South African wine exporters to African countries can start reaping the benefits from a newly implemented African Continental Free Trade Area (AfCFTA) from June 2021. Michael Mokhoro, stakeholder manager at Vinpro and Salba’s Wine Desk explains.
** Updated on 8 February 2021
When is trade expected to commence?
Although the African Continental Free Trade Area (AfCFTA) agreement was expected to come into force from 1 January 2021, South African wine exporters to other African countries can only start reaping the full benefits after June 2021 when Phase 1 of the AfCFTA negotiations are finalised.
Phase 1 entails setting up the dispute settlement mechanism, as well as negotiation on trade in goods and services, which are yet to be finalised. Specific internal implementation requirements, such as the need for member states and customs unions to have ratified the agreement, a confirmation that offers are technically sound and implementation of domestic legislation to administer AfCFTA preferential have also not been fully met across all member states.
Within the Southern African Customs Union (SACU) it is only Botswana that has not yet ratified the agreement, which makes it difficult for SACU member states to start accepting goods under AfCFTA. It is for these reasons the implementation date has been shifted to June 2021.
Phase 2 of the negotiations include investment, competition policy and intellectual property rights, and is scheduled to be concluded by the end of December 2021.
Which countries are involved?
About 54 member states have signed the AfCFTA agreement with the exception of Eretria. The AfCFTA have been signed and ratified by the following countries: Kenya, Ghana, Rwanda, Niger, Chad, Central African Republic, eSwatini, Guinea, Uganda, Cote d’Ivore, South Africa, Sierra Leone, Mali, Senegal, Namibia, Congo. Republic, Republic of Togo, Djibouti, Egypt, Ethiopia, The Gambia Saharawi Republic, Zimbabwe, Zambia, Burkina Faso, Sao Tome & Principe, Gabon, Equatorial Guinea, Mauritius, Cameroon, Lesotho, Malawi, Mauritania, Nigeria, Tunisia and Angola. These countries are referred to as “state parties” due to their readiness to commence trade under AfCFTA.
We are particularly fortunate that specific countries Wines of South Africa (WoSA) is focusing on for growth, namely Kenya, Angola, Ghana and Uganda have signed and ratified the agreement. This includes most of the countries in the Southern African Development Community (SADC) with which we have a free trading relationship. Our trade with these SADC member states will continue to be governed by the SADC free trade agreement until the AfCFTA has achieved its liberalisation status, and the SACU will continue to govern trade amongst the SACU member states.
What does this mean for South African wine trade?
The AfCFTA will definitely open up new opportunities for the South African wine industry and enhance our competitiveness at industry and enterprise level in terms of intracontinental market access. South African wines will enjoy preference above other wines originating from outside Africa in terms of import tariffs and non-tariff barriers. It is further expected that some of the benefits would also extend to the wine tourism industry.
We also expect that there will be greater coordination in terms of regulatory matters. The African Export-Import Bank will be responsible for compliance with international standards and technical regulations. It will facilitate payments and be responsible for the low cost and risk controlled payment clearing and settlement system, while addressing challenges with regard to forex and cross-border payments. The AfCFTA Office of the Secretary General and its supporting structures will continue to engage with business with regard to the implementation of the agreement.
Do wineries and traders already have access to these benefits?
Yes, the markets are open for trade in goods and services and WoSA has expanded our footprint in a number of these countries under the existing free trade agreements.
In some countries, however, trade tariffs and non-tariff barriers still hamper trade. In some countries the trade tariffs are still important source of government revenue and they tend to be very high. However, once the AfCFTA tariff phase roll-out is concluded. Wine will enjoy duty free and quota free trade in the African Continent under this agreement.
We have been advised by government to focus on East Africa Community (EAC) countries and Morocco, the Economic Community of West African States (ECOWAS) and Egypt. The countries that WoSA is focusing their efforts on, specifically Kenya and Uganda, have shared their tariff offers with SACU. The commercial value of these offers are currently being evaluated. Since Tanzania is part of the SADC free trade agreement, the industry will continue to enjoy duty free market access under the existing agreement.
The South African Revenue Service (SARS) is in the process of setting up customs structures and providing training to its officials to enforce the rules of origin and goods clearance under the AfCFTA. The Department of Trade, Industry and Competition (DTIC) has established the Non-Tariff Barriers (NTB) Portal to address this aspect of trade. The AfCFTA NTB reporting and monitoring mechanism is now fully functional. While the AfCFTA is still being integrated into this system, the DTIC and DALRRD are negotiating the outstanding issues such as the rules of origin and tariff concessions.
What are the next steps that wine businesses should take to ensure that they are able to benefit from the AfCFTA?
I would advise wineries to increase the awareness of South African wines and their own brands in African countries. WoSA’s country manager for Africa, Matome Mbatha, is doing some great work in this regard, in close collaboration with the South African government’s Market Access Promotion Department.
Exporters should also register with SARS to export to other African countries under AfCFTA. The export forms are similar to those needed to export to SADC countries, with some minor amendments. Government has also shared with the industry the AfCFTA trading documents, such as customs declarations, supplier’s declarations and the certificate of origin. Other critical information circulated included tariff offers (Egypt, CEMAC, EAC, Sou Lome & Principe and ECOWAS) and updated Appendix IV containing the agreed rules of origin which the submitted offers are based.
Should an exporter be faced with any non-tariff barrier from one of the AfCFTA countries, they must report it to the relevant structures via the NTB Monitoring Mechanism website, www.tradebarriers.org, with immediate effect, as well as to the Wine Desk, so that we can log it with the DTIC Portal Export Monitoring Mechanism. We have been assured that any non-tariff barriers would be resolved within 24 hours from the time of reporting.
Digital trade solutions such as e-certification through the systems mentioned above also increase efficiency.
It is still important to note that South African businesses will continue to benefit from existing trade regimes such as the SADC free trade agreement and SACU agreement.
For further enquiries, contact:
Wine Desk: Stakeholder Relations Manager
Tel: 012 807 6686
Cell: 083 271 7482