How would an Africa-wide free trade agreement work for SA?

African Union (AU) heads of state are this week set to sign a declaration on the biggest trade agreement since the World Trade Organisation (WTO) was established.

Presidents, prime ministers, high-level officials and private-sector stakeholders are gathered at the 10th Extraordinary Summit of Heads of State and Government of the African Union (AU) in Kigali.

President Cyril Ramaphosa, International Relations Minister Lindiwe Sisulu and Trade and Industry Minister Rob Davies are in attendance.

Gugulethu Mhlungu spoke to analyst at the Institute for Security Studies (ISS) Liezel Louw Vaudran who explained what the African Continental Free Trade Area is.

The agreement is a framework agreement, so it really is the first of six phases that were in the Abuja road map toward a single trade zone, single currency, harmonisation of tariffs etc.

Liezel Louw Vaudran, analyst at the Institute for Security Studies

It's really just a political agreement to give some impetus to this continental free trade area.

Liezel Louw Vaudran, analyst at the Institute for Security Studies

Nigeria has refused to sign the declaration, with its Chief Trade Negotiator saying it was rejecting the agreement “in the national interest of a great and diverse country”.

There is that fear in Nigeria that if there is a free trade agreement then they will be completely flooded with consumer goods services from countries like South Africa.

Liezel Louw Vaudran, analyst at the Institute for Security Studies

Vaudran explains how the agreement will benefit South Africa and the rest of the continent.

South Africa is one of the winners of this continental free trade area because we are one of the most sophisticated industrialised economies, we are one of the biggest investors on the continent, we export a lot. So I think the feeling inside South Africa is very different from what Nigerans are feeling about it.

Liezel Louw Vaudran, analyst at the Institute for Security Studies

Economists say that if there is a continental free trade area that could boost trade up to 50%. It makes just so much more sense for African countries to trade with their neighbors then to be exporting raw materials to the EU, China and the US.

Liezel Louw Vaudran, analyst at the Institute for Security Studies

Click on the link below to listen to the full interview...


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