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About African Continental Free Trade Agreement

[39] In 2018, Washington launched Prosper Africa to coordinate U.S. government resources and increase business opportunities in Africa, with the goal of doubling reciprocal trade between the country and the continent. It is not yet known how this project, which in principle looks great, will be implemented and how quickly. Meanwhile, the official U.S. response to the AfCFTA has been, at best, ambivalent. Much to the chagrin of African leaders, the United States continues to negotiate a bilateral trade agreement with Kenya in hopes of developing a model that could be applied later to other African countries. These efforts are followed by a phase of declining trade between the United States and Africa: between 2014 and 2018, U.S. exports to Africa decreased by 32%, while exports from Africa to the United States decreased by 55% over the same period. Given that the EAC regional bloc is a customs union and therefore has a Common External Customs Tariff (TEC) without the other three member states having yet ratified the AfCFTA, the integrity of the TEC will be problematic.

Rules of origin can in principle limit this problem, but their liberal application will lead to higher overhead costs and increase the risk of trade diversion (thus diverting trade from a more efficient exporter to a less efficient exporter due to differences in tariffs). This could reduce the benefits of the AfCFTA. The greater the degree of harmonization of trade regimes within East Africa, the better, as it will facilitate deeper regional economic integration and pave the way for the creation of an Africa-wide customs union, as provided for in the AfCFTA agreement. . . .