Major trade agreements link Egypt to the African continent

Sunset from the famous Cairo tower

Ahmed Abdul-Rahman explains how Egypt's link to the African continent will benefit Egypt and the African continent.

Egypt is always trying to create more cooperation and trade interdependence with the countries of the African continent. To achieve this goal, it has signed a number of economic and trade agreements, such as COMESA (Common Market for Eastern and Southern Africa) which removes trade barriers between Egypt and some countries on the continent. There is also the African Continental Trade Agreement (AfCFTA) that links 54 African countries in trade and aims at a huge increase in the movement of trade cooperation.

COMESA Agreement

Perhaps the most prominent trade agreement on the African continent is COMESA, which is aimed at establishing a free trade area between member states. First, it became a Customs Union  and then a Common Market. Egypt became a member of COMESA in 1998 along with 19 other active member states. As a member of COMESA, Egypt is completely exempted from customs duties and any other fees and taxes with other members of COMESA.

With reference to the rules of origin of the agreement, customs exemptions shall be applied to all imports of goods originating from member states with an added value of up to 45%. COMESA started its Customs Union in June 2009 with the aim of reducing and unifying the external tariff linearly over a period of 10 years, starting in 2009 and ending in 2018.

African Continental Free Trade Agreement

The African Common Market Agreement formally entered into force on May 30, 2019 after 22 African countries ratified the Agreement establishing the African Continental Free Trade Area (AfCTFA). This agreement is the largest trade agreement in the world. Egypt was among the first countries to sign and ratify it. Undoubtedly, the arrival of the number of ratifying countries today to more than 25, out of 49 countries in a period of less than one year is a record. This is especially so if compared to what has typically been the norm in Africa regarding the signing and ratification of conventions in general in Africa, which usually take many years.

Perhaps the most prominent feature of AfCFTA is its comprehensiveness and depth of liberalisation among African countries in the areas of trade in goods and services. This agreement also includes other agreements that urge the countries of the continent to increase investments among themselves, provide them with the necessary protection, adopt competition policies and respect intellectual property rights.

Egypt seeks to exploit AfCFTA for its own benefit, because the agreement makes the African market open to Egyptian products. In addition their prices are competitive compared to those products from Indian and China.

For Egypt to get the most benefit from this agreement, a plan is required to increase Egyptian exports to the African market, and sectoral strategies for the products most in demand. Among the most important materials that Egypt exports to Africa are chemicals, engineering equipment, electronic devices, foodstuffs and clothing. Additionally, there is a need for Egypt to activate the role of joint business councils with the countries of the continent, and provide logistical centers in Africa to ensure easier access to Egyptian products in African countries.

There is also the need to improve infrastructure on the African continent. Cairo, Egypt's capital, is trying to finish linking North Africa with the South, through several projects, perhaps the most prominent of which is a road between the cities of Cairo and Cape Town, the capital of South Africa. For example, part of the road from Egypt to the border with Sudan which is part of the Cairo-Cape Town road project, which starts from the port of Alexandria to Cape Town in South Africa, has already been completed.  The length of the road is about 10,000 square kilometers, and it passes through several countries in central and eastern Africa. This project aims to facilitate the transportation of goods and products to and from African countries, which was a big obstacle facing businessmen, importers and exporters.

There is also the road linking Cairo to Dakar in Senegal in West Africa, as well as a highway that runs across West Africa from Nouakchott, Mauritania, to Lagos, Nigeria. There is also the river link project between Alexandria and Lake Victoria, which would make the country a gateway to Central Africa through the Nile. Other projects also aim to link African countries to each other to enhance trade and the movement of labour.

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Thursday, 09 December 2021