- AfCFTA: Implementation and progress to date: Introduction
- Outline of the agenda:
- 1. Welcome and rules of engagement
- 2. Keynote address from the AfCFTA Secretariat – Demitta Gyang
- 3. Panellists’ discussions
- a. Trade Facilitation under the African Union Commission – Dhunraj Kassee
- b. Implementation of the AfCFTA on Digital Trade and the Fourth Industrial Revolution – Alice Twizeye & Balness Sumani
- c. Implementation of the AfCFTA on NTBs in the region – Stephen Analo
- d. Lessons learned on COVID-19 and how the AfCFTA can improve on these – Maggie Tladi
- e. How will the future flow of trade look under the AfCFTA – Alcides Monteiro
- 4. Closing remarks
- 5. Questions and answers
AfCFTA: Implementation and progress to date: Introduction
The African Continental Free Trade Agreement (AfCFTA) has been called the biggest trade agreement in history. It covers a market of 1.2 billion Africans with a combined GDP of US$2.5 and could increase intra-African trade by up to 52.3%. Therefore, the potential of the AfCFTA is immense.
However, after a relatively slow start thus far, trading under the AfCFTA must be accelerated. Indeed, acceleration will aid the long-term objective of the AfCFTA, which is “boosting intra-African trade, integration, and development by creating an integrated market for goods, services, promoting the cross-border movement of capital and persons“. Various stakeholders, most notably the Regional Economic Communities (RECs), are set to play a vital role in augmenting trade under the AfCFTA.
This WCO-ESA-RPSG webinar – the 10th of its kind – aimed to encourage a more comprehensive discussion around the AfCFTA by bringing together speakers from the various RECs within the African continent. The webinar was chaired by Dr. Juanita Maree (WCO ESA-RPSG and SAAFF Director) and joined by eight leading customs panellists from the respective RECs in Africa:
- Demitta Gyang – Senior Advisor Customs – AfCFTA Secretariat
- Dhunraj Kassee – Senior Policy Officer, Customs Cooperation Trade, and Industry Department – African Union Commission (AUC)
- Alice Twizeye – Common Market for Eastern and Southern Africa (COMESA) Secretariat
- Balness Sumani – COMESA Secretariat
- Stephen Analo – Technical Advisor on Customs capacity building at the Directorate of Customs – East African Community (EAC)
- Maggie Tladi – Deputy Director Trade Facilitation – Southern African Customs Union (SACU)
- Alcides Monteiro – Program Officer Customs – Southern African Development Community (SADC)
- Larry Liza – Director – Regional Office for Capacity Building, World Customs Organization East & Southern Africa Region
Outline of the agenda:
- Welcome & rules of engagement: Dr Juanita Maree
- Keynote address from the AfCFTA Secretariat: Demitta Gyang
- Panellist discussions:
- Dhunraj Kassee
- Alice Twizeye & Balness Sumani
- Stephen Analo
- Comfort break
- Panellist discussions:
- Maggie Tladi
- Alcides Monteiro
- Comfort break
- Closure: Larry Liza & Juanita Maree
1. Welcome and rules of engagement
A warm welcome note was extended to the distinguished panellists and all participants with a stake in customs and trade-related matters in the ESA region. Dr Maree hoped that the webinar would enrich each participant’s understanding of the AfCFTA and hoped for a good outcome. Personally, the RPSG believes it is Africa’s time now. Furthermore, Dr Maree provided the meaning of each of our esteemed participants’ names.
Participants were encouraged to mute their microphones and use the chatbox that was monitored throughout the discussion. Panellists switched on their videos when presenting. It was noted that the presentations with all relevant information and the video concerning the webinar would be made available on the WCO ESA RPSG’s website. Therefore, attendees were encouraged to visit the website and read through the information.
Dr Maree highlighted the profound meaning of the chosen Panellist, which stretches far beyond the AfCFTA:
- Demitta – Earth Mother
- Dhunraj – King of Wealth
- Alice – The Noble, exalted
- Balness – The Absolute Truth
- Stephen – The Clown
- Maggie – Pearl, Gift of God
- Alcides – The Strength
- Larry – Lord of Kings
- Juanita – God is Gracious
2. Keynote address from the AfCFTA Secretariat – Demitta Gyang
Demitta Gyang acting as Senior Customs Advisor of the AfCFTA Secretariat, expanded her gratitude towards the WCO-ESA-RPSG Chair, who organized the webinar and invited the Secretariat to critical engagement. She advised that such an engagement is at the heart of the Secretariat Generals’ vision for the AfCFTA. She further advised that the Secretariat General took the time to engage extensively with the continents’ private sector parties, business communities, and state companies to ensure that the goals of the AfCFTA are met. These goals can be met by making sure all stakeholders are well informed about the status of the AfCFTA agreement.
With that being said, the following was noted in terms of the status of the AfCFTA:
- There has been an expanded mandate since the agreement was last signed on 21 March 2018 to include digital trade and the movement of women and youth.
