African leaders sign Tripartite Free Trade Area pact
On Wednesday, June 10, leaders of three existing regional economic communities pledged to launch the Tripartite Free Trade Area (TFTA). The TFTA brings together 26 African countries, a group that includes the member states of the East African Community (EAC), the Southern African Development Community (SADC), and the overlapping Common Market for Eastern and Southern Africa (COMESA). The pact—to be officially unveiled this weekend at the African Union (AU) summit—will span roughly half the continent, from Cairo to Cape Town, and cover over 55 percent of the continent’s GDP. Once implemented, the TFTA will represent more people than the North American Free Trade Agreement (NAFTA) or the European Union. The tripartite initiative is a significant step towards establishing a continental customs union. This free trade area pact has been commended as an important moment for the economic future of the continent, given its potential to foster intra-Africa trade, which accounts for a mere 10-12 percent share of the continent’s total trade.
Despite this energy, many Africa experts have stated that the free trade agreement may disappoint and that the key to regional integration lies in improved domestic political capacities instead. Furthermore, they argue, implementation of the TFTA could be a slow process, as the agreement will still have to be ratified by national parliaments over the next two years. For this reason, member states have been directed to expedite the resolution of all outstanding issues, such as elimination of import duties, trade remedies, and Rules of Origin.
For more on the issue, see Nonresident Senior Fellow Jaime de Melo’s discussion on whether the TFTA can provide the glue needed to integrate African economies more deeply.
The African Growth and Opportunity Act passes the U.S. House of Representatives
The U.S. House of Representatives moved to reauthorize the African Growth and Opportunity Act (AGOA) with a 397-32 vote on Thursday. AGOA renewal was initially incorporated as an amendment to the IRS Bureaucracy Reduction and Judicial Review Act, which seeks to improve the process of making determinations on the tax exempt status of U.S.-based organizations. This amendment also included an extension of the General System of Preferences. The House voted to extend AGOA for 10 years, until September 2025, and is largely the same as the version earlier passed by the Senate except for discrepancies on cost offset issues. These issues will now either need to be reconciled through the Senate’s approval of the House version of the bill or through a conference committee before President Obama ultimately signs AGOA into law. The House’s vote on AGOA preceded its action on the broader Obama trade agenda. However, early Friday, the House rejected the Trade Promotion Authority legislation, which is seen to reduce the likelihood of the finalization of another large U.S. trade deal, the Trans-Pacific Partnership.
AU summit in South Africa focuses on gender equality, security, and economic issues
This week, the African Union brought the leaders of its 54 member states to South Africa for its 25th biannual summit on the theme, “Women’s Empowerment and Development towards Africa’s Agenda 2063.” While the focus of the AU Summit, which runs from June 7-15, is on furthering African women’s political and economic participation, it also plays host to a number of discussions on the continent’s security challenges, including violent extremism in Nigeria and Kenya, the civil conflict in South Sudan, “third termism” and political instability in Burundi, and recent xenophobic violence in South Africa. Economic issues such as poverty alleviation, regional integration, and infrastructure development will also be foremost on the agenda as the AU continues to promote economic transformation through its New Partnership for Africa’s Development (NEPAD). Other likely topics of debate include strategies for self-financing AU programs by reducing the union’s dependence on foreign donors as well as the African position on the Post-2015 development agenda, which African leaders will be looking to finalize in advance of the U.N. General Assembly meetings in September.
U.S. funding for HIV treatment linked with employment gains in sub-Saharan Africa
A new report this week found that the President’s Emergency Plan for AIDS Relief (PEPFAR) not only contributes to increased positive health outcomes for HIV/AIDS-afflicted sub-Saharan African countries, but also has a positive effect on employment. The study, by Brookings Okun-Model Fellow Jeremy Barofsky; the University of Southern California’s Neeraj Sood; and the University of California-Berkeley’s Zachary Wagner, found that PEPFAR was associated with a 13 percent increase in employment among males in PEPFAR-focused countries. The results suggest that only accounting for health benefits of the PEPFAR can underestimate the total impact of the program. For more on the findings, check out the Brookings Health360 blog, “U.S. funding for HIV treatment linked with employment gains in sub-Saharan Africa.”