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Unifying Markets
It is time for China to consider launching negotiations with African countries and regional organizations on free trade agreements
By Zhu Weidong | NO. 15 APRIL 12, 2018
 

Chairman of the AU and Rwandan President Paul Kagame (left), President of Niger Mahamadou Issoufou center) and Chairperson of AU Commission Moussa Faki Mahamat unveils a plaque of the AfCFTA in Kigali, Rwanda on March 21. Forty-four African countries signed an agreement to establish the AfCFTA that day (XINHUA)

An agreement signed in Kigali, capital of Rwanda, has caught the world's attention. On March 21, a total of 44 African countries agreed to establish the African Continental Free Trade Area (AfCFTA), aimed at creating a single continental market for goods and services with free movement of businesses and investments. The agreement, signed at the 10th Extraordinary Session of the Assembly of the African Union (AU), will be submitted for ratification by state parties in accordance with their domestic laws.

At the press conference held after the extraordinary session, Mahamadou Issoufou, President of Niger and champion of the AfCFTA, noted that owing to the good relations between Africa and China, the continent can launch cooperation with China in this area.

The bilateral trade between China and Africa has seen rapid growth in recent years. China's customs statistics show that China-Africa trade reached $170 billion in 2017. China has been Africa's largest trade partner for eight years in a row since 2009. The Johannesburg Summit of the Forum on China-Africa Cooperation (FOCAC) held in late 2015 set out 10 China-Africa cooperation plans while China aims to increase the bilateral trade value to $400 billion by 2020. This means bilateral trade is set to more than double in the next two years.

In this context, China and African countries are facing historic opportunities in strengthening their trade relations, which can help improve integrated and globalized development on the continent. On the other hand, the trend of anti-globalization has emerged in the international community with rising trade protectionism. Thus, it is necessary for China to consider launching free trade agreement negotiations with African countries and regions.

Negotiation factor

It is of great significance for China and African countries and regions to sign free trade agreements through negotiations. First of all, this can help promote African integration, encourage development of globalization and realize common prosperity for both China and the African Continent. In recent years, China has been supporting African integration and promoting institutionalization of China-Africa trade for common prosperity. According to the second Africa policy paper issued by the Chinese Government in December 2015, "China will continue to support the development of the African Free Trade Zone and regional integration, and discuss the establishment of institutionalized trade arrangements with countries and regional organizations in Africa."

African integration is also a goal pursued by African countries in recent years. Fighting against corruption and promoting African integration were the two major themes of the 30th Ordinary Session of the AU Summit, which was held from January 22 to 29 in Addis Ababa, Ethiopia. The ordinary session also noted that establishing AfCFTA, promoting the establishment of a single African air transport market, and the free movement of persons and goods are the three major measures for realizing African integration. For this purpose, AU Commission Chairperson Moussa Faki Mahamat called for AU members to accelerate free trade agreement negotiations so as to promote sustainable development of Africa.

Second, China reaching free trade agreements with African countries and regional organizations can help further enhance the African market and promote transformation and upgrade of China-Africa trade cooperation. Currently, China's trade with African countries is all based on bilateral trade agreements, and China is yet to reach any comprehensive free trade agreements with any African country or regional organization. Free trade agreements between China and African countries and regional organizations can benefit both sides, helping Chinese products go into African markets and vice versa. Through institutional trade arrangements, China-Africa trade will be more balanced, stable and healthy. There are many regional organizations in Africa, such as the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). All these organizations have their own trade and investment policies for their members and broader markets. If China could reach free trade agreements with these regional organizations, both sides could greatly broaden their markets.

Third, reaching free trade agreements can help enhance China-Africa economic and trade relations and deepen cooperation between Africa and the rest of the world. The international community stresses the launching of investment and trade with African countries and regions through such economic and trade arrangements as free trade agreements. For instance, in recent years, the European Union (EU) launched a series of negotiations on economic partnership agreements with African regional organizations such as SADC, EAC, the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA). The agreements signed by the EU and EAC and SADC went into effect in June and October 2016, respectively. The EU and 16 members of ECOWAS and UEMOA have reached consensus on the contents of the economic partnership agreement. The United States also signed similar agreements with some regional organizations in Africa. These agreements stipulated detailed arrangements on market access, trade and related issues. Similarly, China should also launch free trade agreements with African countries and organizations so as to enhance cooperation between Africa and the rest of the world.

Unified market

Simultaneously, China can first choose some countries and regional organizations with sound economic conditions, promising market potentials and strong regional influences to launch the negotiations. In November 2016, China and Mauritius announced the launching of joint feasibility research on free trade negotiations, the first joint feasibility research on a free trade agreement ever launched by China and an African country. In November 2017, the two countries signed a memorandum of understanding, to officially launch negotiations on a free trade agreement.

While negotiating free trade agreements, China and African countries could set detailed and feasible stipulations on trade in goods, especially in areas of mutual concern such as tariff reduction and exemption, customs procedures, trade facilitation, intellectual property and dispute settlements. This can promote China-Africa trade.

In terms of regional organizations in Africa, China could first consider launching negotiations with the Southern Africa Customs Union, COMESA, ECOWAS and EAC. Currently, Africa is promoting a unified African market by encouraging trade within the continent. China can also consider launching free trade negotiations with the upcoming COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) and AfCFTA, so as to further expand China-Africa trade.

TFTA was agreed upon in June 2015 according to the free trade agreement signed by 26 heads of state and government in Africa. It will benefit 1 billion African people through trade facilitation, attracting foreign capital and unifying quality and standards of products and services. Tariffs will be eliminated in trade in goods between countries within the area.

TFTA is the key to establishing AfCFTA. The AU hopes to reduce tariffs, eliminate trade barriers, promote trade and investment development within the area, and realize free movement of commodities, services, capital and personnel within the area through AfCFTA construction so as to unify various economies in Africa into a single large market.

The Belt and Road Initiative has provided important opportunities for China-Africa economic and trade development. In September, the FOCAC Summit will be held in Beijing and new policies and measures promoting China-Africa cooperation will be raised to align the Belt and Road Initiative with the AU Agenda 2063. In this context, China and African countries and regional organizations are facing valuable opportunities and conditions to launch free trade agreement negotiations. These opportunities should be seized upon so as to upgrade China-Africa trade, encourage stable and healthy development of China-Africa economic and trade relations and promote the realization of a community with a shared future between China and Africa.

The author is a senior research fellow with the Institute of West-Asian and African Studies at the Chinese Academy of Social Sciences

Copyedited by Francisco Little

Comments to yulintao@bjreview.com

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