International Finance

African Free Trade Act to boost US exports: South Africa

Africa free-trade deal US
Members have to remove tariffs from 90% of goods which will facilitate free access to goods and services across the continent

According to South Africa’s trade and industry minister Ebrahim Patel, the African free-trade zone will unite the continent of Africa and potentially boost Africa’s exports to the US.
With US President Donald Trump determined to protect US domestic businesses against threats from abroad, serious concerns have been raised about the future of the African Growth and Opportunity Act (Agoa).
Approved by the US in 2009, the African Growth and Opportunity act gives special treatment to 39 African countries by abandoning import levies on more than 7,000 wide-ranging products.
According to reports, in 2018, US-Africa trade shrank to $61 billion which accounts for 45 percent of its 2008 value. However, the figures are expected to change after the implementation of the Africa free-trade deal.
In 2018, 44 African countries including South Africa signed the Continental Free Trade Area agreement that aims to create a single continental market for goods and services. According to the agreement, the members are required to remove tariffs from 90 percent of goods which will facilitate free access to goods and services across the continent. African companies selling goods on the continent still face a tariff of 8.7 percent versus 2.5 percent when selling outside Africa.
According to the African Union (AU), trade within Africa is estimated to increase by 52.3 percent after the implementation of the African Continental Free Trade Agreement (AfCFTA) which is worth $34.6 billion. The act which impacts about 1.2 billion people in Africa, is expected to improve their standard of leaving.
Eritrea is the only African country that has not joined the agreement.

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