Discordant Tunes over CFTA Agreement
Obinna Chima
The Federal Executive Council (FEC) last week resolved to bid for the location of headquarters of Continental Free Trade Area (CFTA), even as uncertainty surrounds the decision by President Muhammadu Buhari to abruptly cancel his trip to join other African heads of state and governments in Kigali, Rwanda, this week, to sign agreement for the take-off of the policy.
The Minister of Industry, Trade and investment, Dr. Okechukwu Enelamah,who disclosed this, said Nigeria’s trade capacity which had hitherto been between 13 and 15 per cent, would be boosted by the framework.
According to him, the decision to establish CFTA was the was taken in 2012 by all Heads of State and Government of the African Union (AU) at their 18th ordinary session held in Addis Ababa, describing it as the first step in the implementation of AU Agenda 2063 meant to build an integrated, prosperous and peaceful Africa.
However, some groups in the country have expressed divergent views about the move by the federal government.
While some believe that the policy would significantly boost trade in the country, considering Nigeria’s market share in the continent, some others have opposed the policy, saying the federal government did not make any consultation before endorsing the agreement.
The CFTA The decision to establish the CFTA was taken in 2012 by all Heads of State and Government of the African Union (AU) at their 18th Ordinary Session. The CFTA is the first step in the implementation of AU Agenda 2063: the “Vision” for an integrated, prosperous and peaceful Africa. The Actual Negotiations for the CFTA were launched at the AU Johannesburg Summit in 2015.
The Negotiations are in two Stages: Stage 1 -covering Trade in Goods and Services; and Stage 2-covering intellectual property, competition policy and investment.
When signed, the CFTA has been predicted to be the biggest trade agreement bringing together 55 African countries second to the World Trade Organisation (WTO) that was signed in 1994. The CFTA will be a market of about 1.3 billion people currently and is expected to be about two billion by 2025.
Some of the objectives of the CFTA include to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union; expand intra African trade through better harmonisation and coordination of trade liberalisation and facilitation regimes and instruments across RECs and across Africa in general; resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes; as well as enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.
Divergent Views To the leadership of the Nigeria Labour Congress (NLC), President Muhammadu Buhari should not be cajoled into signing the proposed agreement.
NLC President, Ayuba Wabba, who stated this, argued that consultation with relevant stakeholders for possible impact assessment of the policy on the Nigerian economy was never carried out.
According to Wabba, the policy would open the country’s seaports, airports and other businesses to unbridled foreign interference, never before witnessed in the history of the country.
He maintained that the policy initiative would make it possible for a foreign airline to directly do local scheduled flights without employing Nigerians.
“Owing to the sensitivity of this policy or its possible fall-outs on our economy, those driving it were directed to consult the Nigerian local business community and organised labour. However, we at the organised labour were not consulted.
“Information reaching us suggests that the relevant business community has not been consulted. We at the Nigeria Labour Congress are shocked by the sheer impunity or blatant lack of consultation in the process that has led to this.
“We are more worried by the probable outcome of this policy initiative if it is given life because of its crippling effect on the local businesses and attendant effects on jobs. “We find it confounding that at a time nations, including the United States are resorting to protectionism in defence of their local businesses and protection of jobs, we have the audacity to want to fling open our doors, windows and roof tops. “We have no doubt this policy initiative will spell the death knell of the Nigerian economy.
“Accordingly, we urge Mr. President not to sign this agreement either in Kigali or anywhere.
“We believe our national interest is at stake and nothing should be done to compromise this,” Wabba warned. According to the NLC president, the proposed CFTA, instead of uniting Africa, would only divide the continent more, adding that rather than enrich Africa will only pauperise it the more. But the Minister of Foreign Affairs, Geofrey Onyeama, argued that the policy was conceived in line with the vision of African heads of state and government to promote free movement and trade in Africa as well as to remove barriers to trade.
He said the development would be resourceful for Nigeria, noting that the country which is made up of 180 million population ought to be the economic engine of the continent that the policy can help it to achieve.
