The mandate of the NG-AfCFTA (National Action Committee) is to: Coordinate the activities of MDAs, the private sector and other stakeholders to successfully execute the AfCFTA readiness interventions identified in the Impact and Readiness Assessment Report and any other trade policy measures or intervention that may be required to prepare Nigeria to take full advantage of AfCFTA opportunities while safeguarding her economy from the potential negative impact.
The goals of this mandate are broken down into Continental / Domestic.
Regional / Continental Readiness;
- Implement safeguards in the AfCFTA Phase I Agreements
- Facilitate ratification of Phase I Agreement;
- Champion programs to resolve the critical continental level challenges
- Concluding ongoing trade reforms programs at ECOWAS (e.g. adoption of a common trade policy
Domestic Readiness
- Facilitate productivity and production capacity enhancement programs on priority products and services.
- Grow the export trade capabilities of Nigerian businesses.
- Facilitate improvements in trade-related infrastructure especially, power, road and port infrastructure.
- improve trade environment including trade facilitation, ease of doing business.
- Improve coordination between trade, fiscal and monetary policies.
- Facilitate enforcement of domestic and international trade rules.
- Facilitate amendment of Acts and enacting new bills as may be required
The implementation of the agreement is broken down into stages.
Stage 1: Covering Trade in Goods & Services
Stage 2: Covering Intellectual Property, Competition Policy & Investment
The negotiations are in two phases:
Phase 1: Liberalization of Goods and Services covering three main protocols: Protocol on Trade in Goods, Protocol on Trade and Services, and Protocol on the Settlement of Disputes.
Phase 2: Regulatory Trade issues that take place “behind the border” these include; the Protocol on Competition Policy, Protocol on Intellectual Property, and Protocol on Investment.
In furtherance to Phase 1 of the agreement, Nigeria has signed the agreement and is now assessing the implementation requirements to support ratification. Still on-going within the AfCFTA is the negotiation for a schedule of tariff concessions for trade in goods, schedule of specific commitment for trade in services and product-specific rules of origin schedule. Following this, the process for the domestication of the agreement will be next.
PROTOCOLS ON TRADE IN GOODS
The Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Property Rights, and Competition Policy, as well as Dispute Settlement, form an integral part of the Agreement.
The Protocols on Trade in Goods and Trade-in Services each have several Annexes covering substantive disciplines.
Trade-in Goods and Trade in Services are being negotiated in Phase 1, with negotiations on some issues (e.g., tariff concessions, rules of origin for goods and schedules of specific commitments for services) still on-going.
Phase 2 of the negotiations will cover Investment, Competition Policy, and Intellectual Property Rights.
Protocol on trade in goods will ensure:
Elimination of duties and quantitative restrictions on imports
- Imports shall be treated no less favourably than domestic products
- Elimination of non-tariff barriers
- Cooperation of customs authorities
- Trade facilitation and transit
- Trade remedies, protections for infant industries and general exceptions
- Cooperation over product standards and regulations
- Technical assistance, capacity-building, and cooperation
PROTOCOLS ON TRADE IN SERVICE
It may be beneficial to explain what services are. Trade principally comprises goods, services, and agricultural products, and services are anything that is not goods (goods, including both agricultural and industrial products). Intangible (or invisible) trade also covers broader items such as foreign direct investment (which can relate to goods as well as services), intellectual property rights, and royalties (which are received as exports from selling a country’s services abroad). The trade-in services agenda is a particularly important one for Nigeria. Services such as communication, transport, and financial services are inputs into all economic activities. Services are essential to facilitate trade across borders, crucial to competitiveness in agriculture and manufacturing, and in fact, in all economic activities. Very importantly, financial, communication, transport, and other services are fundamental to structural economic transformation as well as indispensable in delivering healthcare, education, and other social services to promote inclusive and sustainable development.
Protocol on trade in services will ensure:
- Transparency of service regulations
- Mutual recognition of standards, licensing and certification of services suppliers
- Progressive liberalization of services sectors
- Service suppliers shall be treated no less favourably than domestic suppliers in liberalized sectors
- Provision for general and a security exception
Trade Remedies
RULES OF ORIGIN
The core premise of continental integration is to create more African value and jobs by enhancing African businesses’ access to cross-regional markets.
Rules of Origin are necessarily passports for goods that identify and guarantee that goods are made in Africa. Rules of origin provisions govern the identification and conditions under which a product can be traded duty-free across the AfCFTA region.
The rules of origin are essential because they determine what goods are allowed under the agreement’s terms. The rules of origin laws seek to unify the tariff requirements and modality rates across African states’ economic communities.
