Customs Administrations Needs and Challenges Analysis Report

AfCFTA Support to the African Union Commission

An Analysis of the Needs and Challenges of Customs
Authorities in implementation of the AfCFTA.

To support the African Union Commission (AUC), Department of
Economic Development, Trade, Industry, & Mining in building
capacity of Customs Officers from State Parties on the African
Continent.

Contract No: 83361288
Project: Pan-Afrikanishen Freihandelzone (AfCFTA)

Processing no: 20.2208.5-001.00

Project Consultant: MARK ALEXANDER GOODGER, Western Cape,
South Africa.

Table of Contents

Acknowledgements ..........................................................................................................3

Preface .............................................................................................................................4

1. Executive Summary .............................................................................................6

1.1 The Methodology of approach:............................................................................7
1.2 Conclusion.........................................................................................................10

2. Report on Analysis of Findings, Current Status, Insight & Recommendations ......13

2.1 Overview...........................................................................................................13
2.2 Status update on AfCFTA Ratification.................................................................13
2.3 General Background ..........................................................................................16
2.4 Specific Background...........................................................................................16
2.5 Implications to Customs Administrations. ..........................................................18

3. AfCFTA Synopsis – Implementation Background.................................................19

3.1 Rules of Origin Capacity is the Key to Success of the AfCFTA ...............................25
3.2 Determination of Origin and compliance to the Rules thereof. ...........................26
3.3 How would the Rules of Origin work? ................................................................27
3.4 References in the AfCFTA Agreement, Protocol on Trade, and the Annexes thereto,

for the Customs Administrations to take note of for Implementation Planning. ..27
3.5 Agreement establishing the African Continental Free Trade Area .......................27
3.6 Protocol on Trade in Goods................................................................................30
3.7 Annex 1 – Schedule of Tariff Concessions ...........................................................34
3.8 Annex 2 – Rules of Origin...................................................................................34
3.9 Annex 3 – Customs Cooperation and Mutual Administrative Assistance .............40
3.10 The role of Customs in implementing Annex 4 of AfCFTA (Trade Facilitation)......41
3.11 The Role of Customs in implementing Annex 8 of the Protocol on Trade (Transit)

.........................................................................................................................44

4. The Research Survey – Conduct, Findings, and Recommendations......................47

4.1 APPENDIX – Checklist of Obstacles to success in Business and Projects ...............52

5. The Key Questions, Responses, Findings and Recommendations ........................54

5.1 (a) Lack of implementation Planning .......................................................................54
5.2 (a) Capacity Building ...............................................................................................66
5.3 Lack of Key Stakeholder and Trader Engagement ...............................................77
5.4 (a) Overlapping REC Memberships ..........................................................................79
5.5 Dependency on inconclusive negotiations and frameworks. ...............................82
5.6(a) AfCFTA General Obligations...............................................................................84

6. Concluding Recommendations...........................................................................97

7. Conclusion.......................................................................................................100

8. List of Annexures.............................................................................................102

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Acknowledgements

The Consultant wishes to acknowledge and express appreciation to the following key persons,
without whose input and participation, this report would not have been as comprehensively
concluded and delivered. These individuals are all experts in their respective fields and have
an unrivalled passion for excellence and dedication towards the professional role of Customs
Administrations in Global Trade.

o His Excellency Mr. Albert Muchanga, Commissioner of Department Economic
Development, Trade, Industry, and Mining.

o Mr. Hassan Hussein – Acting Director of Department Economic Development, Trade ,
Industry, and Mining.

o Mr. Dhunraj Kassee – Senior Policy Officer, Customs Cooperation Trade, and Industry
Department - AUC.

o Mr. Larry Liza – Director WCO Regional Office Capacity Building (ROCB ESA).
o Mr. Felix Hesse – Advisor GIZ AfCFTA Support Programme.
o Mr. Willie Shumba – Senior Customs Expert / AfCFTA issues - AUC.
o Ms. Faith Mosongo – Programme Officer – WCO ROCB ESA.
o Mr. Christoffel van Rensburg – Ex (SARS) South African Revenue Service, Origin and

Policy Expert.
o Ms. Caroline Keim – GIZ support unit.
o Ms. Trudi Hartzenberg MCom – Executive Director, tralac.
o Mr. Jason Blackman BCom – Senior Director Customs, Trade Compliance and

Regulatory Affairs Sub Sahara Africa – DHL.
o The GMLS team, Ms. Estee Tyler – research, typesetting and editing, and Ms. Lee-Anne

Janse van Vuuren – Webinars, On-line Research Libraries, etc.