According to further information provided by the presidency on the policy, with the advent of CFTA, the continent said to be a market of 1.2 billion Africans with a combined gross domestic product (GDP) of $2.5 trillion is expected to witness an increase in intra-African trade by up to 52.3 per cent. Furthermore, the presidency said all AU countries would share in the welfare gains estimated at about 2.64 per cent of continental GDP of $65 billion in 2018 and consequently expand the size of Africa’s economy to $29 trillion by 2050 as estimated by the United Nations Economic Commission for Africa.
Specific gains listed to accrue to Nigeria from the policy include: expansion of market access for Nigeria’s exporters of goods and services, growth and job creation; elimination of barriers against Nigeria’s products and provide a dispute settlement mechanism for stopping the hostile and discriminatory treatment directed against Nigerian natural and corporate business persons in other African countries.
Asked whether enough consultations were carried out with the Nigerian business community before Nigeria resolved to sign CFTA policy, Enelamah said: “The president has constituted a negotiating committee that included organised private sector and business like Manufacturers Association of Nigeria (MAN) and Nigeria Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA). They have been working with us.
“However, the level of consultation needs to be much wider and FEC also pointed that out.
Nevertheless, the airline operators and investors have urged the federal government to exercise caution in signing and implementing a free trade policy with other African countries.
The airline operators, under the aegis of Airline Operators of Nigeria (AON), are wary of alleged haste by the federal government in signing the treaty without first allowing experts, investors, industrialists and operators to review the comparative gains and implications of such treaty.
The Chairman of AON, Captain Nogie Meggison, noted that without due diligence “that puts Nigeria first”, the free trade initiative would go the way of the Single African Air Transport Market (SAATM) recently signed with 22 African countries “without plans on how it will benefit Nigeria.”
He warned that Nigeria could not afford to rush into signing the CFTA treaty allegedly aimed at giving unfettered access into the Nigerian market, adding that the treaty is more likely to erode the efforts of the government at diversifying the economy and reverse the gains of the present administration in reviving the economy out of recession
According to Meggison, “The basic issue of visa free movement of people and trade is an integral aspect of SAATM and CFTA that will go a long way to determine the fairness of the project.
“Sadly, it is a well-known fact that it is a herculean task for Nigerians to get visas to travel to many African countries. Nigerians require over 34 visas to travel within Africa alone. This is an issue that needs to be addressed first before the full implementation of SAATM or the signing of CFTA.
“For instance, a country like Ethiopia, which is a strong pusher of this treaty, makes 45 per cent of its income from Nigeria. Yet, it has not employed Nigerians as aircrew or ground technical members of staff.”
Besides, Secretary of the association, Ewos Iroro, noted that while the initiative is a laudable idea and could be considered as a step in the right direction, the timing is not right as there are several unresolved issues. Therefore, as Calestous Juma and Francis Mangeni, warned in report they co-authored, the trade agreement needs to be carefully thought out, particularly given that Africa is starting with a low intra-regional trade of 15 per cent compared to 19 per cent in Latin America, 51 per centin Asia and 72 per cent for Europe. They stressed that there is the risk that rushed negotiations could result in an agreement with too many exceptions to cover protected industries. This could include using non-tariff barriers – like safety measures – to protect local industries. A range of African countries use non-tariff barriers to curb imports of goods such as maize, milk, sugar, food oil products, and steel and iron.
Sensitive and excluded products – like sugar and dairy products – might in some cases cover up to 600 tariff lines (product codes used at the national level). But these exceptions should be used sparingly to enable domestic industries to access the larger regional and global markets needed for their growth.
In addition, the trade agreement needs to address the effects it may have on existing industries, environment, peace and security. It also needs to provide the policy space needed for governments to promote social policies such as job creation that could provide new performance standard for industries. Such policies should also balance between social goals and the need to be competitive on the global market. Concerns over the expansion of foreign imports, rather than regional trade integration, also needs to be carefully assessed to avoid the free trade area becoming a conduit for imports as this could undermine Africa’s goals to increase its industrial and trade capacity.