Free Zone: AU seeks aid to compensate countries that agree to cut tariffs

The African Union is seeking to create an “adjustment mechanism” to compensate governments whose revenues will suffer from cutting tariffs to join the continent’s free trade area.

According to the continental bloc’s trade commissioner, Albert Muchanga, the mechanism would be used to provide budget support, improve officials’ competence and develop infrastructure during the period of “short-term losses”.

Forty-four of the 55 members of the African Union in March created the African Continental Free Trade Area.

The deal, if implemented, will be the world’s largest free trade zone in terms of member countries.

The African Union has said businesses currently pay more to export to other African countries compared to outside the continent.

African Union hopes the deal, which still needs to be ratified at the national level, will help boost meager levels of continental trade.

Eleven countries, including Nigeria – the continent’s most populous country and its largest economy – did not sign the deal. Nigeria’s president said he is facing opposition from national trade unions and entrepreneurs.

The Democratic Republic of Congo and Mali who also rely heavily on tariffs said they would suffer significantly from cutting the hundreds of tariffs required to participate in the free trade area.

Posted by on May 16, 2018. Filed under Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.