Compiled by Eamonn Ryan from the presentation transcript
At the 2024 GCCA Africa Cold Chain Conference held on August 23 in Cape Town, there was a panel discussion following the presentation by Donald MacKay, CEO of XA Global Trade Advisors, on market expansion and trading opportunities facilitated by the African Free Trade Agreement (AfCFTA). This is Part 4 of a five-part article.
The panel consisted of MacKay; Professor Lawrence Edwards, director of policy research in services and manufacturing at the University of Cape Town; and Martin Cameron, the managing director of Trade Research Advisory at North-West University.
Cameron brought up a significant concern about the proliferation of overlapping trade agreements in Africa, often referred to as the ‘spaghetti bowl’ effect. This phenomenon complicates trade relationships and can create barriers rather than facilitating smoother trade flows. They questioned whether existing agreements adequately address the underlying reasons why neighbouring countries struggle to trade with one another despite their potential for growth.
A response highlighted South Africa’s unique position within the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). It noted that while South Africa has a consistent approach to trade agreements, neighbouring countries often belong to multiple trade blocs, leading to discrepancies in rules of origin and trade regulations. This inconsistency can hinder the establishment of regional value chains, as countries face different requirements depending on their trading partners.
The discussions at the conference underscored the complexities of fostering intra-African trade under AfCFTA. As participants acknowledged, while there is tremendous potential for economic growth, addressing the underlying infrastructure challenges, harmonising trade regulations, and simplifying rules of origin will be critical for realising the agreement’s goals. Stakeholders must focus on building a cohesive framework that supports regional cooperation and development, ultimately paving the way for a more integrated African economy.
A significant point raised was the ease of signing trade agreements compared to the complexities of implementing them. As trade dynamics shift, industries may resist changes that threaten their viability. AfCFTA has the potential to streamline trade by creating a unified set of rules of origin, reducing the existing multiplicity of agreements. This could allow businesses to choose between static rules under existing trade agreements or the new AfCFTA rules, potentially simplifying the trading landscape.
Edwards emphasised the importance of institutional frameworks for effective dispute resolution and the enforcement of agreements. Currently, the fragmented state-to-state negotiation structure risks undermining the objectives of the Trade Facilitation Agreement (TFA) and other critical initiatives. A call for a more robust Africa-wide institutional framework was made to ensure that disputes can be effectively managed and that trade facilitation measures are adequately implemented.