The African Continental Free Trade Agreement (AfCFTA) officially begins in early 2021, when participating member countries establish a common market that includes both trade and investment with a total GDP is 3.4 trillion US dollars.
Overview of the African Continental Free Trade Agreement
AfCFTA was established with the purpose of eliminating tariffs on intra-African trade in goods, reducing non-tariff barriers, liberalizing trade in services, and developing mutual recognition of standards. , promoting inclusive and sustainable development, while facilitating the movement of capital and people between countries. The AfCFTA is structured in phases, allowing the Agreement to evolve over time.
Specifically, many other negotiations are planned in areas such as competition policy, investment, intellectual property rights and e-commerce. AfCFTA is built on the Agreements and principles of the World Trade Organization (WTO), which is important because 11 members of the African Union are not yet WTO members. According to the United Nations Economic Commission for Africa (UNECA), once fully implemented, AfCFTA has the potential to increase intra-bloc trade to 52.3% compared to the time before the signing of the Agreement.
According to information on the official website of the AfCFTA, as of March 2023, 54 out of 55 member countries of the African Union have signed the AfCFTA (Eritrea has not yet signed on). As of April 2023, 46 out of 54 signatories (81.5%) have completed procedures for ratifying the Agreement and depositing it. Africa expects that thanks to the positive impact of AfCFTA, 30 million people will have the opportunity to escape extreme poverty. Besides, income before 2035 is expected to increase by 7% compared to now, equivalent to 450 billion USD.
Opportunities for Vietnam - Africa trade
Over the past decade, Vietnam-Africa trade exchange has more than doubled, from just 2.52 billion USD in 2010 to 5.5 billion USD in 2022. Of which, turnover Vietnam's exports to Africa reached 2.8 billion USD, Vietnam's import turnover from Africa reached 2.6 billion USD, trade surplus reached a value of 226.3 million USD. Main export commodity groups include: Rice (reaching 568.6 million USD); Phones of all types and components (reaching 355.6 million USD); Computers, electronic products and components (reaching 210.4 million USD); Footwear of all kinds (reaching 141.8 million USD); Coffee (reaching 131 million USD); Textiles and garments (reaching 129 million USD); Aquatic products (reaching 60.3 million USD)...Main imported product groups include: Cashew nuts (reaching 1.1 billion USD); Other base metals (reaching 484.1 million USD); Wood and wood products (reaching 114.3 million USD); Fruit and vegetable products (reaching 64.1 million USD); Cotton of all kinds (reaching 54.2 million USD)... In general, the export potential to Africa is still very large because Vietnam only accounts for 0.6% of Africa's import market share of 600 billion USD each year.
With the advent of AfCFTA, Vietnam's trade with the African market area can enjoy many new opportunities, specifically:
The first, Exported goods can reach new markets: To facilitate the movement of goods between intra-regional countries, African countries will certainly have to increase investment in basic development in the near future. transport, communications and energy infrastructure – roads, ports, airports, telecommunications, electric power, etc. Infrastructure projects in Africa financed by Chinese loans National and US funding over the past decade will continue to increase in the near future. Accordingly, the ability for imported goods to penetrate inland areas will be more favorable, especially into the 15 landlocked African countries. This opens up opportunities for Vietnamese goods to access more markets, in the context that Vietnam's main export markets in Africa are still countries with large economies and seaports. Convenient for trade such as: South Africa, Egypt, Nigeria.
Monday, The cost of importing raw materials and agricultural products from Africa can be cut: As presented in the above section, Vietnam currently mainly imports agricultural products and raw materials from Africa to produce and create more. added value. The world's leading powers have been using economics as a "spearhead" in implementing their strategy of competing for influence in Africa, especially since this region announced the birth of the AfCFTA, opening up This continent has the opportunity to integrate into the global supply chain, expand markets, and transport goods more conveniently. Specifically, to protect its strategic and economic relationships in Africa, it is predicted that in the coming time, China will support Africa in developing value chains, helping African businesses gain own position in the Chinese market. Due to its close geographical location, Vietnam can benefit from this relationship, including the opportunity to reduce the cost of importing raw materials from Africa through China.
Tuesday, Opportunities to increase export turnover through negotiating trade agreements with the entire continent: A promising trend that will take place in the near future is that countries around the world will research and negotiate. , signing international trade agreements, especially Free Trade Agreements (FTA) with the entire African continental free trade bloc. This will help countries save time negotiating with individual countries or regions (Africa currently has 55 countries divided into 8 economic regions). In fact, African countries have quite similar production structures, mainly primary products such as crude oil, raw agricultural products, minerals, precious metals... Therefore, even if AfCFTA takes effect, efforts across the region and continent are still unable to ensure supply of many capital goods (machinery, equipment) and important items in life such as rice, textiles, garments, and footwear. , processed seafood products... and still have to depend on imports from foreign countries. Meanwhile, products such as rice, coffee, textiles, footwear, and seafood are Vietnam's strong export products. For example, although Vietnam is currently one of eight major textile and garment exporting countries in the world, the export value of this product group to Africa is still quite modest, only reaching 129 million USD in the year. 2022, partly due to tariff barriers and competition from countries that have FTAs with a number of countries in the region.
Therefore, if Vietnam or ASEAN negotiate a trade agreement with the entire AfCFTA region, Vietnam can completely increase exports of textiles, garments, and footwear to Africa, promoting its competitive advantages. such as lower labor costs compared to many Asian countries, good sewing techniques, and high quality products.
