African Union Aims for Continental Free Trade Area by 2017

Plans to establish a pan-African trade pact are well underway, as part of a broader effort to increase intra-regional trade within the continent. However, these plans also hit an early roadblock during a week-long meeting of African leaders in Addis Ababa, Ethiopia, after various participants questioned such an agreement’s feasibility.

Leaders at the African Union Summit, which took place from 23 to 30 January 2012 under the theme ‘boosting intra-African trade’, endorsed a plan to set up a Continental Free Trade Area (CFTA) by 2017. The proposed CFTA would be a key component of the AU’s strategy to boost trade within the region by at least 25-30 percent in the next decade.

The “Declaration on boosting intra-African trade and the establishment of a continental free trade area” calls on member states, regional economic communities (RECs), and development partners to adopt the necessary measures toward the effective implementation of an Action Plan - a document produced during the AU trade ministers’ meeting in December 2011 detailing priority action clusters to address obstacles to increasing intra-African trade.

Intra-African trade currently stands at 12 percent of total trade, compared to 60 percent for Europe, 40 percent for North America, and 30 percent for ASEAN, according to statistics cited by the WTO.

Enhancing this trade - such as through a large continent-wide trade deal - and deepening market integration “can contribute significantly to sustainable economic growth, employment generation, poverty reduction, inflow of foreign direct investment, industrial development, and better integration of the continent into the global economy,” the AU declaration said.

Along similar lines, Nigerian President Goodluck Jonathan said on Sunday that the 2017 target date for launching the proposed Continental Free Trade Area was unrealistic. “There are no quick-fixes to integration,” he said.

Meanwhile, WTO Director-General Pascal Lamy supported the initiative, stating that “there is absolutely no contradiction between accelerating regional integration and deepening the multilateral trading system” and encouraging leaders to “operationalise” intra-African trade.

“Creating a platform premised on a continental area free of restrictive trade barriers can create an environment receptive to the growth of these regional and global supply networks in Africa,” Lamy added.