There is no doubt that COVID, besides its detriment to Global society, has also had particular
negative impacts to the implementation of the AfCFTA and specifically to the conduct,
duration, and collection of information, for this important research mandate and report.
These impacts were overcome through innovative strategies, group cooperation and the
dynamic assistance of the WCO ESA ROCB. To Director, Mr. Larry Liza, and Ms. Faith
Mosongo, we express our heartfelt thanks for all the WCO ESA ROCB input and
communications delivered. Without your help we would not have succeeded. Collectively,
and under the trying circumstances, these key professionals have assisted, in meeting and
addressing those challenges, in every manner possible towards conclusion of the report.

DISCLAIMER

This study was prepared at the request of the African
Union Commission Department of Trade and Industry. It
was conducted by a consultancy firm based in South
Africa, GMLS, in partnership with the African Union
Commission (AUC). This study has been prepared with the
financial assistance of Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) GmbH. The views
expressed herein are those of the consultant and
therefore in no way reflect the official opinion of the AUC
or GIZ.

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Preface

Customs is a key institution within the African State Parties, whose strategic involvement and
cooperation is important in the process of successful implementation of the AfCFTA –
specifically the implementation of the “Protocol on Trade in Goods” (the Protocol) and its
Annexes.

All nine (9) Annexes, to the Protocol on Trade are, to different degrees, relevant for Customs
Administrations. Customs Authorities, are directly and indirectly involved, in assisting with
the process of negotiating Tariff Concessions and interpreting Rules of Origin (Annexes 1 and
2), as well as implementing the additional provisions relevant to Customs Cooperation and
Mutual Administrative Assistance (Annex 3), Trade Facilitation (Annex 4), Elimination of Non-
Tariff Barriers (Annex 5), and Transit (Annex 8). The Customs Administrations have further
roles in the elimination of Non-Tariff and Technical Barriers to Trade (Annexes 5 and 6) as well
as enforcing Sanitary and Phytosanitary standards (Annex 7), as well as measures taken to
address Trade remedies (Annex 9).

It is therefore apparent that the uniform and sustained implementation of the AfCFTA
Agreement by Customs Authorities is crucial for intra-Africa Trade.

It is envisaged that the objective of the African Renaissance, and the attainment of the
“Agenda 2063” goals, will be achieved through the successful implementation of the AfCFTA,
bearing in mind that each nation is diverse, and has its own Trade, Fiscal, and Economic
dynamics, and the media abundantly cover in the pros and cons of the ultimate successful
implementation of the AfCFTA. Under any examination of the Agreement itself, its Protocol,
and Annexes, it will be evident that the success of AfCFTA is dependent on the Customs
Authority. Thus, in all State Parties, the Customs Authority, will be a strategic conduit to
successful implementation, control, regulation, and administration. Whilst simply stated, this
will not be achieved without having met the many needs and challenges that such Authorities,
will inevitably encounter.

This research, as identified by the AUC, therefore represents a collective summary, to the
benefit of all.

As we have all learnt, “change” is the only thing that is certain about the future…

The research project deliverables focused on the following:

1. Conducting a needs and challenges assessment among National Customs Authorities
in East and Southern Africa.

2. Development of an AUC Customs Leadership Training Module, which takes into
account, Change Management Capacity towards AfCFTA implementation. This
Module will highlight how Customs Leadership Training and Capacity Building will
support this process.

3. Conducting Workshops and Webinars with all key Stakeholders as well as the 24
Customs Administrations.

4. Production and delivery of a final report for all relevant Stakeholders towards
achieving the continued objectives of the AUC.