- Following the agenda for the AfCFTA, the Secretariat achieved around 80% completion in terms of negotiations with trade in goods. All that remains is the 41 countries that have deposited their tariff concessions/offers (some have done so in customs groups like SEMA, SACU).
- Regarding Rules of Origin (RoO), 86% of the agreement is complete since the Health and the State of Government met in December 2020. An additional 5% of tariff lines have been finalized. A deadline has also been scheduled for completion of the RoO at the end of June 2021.
- The Secretariat itself is fully operational – meaning several institutions within the AfCFTA is fully operational. Various meetings have been held with the different counsellors responsible for trade. Also, the Subcommittee of trade in goods has just had their 6th meeting whereby all the agreement policies have been finalized and the rules established. The Subcommittee of trade in Services has also met several times. However, they are not as complete as the Committee of trade in goods. The legislative framework and specific commitments still need to be negotiated and finalized due to the hybrid approach. Therefore, these Committees will be left with the essential tasks of ensuring that the AfCFTA is fully implemented and operationalized.
- In that regard, the Secretariat of the AfCFTA saw it fit to bring together the Director Generals of Customs to discuss critical aspects of customs administration that affect the agreement in terms of customs cooperation, trade facilitation, and transit. Accordingly, two meetings were held with the Director Generals of Customs to ensure that the Annexes in terms of Customs will be fully operational.
- Almost 80% of the Annexes will have to be implemented by Customs, and now that the agreement is almost complete, Customs plays the most vital role in ensuring that the agreement comes to life.
- A summit is scheduled for July 2021, and it is hoped that the summit’s mandate in terms of completion is met by that time.
3. Panellists’ discussions
a. Trade Facilitation under the African Union Commission – Dhunraj Kassee
Trade facilitation initiatives under the African Union Commission can be dated back to as early as the 1990s. Then, a different focus of the AU Heads of State was noticed, including fostering regional economic integration. With the Abuja Treaty, the African Union (AU) embarked on the landmark project of the African Economic Community with clear milestones that include: the creation of free trade areas, customs unions, a single market, a central bank, and a common currency. The Treaty had already laid a solid foundation for trade facilitation in Africa previously, which relates to, among other things: Liberalization of trade through (1) abolition of customs duties and non-tariff barriers; harmonization of national policies in areas of industry, transport, trade, finance, etc. and the adoption of a Common External Tariff (CET). (2) Simplification and Harmonization of trade documents as well as Customs cooperation and administration.
Then in 2012, the Heads of State also embarked on two major projects: the AfCFTA and the Boosting Intra-African Trade. Subsequently, the AU had introduced two flagship projects under Africa’s Agenda 2063, including the AfCFTA and other related trade facilitation projects such as the Development of the Commodity Strategy, the High-speed network for Africa, and the Single Air Traffic others.
1. AU facilitation measures in terms of the AfCFTA project:
The AU, under the auspices of the AU Subcommittee of Directors General Customs, chose a theme for their meeting in 2018 to landmark the event of the signing of the AfCFTA in March 2018, which was “Combating Corruption in Customs to effectively implement the African Continental Free Trade Area (AfCFTA)”. Then in 2019, when the AfCFTA entered into force, the AU Subcommittee of Director Generals decided on a familiar theme for their next meeting: “Entry into Force of the AfCFTA: Implications for Customs Administrations”. One of the critical recommendations for this meeting in 2019 in Kampala was that the AU should develop programs and activities to build the capacity of customs administration to implement successfully. In line with the recommendations of the AU Customs Director Generals and collaboration with GIZ and the WCO ROCB ESA, a Needs Assessment was conducted last year to examine the needs and challenges of Customs Administrations to implement the AfCFTA effectively. In addition, a Customs Leadership Module has been developed to address the challenges and requirements posed by the assessment. Both reports have been finalized and are currently fine-tuning before being shared with the AfCFTA Secretariats and other stakeholders. These two documents form a solid foundation for a comprehensive capacity-building programme for Customs Administration and the Private Sector. The only limitation that was realized was the omission of the assessment of needs and challenges of the private sector, and maybe this is something the AfCFTA can pursue.
2. AU facilitation measures in terms of the Boosting Intra-Africa Trade (BIAT) project:
In 2012 the Assembly endorsed an action for the BIAT project to deepen African market integration and significantly increase the volumes of Intra-African trade. The BIAT program has seven clusters that are dealt with by several departments. Under the cluster Trade facilitation, one of the immediate actions foreseen was simplifying and harmonizing customs and transit procedures. Among Trade Facilitation, the other clusters include Trade Policy, Productive capacities, Trade-related infrastructure, Trade Finance, Trade Information, and Factor Market integration.
Under the cluster Trade Information, at the 12th Extraordinary Summit on AfCFTA on 7 July 2019, at the level of the AU, an information dashboard was launched that is referred to as the African Trade Observatory with main functions about (1) Collect trade and trade-related quantitative and qualitative data and information from and for the Member States, and other resources (2) Analyze trade and trade-related data and information, focusing on emerging issues such as regional value chains and e-Commerce (3) Monitor and evaluate the implementation process and impact of the AfCFTA, and the BIAT (4) Provide relevant and detailed trade, and trade-related information for the private sector (5) Establish a database for the African trade that is used to publish and disseminate information on intra-African trade.
