The AfCFTA is a Lightning Rod for Regional Integration and Free Trade

This paper looks at the construction of tariff band structure and linear cut of the AfCFTA countries. AfCFTA symbols a different landmark on the road to deeper regional integration and the pursuit for well-built and prolonged growth, which the extensive nature will transform businesses especially small and medium-sized enterprises (SMEs), traders and consumers because of the removal of tariffs, and non-tariff barriers by 2025 for developing countries ,2030 for LDCs and 2045 for the six countries. The agreement commits countries to removing tariffs on 90 percent on inclusion list after 5 and 10 years for the non LDCs and LDCs in that order, while the remaining 10 percent of sensitive items to be phased out after 10 and 13 years for developing and non LDCs respectively on 7% for sensitive list and 3% for exclusion list. Thus the AfCFTA may make global trade regime either to become stronger or to remain under attack from a membership of 55 less one (Eritrea) highly diverse countries of Africa. Further, the AfCFTA aims to preserve existing regional economic communities as building blocs. With regard to disposition toward trade liberalization COMESA and SADC countries show much more likelihood and stand to liberalize faster than the ECCAS, UMA and ECOWAS countries. This can be done through an equal annual reduction of 20 percent to all tariffs above 5 percent over 5 years for the developing countries and 10 percent equal annual deductions for 10 years for LDCs.


Introduction
The world is now watching Africa for having demonstrated the most positive attitude to regional integration without political motives or mischief interpreted. We can't read any malice or behind the scene forces into the formation of the AfCFTA. They have opened up for Trade and Development as secondary to political or security goals and they will be used as a tool rather than a scheme of the uppermost, being driven by political will as a crucial component in the whole process without which, little progress will be made.
The stumbling block is whether the RECs who would have agreed to cut MFN tariffs prior to the AfCFTA will still agree to cut them after the AfCFTA was signed and if AU member can provoke nationalistic feelings of the 1960s. Of interest is the silent stumbling block which needs to be accommodated in the negotiations and after commencement of the AfCFTA in 2020 and that is the Rules of Origin requirements, special interest politics and the power of exporters and import-competitors who are the cause of trade. Nevertheless, their concerns are counteracted as tariffs come down reciprocally with the AfCFTA; since the import-competing sectors get smaller and less powerful in trade policy formulation. Similarly, as trade tariffs reduce, exports increase and political muscles also grow as the access to foreign markets increase. Thus the reciprocal liberalization will reshape the political-economic landscape inside each country in a way that makes the future liberalization stronger. On the other hand the rules of origin must be made straightforward, translucent, business welcoming, unsurprising and easy to get to.
On the pacing of the tariff reduction, some concerns could be raised that the AfCFTA is moving at a faster pace than her old regional trade blocs. On the political front, it can be observed that liberalization come 2020 may be relatively easier than the last two years of achieving full liberalization because the impact of revenue loss and flooding of cheap products from other countries will be felt. The sectors left to be liberalized at the later stages are either politically sensitive like agriculture or are highly protected in the past. Thus there would always be pressures for a delay or for extension or status quo of the protection on said sectors or others would want higher protection

Acceleration of the AfCFTA
AfCFTA remains a lightning rod for political opinions about regional integration, globalisation and free trade. The treaty which was to be entered into force by the AU members in December 2017 but put forward to march 2018 and Africa become the largest free market in the world. AU countries have agreed to remove tariffs on more than 90 percent of products within 5 and10 years. On that spirit AfCFTA will promote peace by promoting trade and investment, make life easier for poor majority Africans, build confidence in the continent, handle disputes constructively, raise incomes and stimulate economic growth, above all realize the spirit of envisioned Pan-Africanism and end discrimination implanted by outsiders among all participating countries.
The AU Heads of State and Government agreed to establish AfCFTA with the objective of increasing the region's competitive advantage with the world market. The AfCFTA must begin as a catalyst for efficiency, long-term competitiveness, expand intra-regional trade and give the AU consumers a variety of choices and better-quality consumer products. Of course, the necessary entry and exit take time, and indeed most liberalisations are phased in over many years. Six member countries were allowed reservation on the 85% instead of 90% liberalization but it's achievable though at a longer period than others. It is thus the time dimension that may lead to the uninterrupted, harmonized nature of the AfCFTA.
So, the setting of a quantitative target for the overall product and trade coverage of 85% and 90% for LDCs and non LDCs meet formally the WTO-compatibility test as well give the impression that Africa can do and is able to show the world that liberalization is the way under AfCFTA as well as an inducement to the REC members to undertake at least an equivalent degree of market opening internally.
The negotiations towards the establishment of this African mega-FTA were officially launched in June 2015 with the objective of concluding them by the end of 2017, but where eventually in Kigali march 2018. Seven meetings of the AfCFTA Negotiating Forum (AfCFTA-NF), the AfCFTA dedicated negotiating body, were held since then, with the last one in July in Niamey, Niger 2019.
In the nutshell, Africa having been ignored for so many years, now it is one of the fastest-growing regions in the world and, a market that no major trading nation can ignore. The scope of liberalization/exclusion is now determined, and the speed of liberalization has been agreed to be of 5 and 10 years. That means in its simplest form, all base rates, whatever the level, can be subject to an equal annual reduction over the 5 years for developing countries and 10 years for LDCs.

