By Amelia Kyambadde
The African Continental Free Trade Area (AfCFTA) was adopted during the 30th Ordinary Session of the African Union Heads of State and Government held in Addis Ababa, Ethiopia in January 2018. With membership of fifty five (55) countries, the AfCFTA is the second largest trading arrangement after the World Trade Organisation (WTO) with 164 members. The Pan African Free Trade market will have a total market of 1.3 billion people, including a growing middle class and a total GDP of US$2.255 trillion as of 2017
As you may already be aware, Uganda has been chairing the negotiations process for the African Continental Free Trade Area. I wish to inform you that because of the Trust and Confidence bestowed upon our leadership by the rest of the African Union (AU) Member States and the AU Commission, our tenure of stewardship of this process was unanimously extended till the July 2019 Extra Ordinary Summit that will be held in Niamey, Republic of Niger.
As the Minister of Trade, Industry and Cooperatives, I have steered the Bureau and chaired the negotiating sessions including the African Ministers of Trade (AMOT). The Extra-ordinary Summit in Niamey, Niger scheduled for the second week of July 2019 is expected to flag off the AfCFTA by launching the following Instruments:
Tariff offer concessions portal, Africa trade observatory mechanism, Non-Tariff Barriers identification and reporting mechanism, and Product rules of origin among others.
The AfCFTA framework agreement negotiations will cover Trade in Goods, Trade in Services, Investment, and Trade Related Intellectual Property Rights, Competition Policy the Protocol on the Rules and Procedures on the Settlement of Disputes.
The negotiations will take place in two phases. Phase I which is on-going covers Trade in Goods and Trade in Services, while phase II will cover Investment, Competition and Trade Related Intellectual Property Rights
How is Uganda benefiting from the AfCFTA?
AfCFTA is a broader market for Uganda. Our export performance in general has improved over the last three years, rising from US$2.482 bn 2016 to US$2.901bn in 2017 and US$3,087bn in 2018 – excluding informal trade. Our exports to Africa account for 51% of total exports in 2017 and 2018; and are on a positive trajectory.
The top export destinations for the last three years have been: Kenya, Rwanda, DRC, United Republic of Tanzania, Morocco, Zambia, Ethiopia and South Africa.
With the conclusion of the negotiations of the AfCFTA, will therefore lead to tariffs reduction for a number of our strategic export products to especially African countries such as Coffee, Tea, Tobacco, Cereals, Iron and Steel, Dairy and Dairy products, Sugar and Sugar Confectionary among others.
Reduction of Non-Tariff Barriers (NTBs) and creation of a mechanism for addressing any remaining NTBs is also a key benefit. These frameworks will certainly lead to further growth of our exports, thus economically benefitting our people that are engaged in the production process.
Overall and in line with the National Trade Policy of Uganda, these negotiated markets are expected to provide preferential market access for Ugandan goods, facilitate development of trade related infrastructure for cross-border trade among others.
The initiatives are also expected to provide a predictable trade regime amongst Member/Partner States as well as stimulate industrial development through creation of value chains and facilitate movement of business persons.
Progress on Ratification of AfCFTA
The Agreement establishing the AfCFTA entered into force on 30th May, 2019 following the deposit of the Instruments of Ratification by the 22nd signatory member state – the Republic of the Gambia – with the African Union Commission.
According to the agreed modalities, Member states are to liberalize up to 90 percent of their trade in a period of 5 and 10 years for Non-Least Developed and Least Developed Countries (LDCs) respectively. In this regard, the Ministry, in liaison with the relevant ministries, departments and departments(MDA)s, is in the process of finalising Uganda’s tariff schedule for submission.
Progress on the Tripartite Preferential Market access negotiation
The Tripartite Preferential market combines the EAC, COMESA and SADC, equally my Ministry coordinates Uganda’s engagement in the COMESA-EAC-SACU Tripartite Free Trade Area (TFTA) negotiations. The TFTA was launched on 10th June 2015 by the Summit and is aimed at establishing a single market for the twenty seven (27) African economies drawn from the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern Africa Customs Union (SACU).
The TFTA has a combined population of about 700 million people (57% of Africa’s population), and Gross Domestic Product of over USD 1.4 trillion. The structure of the TFTA is built on three pillars; a) market integration b) infrastructure development, and c) industrial development
On the sidelines of the African Continental Free Trade Area meeting in Addis Ababa Ethiopia (6th of June 2019), the EAC and SACU countries held a Ministerial level meeting to conclude tariff negotiations under the TFTA framework.
Under the Agreement, Uganda together with the other EAC Partner States have been granted market access in to the SACU market of (Botswana, Eswatini, Lesotho, Namibia and South Africa) to up to 87.2 percent product lines on entry into force of the Agreement and under a 5-year tariff phase-down.
The conclusion of SACU-EAC negotiations, therefore, marks a significant step towards realising the benefits of the TFTA for Uganda and the EAC region. The concession by SACU provides the EAC (Uganda) a commercially meaningful market access for their private sectors. The offer provides ground for new and dynamic markets for exports as well as new sources of inputs for domestic production processes. Targeted sectors for export interest for EAC include; edible oil, textile and apparel, tea, coffee, beef, plastic among others
Furthermore, emphasis has also been on the development of regional value chains in a wide range of sectors such as automobiles, textiles and apparel, sugar and confectionery among others, with a view to deepen integration of Uganda’s economy into international markets and value chains.
The writer is the Minister of Trade, Industry and Cooperatives