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The AU Sub-Committee of Directors General of Customs (AUSCDGC) has left no stone
unturned to ensure the successful implementation of the AfCFTA. The main objective of
the 10th Ordinary meeting of the Sub-Committee in 2018 was to exchange views and
reflect on the way forward on the theme of the meeting, “Combatting Corruption in
Customs to effectively implement the African Continental Free Trade Area (AfCFTA).

Cognisant of the fact that implementation of the AfCFTA will, amongst others require:

o Zero rates of Duty on at least 90% of the tariff lines.

o Publication of effective tariff rates of Duty for Stakeholders to be fully informed.

o Implementation of new rules of origin.

o Enhanced Customs Cooperation in order to meet the demands of trade; and

o Implementation of a number of trade facilitation measures to ensure the expedited
movement of goods within Africa, the Sub-Committee again resolved to discuss
implications for Customs Administrations in 2019.

As a matter of fact, the main theme for the 11th Meeting of the Heads of Customs was
“The Entry into Force of the Agreement Establishing the African Continental Free Trade
Area (AfCFTA) -Implications to African Customs Administrations.”

At the same meeting, AU Heads of Customs requested AUC to collaborate with the WCO
and other Development Partners to develop a specific technical assistance and Capacity
Building programme to support African Customs Administrations in the effective
implementation of the AfCFTA. It is in this regard that, in 2020, the Customs Cooperation
Division of the AUC embarked into this Customs Leadership Programme in collaboration
with WCO and GIZ, for the East and Southern African Region.

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1. Executive Summary

Article 4(g) of the AfCFTA1 Agreement sets out, as one of its Specific Objectives, that “the
State Parties shall establish and maintain an institutional framework for the implementation
and administration of the AfCFTA”.

The African Union Commission (AUC)2 therefore, has a distinct and significant interest in the
Capacity of Customs Administrations of State Parties, to successfully implement the AfCFTA.

The final feedback engagement webinar held on 8th March 2021, was attended by various
Heads of Customs and Senior Officers providing valuable information to support the findings
reflected.

This study3 is based on a survey4 vide electronic questionnaire, of the African Customs
Administrations of 24 State Parties from the ESA and SADC Region, of whom 14 State Parties
responded to the questionnaire provided, representing 58%5 of the total. The detailed
analysis and report of the Key and Crossfield Outcome questions is summarised accordingly
in the main report.

A comprehensive review of literature and legislative provisions addressing “Origin”
compliance and verification thereof in Trade Agreements, Customs, and Trade-related
Capacity Building initiatives, structures, and delivery systems, as relevant to the sphere, was
conducted at all levels across the continent as well as globally, which drew relevant Customs
Administration conclusions, which could be considered, analysed, and deployed in support of
the AfCFTA implementation.

The main objective of this research study, was to establish the needs and challenges of African
Customs Administrations in the implementation of the AfCFTA Agreement, as well as
evaluating how the diagnostic synergies pertaining to the Customs compliances in the
respective Annexes6, could be developed and aligned with other potential Regional and
International Agencies, towards attaining the mandated Terms of Reference.

1 The fifty-five State Parties of the Africa Union (AU) have established the African Continental Free Trade Area (AfCFTA) to
create a single continent-wide market for goods and services and to promote the movement of capital and natural
persons. Eritrea should be monitored for full adoption. The Agreement establishing the AfCFTA entered into force on
30th May 2019.

2 The African Union Commission (AUC) is the AU's secretariat and undertakes the day-to-day activities of the Union. It is
based in Addis Ababa, Ethiopia. Its functions include: Representing the AU and defending its interests under the guidance
of and as mandated by the Assembly and the Executive Council.

3 The study has used open-sourced materials complimented with information obtained through electronic communication

and participation in virtual meetings.