AfCFTA TARIFF LIBERALISATION STRATEGY-low hanging fruits
Zero MFN, blanks and nuisance tariffs.
AfCFTA tariff liberalization for some countries will be faster than others, especially the one who shall be wise and ambitious, to go in for the low hanging fruits with the agreements in force and trade commencing in 2020. These include zero MFN lines, the blank lines as well as low rates (nuisance tariffs) of below 3 per cent. But because the concentration rate in all AU countries starts at 5 percent and above it is paramount and ambitious too, to immediately eliminate tariffs below 5 percent (4-5%) come 2020 and treat them as nuisance. This sounds farfetched, but it might be the best way forward for the AfCFTA to accelerate liberalization process to allow Africa to boost its bargaining power in the world trade and negotiation as well as avoid having her exports face discrimination in outside markets.
Nuisance tariffs are the ones regarded to be so low that it costs the government more to collect than the revenue they generate. They range from 0-3 percent. The quickest strategy to liberalise could include scrapping all tariffs below 5% which can be regarded as a nuisance because they generate little benefits. Thus for the AfCFTA tariffs below 5% will be very ideal to be liberalized come 2020 when trading starts because they comprise of a negligible percentage of the product line, as shown in Table1. This will lead to over 50 percent of the tariffs abolished immediately when the agreement takes effect for the SACU countries, 20% for EAC countries,20% for the majority of COMESA, 3% for the majority of ECOWAS and 2% of ECCAS countries. The greatest beneficially of this strategy will be Mauritius with 81.9% and Seychelles with 88.4%, while Kenya has 41.5%, Nigeria 2.83%, South Africa 50.1%, Egypt 30.4% and Zimbabwe 30 % line liberalized immediately. The remaining tariffs of 5% and above can be targeted for gradual elimination of 5 and 10 years for developing and LDCs respectively, to achieve the ambitious agreement, of opening new trade and investment opportunities for African countries. Thus, in order to evaluate the level of market access for goods when the AfCFTA comes to force, we first examine RECs tariff concession schedule in Tables 1-4, in terms of the number of tariff lines, belonging to the Early Harvest Program-zero MFN, blank lines and the nuisance. It's clear that serious negotiations will have to be done with ECOWAS countries to make more sacrifices of tariff cuts above 5 percent. Their early harvest level is below 4 percent, except for Liberia, Cape Verde, and the Gambia, which are at 13.23, 19.12 and 9.64 percent in that order. This is way below some countries in COMESA and SADC.   This can be done through an equal annual reduction of 20 per cent to all tariffs above 5 per cent over 5 years for the developing countries as shown in Table 5. Similarly, the 10 percent equal annual deductions for 10 years can be applied for LDCs as shown in Table 6. This linear method allows reduction to continue until the tariffs are eliminated as well as softening the impact of liberalization. However, the equal reduction of 20 and 10 per cent can necessitate different effect on different tariff rates, as well as greater percentage points for higher tariff rates e.g. the 60 per cent tariff band for 5 years for EAC countries would need to be reduced by 12 percentage points for Kenya annually and 6 percent for others in 10 years so that they would incur greater effect on import price with greater commercial implications by being reduced to zero.

