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Free trade deal: What’s in it for Nigeria?

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President Muhammadu Buhari’s refusal to sign the African Continental Free Trade Agreement(AfCFTA)at the just concluded African Union summit in Kigali,Rwanda, has raised mixed reactions from a cross section of Nigerians over the propriety or otherwise of that decision.  Ibrahim Apekhade Yusuf in this report examines the issues

How free is free trade? This is one simple question that has been hotly debated so much with welter of criticism rife amongst the organised private sector most of who have stoutly opposed Nigeria’s participation in the African Continental Free Trade Agreement(AfCFTA)signed at the just concluded African Union summit in Kigali, Rwanda.

At the AU meeting in Rwanda, 44 African countries signed the AfCFTA framework agreement. The continent’s two biggest economies, Nigeria and South Africa, refused to sign.

Like Nigeria, South Africa’s President Cyril Ramaphosa reportedly said his country will join the agreement when the necessary legal processes are concluded. He said he will sign once the legal and other instruments associated with the trade bloc are processed and ratified by South African stakeholders and parliament.

What the AfCFTA is all about

According to statement issued on its website, the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union (AU) in Addis Ababa, Ethiopia, in January 2012,gave birth to the AfCFTA which was designed to create a continental trade bloc of 1.2 billion people, with a combined Gross Domestic Product (GDP) of about $3 trillion.

The agreement, seen as an important milestone in promoting Africa’s regional integration and helping to increase intra-African trade, requires that countries remove tariffs on 90 per cent of goods and to liberalise services. Just as its  has its main objective as the creation of a single continental market for goods and services, with free movement of business persons and investments.

The AfCFTA treaty is one of the flagship projects of the African Union Agenda 2063, and is aimed at creating a single continental market for goods and services, with free movement of business persons, investments and a single currency.

Furore over AfCFTA

Interestingly, former President Olusegun Obasanjo is one those that has raised his voice above the din over the inability of President Buhari to sign the Africa Continental Free Trade Area agreement, warning that there are dire implications if the president decides to change  it may be too late when he changes his .

Obasanjo poured out his mind on the AfCFTA during a presidential panel, titled: ‘When Leaders Make History’ at the Africa CEO Forum in Abidjan, Cote d’Ivoire on Tuesday. He was joined by the President of Zimbabwe, Emerson Mnangagwa.

Obasanjo said, “That President Buhari didn’t sign the free trade agreement in Kigali is disappointing; I hope he signs it before it is too late.

“Egypt started the discussion on the formation of the Organisation of African Unity but didn’t conclude it and Nigeria took over. Nigeria was also central to the discussion of the free trade agreement, but I am surprised that the country withdrew from signing.”

Besides, there are fears on what may be the adverse implications of such action chief among which is the  fact that it will boost smuggling activities. However, the Minister of State for Commerce, Industry, Trade & Investment, Hajia Aisha Abubakar, recently said that the government will in due course, make its position known on it, pledging that government remained poised towards protecting indigenous manufacturers.

The federal government had delayed the signing of the treaty to allow for more deliberations and input from stakeholders and had set up a committee on the issue before the President would sign the treaty.

OPS groundswell of opposition

But the President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, said the government’s enforcement mechanism in the area of enforcement of rules of origin needed to be clearly defined before local producers could support the agreement.

Jacobs noted that although, he and other MAN members were not oblivious of the benefits inherent in the establishing the AfCFTA could improve intra-African trade and enhance economic growth and sustainable development, Nigeria must be cautious before rushing into a free trade agreement with other African countries.

He, therefore, urged the government to renegotiate trade conditions that could impede economic growth in its review of the (AfCFTA) agreement.

Jacobs, who spoke in Lagos, last week, said the trade pact will result in job losses, as most manufacturing companies in the country will close shop.

He explained that the private sector’s agitation was because of the lack of consultation and inclusion of inputs of key stakeholders before Nigeria’s position was presented at the meetings of the AU-Technical Working Group on CFTA in the build-up to AfCFTA negotiation by Nigeria.

Jacobs urged the government to set in motion a process that will enable all stakeholders on the international trade value chain in Nigeria to quickly review the text of the draft AfCFTA agreement and come up with comments on areas that are not in the best interest of the economy and sectors.

He said: “The government should, as matter of urgency, convene a special meeting of the relevant stakeholders, including experts on trade policy, to consider tariff lines rates along the line of efficiency, sectoral and sub-sectoral preferences that would be most beneficial to Nigerian businesses under the AfCFTA dispensation.

