Mauritius: The Minister of Financial Services and Good Governance, Mahen Kumar Seeruttun, participated in the Third Extraordinary Meeting of the Council of Ministers of the African Continental Free Trade Area (AfCFTA), held from 12 to 13 July 2023 in Nairobi, Kenya, where the crucial issues of the Rules of Origin in the automotive and textiles sectors and other crucial trade protocols were discussed.
The Deputy-Director for Trade Policy, Ministry of Foreign Affairs, Regional Integration and International Trade, Danandjay Luximon, was also present at the Meeting.
It is recalled that the AfCFTA, the world’s largest free trade area grouping 55 countries of the African Union and eight Regional Economic Communities, entered into force on 30 May 2019. Mauritius ratified this FTA in September 2019. The commencement of trading under the AfCFTA was on 1 January 2021.
The AfCFTA aims to establish a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion. In that endeavour, one of the mandates of the AfCFTA is to eliminate trade barriers and boost intra-Africa trade.
The full potential of the AfCFTA will be achieved once all its components, including the Rules of Origin and Protocols on Investment, Women and Youth in Trade, and Digital Trade, are completely finalised and agreed upon.
Thus, the Council of Ministers met on two occasions in Extraordinary Sessions in May and July 2023 to consider the outstanding Rules of Origin on textiles and apparel and to take stock of the progress made so far in the ongoing negotiations on the draft Protocol on Women and Youth in Trade and the Protocol on Digital Trade.
The Rules of Origin determine the nationality of a product and decide whether a product can benefit from preferential treatment under the FTA. Their main purpose is to ensure that the benefits of the AfCFTA go to those genuinely located within Africa, especially from the automotive and textiles sectors, which are significant contributors to Africa’s industrial and manufacturing growth, instead of companies rerouting their products through the Continent.
Since the beginning of the AfCFTA Rules of Origin negotiations, rules covering around 88.03% of the tariff lines have already been agreed upon.
However, the Rules of Origin for textiles and apparel, accompanied by the Automotive Chapters, remained outstanding due to the high level of divergence among countries.
As one of the most pertinent issues for Mauritius remained the conclusion of the outstanding rules of origin for textiles and clothing, Minister Seeruttun, in his address during the Council of Ministers, spoke on the need to conclude the outstanding rules as this would provide further clarity in the measures required at country level to boost the confidence of investors and increase trade with the Continent.
The Minister proposed the necessity for Africa to have Rules of Origin that would strengthen the relationship between trade and industrialisation and encourage value addition within the Continent.
It is noted that the Meeting has concluded with an agreement for a double-transformation rule to be applied for Chapter 62 (Articles of Apparel and Clothing – not knitted) and Chapter 61 (Articles of Apparel and Clothing – knitted), except a more flexible rule applicable to few tariff lines.
Following adopting the rules for Chapter 62 and Headings 63.09 and 63.10, the agreed Rules of Origin have increased from 88% to 90.1%. The remaining chapters have been agreed to be finalised by the end of this year.
The agreement on the double transformation sealed during the Council of Ministers implies that fabrics used in making apparel items targeted for the regional market under the AfCFTA will be sourced from the African Continent, thereby strengthening Mauritius’ strategy of integrating the regional value chains.
Hence, Mauritian’s export turnover for apparel, estimated at around Rs 10 billion on the South African market, has been preserved. It will also give Mauritius additional preferential market access for exports of garments and textiles to the Continental market.