The 2019 report of the United Nation Conference on Trade and Development (UNCTAD) recommends for simple and business friendly steps and says attention should be given to the Rules of Origin (RoO) to get the best from the African Continental Free Trade Area (AfCFTA).
RoO are the criteria which establish the nationality of a product enabling it to circulate duty free within a free trade area as long as the goods qualify as originating within FTA.
Rules of origin are the cornerstone for the effective implementation of preferential trade liberalization, the critical policy tool needed to make any FTA operational and are of vital importance in creating opportunities for African LDCs to boost trade,” Dr. Kituyi said.
“The criteria needed to determine the nationality of a product – could make or break the African Continental Free Trade Area (AfCFTA) that entered into force,” says a new UNCTAD report.
The AfCFTA is expected to lead to the creation of a single continental market of more than 1.3 billion people, with a combined annual output of 2.2 trillion USD.
AfCFTA is also expected to boost intra-African trade by 33% once full tariff liberalization is implemented, attracting additional intra-African investments and creating market opportunities to foster Enabling goods to circulate duty-free within a free trade area as long as these goods qualify as originating within the FTA.
According to UNCTAD estimation the gross domestic product of most African countries could increase by 1 to 3 percent once all tariffs are eliminated, and if the agreement is fully implemented
The report also warns that if rules of origin are made too costly or complex to comply with, firms may instead forego these preferences and choose to trade with partners outside the AfCFTA.