On May 16, 1963, the forty-seven members of the General Agreement on Tariffs and Trade (Gatt) began preparing what might be called the Kennedy Round. This set a precedent by increasing tariff reductions between countries, which helped mobilize the most powerful nations of the day to increase world trade.
With few exceptions, Africa was absent from this call. At the same time, it was busy establishing its first continental institution, the Organization of African Unity (OAU), in Addis Ababa.
African Union Agenda 2063
After tireless efforts to bring together the various ideological groups of new independent countries, the Ethiopian Emperor Haile Selassie was more concerned about how Africa would place itself politically, probably not noting that others were working to establish the new world trade order. His major concerns were not so far from those of today.
In his speech at the inauguration of the OAU, he declared: “Some people claim that African unity is impossible […]. Around us, there is no lack of doubts and pessimism […]. Those who speak of Africa, its future and its place in the twentieth century do so on sepulchral tones. They predict dissensions, disintegration among Africans, fratricidal struggles and chaos for our continent. Let’s confuse them and, by our actions, throw them into confusion. “
Sixty-five years later, the Continental Free Trade Area (Zlec) , a key element of the ambitious Agenda 2063 of the African Union, will finally see the light of day. Kigali experienced a rare moment of history on March 21 when the project was ratified by the African presidents.
The marginalization of Africa in world trade is old and has not changed much. It is appalling, but its share is still below 3%, despite a billion more inhabitants than in 1963. The situation has not changed: weak skills, productivity and economic activity. Yet something fundamental can change with Zlec.
Latecomers generally face all kinds of difficulties. In terms of trade, the best places are already occupied, the rules are more stringent, financing complex, intellectual property concentrated, global value chains, logistics chained, universalised standards and asymmetric rules. Whether we like it or not, Africa is late on many points. It missed the structural transformation, which saw the value produced move from agriculture to the industrial sector. Finding business opportunities has become even more difficult for latecomers. They must travel the distance of a marathon at the speed of the best sprinters. Can Zlec help change the situation in Africa?
When the continent negotiates with one voice, it weighs nearly 3 trillion dollars (2.5 trillion euros) of production – it’s not the same as 55 entities that shout. The establishment of free zones makes it possible to establish new rules of engagement by questioning past agreements, or the absence of any agreements, with our main trading partners, such as the European Union, the United States, the United States, Japan or China.
The voice of Africa in the WTO will be equal to that of India in size and size. And the negotiators know that India has given everyone a hard time, when African voices, heard separately, are simply ignored.
Modification of commercial structures
A large non-tariff zone is becoming attractive for foreign direct investment, but also for small and medium-sized enterprises that can enter cross-border or sub-regional value chains away from global competition.
Countries with larger infrastructure or industrial potential can provide upstream and downstream linkages that should allow at least a longer period of time to employ cheap labor global phenomenon of robotization and automated systems in the industry.
Africa’s business models do not lie. Exports of manufactures on the continent have a higher value-added content than raw materials exports. The reason why this nonsense has lasted so long is partly explained by the fact that raw materials have remained at the center of formal economic activity since colonial times, even though the growth of services over the last decade has started to change the game. However, this has not significantly changed the commercial structures. With Zlec, it will finally be cheaper to develop exports between African countries than outside the continent.
Customs efficiency, the adoption of common standards and the resulting simplification will change the way markets work for the benefit of all economic agents. The open sky policy, already signed by 23 countries in the aviation sector , and the progress made in implementing the principles of free movement of citizens across the continent complete this scheme.
Intra-African trade already accounts for 20% of the continent’s total trade (and not 12% as most still believe) and is expected to increase by 52% within ten years.
Some skeptics question the need to move to free trade at a time when some states advocate a return to protectionism. Paradoxically, with few exceptions, if African countries are poorly integrated into the world economy, they have been very liberal in their trade.
Zlec can therefore restore a level playing field by introducing a certain degree of internal protection for African productions. This will counterbalance the dominant role of some countries in value chains and intellectual property.
The advantage of latecomers is to be able to skip steps. Zlec can significantly boost intra-African trade provided it is implemented with determination.
In her recent spectacular road movie Frontières, Burkina Faso director Apolline Traoré talks about the meeting of three women – Adjara, Emma and Sali – during a bus trip from Dakar to Lagos via Bamako, Cotonou and Ouagadougou. The trip reveals a true race of combatants. They suffer engine failures, face road cutters and theft.
But their worst nightmare is crossing borders, where they are exposed to corruption, violence and trafficking. And yet, the ECOWAS and its area of free movement, have existed for a long time. Sixty-five years after Selassie’s call for “sepulchral tones”, we need more than goodwill.