Free Trade Agreements in the African Union: What You Need to Know
As the African Union (AU) strives to create a single market for goods and services within the continent, regional and sub-regional trade agreements are being signed at an unprecedented rate. One of the key strategies of the AU is to boost intra-African trade through the elimination of trade barriers and the creation of a continental free trade area (CFTA). In this article, we will explore the significance of free trade agreements in the African Union and their impact on Africa`s economic growth.
What are Free Trade Agreements?
Free trade agreements (FTAs) are agreements between countries or regions that promote the free flow of goods, services, and investment across borders. FTAs also eliminate tariffs and non-tariff barriers that limit trade and investment. By doing so, FTAs can promote economic growth, create jobs, and increase competition.
Why Free Trade Agreements are Important to the African Union
The African Union has identified the need for free trade agreements as a critical factor in promoting regional integration and economic growth. According to the African Development Bank, intra-African trade is expected to double by 2022 through the implementation of free trade agreements.
Free trade agreements promote, among other things, increased competition, increased investment, and economic diversification. These factors help to create a more robust and diverse economy, which in turn, leads to sustainable economic growth and development.
The African Continental Free Trade Agreement
The African Continental Free Trade Agreement (AfCFTA) is one of the most significant free trade agreements ever signed in Africa. The AfCFTA is aimed at creating a single market for goods and services, as well as a customs union with free movement of capital and business persons. The AfCFTA was signed in March 2018, and is currently being implemented by African Union member states.
The AfCFTA is expected to boost intra-African trade by creating a large market with a combined GDP of US$3.4 trillion. It is also expected to bring about a significant reduction in tariffs and non-tariff barriers, which will lead to increased trade and investment.
Other Regional and Sub-regional Trade Agreements in the African Union
Apart from the AfCFTA, the African Union has also signed several regional and sub-regional trade agreements. These agreements, such as the East African Community (EAC) and the Economic Community of West African States (ECOWAS), have been instrumental in promoting regional integration and intra-regional trade.
Regional and sub-regional trade agreements create a common market with the free movement of goods and services, as well as the harmonization of trade policies, regulations, and standards. They also promote cooperation and integration among member states, which enhances their collective bargaining power in international trade negotiations.
Conclusion
Free trade agreements are crucial to the African Union`s goal of creating a single market for goods and services within the continent. The African Continental Free Trade Agreement and other regional and sub-regional trade agreements are expected to increase intra-African trade, promote economic growth, and create job opportunities for Africans. The implementation of these trade agreements will require a collaborative effort from African Union member states, as well as support from international partners.
