African countries are battling to navigate non-tariff barriers as the continent opens her free trade area. But, an innovative online tool by the United Nations Conference on Trade and Development (UNCTAD) and the African Union (AU) is set to help them overcome the challenge.
Though the ink on the African Continental Free Trade Area (AfCFTA) agreement has dried and the players ready to trade, a large and complicated hurdle still remains, the Non-Tariff Barriers (NTBs).
NTBs are a wide range of restrictive regulations and procedures, other than tariffs, that make trade difficult and/or costly.
They are one of the main roadblocks to trade on the African continent – much more than tariffs and include customs clearance delays, restrictive licensing processes, certification challenges and rules of origin.
UNCTAD Secretary-General Mukhisa Kituyi said, ‘’the time and costs of moving goods in Africa will be reduced if there is political willingness to fight non-tariff barriers.’’
As UNCTAD and the AU are taking on these barriers through an online tool that aims to facilitate quicker and more efficient trade, Niger’s President, Issoufou Mahamadou, and Kituyi presented the new tradebarriers.africa platform to the AU at the union’s 12th Extraordinary Summit in Niamey, Niger on July 7.
Mahamadou said. ‘’looking at the map of Africa, one has a sad feeling of facing a broken mirror. Our generation has the historic responsibility of breaking these borders. The AfCFTA will benefit all Africans.’’
The AfCFTA non-tariff barriers online mechanism is designed to improve intra-African trade by offering a site for reporting and resolving non-tariff barriers experienced by businesses, particularly small ones, and those owned by women and youth.
Lowering and managing non-tariff barriers better will also help maximize the anticipated benefits of the free trade area.
A recent UNCTAD report shows that African countries could gain $20 billion each year by tackling the trade-distorting effects of non-tariff measures at the continental level – way more than they could pick up by eliminating tariffs.
This gain and a need to curb the costs of NTBs, are part of the reason why UNCTAD and the African Union worked together to develop the new mechanism.
It’s a boon for the AfCFTA because traders and companies can use it to:
· Report barriers to their day-to-day operations on the website
· Submit complaints using an offline short-messaging-service feature
· Receive up-to-date information on NTB resolution processes
UNCTAD economist Christian Knebel said, ‘’Buy-in and ownership by the AfCFTA member states is the main reason this mechanism will work. Over several negotiating rounds, the online tool was reviewed and approved by technical experts, chief negotiators, senior trade officials, ministers of trade and finally launched by heads of state’’, adding, ‘’there was a strong commitment to implementing the mechanism and achieving inclusiveness for small traders.’’
While the tool will be managed by the AU through the AfCFTA Secretariat, to be based in Ghana, an NTB coordination unit in the secretariat will manage the system and facilitate the resolution of reported barriers between countries.
Governments have committed to appointing national focal points to help resolve NTBs.
These officials are mandated to receive NTB complaints in real-time and resolve them within given deadlines to enhance and facilitate intra-Africa trade.
‘’This tool will also impact ordinary lives, opening up earning opportunities for the informal sector and small and medium enterprises, which will help to create jobs and, importantly, alleviate poverty’’, Kituyi said.
Many expect the tool to help African traders capitalise on their new free trade area, a fast-growing $2.00 trillion market of 1.2 billion people.