3. The development of an African Continental E-Commerce Strategy:
E-commerce is increasingly becoming a critical lever of growth for Africa, rather than simply an option. It poses real possibilities to help African Enterprises develop capabilities to understand better their comparative advantages and the opportunities existing in the regional markets. Furthermore, e-commerce increases the know-how to establish strategic alliances with other enterprises across borders. The AU’s developed an E-Commerce Strategy which recommends the implementation of the WCO’s 15 standards for cross-border commerce, including:
- Simplified clearance procedures, risk management, and EDI
- Inter-Agency Cooperation and International Cooperation
- Public and Private Partnerships, African Economic Operator (AEO) concepts, De Minimis and Models of Revenue Collection
- The Prevention of frauds and illicit trade
4. The development of a Trade Facilitation Strategy:
In 2018 the AU developed a Trade Facilitation Strategy that the Subcommittee of Director-General adopted. The strategy was presented to the STC in 2019, who believed that it needed to be considered by a joint committee of the Directors General and the Subcommittee of the Trade Facilitation at the level of the AfCFTA. It includes Simplification and Harmonization, Information Technology, Security and Compliance, Institutional Coordination and Capacity Building, Multi-modal Transport Systems, Small- and Medium Scale Enterprises, and Non-Tariff Barriers.
5. The AU Guideline on Covid-19:
In collaboration with UNECA, AUDA NEPAD RECS, and International Organizations such as WHO, WCO, WTO UN OCHA, the AU developed a continental guideline to facilitate goods, persons, and services amidst and beyond the Covid-19 pandemic. The guideline has several trade facilitation and customs related articles and measures that consider the WCO RKC (Revised Kyoto Convention) Annex J on Relief Consignment and other international conventions and best practices. The guideline is almost finalized and presented to the Ministerial Meeting (STC) in July 2021 for adoption.
|Critical reflections directed towards the Private Sector Group: Is the Private Sector sufficiently conversant with the AfCFTA?How much is the Private Sector involved in the implementation of the Agreement? Is it at a Continental, Regional and National Level?Is the Private Sector adequately represented in the Institutional Mechanism responsible for the implementation of the agreement both at the Continental and National level?Is the Private Sector adequately capacitated in terms of tools, expertise, knowledge, and experience?Is the Private Sector ready to take a long drive in the AfCFTA journey?|
1. COMESA’s participation in the AfCFTA Framework:
COMESA is a regional economic community comprising of 21 African Member States. COMESA’s current strategy can be summed up in the phrase: “economic prosperity through regional integration”. COMESA participates in the AfCFTA Framework at two levels, namely, REC (Regional Economic Community) and Member State levels. The African Union recognized that RECs play a significant role in developing and negotiating various instruments for the AfCFTA by establishing a Continental Task Force. It includes multiple experts from the eight RECs recognized by the AU to create different AfCFTA instruments and participation in the negotiation processes. In addition, legal and policy instruments designed under the COMESA, EAC, and SADC Tripartite were used to fast-track the development and negotiations of the AfCFTA.
2. Existing Digital Trade instruments
a. Web-based NTB reporting, monitoring, and elimination mechanism:
COMESA-EAC-SADC developed a web-based NTB (Non-Tariff-Barrier) reporting, monitoring, and elimination mechanism. An online web page allows anyone experiencing an NTB to report it online by going to the web page: www.tradebarriers.org. The same instrument was implemented at the continental level, whereby the AfCFTA developed a similar mechanism. The website is https://tradebarriers.africa/. Reported complaints are sent to formally nominated government officials, also known as National Focal Points. National Focal Points and REC Focal Points (COMESA/EAC/SADC) collaborate to resolve reported complaints promptly. To date, 728 written complaints were resolved through the COMA-EAC-SADC online reporting system. COMESA developed a mobile version to assist those stakeholders who cannot access this online mechanism. COMESA piloted Malawi, Zambia, and Zimbabwe into using the SMS tool for reporting, monitoring, and eliminating NTBs.
b. COMESA Regional Customs Transit Guarantee Scheme (RCTG-Carnet)
The RCTG Agreement was signed and ratified by 13 Countries (twelve of which are COMESA Member and one non-Member States), namely: Burundi, Djibouti, DR Congo, Ethiopia, Madagascar, Malawi, Kenya, Rwanda, Sudan, Tanzania, Uganda, and Zimbabwe. Under this agreement, goods can be traded with member countries using only one registered bond. This scheme became operational in 2012, but even though 13 Countries ratified the agreement, only five countries are trading under the agreement: Burundi, Kenya, Rwanda, Tanzania, and Uganda.
