SADC’s biggest economy (US$408 Billion) has started its preferential trade under the auspices of the African Continental Free Trade Area (AfCFTA). What this signifies is more than just a ceremonial move by South Africa but what seems to be a proper commitment to the AfCFTA because South Africa is the first Southern African Customs Union (SACU) Country to start shipping products under the AfCFTA rules.
What are the AfCFTA Trade Protocol?
The Protocol on Trade in Goods pertains to the trade of physical goods and the need to facilitate their transfer across the African Union which deals with the elimination of both financial (tariff barriers) and non-financial impediments to trade or non-tariff barriers. A simple average for the former was at about 10.83% across all products in 2021 for Sub-Saharan Africa. For the latter, it would be a range of issues from import quotas, customs delays, regulatory barriers and other non-tariff-related impediments that stop the flow of goods through borders.
What has been the sticking point, relatively, for the AfCFTA Trade Protocol are the definitions of critical terms which are Rules of Origin (RoO). However, the AfCFTA released a manual to map out what constitutes a product originating from a country.
An example of how this works is if one country imports gems from another country and polishes them. That process of processing depending on how involved or substantial it is, could mean those polished gems can be seen as products originating from the country that imported them.
The Impact of South Africa on Africa
South African President Cyril Ramaphosa officiated the commencement of trade in the Port of Durban (KZN) and how to properly caption this is by looking at the bilateral trade of South Africa with the rest of the African Countries it does trade with.
For South Africa, this is great because they are in a very capable position to benefit further from the AfCFTA’s policies given that it is a manufacturing powerhouse and is blessed with shorelines and ports on its eastern, southern and western sides.