4 An investigation of the opinions or experience of (a group of people) by asking them questions.
5 GFA Consulting Group GmbH conducted a recent study titled, Capacity Building for Customs Administrations for the

African Continental Free Trade Area (REF: AUC/CFTA/STUDY No. 4.1.9 / 2020). The GFA study is an important step in
assessing the Technical Assistance and Capacity Building needs of Customs Administrations for implementation of the
Agreement. Whilst the GFA study identified Capacity Building as a key inhibitor to implementation, this study key focus
is on the challenges for Customs Administrations in implementation of the AfCFTA. Interestingly, although the GFA
authors sent questionnaires to Customs Administrations of all the 55 AU State Parties, they received responses from 32
State Parties spanning all regions of the continent (a response rate of 58%). This is the exact response rate as experienced
in this study. What is concerning is those Administrations that did not respond to either survey.
6 The analysis of the Customs related obligations and compliances is provided within this report.

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An additional objective of this mandate was to develop the customised AUC/GIZ Customs
Leadership Training Module for Customs Authorities of African Union Commission State
Parties, specifically concerning their needs and challenges for the implementation of the
AfCFTA, as concluded from the research, including change management impacts.

Accordingly, the major outcomes of the Consultancy would be that Representatives from
National Customs Authorities and the continental trade community, are familiar with the aims
and procedures of the AUC/GIZ Customs Leadership Training Module and this Report.

Furthermore, the value of the AUC Customs Leadership Training Module towards the
implementation of the AfCFTA, should be well-defined and tangible. Overall, the introductory
activities should pave the way for an effective commencement of the Customs Leadership
Training procedures and outcomes, which are desired to be imparted. Additionally, the most
urgent priority needs and challenges, of Customs Authorities in African Union State Parties
were identified.

1.1 The Methodology of approach:

o Conception, implementation, and evaluation of an on-line survey on the needs and
challenges of selected Customs Authorities, regarding AfCFTA implementation.

o Preparation, facilitation, and documentation of a 1-day “kick-off” virtual Workshop
with a total of approximately 30 participants (Representatives of AUC State Parties
from East and Southern Africa, AUC-DTI/WCO ROCB, and others).

o Presentation of the results of the needs assessment survey in a final Workshop to the
Parties mentioned above.

o Report back of the survey conducted, and sensitisation on the AUC GIZ Customs
Leadership Training Module as developed, specifically concerning the AfCFTA
implementation (explanation of change management, goals, procedures,
responsibilities, and benefits).

o Report of needs assessment results (including analysis, evaluation, and how the
Customs Leadership Training can assist Customs Administrations, their Leaders, and
Traders alike, with the interpretation and implementation of the AfCFTA, among
others).

Change Management Theory and Capacity for Customs Leaders, reflecting a holistic approach
to examining the needs for change, preparing change goals, and implementing change itself,
is crucial towards implementation of the AfCFTA. Information in this report, as secured and
concluded, draws on the results of the mentioned questionnaire distributed among the
“change agents” (that is, Customs Leaders and Officers responsible for implementing the
various tasks described in the new Customs Strategy), in order to ascertain whether Customs
Managers in charge of implementation, are operating under conditions and guidelines,
conducive to achieving the desired results.

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The survey questionnaire target and focus areas are quite different in character and strategic
objectives, some relating to maximising the effectiveness of each organisational unit, while
others relate to the effective protection of society, some relate to modern IT-systems, and
others defining the need to develop efficient working methods, and last, but not least, various
specifically defined targets relating to legislation drafting, effective control, interpretation,
and ultimately, the capacity for implementation.

Due to the impacts of the COVID-19 pandemic, various virtual Workshops, and research
initiatives under the Terms of Reference (TOR) have been imparted. These replaced the
desired Face-to-Face contact Workshops, originally envisaged. Discussions and debates,
typical under African tradition, were not achieved and the relevant excellent additional
information normally gleaned from such physical engagement events, was unfortunately not
possible. However, with support from the WCO ESA ROCB, the virtual events were well
supported and most enlightening.

The 1st of January 2021 arrived, with minimal implementation having taken place by the
majority of Member State Customs Authorities. There is no doubt, that the Secretariat has
faced several delay challenges, and may continue to experience more into the future. As it
gains traction, it is trusted that this study will contribute towards its future anticipated
success.

