AfCFTA to Sharpen U.S. Competitive Edge in Africa
As the African Continental Free Trade Agreement (AfCFTA) approaches full implementation, African and global partners alike are set to unlock a three-trillion-dollar free trade opportunity and witness a transformative shift in foreign investment flows. The AfCFTA unites 1.3 billion people across 54 African countries, establishing a single, liberalized market for goods, capital and services and representing the largest trade bloc since the formation of the World Trade Organization. The Agreement eliminates key tariff and non-tariff restrictions on intra-continental trade, as well as contains annexes on trade facilitation, customs cooperation and transit, which are anticipated to enable cross-border trade, raise regional income by seven percent and lift 30 million Africans out of extreme poverty by 2035. The AfCFTA will also play a significant role in developing African small- and medium-sized enterprises. By eliminating red tape and streamlining customs procedures, the establishment of a free trade area will enable smaller enterprises to scale-up through increased efficiencies, innovation, productivity and digitalization.
U.S. Emerges as Premier Trading Partner
The operationalization of the AfCFTA will facilitate the expansion of U.S. private investment and commercial activities across the continent, enabling the U.S. to position itself as the trading partner of choice. Under the U.S. Government-led Prosper Africa initiative – which serves to increase two-way trade and investment between the U.S. and Africa – the U.S. Agency for International Development is launching an up to $500 million trade and investment program to facilitate deal-making between American and African businesses and eliminate barriers to trade and investment. In addition, the newly-operational, $60-billion International Development Finance Corporation streamlines American support of large-scale infrastructure projects in emerging markets, which will be critical to the expansion of intra-African trade routes. By catalyzing U.S. support for the AfCFTA, the Biden administration can align itself with this agenda and give rise to long-term negotiations of a U.S.-AfCFTA free trade agreement.
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