A Carnet is a ‘guarantee’ document used throughout the transit process to prove a valid guarantee/bond and an undertaking to comply with customs obligations within each transit country. COMESA RCTG Carnet is the second globally after the European Transports Internationaux Routiers (TIR) Carnet and the only one in the region and continent. In 2020 the new version of the RCTG was launched as a mobile application whereby Clearing and Forwarding agents can view their current bond balance and view active Carnets. Its key benefit is to reduce the cost of Bond/Guarantee and collaterals charged by Sureties and Agents. A trader no longer needs to apply for a bond or guarantee for each transit country.
c. The AfreximBank African Collaborative Transit Guarantee Scheme (AACTGS)
A similar instrument was developed at a continental level called the AfreximBank African Collaborative Transit Guarantee Scheme. This programme was designed to facilitate the smooth transit of goods across Africa. In addition, in March 2021, COMESA signed an agreement with the African Export-Import Bank (Afreximbank) to implement the COMESA Regional Customs Transit Guarantee/bond Agreement. Under this agreement, Afreximbank will become a regional and continent-wide guarantor, providing transit bonds covering the full range of borders that goods are required to cross.
d. COMESA Virtual Trade Facilitation System (CVTFS)
The CVTFS is another digital trade instrument developed by COMESA. It is a cargo tracking system that uses electronic seals (e-Seals) to track the movement of goods in the COMESA region. It is an online system that can easily interface with other COMESA trade facilitation instruments such as the RCTG, Yellow Card, Carrier Licence, and Harmonized Axle Load, all on one platform. The CVTFS enhances the security of Customs revenue and the goods being transported. It has also led to reduced volumes of cargo being lost during transit.
e. COMESA Covid-19 Online Platform
The platform is a web-based portal whereby information is publicly shared and controlled by using a password. It was launched on 17 July 2020 and accessible on the webpage https://covid.comesaint/. The platform aims at sharing information about the availability of goods and services, especially essential commodities and services. As of June 2021, 24 companies/individuals or associated businesses have registered on the platform, some of which updated their products. This tool facilitates business operators to market their products locally at no cost. Member States (Governments) are encouraged to upload information and trade policy measures beneficial to all stakeholders. Sellers and buyers are urged to network through this platform. Vendors can advise on various available modes of shipping and preferred payment options. Since the vendors’ contact details are made available online, the parties can discuss before concluding a sale.
3. The Fourth Industrial Revolution (4IR):
The 4IR is characterized by the amalgamation of an economy’s digital, biological, and physical spheres. As a result, the growing utilization of new technologies like Artificial Intelligence (AI), 3D printing, machine learning, the Internet of Things (IoT), advanced wireless technology, and cloud computing is also growing.
TradeTech is the technology and innovation that enables trade to be more efficient, inclusive, and equitable. It is fundamental to harness the innovations of the Fourth Industrial Revolution to support public goods. With the rise of the 4IR technologies, the means to facilitate international trade is growing too. Digitalization and advanced technologies can significantly reduce processing times and the cost of cross-border movements of goods and further facilitate trade in services.
Interesting to note from a survey done by the World Economic Forum 2020 on TradeTech was that under the most transformative technologies for trade is the Internet of Things in the supply chain at 59%, Digital payments at 56%, E-Commerce at 53%, Clouding computing at 52%, 5G and 49% and Artificial Intelligence at 45%. According to the survey, technology lowers trade costs and increases the speed of trade by 63%. It promotes the possibilities of trade in new products and services by 55%. It also allows for positive environmental outcomes and the inclusion of smaller players in the industry. There are, however, challenges to adopting technology. It is very costly, and there is an overall lack of human capital or skills. Furthermore, there is not a strong Tradetech ecosystem in the local market. Some company policies prevent new technologies, and accessibility to Tradetech from other countries is sometimes compromised due to regulatory restrictions.
4. COMESA Digital Free Trade Area (DFTA)
COMESA is in the process of implementing a Digital Free Trade Area (DFTA), which is all about empowering traders to do cross-border trade using ICT as a tool to minimize physical barriers. This instrument comprises of four different segments, namely: (1) E-Trade whereby COMESA will launch an online market, (2) E-Logistics whereby an electronic Certificate of Origin will be piloted in certain countries, and (3) E-Legislation whereby COMESA will create a Trade Information Portal.
In conclusion, COMESA encourages the AfCFTA to maximize digitalization and use emerging technologies to reduce cost and the time of doing business in Africa.
c. Implementation of the AfCFTA on NTBs in the region – Stephen Analo
The EAC (East African Community) Customs Union was established in 2005 and comprised several Member States, namely: Burundi, Kenya, Uganda, Rwanda, Tanzania, and South Sudan. The objectives of the EAC Customs Union include (1) Further liberalization of intra-regional trade in goods (2) Promotion of efficiency in production within the community (3) Enhancement of domestic, cross-border, and foreign investment in the community (4) Promotion of economic development and diversification in industrialization in the community and (5) Deepening and widening political, social, and economic cooperation.