Creating one common free trade area will unify customs requirements across Africa, thereby making trade cost-effective and seamless.
A ‘common free trade area’ refers to a group of countries with an agreement that allows goods to be moved, bought, or sold between them very quickly. Most free trade areas are considered trade blocs because the trade barriers such as policies on product regulation, freedom of movement, etc. are removed to facilitate a more effortless flow of goods, services, and people within the ‘free trade agreement area.’
Put in theory, on the start date of the AfCFTA, one could send a shirt from Nigeria to Ghana. Ghanaian customs authorities get notified that the shirt is made in Nigeria via its passport (rules of origin).
Before the operational start date, a schedule of items allowed concession under the agreement gets exchanged between customs unions. It is expected that a good rule of origin should safeguard against the smuggling of goods, sub-standard products, and transshipment.
Rules of origin works by determining how much of the material in an item is made in Africa. Thresholds in the determination of the originating status of goods in the AfCFTA rules of origin shows as follows:
- Some State Parties would calculate the Value of Non-Originating Materials (VNoM) as a percentage of the Ex-Works Price of a product using FOB values of non-originating materials while others would use the Cost of Insurance and Freight values
- The difference in (1.) above would be as a result of the interpretation of the definitions of “Value of Materials” and “Customs Value” used in Annex 2 on Rules of Origin
- he WTO Agreement on Customs Valuation gives options for Members to determine their own Customs Value;
- The “Customs Value” for purposes of Annex 2 on Rules of Origin would be determined in line with the existing national laws of a State Party since there was no common base contained in Annex 2 on Rules of Origin; and
- The location of a State Party on the continent from that of the Third-Party suppliers of non-originating materials coupled with being a coastal or landlocked country would disadvantage products of some AFCFTA State Parties from fulfilling the AfCFTA Ad Valorem Rules of Origin.
The agreement document from the summit proposes thresholds to understand that the FOB values of non-originating materials are used to calculate these thresholds.
AfCFTA: Appendix IV, Annex 2 on Rules of Origin Summit; on the implications of Cost Insurance and Freight (CIF) and Free on Board (FOB)
ANTI-DUMPING / COUNTERVAILING MEASURES
Dumping is defined as the selling of goods in quantity at below market price. When a country lowers export prices to gain market share a result, it can often destroy the trading partner’s industry. For a country like Nigeria, dumping could destroy infant industries.
AD (Anti – Dumping) measures provide protection against dumped imports. Dumping involves the selling of goods below their “normal value”. When dumping causes or threatens to cause material injury to a domestic industry, AD duties may be imposed. (Anti –Dumping rules regulate anti-dumping measures, not the practice of dumping.).
What does the AfCFTA say about dumping:
Article 17 of on Anti-Dumping and Countervailing Measures
‘’State Parties may, with respect to goods traded under the provisions of this Annex, apply anti-dumping, countervailing and safeguard measures as provided for in Articles –17 – 19 of the Protocol on Trade in Goods, this Annex and the AfCFTA Guidelines in accordance with relevant WTO Agreements.’’
Article 18 on Global Safeguard Measures
‘’State Parties confirm their rights and obligations under Article XIX of the GATT 1994 and the WTO Agreement on Safeguards’’
Current challenges in Nigeria on the issue:
- Lack of Efficiency in tracking systems to identify dumped items in Nigeria.
- Bilateral agreements with the European Union and other nations by some African countries brings an increased risk of unregulated dumping from Europe
How is the issue of dumping managed currently?
- Improved intelligence gathering, physical inspection to establish true origin of the product and/or validation through granting authority.
- Application of Risk Management System.
- Adherence and steady implementation of the Agreement on Customs Valuation (ACV) and three core customs procedures.
- New Seme border control centre aimed towards cooperation.
- In the case of smuggled vehicles, End-User control mechanism is being used by Nigeria Customs.
Proposed solutions to prepare Nigeria for the agreement:
- Identifying which countries in Africa have standing bilateral trade agreements with countries not subject to AfCFTA agreements as a potential risk of dumping
- Creating a database of items that make its way to Nigeria tracking by volumes which countries record the highest item numbers
- Organizing trade delegation visit to African countries under the agreements to understand what each country produces for export and in what volumes for ease of tracking
With the elimination of the trade barriers and the continuous engagement and cooperation that will ensue with the implementation of AfCFTA on trade issues between all the regional Customs Departments, traders across Nigeria will find it easier to export their goods within the continent.