On January 23, the opening ceremony of the Lekki deep-water port project invested, constructed and operated by Chinese enterprises in Lagos State, southwest Nigeria, was held. The picture shows the port facilities.
Photo by Top Ayuku (Xinhua)
At the recently concluded 36th summit of the African Union (AU), the "free trade area" became a hot topic of discussion among the participants. The theme of the conference, "Year of the African Continental Free Trade Agreement: Accelerating the Implementation of the African Continental Free Trade Area", demonstrated the continent's determination to promote economic integration.
The results are remarkable
In accordance with the implementation of the first ten-year plan of the African Union's Agenda 2063 (2014-2023), Africa has made progress in accelerating the construction of the African Continental Free Trade Area and promoting sustainable economic and social development. At present, 54 AU member states have signed the African Continental Free Trade Area Agreement. As of November 2022, 44 Member States had deposited their instruments of ratification. The agreement became the free trade agreement with the largest number of participating countries since the establishment of the World Trade Organization.
The African Continental Free Trade Area was officially established in July 2019 and started operations in January 2021. Against the backdrop of the delay of the new crown epidemic and the fragile recovery of the world economy, the achievements of the African Continental Free Trade Area are still remarkable:
The first two stages of negotiations on the FTA have been basically completed. The second phase of negotiations dealt with IP, investment and competition policy. The third phase of negotiations is intensifying, including the consideration of the Digital Trade Protocol and the Women and Youth Trade Protocol.
Transaction costs are expected to decrease. In January 2022, the African AfCFTA Secretariat, together with the African Export-Import Bank and other institutions, launched a pan-African payment settlement system in Accra, Ghana. The system supports African countries to make timely, secure and fast payments on the continent using their national currencies, reducing dependence on third-party currencies, and is expected to save the continent $5 billion annually in payment costs.
Positive progress has been made in trade connectivity. In July 2022, seven countries were selected to pilot trade under the African Continental Free Trade Area Agreement: Rwanda, Cameroon, Egypt, Ghana, Kenya, Mauritius and Tanzania. The African AfCFTA Secretariat said the move aims to test the environmental, legal and trade policy foundations of intra-African trade. In addition, some African countries have also actively responded to the call and implemented relevant policies. For example, Nigeria has launched the free trade zone Anyaba Economic City, where products processed or assembled can be sold duty-free to the entire African market.
The World Bank and the African Free Trade Area Secretariat previously released a report saying that with the full implementation of the FTA agreement and the regulation of investment and competition, Africa is expected to increase revenue by $571 billion by 2035, create 18 million new jobs, and push 2.5% of the labor force into emerging industries, thereby lifting 50 million people out of extreme poverty.
Yang Baorong, director of the Economic Research Office of the China Institute of African Studies, pointed out in an interview with this reporter that the African continent's promotion of the construction of the free trade area marks the return of the vast majority of African countries to the key topic of achieving independent development through unity and self-strengthening, and at the same time, it has also strengthened the understanding and practice of the African continent to establish a unified large market to make up for the shortcomings of development. From a global perspective, as a market with a large population and huge scale, the African continent is committed to promoting the construction of free trade areas, which is a positive signal for economic globalization and global economic and trade cooperation, and a counterattack to the remarks advocated by some countries such as "decoupling" and "chain breaking". At the same time, the construction of the African Continental Free Trade Area has also learned from some useful experiences in regional cooperation after World War II, which is conducive to promoting regional and global development.
The challenges cannot be ignored
As the continent with the largest concentration of developing countries in the world, the construction of the African Continental Free Trade Area still faces many challenges. At the 36th AU Summit, AU Commission Chairman Faki stressed that factors such as the uncertain international situation, intensified geopolitical conflicts, and challenges to the global economic governance system have a far-reaching impact on Africa. He called on African leaders to focus on the main goals to be achieved by Africa, including accelerating the construction of the African Free Trade Area, advancing African integration and the African Union's Agenda 2063.
Yang Baorong pointed out that at present, the construction of the African Continental Free Trade Area needs to continue to make efforts from both internal and external aspects.