1. What is NTBs?
Non-Tariff Barriers (NTBs) refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult and or costly. NTBs also include unjustified and or improper application of Non-Tariff Measures (NTM’s) such as sanitary and phytosanitary (SPS) measures and other technical barriers (TBT).
NTBs arise from different measures taken by governments and authorities in government laws, regulations, policies, conditions, restrictions or specific requirements, and private sector business practices or prohibitions that protect the domestic industries from foreign competition.
2. Categories of NTBS:
- Government participation & restrictive practices like export subsidies and monopolies.
- Customs and administrative entry procedures like arbitrary customs classifications, misinterpretation of Rules of Origin.
- Technical barriers to trade (TBT) like technical regulations, inspections, testing and certification procedures, packaging, marking, and labelling requirements.
- Sanitary & Phyto-Sanitary (SPS) measures such as limits of pesticides, residues, heavy metals, restricted pests, and diseases are put in place to protect the health of humans, plants, and animals.
- Specific limitations like trade remedies, quantitative restrictions, export taxes, and quotas.
- Charges on imports like prior import deposits and subsidies, administrative fees, and duties.
- Other such as arbitrariness, discriminations, costly or unclear procedures
NTBs are often justified on four main reasons; (1) to safeguard health, safety, and security of human beings, animals, and plants and against environmental pollution; (2) to protect home industries and consumers; (3) to safeguard national security; (4) to safeguard against revenue loss. NTBs mainly occur due to not granting Preferential Tariff Treatment to goods originating from the EAC Partner States. Implementing domestic laws, regulations, and administrative measures contrary to Community laws or protocols. A lack of harmonization of Standards and Conformity Assessment procedures (like testing, inspections, and certification) and a lack of transparency in the development and implementation of measures likely affect trade.
3. EAC’s measures to eliminate NTBs:
To address the effect of NTBs, the EAC adopted a Legal Framework called the EAC NTB Act of 2017, which aims to give effect to the second clause under Article 13 of the Customs Union, establishing a legal mechanism for identifying and monitoring the removal of NTBs. The Act prohibits activities that create NTBs and requires the Member States to review their trade policies, customs procedures, and other measures to remove existing NTBs. It also provides the establishment of National Monitoring Committees and National Focal Points to support the elimination of NTBs. In addition, it identifies three mechanisms to eliminate NTBs (1) mutual agreement of Member States (2) implementation of the EAC Time-Bound Programme for the Elimination of NTBs (which refer to the COMESA-EAC-SADC online webpage for the reporting of NTBs), and (3) regulations, directives, or recommendations of the Council of Ministers. In case a dispute is not resolved, the aggrieved party may petition the EAC Court of Justice.
The EAC has put several measures in place to eliminate NTBs in the region of which entail the institutional, legal, and policy frameworks, National Monitoring committees (NMCs) as well as a Regional Monitoring Committee, various EAC Policy meetings like the Sectoral on Trade Committee on Customs and East African Standards Committee. The existence of the EAC Court of Justice as well as other Bilateral discussions between the Partner States. From 2007 till date, 226 NTBs have been resolved within the EAC region, and 15 NTBs remain outstanding.
Therefore, the EAC encourages the AfCFTA to use the Time-Bound Programme whereby NTBs are reported and eliminated, adopt the existence of the EAC NTB Legal instruments, and request for a commitment by all Member States to eliminate NTBs.
d. Lessons learned on COVID-19 and how the AfCFTA can improve on these – Maggie Tladi
South African Customs Union (SACU) represents five countries: South Africa, Eswatini, Lesotho, Namibia, and Botswana. The focus areas of SACU involve; Regional Industrial development, Review of the Revenue Sharing Arrangement, Trade Facilitation, Development of SACU Institutions, Trade in Services, and Strengthening the Secretariat’s Capacity.
1. Lessons learned from Covid-19 pandemic:
Disruptions are inevitable, constant, and part of humanity. The Covid-19 pandemic depicted our exposure and vulnerability due to an interconnected world, and it proclaimed our reliance on global supplies and value chains. It ultimately led to health, economic and social shocks, supply and demand shocks, limited human mobility, and stricter measures to contain the virus. According to the 26th edition of the Global Trade Alert Report, governments worldwide imposed around 2,031 policy interventions, and 106 nations implemented a total of 240 reforms to ease the importation of medical goods and medicines. In addition, market access restrictions were imposed, with supplies being limited to essential goods.
2. Trade facilitation became more relevant during the COVID-19 pandemic:
- Expedited clearance of essential goods, including Covid-19 goods.
- Special procedures to expedite medical equipment, supplies, and pharmaceuticals to authorized operators.
- Pre-arrival processing included acceptance of electronic submission of documents.
- Simplifying import and export forms and procedures.
- Implementing green lanes under the guidelines to protect health and ensure the availability of goods and essential services.
