, wrote Vera Songwe, executive secretary of the United Nations Economic Commission for Africa (UNECA) in a January 2019 essay.

Currently, only 16 percent of trade by African nations is with continental neighbors. The new deal is expected to cut duties on 90 percent of goods.

Some critics, however, say that poor infrastructure and a lack of diversity between the continent’s economies could throw up barriers to the hoped-for integration.

AfCFTA has been a flagship project of the African Union’s “Agenda 2063” development vision for five years. The AfCFTA proposal was approved in 2012 and the members started working on a draft in 2015. In March 2018, the leaders of 44 African countries endorsed the agreement in Rwanda. AfCFTA participants are reportedly weighing the possibility of using a common currency.

For more stories on economy & finance visit RT's business section

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