Africa-Europe Alliance: EU supports the African Continental Free Trade Area with €50 million

Africa-Europe Alliance: EU supports the African Continental Free Trade Area with €50 million

18/12/2018

 

The African Continental Free Trade Area (AfCFTA) is one of the key priorities of Africa´s Agenda 2063 and a flagship project for the continent. Signed by 49 African countries and ratified by 14 countries so far, it needs 8 more ratifications to enter into force.

In September 2018, Commission President Juncker had announced in his State of the Union address that the EU would allocate €50 million of support for the period 2018-2020. A first step was taken today with a €3 million programme signed with the United Nations Economic Commission for Africa (UNECA) to develop national implementation strategies for the continental free trade area. The establishment of an African trade observatory is also planned, and will be a key pillar of the African Continental Free Trade Area.

The remaining budget (€47 million) will be used to provide a solid evidence base, policy analysis and strategic dialogue platforms; advice to lower technical barriers and harmonisation of African policies and the classification of goods, standards and regulations. The bulk of this funding is planned to be committed in the next two years.

The AfCFTA aims at providing a single continental market for goods and services, with free movement of people and investments. Its goal is to accelerate Intra-Africa trade through better harmonisation and coordination of trade liberalisation. Through these measures, the establishment of the AfCFTA is expected to gather impetus to boost economic growth and attract investments from both within Africa and the world. 

The EU, with its extensive experience with creating an internal market, has been supporting the free trade area since its inception in 2015 and remains committed to support its ratification and implementation process.

Background

The African Continental Free Trade Area (AfCFTA) was formally established in March 2018 at the 10th Extraordinary Session of the African Union Assembly in Kigali, Rwanda. It is one of the key priorities of the Africa Agenda 2063 and a major step towards African continental economic integration. It also featured highly in the political declaration of the fifth AU-EU Summit of Abidjan.

The potential gains from increased regional and economic integration are substantial for Africa, as the continent has the lowest percentage of intraregional trade. Only 15% of exports take place within Africa, compared with 25% in the Association of Southeast Asian Nations (ASEAN) and over 60% in the EU. In addition, exports are often limited to natural resources with little added value from other sectors of the economies

The support to the African continental free trade agreement is one of the pillars of the recently launched Africa-Europe Alliance for Sustainable Investment and Jobs. The Alliance aims to deepen economic and trade relations between Africa and Europe.

The final aim is to support regional economic integration in Africa, to achieve markets that are more integrated, promote intra-regional trade, develop Africa’s investment and productive capacity, create decent jobs and improve inter-regional economic infrastructure.

The EU has expressed its continued support (politically, technically and financially) towards African continental integration, and notably the AfCFTA, on numerous occasions. Already in 2018, the EU mobilised €5 million to support African countries implementing and enforcing global rules on customs and trade facilitation, following an agreement signed on 4 October with the World Customs Organization (WCO). The project aims to contribute to enhanced coordination and harmonisation of customs rules while reducing the costs of international trade.