Tough negotiations are happening behind the scenes between African governments to hammer out differences in their localisation and industrial protection policies in respect of the aims of the Africa Continental Free Trade Area (AfCFTA), which seeks to liberalise trade between the countries.

This was according to Trudi Hartzenberg, an executive director of the Tralac Law Centre, who spoke about the imminent commencement of inter-continental trade at the Eastern Cape Export Symposium yesterday.

Hartzenberg said the AfCFTA was a “very ambitious” trade agreement between 55 African countries that would not supplant existing agreements such as SADC and the SA Customs Union. .

She said a pilot implementation phase was set to launch on October 1 between eight countries – Kenya, Tanzania, Tunisia, Cameroon, Egypt, Mauritius, Rwanda and Ghana – that was aimed at showing other countries still negotiating their positions in the AfCFTA that the proposed free trade agreement would work.

She said the problem was that almost every country had its own industrial protection and localisation policies, including Special Economic Zones, but in the context of the proposed liberalised trading regimes of the AfCFTA some countries might argue that these concessions unfairly pitted the industries and companies of some countries against their counterparts in other African countries.

She said these differences were exacerbated by the fact the 16 of the African countries were landlocked and there was a wide gap of levels of development between the countries.

She said the AfCFTA came into commercial effect on May 31, 2021, but no trade had yet taken place because of the negotiations surrounding proposed tariff changes and rules of origin for cross-border trade.

She said only a limited number of products would start trading under the new regime in the eight countries from October 1.

Dr Clive Vinti, an associate at XA International Trade Advisers, said the South African government needed to specify more clearly what it meant by its localisation policies, such as did it pertain to products being made locally, or locally sourced raw materials being used in product manufacture, or percentages of raw materials used.

He said some aspects of localisation policies already did not comply with the country’s World Trade Organisation commitments.

Other questions were how does localisation get enforced, given that one could not force private companies to make products.

Also, while the Department of Trade, Industry and Competition (Dtic) did specify, for government procurement purposes, which products should be locally sourced.

There was no input in these decisions by the private sector. In addition, the power on decisions of trade had also shifted recently from the Dtic to the National Treasury, which could veto decisions by the Dtic on the basis of its impact on the fiscus.

AE News