Reaping the AfCFTA potential through well-functioning rules of origin

The African Continental Free Trade Area (AfCFTA) Rules of Origin (RoOs) determine the conditions for the application of the Agreement's tariff preferences. The effectiveness of existing preferential trade agreements within the continent is undermined by heterogeneous RoO regimes and costly trade facilitation procedures. If these issues continue unchecked, they could harm the realization of AfCFTA ambitions. Here, we first discuss the economics of preferential RoOs, highlighting their associated benefits and costs within and beyond the African context. Second, we focus on the implementation of RoOs under the AfCFTA. We contend that cost-effective implementation is crucial to the AfCFTA RoO regime for production hubs to benefit from integrated African markets. Capacity building, the adoption of new technologies, and the establishment of effective institutional mechanisms will be important to track progress on RoO implementation and ensure high preference-utilization rates under the AfCFTA. These efforts shall be complemented by targeted support to the least developed countries and to small and medium enterprises. Finally, we recommend a set of actions to ensure the impartial, transparent, predictable, consistent, and cost-effective implementation of the AfCFTA RoOs.