Negotiators at the Ministry of Investment, Trade and Industry say the country is 'months away' from finalising negotiations that will result in formal ratification of the African Continental Free Trade Agreement (AfCFTA), a trade deal that grants easier market access to the continent’s 1.2 billion people.
Botswana is one of 13 countries left on the continent that are yet to ratify the AfCFTA deal sealed by countries on the continent in 2018 in Rwanda. While Botswana signed the text of the 2018 agreement together with the majority of the continent, the country is still negotiating the final terms of how it wants to trade with Africa under the AfCFTA.
Countries that are yet to ratify the AfCFTA have until June this year to finalise the negotiations. The ministry’s chief negotiator, Phadza Butale said the outstanding issues were negotiations over trade in goods, rules of origin and trade in services. “In terms of our tariff offer for trade in goods, we submitted our offer and it did not pass and we have gone back to the drawing board to try and recraft the offer so that it meets the verification test at the African Union Commission,” Butale told last week’s meeting held to develop a local AfCFTA strategy. “We are at a very advanced stage of finalising this offer and we hope to submit it to the AU Commission and hopefully it passes the verification test. “Once it does that, we will be in a position to trade under the AfCFTA and we will change our tariff book to go in line with the offers we have made.
This will be fast-tracked and perhaps in the next three months, this whole process will be done.” Part of the verification test involves guidelines set by AfCFTA for tariffs, which state that tariffs on 90% of tariff lines are to be eliminated, covering non-economically sensitive goods. Seven percent of tariff lines can be for economically sensitive goods, while three percent of tariff lines can be excluded from the AfCFTA deal.
The trade talks are critically sensitive for Botswana whose negotiators have to balance the need to provide market access to local producers, with the risk that the country’s comparatively small productive capacity could find itself flooded by cheaper imports from Africa.
The AfCFTA allows countries like Botswana to introduce reduced tariffs over five years for non-sensitive products and over 10 years for sensitive products. Butale said negotiations were also ongoing over rules of origin, with agreement over 87.8% of this aspect of the AfCFTA. “The SACU Council of Ministers took a decision to say notwithstanding the 13.3% shortfall, we will go ahead and implement the agreed rules of origin,” he said. “Those on which there is no agreement, the rules of the economic communities such as SADC will apply on imports from the rest of Africa, where there is no agreement yet under the AfCFTA,” he said.
Rules of origin are legal provisions that are used to determine the nationality of a product in the context of international trade.
Experts at Cape Town think tank, the Trade Law Centre, say under the AfCFTA, rules of origin are being negotiated on a sector-by-sector level, resulting in product-specific origin rules rather than generic origin criteria that apply equally to all products.
Butale said Botswana also has to finalise negotiations over trade in services under AfCFTA and an offer has been submitted. “We look forward to engaging the other partners so we agree on the reciprocal trade in services offers,” he said. “These include communication services, financial services and others.” The chief negotiator said the trade ministry and its partners in implementing the AfCFTA would continue engaging the local private sector to help position companies for the opportunities coming out of the continental trade deal. When fully operational, the AfCFTA will be one of the world's biggest common markets, with 1.27 billion consumers, and an aggregated gross domestic product of up to $3.4 trillion.
The continental trade deal aligns with the government’s priority of restructuring the country into an export-led economy, while at the same time fostering local industrialisation through various policies, funding and private sector engagement.