Compliance to Rules-of-Origin requirements the most restrictive aspect of AfCFTA – Report
African businesses on the Continent have identified compliance to requirements of the Rules-of-Origin in trading under the African Continental Free Trade Area (AfCFTA) as the most restrictive part of the entire trade pact.
According to the AfCFTA Country Business Index Report by the United Nations Economic Commission for Africa, the negative views of African businesses with regards to the Rules-of-Origin, is the result of the difficulty of conforming to the rules which are onerous particularly for informal traders and women-owned businesses.
In view of this, the United Nations Economic Commission for Africa believes a simplified Rules-of-Origin for trading under the AfCFTA will engender compliance to the Rules-of-Origin among African businesses, alleviate the negative perceptions about the rules and enhance cross-border trade.
“Complying with the rules-of-origin requirements of a free trade agreement was perceived as the most restrictive aspect of trade. This can partly be explained by the difficulty of conforming to the rules, which can be particularly onerous for informal traders and women-owned businesses and need to be simplified.
“In terms of using existing African free trade agreements, the dimensions for which firms in all the countries had the least positive perceptions were the ease of use of rules of origin and access to information on those rules. This shows that, although several regional free trade agreements have existed for many years, their use by the private sector can be hampered by laborious and overly complicated administrative burdens, which make them expensive to use.
“Simplified rules of origin could increase the use of existing agreements and allow deeper value-chain integration to develop across borders,” states the report.
Rules of Origin (RoO) are legal provisions used to determine the nationality of a product in the context of international trade.
Within a preferential trade area such as the AfCFTA, the RoO specify the conditions under which a product traded between the parties to the agreement can claim local ‘economic’ origin status and therefore benefit from the preferences offered by the AfCFTA.
The AfCFTA follows a general approach to RoO that is similar to the one used in various regional (REC) trade areas, the EU EPAs, and many others. Preferences are available only to products where it can be demonstrated that they are of the economic origin of one or more State Parties of the AfCFTA.
Broadly speaking, this approach requires that products are wholly produced in an AfCFTA State, or where non-originating inputs are used, that these are substantially transformed within the AfCFTA State Party (or Parties, under the cumulation provisions).
The African Continental Free Trade Area Country Business Index is the first comprehensive tool based on a robust methodological framework in which data are collected in a way that allows businesses to express their views on implementation of the Area.
The Index differs from other integration indices, since it is informed entirely by private-sector perceptions, not by secondary data, making it truly representative of African business.
A key focus of the Index is to show how the business sector perceives trade under the free trade agreements that are already in force across African countries.
Phase 1 of the AfCFTA Country Business Index Report was conducted in Cameroon and Zambia.
The present report [second phase] includes results from seven countries namely Angola, Côte d’Ivoire, Gabon, Kenya, Namibia, Nigeria and South Africa.
In the third phase, the Index will be rolled out in the Democratic Republic of the Congo, Egypt, Morocco, Rwanda, Senegal and Tunisia.