“It will also reconsider the national position on EPA vis-a-vis the AfCFTA, especially on tariff lines of products on the sensitive/exclusion list, with a view to ensuring that the EU-EPA is not reintroduced through the AfCFTA’s back door.

“Review presentations and prepare a detailed submission for the Government on ways and means of participating in the AfCFTA in a manner that our national interest and that of the budding manufacturing sector are effectively protected.”

While commending Buhari for refusing to sign the trade deal, Jocobs reiterated that MAN will not support the government’s adoption and ratification of the agreement establishing the AfCFTA until the issues of market access and enforcement of ROO are addressed.

As to be expected, before President Buhari’s scheduled visit to Rwanda for the Extra-Ordinary Summit of the AU on March 21, during which he was to sign the AfCFTA, a groundswell of opposition by OPS members, labour and other critical stakeholders in the economy, had trailed the proposed agreement.

The labour movement, particularly the Nigeria labour Congress (NLC) and,other civil society groups also warned the President against signing the agreement. They insisted that it will hurt Nigeria’s productive sector and the economy generally.

The NLC specifically warned the federal government not to sign the policy document, warning that it will cripple the economy and leave more Nigerians unemployed.

Besides, it expressed fears that the agreement will expose the economy to foreign intervention, which will allow foreign firms to operate in the local market without employing Nigerians.

NLC President Ayuba Wabba aligned with MAN’s President Frank Jacobs argument that the proposed agreement lacked the inputs of relevant stakeholders, including the organised labour.

He said ordinarily, proponents of the

Wabba said: “We find it confounding that at a time nations, including the United States (U.S) are resorting to protectionism in defence of their local businesses and protection of jobs, we have the audacity to want to fling open our doors, windows and roof tops.

“We have no doubt that this policy initiative will spell the death knell of the Nigerian economy. Accordingly, we urge Mr. President not to sign this agreement either in Kigali or anywhere.”

According to him, the national interest takes precedent and nothing should be allowed to compromise it.

He said: “The AfCFTA, rather than unite Africa will only divide it the more.  Rather than enrich Africa, it will only pauperise it the more.

“Those pulling the strings of this radioactive agreement are somewhere, well concealed and protected in the metropolis of the world. They have had this all thought-out and profits computed well ahead.”

The United Labour Congress (ULC) faction of the NLC commended Buhari for putting a halt to its hurried signing of the trade deal.

In a statement by its General Secretary, Didi Adodo, ULC said: “Nigeria is not only an importer nation, but also an economy with weak infrastructural base thereby increasing the cost of the products produced in Nigeria.

“If signed, the AfCFTA will only encourage industrialised countries to use other African nations to push their products to the Nigerian market thereby killing locally produced goods. We reject it in its entirety.”

Support for AfCFTA

It is however instructive to note that a few discerning Nigerians pushing for AfCFTA have argued matter-of-factly that the supposed benefits of the trade pact are too good for Nigeria to ignore. Apart from its inherent capacity to promote economic growth and development, reduce poverty in the partnering countries (Nigeria inclusive), the promoters believe it would expand and diversify trade and increase domestic and foreign investment.

The continent’s share in world trade is also not impressive, standing at less than three per cent. That informed the move to stimulate intra-African trade by at least 25-30 per cent to raise the continent’s share in global trade and competitiveness, African leaders came up with the idea of establishing AfCFTA.

The AfCFTA they argue,would lead to a significant growth of intra-Africa trade and also assist Africa use trade more effectively as an engine of growth and sustainable development. It was expected to help Africa participate in global trade as an effective and respected partner.

Besides,by the agreement include, enhancing competitiveness at the industry and enterprise level, through exploitation of opportunities for scale production; continental market access and better re-allocation of resources; provision of a comprehensive framework to pursue a developmental regionalism strategy for the continent.

In the view of Prof. Jonathan Aremu,a professor of International Economic Relations at the Covenant University,Nigeria’s refusal to be of the epochal event is the saddest thing that can happen to any country.

While trying to.justify what he considered a very awkward development.

“Ithink the real problem with Nigeria is that there was not enough sensitisation and I agree. Secondly, the Nigerian Office of Trade Negotiation was just created August last year. I don’t think that office that is in charge of negotiation for AfCFTA has enough capacity in terms of funding to be able to organise a free trade area because up till now, I think that it was created by an Executive Order. So I don’t think they’ve been able to mobilise funds immediately to get it done.”

 

The post Free trade deal: What’s in it for Nigeria? appeared first on The Nation Nigeria.

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