Poor infrastructure, and lack of planning, the critical need for Capacity Building across the
entire African continent, and Leadership Capacity, have been identified, as the major Barriers
to the development of Trade in Africa, posing a huge burden on the successful
implementation of the AfCFTA. Although the study is AfCFTA implementation-related, it is
important to note that the existing Regional Economic Communities (REC’s) will not
disappear. Intra-Africa Trade is highly focused within the REC’s, with more than half of the
total intra-Africa Trade, taking place within the Southern African Customs Union, and more
than 65%, within the SADC.

While all the nine (9) Annexes to the Protocol on Trade are relevant for Customs
Administrations, Customs is more directly involved in the process of negotiating Tariff
Concessions and Rules of Origin, (Annexes 1 and 2) and implementing the provisions on
Customs Cooperation and Mutual Administrative Assistance (Annex 3), Trade Facilitation
(Annex 4), elimination of Non-Tariff Barriers (Annex 5), and Transit (Annex 8). Uniform and
sustained implementation of the Agreement is necessary for Africa to reap the benefits of
integration, yet the relevant institutions, including Customs Administrations, require
Technical Assistance and Capacity Building to enable them to implement its provisions – (GFA
report). 7

7 Recommendation 2: State Parties should report to the Sub-Committee on Customs Cooperation, Trade Facilitation and
Transit on their activities in relation to sensitisation of staff on the AfCFTA Agreement and its Protocols and Annexes,
including any challenges encountered for possible corrective action. (GFA report Exec Summary REF: AUC/CFTA/STUDY
No. 4.1.9 / 2020)

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Determining the “Country of Origin” or the “Economic Nationality” of imported products, is a
requirement for applying basic Trade Policy measures such as Tariffs, Quantitative
Restrictions, Anti-Dumping, and Countervailing Duties, Safeguard Measures, as well as
requirements relating to Origin Marking, Rulings, Procurement predictability, and Statistical
purposes, all of importance under the AfCFTA, for ultimately extending of the preferences to
Traders. The justification for clear Preferential Rules of Origin, such as that of the AfCFTA, is
to prevent trade deflection or simple transhipment, whereby products from non-preferred
countries, are redirected through a “Free Trade Party” to avoid the payment of Customs
Duties.

The responses, according to the Survey, assisted to draw conclusions which reflect six
principal areas amongst others, identified as inhibitors to implementation, which are directly
under the control of the Customs Administration:

1. Lack of Implementation and Change Management Planning.

2. Capacity Building.

3. Lack of Key Stakeholder and Trader Engagements.

4. Leadership Capacity.8

5. Dependency of administrations and traders on inconclusive negotiations and
submissions.

6. Identification, interpretation of customs related AfCFTA general and specific
Obligations.

Obviously, each State Party’s Customs Authority, as evidenced, do have diverse and alternate
challenges, which are also addressed elsewhere in the report. However, for the main
collective, these are the concerning six areas of focus9.

It must be appreciated that, aside from the vast array of incomplete aspects (ongoing
negotiations, meetings and other)10, relevant to the Agreement components itself, that there
are additional areas of concern.11

8 These concern areas could be listed in alternate priority order, subject to country specific examination and circumstances.
In all however, Leadership capacity is key. The WCO PICARD Standards clearly reflect the requirement of Customs

strategic Leaders to be cognizant of Micro and Marco economic policy and government compliances in meeting
International agreements.
9 Additional obvious considerations are to strengthen the PCA (Post Clearance Audit) and Risk Management functions and
the promotion of integrity in Customs.
10 As communicated by South African Revenue Services (SARS), according to AfCFTA Secretariat revised work Programme,
the following events are still in process. The fourth meeting of the Sub-Committee Trade Facilitation, Customs and Transit
will be held in March 2021. Purpose, to finalise Customs documentations and re-confirm readiness for trading. The first
meeting of the Sub-Committee on Rules of Origin will be held from 29 March to 2 April 2021. Purpose, to continue
negotiations on outstanding issues on Rules of Origin. The third meeting of the Directors-General/Heads of Customs
Authorities will be held from 31 May to 01 June 2021 to consider all documents for trading. The fifth meeting of the
Council of Ministers will be held from 07 – 08 June 2021 to approve final documents for submission to Extraordinary
Summit. The date for the Extraordinary Summit is not known yet for implementation. After implementation, each
country should amend their Customs and Excise Acts to domesticate the Tariff offers, trading documents and so forth.
11 Modalities are not reflected anywhere in the AfCFTA. This is also a landscape that requires compliant focus to submit
Tariff Concessions to implement the AfCFTA. By way of example - Based on the consultations, by Nigeria, on 21st