3. SACU’s response to Covid-19:
SACU strengthened bilateral and regional cooperation and collaboration to expedite a response. Communication with stakeholders was encouraged by availing Covid-19 information through all communication mediums like radio, television, email, letters, websites, social media, standing meetings with business associations, and the national Presidential Private Sector Consultative Group. SACU also initiated communication and optimization of virtual engagements through various modes at the bilateral and regional levels to resolve customs queries. Using green lane channels, Customs could fast track the movement of legitimate goods. Essential goods were given preference and were channelled through dedicated lanes. These lanes are used for special dispensations to transport hazardous goods, relief goods, and accredited Preferred Traders. SACU invested in training Customs Officials continuously on Covid-19 regulations and their application thereof and the exchange of information. SACU implemented Business Continuity Plans to sustain Customs Operations during the lockdown periods and after that. Personal Protective Equipment is continuously procured and provided to front-line personnel. SACU has also revised their Trade Facilitation Programme by focusing on a new flagship programme called the “Customs Modernization Programme”. This programme aims to increase efficiency in terms of revenue collection to serve traders better. SACU also facilitates Border Coordination by having border officials collaborate and share information. SACU specifically looks at Issues of Standards behind Border Measures within the country and bordering countries within the Member States. A new area SACU is focusing on now is Transport and Logistics in terms of infrastructure development and emerging technologies to address soft infrastructure issues.
4. SACU Customs Modernization Programme:
This flagship programme has four focus areas; (1) IT Connectivity Utility Block called “Your Entry is My Entry”, whereby all SACU countries’ Customs networks are interconnected. In addition, SACU has created a Data Matching mechanism on Exports and, so far, has a 70%-just below 50% match. (2) National Authorized Economic Operator (AEO) Programme with a total of 151 AEO’s accredited. (3) Risk Management and Compliance Strategies developed and implemented and lastly (4) A Customs Legislative Framework aimed at facilitating number (1) and (2). The AEO Programme is a compliance management programme whereby members benefit from simplified Customs procedures, greater predictability in trade, lower administrative costs and burdens, and the opportunity for stakeholder engagement.
5. The Future SACU Regional AEO:
SACU is aiming at establishing a regional AEO Programme, which includes one certification process to enable cross-accreditation. All agencies will grant AEO benefits within the SACU region as a restricted Mutual Recognition Agreement (MRA). SACU envisions the programme to include the following:
- Minimum criteria – all-inclusive, flexible approach without any entry barriers.
- Border Intervention – reduced number of border agencies intervening in the flow of cargo.
- Interagency AEO – a joint development with OGA’s (Other Government Agencies) and additional benefits
- Regional AEO & MRA – single program and cross-accreditation of MRAs and benefits.
- Global Recognition – WCO recognition for mutual recognition.
- Augment Benefits – tangible, meaningful, transparent, and measurable.
- Cross-border e-Commerce – leverage the role of intermediaries and apply AEO status and benefits to non-AEOs.
- Other Operators – recognition of different operators and service providers in MRAs
6. Lessons for AfCFTA:
- Strengthen capacity for production and manufacturing of vaccines in the continent.
- Rehabilitate infrastructure and logistics to simplify cross border movement of regional and global value chains.
- Develop and implement continental intra-Africa Trade Operational Resilience, Continuity and Sustainability Strategy for future disasters, pandemics, trade wars, and other unforeseen events.
- Work towards eradicating thick borders.
- Invest in trade and customs reforms to eradicate paper-based legacy systems & leapfrog to emerging technologies and innovations such as Artificial Intelligence, Machine Learning, Blockchain Technology, Internet of Things, 3D Printing, etc.
- Capitalize on existing pockets of success & use these as case studies to champion trade and customs reforms.
- Invest in upskilling and empowering public sector professionals, youth, women, and the private sector at large to build cohorts and a pool of skills to draw from to successfully implement the AfCFTA.
- Build stronger partnerships & collaboration between public, private sector, and civil society.
- Identify quick wins to simplify the cross-border movement of goods to promote intra-Africa trade.
e. How will the future flow of trade look under the AfCFTA – Alcides Monteiro
SADC (South African Development Community) includes a group of six landlocked countries (Botswana, Zimbabwe, Zambia, Malawi, Eswatini, and Lesotho), six coastal countries (South Africa, Angola, Mozambique, Namibia, Tanzania, the Democratic Republic of the Congo), and four islands (Madagascar, Mauritius, Seychelles, and Comoros). The main objective of SADC is to achieve economic development, peace, and security, alleviate poverty, enhance the standard and quality of life of the peoples of Southern Africa, and support the socially disadvantaged through regional integration, built on democratic principles and equitable and sustainable development. The FTA representing 13 countries was launched in 2008.
1. The AfCFTA project:
The AfCFTA was adopted by the 10th extraordinary session of the Assembly in Kigali, Rwanda, on 21 March 2018 and entered into force on 30 May 2019. The agreement currently holds 54 signatures, 30 ratifications. Further, the agreement comprises a Protocol and its Annex (RoO, Tariff, Customs-Trade Facilitation-Transit, SPS-TB-NTBs, and Trade Remedies). Now that we have the various AfCFTA instruments in place, it is crucial to ensure these are domesticated mainly in establishing the tariff book and Customs Code.
