The African Continental Free Trade Area (AfCTA) came into operation earlier this year, with the broad intentions of boosting trade and reducing extreme poverty on the continent. This will be particularly helpful after the damage caused by the COVID-19 pandemic, which the World Bank says caused output losses of up to $79 billion across Africa's 55 countries.

AfCTA will roll out over a series of stages due to the complexity of its lofty goals, and even though the first phase that covers goods and services trade came into effect this year, talks to finalise tariff schedules remain ongoing.

One of the key elements under discussion is the rules of origin guidelines, which govern how much content of an item must be produced locally for that product to be named as being from a country. While this is an important element, particularly for heritage-based products, the United Nations Conference on Trade and Development has emphasized that simple and flexible rules of origin are ideal, as rules that are too complex are likely to stifle trade.

The first phase also includes a Protocol on Rules and Procedures on the Settlement of Disputes, which provides guidance for the resolution of trade disputes that is similar to that of the World Trade Organisation System. Its Dispute Settlement Body stipulates that parties to a dispute must first aim to resolve it through consultation, conciliation, and mediation processes, and only if these processes fail, will the DSB facilitate an arbitration panel.

The second phase will see the development of investment protocols, competition policy, and guidelines on intellectual property rights, while the third phase will see the negotiation of e-commerce protocols.

At present, the biggest hurdles that AfCTA needs to overcome are the ramifications of the pandemic, and the development of better infrastructure across the continent, most particularly its transport networks.

At Andersen, we're watching all these developments closely, with our teams across 45 locations on the continent keeping abreast of changes and developments as they're made official, positioning us to provide legal and tax advisory services within the new frameworks.

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