September 2017, on the margins of UNGA-72, in New York, a compromise accommodation was proposed to be accorded
to the Group of Seven (G-7) countries to provide for their vulnerabilities and special needs with respect to Tariff

liberalization in the CFTA, over a defined Transitional period. To account for the special needs of these countries, and

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These are not directly under the control of the Customs Authority at National level, however,
could continue to negatively impact implementation.

NB!! Keep in mind that the survey was conducted prior to the implementation date of the
1st of January 2021 and several of the outcomes may thus have changed in the interim.

1.2 Conclusion

Whilst the study identified Capacity Building as a major obstacle in successful
implementation, it does not fully address the scope or drill-down of all Capacity Building
related dynamics and associated criteria12.

However, it specifically addresses the broad scope of needs and challenges, for Customs
Administrations in the implementation of the AfCFTA. It further addresses the Capacity of
Customs Leaders to ensure their competency in Change Management, through provision of
the AUC Module providing Strategic Leadership, specifically directed at the implementation
of the AfCFTA.

The recommendations as furnished, should further make it abundantly clear that, aside from
implementation challenges, the ultimate objectives of African Customs Authorities becoming
globally recognised, and modernised Customs Authorities across the whole continent, can be
achieved, through compliance to all the Annexes of the AfCFTA Agreement. These in fact,
resonate directly to all major Customs-related Global Instruments, Agreements, and
Conventions, to which all State Parties should aspire.

The overwhelming conclusion drawn from the survey is that the AUC is recommended to
continue its role directly, or through related structures, such as the Secretariat, to drive,
monitor, and sustain implementation solutions for Customs Administrations. The momentum
must be sustained and not interrupted under any circumstances. The main recommendations
are therefore set out as follows.

The analysis of key questions and recommendations, addressed in this report should be
considered by Customs Leaders when striving for successful AfCFTA implementation, some of
which are re-emphasised hereunder:

1. A priority implementation compliance and obligation checklist with performance
management targets and measurement criteria must be compiled, to distribute
urgently to all national customs leaders.

2. The AUC should Implement a Capacity Building programme in tandem with the various
ROCB’s, which should be made available to both Public and Private Sector in all State
Parties. The GFA report alluded to, is of high relevance towards such solutions and
ongoing sustainability.

without prejudice to the agreed 90% level of ambition, these special needs countries are to begin the process of
Liberalisation, exceptionally, from a starting level of ambition of 85 percent. This means that instead of liberalising 90
percent in 10 years they will instead liberalise only 85 percent of Imports over the 10-year timeframe. These
Liberalisation commitments are to be subject to the same process of Tariff phase-down as is agreed to be applied to the
Liberalisation commitments of all non-special-needs countries, i.e., Linear Approach. Thus, Traders will need to have
assistance in interpretation of Trade Offers, and exclusions and phasing in dynamics, in order to identify and secure Trade
opportunities.
12 This is covered in significant detail in the GFA report and by some associated recommendations contained in this report.

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3. It should be considered by the AUC, Secretariat and national administrations, that
such a Capacity programme is to be accredited by the NQA13 (National Qualifications
Authority) of each Member State, which will serve to achieve mutually recognised
professional competency in implementation, technical command of Principles of
Origin, and the wider scope of Annexes, thereby meeting modernised Global
Standards for Customs Administrations and others, in imparting recognised
qualifications to all receiving such capacity. Same should be WCO certified via
cooperation with the relevant ROCB. Experts in drafting qualifications to be identified.

4. The AUC in cooperation with relevant organisations, must urge that all outstanding
negotiations be concluded as soon as possible and ensure visibility to all Stakeholders.

5. Traders and all relevant Private Sector Stakeholders must be engaged according to
AUC and ROCB programmes. It is recommended that a further similar research study
is conducted into the readiness and capacity of the Private Sector itself in its
implementation challenges for the AfCFTA.