The AfCFTA comprises a Council of Ministers responsible for Trade of the African Continental Free Trade Area. Under this division falls the Committee of Senior Trade Officials. Then the Subcommittees follow which are mainly the Subcommittee for Trade in Goods, Subcommittee for Trade in Services, and the Subcommittees that focus on Rules of Origin (RoO), Non-Tariff Barriers (NTBs), Trade Remedies, Technical Barriers to Trade (TBT), Tariffs and Customs and Facilitation. The Subcommittee for Trade in Services focuses on five priority service sectors. Currently, the Protocol on investment is still under development. A Dispute Settlement Body (DSB) facilitates trade-related disputes between the Member States or third parties.
From past experiences, it has become evident that Africa suffers from a lack of diversification. This lack is hoped to be addressed by focusing on industrialization, which is on the agenda. In addition, there will be phase II of negotiations of the AfCFTA, which will focus on investment, completions policy, intellectual property rights, digital trade, and women and youth in trade. The Secretariat is settled and hosted in Accra, Ghana.
2. SADC facilitation measures in terms of the AfCFTA project:
For the AfCFTA to be successful in its implementation, it is essential to consider soft infrastructure provisions such as the WCO Revised Kyoto Convention, the Safe Framework of Standards, and the WTO Agreement on Trade Facilitation. Also, for consideration under the AfCFTA is the Programme for Infrastructure Development for Africa (PIDA) and the SADC Infrastructure Master Plan, which looks explicitly at developmental measures concerning hard infrastructure.
SADC has a comprehensive Trade Facilitation Programme (TFP) that incorporates 28 tasks and can be subdivided under the programme’s Transparency, Predictability, Simplification, and Cooperation objectives. The SADC TFP is meant to speed up the focus area of consolidating the SADC Free Trade Area. It also supports the industrialization strategy and enables Member States to comply with the ECO RKC and WTO TFA measures. In addition, the programme is set out to improve the ease of doing business in the region and contribute to market accessibility. The SADC TFP advances the agenda of the AfCFTA in boosting Intra- African Trade and brings about various benefits to the private sector. These benefits include reducing overall costs due to delays and informal payments, expediting clearance and release, enabling consistent and predictable application and explanation of rules, enabling the effective and efficient deployment of resources, and ultimately Improving transparency.
4. Closing remarks
In conclusion, all the panellists were thanked for their participation, noting that the region has grown in leaps and bounds. It is encouraging to see how the various RECs actively work towards a more integrated Africa in terms of trade. And of course, with special engagements like this one, all concerned stakeholders can learn from each other better to understand the challenges and opportunities that the AfCFTA present.
5. Questions and answers
Several questions were posed to the panellists during the webinar. Unfortunately, due to the time constraints of the packed schedule, there was insufficient time to answer these questions. Nevertheless, to clarify the matters that arose, the panellists were requested to provide some feedback. Therefore, this section outlines the questions and answers for the webinar.
1. Is the needs assessment in customs done country by country? Customs agents end up performing very different roles in a fragile context than they do in other contexts (e.g., even though revenue generation remains important, there are security considerations, maintaining peace which may override the revenue generation objective)?
In line with the recommendations of the AU Customs DGs and in collaboration with GIZ and WCO ROCB ESA, a Needs Assessment was conducted last year to examine the needs and challenges of Customs Administrations to implement the AfCFTA effectively. A Customs Leadership Module has also been developed accordingly to address the above. Ultimately, the AfCFTA Secretariats and the AUC can suggest an approach; however, each country would follow its assessments.
2. Are the discussions in the African Trade Observatory also about informal (cross-border) trade, which is quite sizeable in the African continent?
The trade observatory will act as a central repository providing exhaustive qualitative and quantitative trade data and information at the continental level to enable policymakers and the private sector to make evidence-based policies and business decisions. Currently, the Trade Observatory makes use of data from Trade Map. Unfortunately, informal trade is not yet included.
Whereas several African countries and RECs have established trade information portals and systems, several challenges remain. These challenges include outdated information, uniformity of data, absence of data and information on non-tariff measures and informal trade and limited collaboration between government agencies and countries and RECs.
3. The AU Covid Guideline is a critical approach as a lot of trade disruption has occurred. What is your view on the harmonization of the requirements across the continent and the timelines around this?
One of the main objectives of the AU Covid Guidelines is to ensure a harmonized continental approach to facilitating trade amid Covid-19 and advance coordination and implementation of standard guidelines. The lesson learned from the Covid-19 pandemic has shown how quickly a region and continent can mobilize itself against a disaster. Unfortunately, the harmonization approach of the movement of goods will not occur at the same rate since the stakes are much lower. Nevertheless, the aim is to harmonize all requirements across the continent as soon as possible.
4. We have been seeing and reading a lot of theories and literature on AFCFTA. Are there any practical examples you can share with the audience on the ‘real’ improvement in intra African trade observed since the beginning of the year?
