Africa Waits as Virus Sets Back ‘Game-Changer’ Trade Pact - BLOOMBERG
By Prinesha Naidoo
Even before the coronavirus pandemic, intra-African trade was set back by border bureaucracy, long delays at frontiers and countless regulations that differ from country to country. Now, the outbreak is delaying the start of a deal that is meant to change all that.
Although the African Continental Free Trade Area legally entered into force last year, commerce that was due to start on July 1 has been postponed as the virus put the brakes on negotiations on the protocol for trade in goods, including tariff concessions.
Still, the delay hasn’t thwarted hopes for what’s set to be the world’s biggest free-trade zone by area, with a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion when fully operational in 2030.
The African Union that’s leading the continent-wide initiative says it offers the best platform the accelerate regional integration and address trade and logistics challenges highlighted by the pandemic.
The establishment of a duty-free zone is “defragmenting Africa to put behind us the history of small uncompetitive markets that have thwarted our efforts to achieve inclusive sustainable development for the benefit of our people,” Chairman Cyril Ramaphosa, who is also South Africa’s president, said when commemorating Africa Integration Day last month.
While the continent is likely to lose $37 billion to $79 billion in output due to the virus this year, the pact could offset its negative impact on regional trade and value chains by reducing trade costs over the short term, according to the World Bank.
It could bolster the region’s income by $450 billion and lift 30 million people out of extreme poverty by 2035, if accompanied by significant policy reforms and trade-facilitation measures, the Washington-based lender said.
The only problem? Negotiations have yet to be completed and a new date for first trade under the agreement still hasn’t been set.
–Prinesha Naidoo in Johannesburg
The deficit in U.S. trade of goods and services narrowed in June for the first time since February as exports jumped, though shipments remained well below pre-pandemic levels.The overall gap in goods and services trade narrowed to $50.7 billion, compared to the median estimate of $50.2 billion by a Bloomberg survey of economists, from a revised $54.8 billion in May.
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