SA ratifies African Continental Free Trade Agreement

South Africa recently officially ratified the African Continental Free Trade Agreement (AfCFTA), a significant step towards economic integration and cooperation across the continent. CNBC Africa's Kopano Gumbi interviewed the Minister of Trade and Industry, Rob Davies, to gain a better understanding of the implications of this agreement for Africa. The ratification was formalized at a summit where South African President Ramaphosa handed over the instrument of ratification to the Chair of the African Union Commission. While South Africa initially showed some hesitation in signing the agreement, Minister Davies clarified that the delay was not due to the content of the agreement itself but rather stemmed from the need to follow legal procedures within the country. The Minister explained that South Africa's system required any international agreement to undergo legal vetting by multiple government departments before being signed. At the time of the Kigali Summit where the AfCFTA was being finalized, there were still outstanding annexes that needed to be reviewed, leading to the delay in South Africa's ratification. This clarification highlights that the hesitation was procedural rather than ideological. Key Points: 1. Rules of Origin and Product Evaluation: Minister Davies emphasized the importance of developing robust rules of origin within the AfCFTA framework. These rules determine the conditions under which a product can be considered 'African-made' and qualify for preferential treatment under the free trade agreement. Product evaluations will be done on a product-by-product basis to ensure that only goods with substantial value addition within Africa benefit from the trade agreement. 2. Enforcement and Border Management: Minister Davies acknowledged concerns around enforcing tariffs and rules of origin at border points, especially in countries with weaker border administration. He highlighted the need for strong border management to prevent the influx of substandard products or goods masquerading as African-made. Effective enforcement mechanisms are crucial to safeguard the industrial development and market integrity of African products. 3. Balancing Trade Facilitation and Regulation: The Minister underlined the delicate balance required in trade agreements like the AfCFTA. While encouraging interregional trade and industrialization, regulations must also guard against unfair trade practices such as under-invoicing and circumvention of tariffs. Finding this middle ground is essential to fostering economic growth while protecting local industries. In discussing the challenges of enforcing tariffs and rules of origin, Minister Davies stressed the need for a robust regulatory framework that strikes a balance between facilitating trade and preventing abuse. Border administration and tariff enforcement play a critical role in safeguarding the integrity of the AfCFTA and ensuring that the benefits of the agreement translate into sustainable economic development for the continent. Quote: Minister Rob Davies summarized the importance of stringent rules of origin and enforcement mechanisms within the AfCFTA, stating, 'We need to ensure that we do have a regime in place that does defend us against influxes of products that are masquerading as products from the continent, which are actually not.' As South Africa takes this significant step towards economic integration through the AfCFTA, the continent looks towards increased cooperation and trade opportunities that will drive growth and prosperity for all member countries.