Eventual Target for AfCFTA: Tariff elimination modalities
Free-trade negotiations must always be the elimination of tariffs, either on entry into force of the agreement or in stages. How this is done depends on the views of the negotiating parties. It is usually possible to reach agreement on phasing where this is necessary. Therefore, the stronger the technique used, the higher the probability that negotiations can be completed successfully.
The 54 AfCFTA Member Countries agreed to working towards the total elimination of import duties on all products to achieve the ultimate objective of the AfCFTA. However, the cuts will be made through phase-ins which are commonly employed but which however, requires caution and slow gradations to avoid cheaper foreign goods of the same kind being poured flooding so fast into the home market which may deprive all at once very many people of employment and means of subsistence. That is why the Phase-ins set by AfCFTA have taken a shorter period (5 years) for developing countries, and 10 years for LDCs, which then requires that these countries have to do it for some products, and will often provide for equal annual cuts during that period. That is why the AfCFTA has adopted the prototype of a modality of linear cut, pursuant to which all tariff lines will be reduced by a specified percentage.
The choice of a modality or Approaches and Techniques to Tariff Reduction depends basically on the objectives sought by the negotiators, which are also dictated by the blessing of launching the negotiations which can be political, practical or even historical considerations. Therefore, the AfCFTA tariff cut is based on 100 percent linear cuts in principle. The 100 percent linear cut applied across-the-board combined with various arrangements for staging, exclusion or limited liberalization as applied to assorted products would accelerate the AfCFTA agreements Thus the linear cut approach, and the speed of annual reduction is basically determined by the length of implementation period. The longer the period, the smaller the annual cuts, and hence slower liberalization. Therefore at all the level of initial tariff, the tariffs are reduced by 20 percent (100%/5years) annually with all tariffs converging to zero rates at year 5, and the pace of reduction is identical across all tariff rates for developing countries, while it is 10% (100%/10) for non LDCs.

Products Covered and Tariff Bindings
The national tariff structures of AU members reveal a wide diversity and Simple average applied tariff rate ranges from 1.47 percent and 2.93 percent for Mauritius and Seychelles respectively to 20.21 percent and 21 percent for Algeria and Sudan in that order.
On the other hand, the bulk of tariff lines concentrate in the tariff 10 and 20 percent for ECOWAS, 10 and 25 percent for EAC, 5 and 40 percent for COMESA, 5 and 20 percent for SADC and 10 and 30 percent for UMA and ECCAS. That shows a large presence of high rates, which are apparently sensitive for economic, revenue and cultural/religious grounds. Table 7 shows that majority of the countries fall on tariff bands 20-25 and 25-30 percent. As a result, the distribution of national tariff lines by applied tariff rates shows that each individual member country is to meet the threshold target for ambition by cutting the applied tariff rate to zero. As depicted in Tables 8-11, all the countries (whose data is available) must cut into a tariff band in order to achieve the 90 percent ambition.  Besides, each country must meet the threshold target for ambition, meaning the higher Applied rates will have to be reduced to zero. If 90 percent of tariff lines are to be covered under AfCFTA, all ECOWAS countries except Cape Verde and Morocco would need to cut into their tariff band of 20-25 percent while Cape Verde will cut into 40-45 and Morocco at 25-30 percent. The majority of COMESA countries as well will have to cut into their tariff bands of 20-25 and 25-30 percent. Zimbabwe and South Africa will cut to 30-35, while Seychelles at will does at 5-10 percent.

