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Why Buhari put AU trade deal on hold

President Muhammadu Buhari may have opted out of the African Union Continental Free Trade Area agreement which is expected to be ratified tomorrow in Kigali, Rwanda. 

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The president yesterday cancelled his planned trip to Kigali for the event.

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Instead, a terse statement from the Ministry of Foreign Affairs yesterday said the president would consult with stakeholders before a final decision is taken on the matter.  

The two-paragraph statement by the Ministry’s spokesperson, Tope Elias-Fatile, to State House correspondents by the Presidency’s Media Office, reads: 

“President Muhammadu Buhari has cancelled his trip to Kigali, Rwanda, to attend an Extraordinary Summit of the African Union on Tuesday,  March 21,to sign the framework agreement for establishing the African Continental Free Trade Area. This is to allow more time for input from Nigerian stakeholders.” 

The Federal cabinet meeting Wednesday chaired by Vice President Yemi Osinbajo, resolved that the President sign the AfCFTA agreement framework. 

The council had also approved that Nigeria bid for the location of the headquarters of the AfCFTA. 

The president’s advance team members had arrived at Kigali while the second batch was on Saturday recalled from the Murtala Mohammed International Airport, Lagos, from where they were set to take off. 

Presidential spokesmen, Mr Femi Adesina and Malam Garba Shehu, were silent on why the trip was cancelled.   

The Minister of Industry, Trade and Investment, Okechukwu Enelamah, had on Wednesday disclosed that Nigeria played a leadership role in the negotiations for the AfCFTA agreement.  

The minister told journalists on the outcome of the cabinet meeting that the nation’s Chief Negotiator and Director-General of the Nigerian Office for Trade Negotiations was the chairperson of the AU negotiating technical team.  

The decision to establish the AfCFTA was taken in 2012 by AU leaders at their 18th ordinary session. AfCFTA is the first step in the implementation of AU Agenda 2063, the “Vision” for an integrated, prosperous and peaceful Africa.    

Actual negotiations for the AfCFTA were launched at the AU Johannesburg Summit in 2015. The negotiations are in two stages: Stage one covers trade in goods and services; while stage two covers intellectual property, competition policy and investment.  

Stage one negotiations were concluded this month; while the AU Heads of State and Government are to adopt, sign and launch the AfCFTA framework agreement on Tuesday.

The agreement to establish the AfCFTA will launch the single liberalized market for trade in goods and services. When in force, the AfCFTA shall be the largest Free Trade Area (FTA) in the global economy, by numbers.   

The AfCFTA is a negotiated rules-based system to establish the rule of law in trade, deepen, and expand intra-Africa trade from its very low base of 14 percent. 

The government had listed the benefits of signing the AfCFTA framework agreement,  for Nigeria, to include: expanding market access for Nigeria’s exporters of goods and services, spur growth and boost job creation; eliminating barriers against Nigeria’s products and provide a Dispute Settlement Mechanism for stopping the hostile and discriminatory treatment directed against Nigerian natural and corporate business persons in other African countries; establishing rules-based trade governance in intra-African trade to invoke trade remedies, such as safeguards, anti-dumping, and countervailing duties against unfair trade practices, including dumping, trans-shipment of concealed origin of products.  

AfCFTA would also support the industrial policy of Nigeria through the negotiated and agreed Exclusion and Sensitive category lists to provide space for Nigeria’s infant industries; improve competitiveness, the enabling environment for business, consolidate and expand Nigeria’s position as the number 1 economy in Africa; stimulate, specifically, an estimated 8.18 percent increase in Nigeria’s total exports, with a small structural shift in Nigeria’s economy towards manufacturing and services. 

“This is expected to lead to a total increase in Nigerian economic welfare by 0.62% – equivalent to around US$2.9 billion in 2018 terms.  Changes would result from tariff reduction, ease of doing business and, trade facilitation.” 

AfCFTA would also provide a platform for Small and Medium Enterprises (SMEs) integration into the regional economy and accelerate women’s empowerment as well as provide an expanded platform for Nigerian manufacturers and service providers for connection to regional and continental value chains.  

Don’t sign deal – NLC

Meanwhile, the Nigeria Labour Congress, last weekend pleaded with President Buhari not to sign the AfCFTA framework agreement, warning that it would destroy Nigeria’s economy. 

It described the proposed signing of the AfCFTA as “a renewed, extremely dangerous and radioactive neoliberal policy initiative being driven by the Ministry of Trade and Investment that seeks to open our seaports,  airports and other businesses to unbridled foreign interference never before witnessed in the history of the country.   

“Information reaching us suggests that the relevant business community has not been consulted. The drivers of this policy initiative, without consulting the relevant stake holders for possible impact assessment, have perfected a document which President Muhammadu Buhari will sign at Kigali on March 21, 2018. We, at the NEC, are shocked by the sheer impunity or blatant lack of consultation in the process that has led to this.”

Private Sector also kicks

The Organised Private Sector feared the Continental Free Trade Area (CFTA) will give ways to the complete liberalization of trade in goods and services among the African countries.

When signed, the CFTA is going to be the biggest trade agreement bringing together 55 African countries second to the World Trade Organization (WTO) that was signed in 1994. The CFTA will be a market of about 1.3 billion people currently and is expected to be about 2 billion by 2025.

The President, Manufacturers Association of Nigeria (MAN), Dr Frank Udemba Jacobs, last week, cautioned the federal government to deal with care in committing to the African Continental Free Trade Area (AfCFTA).

He said (AfCFTA)  would open up the economy to foreign products, through the back door and expose the country’s relatively disadvantaged productive sectors to unmanageable pressure.

The Airline Operators of Nigeria (AON) also advised the Federal Government to put on hold the plan to sign the African Continental Free Trade Area (AfCFTA) at the meeting. 

More consultations required 

Nigeria needs to carry out more consultations before the country can decide to either sign or jettison the African Continental Free Trade Area (AfCFTA).

Responding to Daily Trust’s inquiry yesterday on why Nigeria will not sign the agreement, the Director General of the Nigeria Office for Trade Negotiations (NOTN), Ambassador Chiedu Osakwe, said “more consultations are required.” 

The latest move not the sign the Agreement may not be unconnected with objections from domestic manufacturers. 

When contacted yesterday, the President of the Manufacturers Association of Nigeria (MAN), Frank Jacobs, said manufacturers were not carried along in the previous negotiations.

Jacobs told Daily Trust that the idea of African Continental Free Trade Area is premature for Nigeria considering that the country is dealing with infrastructure challenges confronting manufacturers.

He said manufacturers in the country will come up with a comprehensive position on the agreement after consultations.

However, the Abuja Chamber of Commerce and Industry (ACCI) recently expressed support for the Agreement, which the Chamber hopes can increase intra-Africa trade by about 52 per cent.

It said it would result in an increase of African manufacturing exports from the current average in which manufacturing only represents about 10 per cent of total Gross Domestic Product (GDP) in Africa.

The President of Abuja Chamber of Commerce and Industry (ACCI), Prince Adetokunbo Kayode, in a recent statement backed FEC’s approval of the signing of the agreement.

The Statement signed by Kayode’s Media and Protocol Officer, Gena Lubem, described the Agreement as “a major opportunity for Nigerian businesses to gain greater access to the fast growing African market.”

The Chamber said it was vital that Nigerian businesses continue to diversify their export markets and with the agreement, trade barriers for companies across a number of sectors will be reduced thereby creating access to new markets within Africa.

 

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