From an internal point of view, the first is to solve the problem of homogenization of industrial structure between countries. Most African countries are underdeveloped in industry, highly dependent on raw material exports and labor-intensive industries, and have low added value of products. The construction of the free trade area relies on the high degree of synergy between countries in the region in terms of production, trade, logistics and people's flow, and the AU needs to strengthen institutional arrangements in this regard and increase the synergy and complementarity of industries among member countries. The second is to continue to upgrade the level of infrastructure and improve the business environment. The construction of the African Continental Free Trade Area is carried out under the development trend of industrial informatization, networking and intelligence in the 21st century, and it is necessary to keep up with the trend of the times, continuously improve the level of infrastructure and business environment, and then improve the degree of facilitation of economic and trade cooperation inside and outside the region.
From an external point of view, the first is to avoid the interference of "deglobalization" and "anti-globalization" ideological trends. From being a provider of cheap labor and mineral resources in the past, to playing an increasingly important role in the global consumer market and economic recovery, Africa has always been an important link in the global industrial chain and supply chain. African countries need to further consolidate the consensus on promoting development through cooperation, accelerate the integration process and integrate into the wave of economic globalization. The second is to enhance its competitiveness in the global market. From the perspective of international cooperation, African countries are relatively inattractive to foreign investment. Under the general trend of accelerating the development of new technologies and new industries, the African Free Trade Area needs to improve its ability to undertake technology, capital and market in order to attract more capital and technology inflows.
In view of the shortcomings faced by the African Continental Free Trade Area, the African Union and African countries are also making efforts. For example, in 2022, the African Free Trade Area Adjustment Fund was established to support States Parties in adapting to the new liberalized and integrated trading environment and to mitigate revenue losses and competitive pressures that may result from lower tariffs and greater market freedom. In recent years, the African Union and many African countries have attached great importance to infrastructure construction. In 2021, African countries adopted 71 priority projects in the second priority action plan of the African Infrastructure Development Plan 2021-2030 at the AU Summit, covering transportation, communications, energy, water conservancy, agriculture and other fields, involving more than 40 countries in the African Union.
China-Africa cooperation can be expected
In recent years, under the guidance of the Forum on China-Africa Cooperation and the Belt and Road Initiative, China and Africa have carried out all-round cooperation in infrastructure, health, education, agriculture, environmental protection and other fields, which has greatly improved the infrastructure and trade facilitation level of African countries and provided impetus for the construction of the African Continental Free Trade Area. As Charles Onunayiju, director of the Nigerian Centre for China Studies, said, the formal establishment of the African Continental Free Trade Area is a milestone in the process of African integration. In recent years, China has promoted China-Africa production capacity cooperation and the construction of the "Belt and Road", which is fully in line with Africa's development vision, and Africa expects China to continue to invest in infrastructure construction and improve regional connectivity.
Data show that since 2009, China has been Africa's largest trading partner for 13 consecutive years. Since the establishment of the Forum on China-Africa Cooperation, China has helped African countries add or upgrade more than 10,000 kilometers of railways, nearly 100,000 kilometers of highways, nearly 1,000 bridges, nearly 100 ports and 66,000 kilometers of power transmission and transformation lines. At present, 52 African countries and the African Union Commission have signed the "Belt and Road" cooperation documents with China, and landmark projects such as the AU Conference Center, the headquarters of the African Center for Disease Control and Prevention, the Mongolia-Nairobi Railway, and the Asia-Kyrgyzstan Railway continue to emerge.
Lisingi, Director of the Energy, Infrastructure and Services Division of the United Nations Economic Commission for Africa, said that the results of cooperation in jointly building the "Belt and Road" have brought many benefits to the construction of the African Free Trade Area and the process of economic integration. Dennis Mwaba, an engineering expert at the University of Zambia, said that China's help has further improved Africa's interconnection and cross-border and regional infrastructure construction, greatly promoted Africa's trade and investment facilitation and economic integration, and brought industrialization development opportunities to African countries.
Yang Baorong pointed out that as China and Africa enter a new stage of development, China's promotion of building a new development pattern will bring more opportunities for Africa's development. The accelerated construction of the African Continental Free Trade Area will promote African economic integration and regional economic integration and expand greater development space for China-Africa cooperation. In the future, the complementarity of China-Africa cooperation will be more prominent, the ability to jointly make up for development shortcomings will be stronger, and there will be more consensus on using development to address challenges in various fields. Under the new situation, China and Africa should seize the opportunities brought by the new round of technological revolution, promote industrial technology cooperation, innovate development methods, enhance the position of developing countries in the global economy and industrial division of labor, and benefit the Chinese and African people.