SENSITIVE LIST
For meaningful negotiation to succeed countries agree on what to liberalize and what to exclude. This then shall mean following the major three criteria identified for selecting sensitive products for both industrial and revenue, cultural or religious concerns.
(i) Those that minimize import surge-attract highest dutiable imports (ii) Those that continued to be protected-highly protected products; and (iii) Those that minimize tariff revenue losses-attract highest tariffs (10 per cent and 20 per cent of bilateral imports) The commitment to reduce tariffs to 0 %, remove quantitative restrictions and other non-tariff barriers is up to the year 2030 for non-LDCs and 2033 for LDCs (10 and 13 years respectively). Following, the Continental Free Trade Agreement (AfCFTA) commencement in 2020, and envisaging a duty-free area by 2025 and 2030, the debates about / negative Lists which may be maintained by Member Countries but which is not there in the RECs is brought up in earnest because the whole issue is wrapped in the AfCFTA agreement without elaboration. That clarity would be intentional bearing in mind that the negative or sensitive list in a preferential or free trade agreement is to provide protection to sectors like infant industry, small-scale producers, agriculture among others. The AfCFTA has fixed the negative lists at 7% of the total tariff lines for sensitive products and not more than 3% for the Exclusion List of the total tariff lines for developing countries for a 10 year period. The same applies for 13 years period for LDCs before they are finally phased out to provide adjustment time to the domestic import-competing sector. The elimination exercise may require using the concept of revealed comparative advantage to identify items on the sensitive list where the exporting country is competitive in the international market. Care should be taken lest countries will maintain two or three sensitive lists under AfCFTA; one for non-LDCs, and the others for LDCs, and another under bilateral FTAs. Pair-wise RCAs for one country and each of the exporting countries in AfCFTA can be used to identify items on one country's sensitive list that are vulnerable to competition from imports from AfCFTA member countries. Kathuria (1997) points out that competitiveness can be measured by the extent of successful export performance which in turn is measured by export propensity, export market shares or pricebased measures like nominal protection coefficients, effective rates of protection and domestic resource costs.
The RCA can also be used by combining the RCAs for products of an exporting country with the corresponding RCAs of another country. Thus the RCA index is a ratio of the share of a given product in a country's exports relative to the product's share in world exports (Balassa, 1965). RCA is computed using the following formula: Where Xij represents country i's export of commodity j, Xwj represents world exports of commodity j, Xi represents the total exports of country i, and Xw represents total world exports.
An RCA index value of greater than unity implies that the country is competitive in exporting a product. So, in the AfCFTA the RCA for each item on one country's sensitive list can be paired with the corresponding RCAs for the other countries.
The RCA concept however, has certain limitations like that the specification of the concept is usually in terms of pre-trade relative prices whereas the data used is generated by trade flows in post-trade equilibriums (Volrath, 1991). The other problem arises due to aggregation where the commodity becomes composite and describes an industry or a sector, unless we compute RCA at the six-digit level. It does not consider unit values of the exporting country in relation to other competitors.

ACCELERATION OF AfCFTA
The Phase-out periods for tariffs and quotas in sensitive sectors are usually kept to the minimum, and also the negotiators should consider the various levels of development among the countries. The liberalization schedule which shall offer progressive liberalization as agreed in Niamey can be tabulated as shown in Table 12. All LDCs would achieve a minimum of 90% of the inclusion list in the zero-tariff range, same with the group of 6 countries achieving 85% fully liberalization.

2033
All LDCs would achieve full liberalization of sensitive list together with the group of 6 7% of the total tariff lines for sensitive products fully liberalised 3% for the Exclusion List of the total tariff lines for developing countries 2045 The group of 6 countries achieving 90% fully liberalization For this to succeed, exceptional attention should also be focused on trade facilitation activities in the areas of customs and the elimination of technical barriers to trade. At customs points the simplification and harmonization of customs procedures and as well the development of product-specific mutual recognition arrangements in conformity assessment should be hastened to ensure that product-related standards and regulations do not become technical barriers to trade.

Conclusion
The danger of violent and rapid movement in the markets for primary commodities after 2020 needs some caution so that the necessary adjustments should not come too fast lest they bring serious distress to many small producers and to their communities. Therefore, as well the negotiators should provide a program of adjustment and a period within which the essential change can be made without undue hardship. Thus the general idea of an early harvest (hanging fruits) can be a quick liberalisation strategy on areas where fast progress is possible, to effect agreement expeditiously and to implement the results in 2020 and then extent to 90%. The problem of doing the easy things first does not necessarily help with solving the difficult ones and sometime the timetable for the negotiations may make an early harvest quite impractical The AfCFTA negotiators must remain aware in all cases that the agreement drafted and especially on rules of origin, should deliver quick and easier trading environment such that the business community do not struggle with its complexities which may simply make them ignore the agreement as the trade makers, and an opportunity to enhance growth and integration will then have been lost. For one they have business relationships at stake with suppliers and buyers in other economies, which will be affected by the agreements while others will be enjoying as well from improved market access in the partner economy, and they will be more competitive in LDCs because of a reduction in some of their input costs.
We still need to approach regionalism with caution, but we believe it is time for a guarded optimism. Regionalism appears to be a useful tool to dismantle trade barriers, but must be employed with care especially this time when multilateral efforts are headed to fail. Forming AfCFTA would make free trade easier to achieve by inducing otherwise uncooperative countries to cooperate.
The discussion over the AfCFTA so far underscores the fears of potentially important external forces shaping the debate about impact of AfCFTA on the prospects of multilateral liberalization. While this makes for a political and intellectually engaging debate, it also reflects an important difficulty direction Africa has taken in the world geopolitics.