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AfCFTA: focus on tariff or non-tariff barriers?

Apart from elimination of tariffs between the African Union (AU) member States (which means elimination of import duties and other levies on imported goods), another objective of the AfCFTA is the elimination of non-tariff barriers (NTBs).

NTBs are generally defined as all those restrictive regulations and procedures, other than tariffs, that make more difficult and/or costly to import or export products. Among these measures there are import quotas, import licenses, discriminatory taxes or excessive document requirements applied on imports, complex or discriminatory rules of origin, extensive use of trade remedies (ex. antidumping or safeguard measures) or, again, the unjustified and/or improper use of health, product safety regulations or quality standards to discriminate against imported products and make particularly hard their access to the national market.  The African Development Bank (AfDB) African Economic Outlook report 2019 points out that most of NTBs are “very difficult to measure… opaque, difficult to identify, and difficult to distinguish from non-tariff measures”.

A United Nations Conference on Trade and Development (UNCTAD) report estimates that NTBs are at least three times more restrictive than customs duties, while, with specific reference to Africa, another report – always from UNCTAD – estimates that a gain of US$ 20 billion in GDP growth could be achieved by tackling such barriers at the continental level.

Compared to NTBs, elimination of tariffs is expected to have a much minor impact in Africa: according to the same UNCTAD report, a total tariff liberalization (without any exclusion of specific tariff lines) could generate a gain of $3.6 billion per annum, a figure that almost halves if 5% of traded goods is excluded from liberalisation. Considering that the percentage of tariff lines that have been excluded from liberalization under the AfCFTA is currently 3%, a realistic figure about the savings in transaction costs in Africa as a consequence of elimination of NTBs would be (about) 2,5 billion USD

On the other hand, the World Bank publication “The African Continental Free Trade Area Economic and Distributional Effects” (2020), made a simulation of the short-term impacts of the intra-African tariff liberalization under the AfCFTA on tax revenues, estimating tariff revenue losses for less than 1 percent for almost two-thirds of African nations, the main reason being that only a small share of tariff revenues come from imports from African countries, which are less than 10 percent on average. Another reason is that import duties collected by African Customs are highly concentrated in a few tariff lines (1 percent of tariff lines account for more than three-quarters of tariff revenues in almost all African countries). These conclusions are in line with the outcomes of other similar studies, such as the AfDB African Economic Outlook report 2019.

The bottom line is that African countries should focus more on eliminating NTBs, rather than tariffs. In this regard, the International Monetary Fund, in the Regional Economic Outlook Sub-Saharan Africa Recovery Amid Elevated Uncertainty (April 2019), recommends to address NTBs, as well as infrastructure needs, because this can have a much bigger impact on intra-African trade than tariff liberalisation under the AfCFTA. Another study, always from IMF, concludes that the AfCFTA has the potential to generate significant welfare gains for its member countries insofar as NTBs are substantially reduced. The study also observes that intraregional tariffs in Africa are already low (because most of African countries are already members of customs unions or free trade areas where goods are traded in exemption of customs duties), while NTBs are large.

A specific Annex (n. 5) to the Protocol on Trade in Goods of the AfCFTA Agreement is expressly dedicated to the NTBs elimination. Such an Annex basically establishes a mechanism for the identification, categorization and progressive elimination of NTBs within the AfCFTA with the relevant procedure to be followed.

The Annex 5 also mandates the States that are part to the AfCFTA to set up National Monitoring Committees and National Focal Points on NTBs that will act under the coordination of a NTB Coordination Unit that will work together with them and other Regional Economic Communities (RECs) NTB Units in the elimination of NTBs, as well as in cooperation with any other forum working in the same area. 

It has to be noted however, that according to art. 12 of the Annex, the mechanism for identifying, reporting and monitoring NTBs within the AfCFTA has a complementary nature. As NTBs resolution mechanisms are already available at intra-REC level (for a general overview of the NTB monitoring systems currently active in Africa read our post), State Parties are encouraged first trying to resolve NTBs using the resolution mechanisms already in place in each REC, using the NTB resolution continental mechanism only in residual cases, namely, for 3 categories of NTBs:

1) those that have not been resolved at REC level (in this case the AfCFTA NTB resolution mechanism operates as a second instance system for eliminating barriers that the concerned States have not been able to solve under the intra-REC NTB resolution mechanisms);

2) those that are inter-REC in nature (i.e. they concern countries member of different RECs), or

3) those arising from State Parties that are not members of any REC.

The African Heads of State at the Extraordinary Summit of the African Union on 7 July 2019 in Niamey, Niger adopted a Decision that announced the adoption of an online platform for identifying and removing NTBs to trade in Africa, as a support action to the launch of the AfCFTA operational phase

This platform was developed at the beginning of 2020 by the African Union in collaboration with UNCTAD, and is operational since 13 January 2020. The AU mechanism for identifying and removing NTBs to trade in Africa allows the private sector, upon registration, to directly report trade obstacles on a web portal, so that the NTB complaints are automatically forwarded, in real-time, to formally nominated government officials (National Focal Points) responsible for monitoring and eliminating the barriers who are mandated by the NTB Annex to resolve NTBs within given deadlines. The AU NTB platform is compatible for real-time data exchange with regional tools in the RECs, for example the Tripartite NTB identifying and removing mechanism.

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