The agreement came into force in January 2021, but there are no fundamental obligations at present on the signatory nations. Prices of goods in shops have not declined, as for that to happen, taxes on imported goods must first fall. Many countries have officially reduced their taxes, so some goods are eligible for the lower tariffs, although governments are first required to gazette their specific tariff changes. However, not all the countries that offered to reduce their import taxes have finalized customs processes (the presentation, identification, and clearance of goods).
5. How will the private sector businesses take advantage of the opportunities AFCFTA presents to improve intra African trade?
The private sector accounts for almost 80 per cent of the total production in Africa, two-thirds of investment, and three-quarters of credit. This sector also employs 90 per cent of the working-age population. In terms of investment decisions, precise information, a clear presentation of available investment projects and opportunities, and a favourable business climate are crucial factors. Considering that there is a tiny percentage of Intra-African trade, the private sector will need to watch the possible investment opportunities that will emerge because of the AfCFTA. The benefits to all sectors concerned will be enjoyed only in a considerable amount of time, by which public-private sector agreements will initiate hard and soft infrastructure improvements. The private sector needs to take advantage of a new market and a new trading environment. Eventually, once the trading environment within Africa starts to become more favourable, investors will promote even further investments, improving the overall business environment by which SMME’s will benefit in terms of costs and technology.
6. Could you kindly shed some light on the operation of the COMESA virtual trade trucking cargo using e-seals?
The CVTFS is an electronic trade facilitation initiative developed to monitor consignments along different transport corridors across the region. In addition, it integrates other COMESA instruments on one online platform. These include The Yellow Card (third party motor vehicle insurance); Regional Customs Bond Guarantee System (RCTG); and Transit Data Transfer Module. Others also include the Carrier License for road freight operators; Harmonized Axle Load, and (Gross Vehicle Mass Limits which consists of the COMESA Certificate of Overload Control); and the Customs Declaration Document.
The CVTFS uses software that helps interpret all the information on the seal and transmits to a dashboard the container details, the vehicle details, and any other relevant details that appear on a centralized server that you can monitor from anywhere. The seal has a GPS modem that provides real-time goods’ location, a GSM modem to transmit information to a central server, and a sensor to detect tampering. The device is fitted on a cargo container carrying the consignment.
CVTFS provides complete visibility in real-time of all tagged consignments from source to destination, making it an effective solution for cargo tracking management. The system is accessible to Customs authorities, freight forwarders, insurance companies, banks, port authorities, container freight stations and traders, to mention but a few.
The system is currently used in Kenya, Uganda, Rwanda, and D R Congo in the Northern Corridor States. Other Member states that have adopted the use of CVTFS include Ethiopia, Djibouti, Malawi, Zambia, and Tanzania.
7. Is there an updated list of countries that offer tariff benefits to RSA exports, and is there an AfCFTA certificate of origin in circulation?
- There is a Certificate of Origin Annexure on the website: https://afcfta.au.int/fr/node/292
- SACU’s Goods Tariff Liberalisation programme is Gazetted as per link: https://www.gov.za/sites/default/files/gcis_document/202101/44049rg11219gon1433.pdf
8. What would you consider to be the significant barriers to full and quick implementation of the AfCFTA? What practical solutions could we prescribe to resolve the obstacles?
The main barriers would be firstly our productive capacity and the trade logistics n infrastructure. So we need to work on industrialization to ensure the availability of products to trade and then enhance the logistics infrastructure. But we should also not underestimate issues related to rent-seeking and corruption.
9. There have been talks by the common person regarding the different levels of development in African countries and fears that some countries will benefit more at the expense of others – some may become the next exporters. But, in contrast, others may remain to be net importers. How could we address this?
This obstacle can be tackled by initiating public-private partnerships (PPP). Furthermore, increase investments in terms of manufacturing and maintain the optimum use of resources. The public and private sectors need to come to the party to establish initiatives aimed at gearing SMME’s to take part in the developing trading environment. In any endeavour like this one, there will be some winners and some losers.
10. What are the remarkable AfCFTA milestones that will change the current situation?
The ratification of 45 member states realized the opportunity for a comprehensive approach to dealing with the bottlenecks within Africa’s borders. The fact that digitization is included in the processes and the effect of trade of women and youth.
Dr Juanita Maree – Chair of SAAFF and member of the WCO-ESA-RPSG
Demitta Gyang – Senior Advisor Customs – AfCFTA Secretariat
Dhunraj Kassee – Senior Policy Officer, Customs Cooperation Trade and Industry Department – African Union Commission (AUC)
Alice Twizeye – Common Market for Eastern and Southern Africa (COMESA) Secretariat
Balness Sumani – COMESA Secretariat
Stephen Analo – Technical Advisor on Customs capacity building at the Directorate of Customs – East African Community (EAC)
Maggie Tladi – Deputy Director Trade Facilitation – Southern African Customs Union (SACU)
Alcides Monteiro – Program Officer Customs – Southern African Development Community (SADC)
Larry Liza – Director – Regional Office for Capacity Building, World Customs Organization East & Southern Africa Region