6. Although the Secretariat14 is in process to undertake its mandate in accordance with
the provisions of relevant Articles in the AfCFTA Agreement, it is apparent that it too
may encounter further delays. Within the recommendations provided, current AUC
progress achieved must not be reengineered, and it must be appreciated that
solutions in the customs context, present an opportunity to achieve Global
modernised administrations status through full implementation of all the AfCFTA
provisions and obligations. Thus, from a point of view of continued AUC involvement
in terms of Continental Customs solutions, all Parties are urged to approach these
objectives and recommendations from a wider all-inclusive perspective.

Much work has already been done through the AUC and relevant Sub-Committee’s
which must be recognised and sustained. Continued cooperation between the two
organisations is imperative.

7. Although full and comprehensive AfCFTA implementation presents wide and diverse
challenges, it must not under any circumstances be allowed to fail. This is the time for
African leaders to leave a legacy that could position Africa as an economically
sustainable CFTA for all that would reap benefits in the future.

13 An authority that implements a national quality assurance system to ensure that education and training is delivered
according to the standards which are formally recognised.

14 Subsequent to the Assembly meeting 5th December 2020, one of the noted the outcomes of the 3rd Meeting of the
Council of Ministers was to transfer the coordination of the AfCFTA negotiations from the AU Commission to the AfCFTA
Secretariat. The December Decision of the AU Assembly takes matters further. This calls for the following observations:
1. The Secretariat is a permanent AfCFTA institution and has been designed to be more than an administrative centre.
2. The AfCFTA Secretariat needs the necessary resources and mandate for implementing a vast agenda; from developing
technical capacity within the State Parties, the coordination of the activities of the technical bodies to implement the
Protocols and Annexes, to blending the RECs and other existing African trading arrangements into one continental Free
Trade Area.
3. The Secretariat will also play a role in future AfCFTA negotiations. https://www.tralac.org/blog/article/15086-the-
afcfta-secretariat-is-the-action-now-in-accra.html

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8. E-Commerce, digitisation, and enhanced technology solutions must be foundational
to implementation methodologies employed, even to the extent of a uniform
Continental Customs Declaration e-Form.

The complexity in the changing landscape and inconclusive items as identified and relevant
to Article 42, Transitional Arrangements, (Annex 2, to the Protocol on Trade), may off course
represent potential confusion and discouragement for the Private Sector Traders15. It must
be appreciated that, without them, the AfCFTA is meaningless.

The content of this report should be utilised by all Customs Administrations on the continent,
as a tool to regularly measure their own readiness, compliance, and sustainability towards
successful AfCFTA implementation.

Finally, challenges as cited, and despite appearing negative, should be viewed in a positive
light through a climate of resolving same, towards the ultimate goal of achieving Customs
Capacity and Professional Standards for all African Customs Administrations, whilst
implementing the AfCFTA Agreement.

In the perspective of the great Pan-Africanist, Dr. Kwame Nkrumah, “It is clear that we must
find an African solution to Africa’s problems, and that this can only be found in African unity.
Divided, we are weak; united, Africa could become one of the greatest forces for good in
the world.”

COVID is noticeably identified as an existing and future concern, where the
recommendation is, to ensure that each Administration in itself, adapts and
ensures that it has a specific COVID plan where COVID will directly impact
challenges identified in this study. Above all, a Trade Facilitation mindset is Key !!

15 Such Stakeholders are already looking forward to the future of E-Commerce, Single Window and Digitisation, requiring
a wide-angle lens of implementation focus and consideration to Trade, in which approach the Customs Authority
according to the WCO Economic Competitivity Package (ECP), can foster a climate of prosperity and growth.

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2. Report on Analysis of Findings, Current Status, Insight &
Recommendations

2.1 Overview

The AUC, through its Customs Cooperation Division in the then Department of Economic
Development, Trade and Industry, and Mining, has identified the strategic role of the State
Parties’ Customs Authority, in implementation of the AfCFTA Agreement.

Consolidation of Trade into one Continental Area, will provide fundamental opportunities for
Traders and Consumers alike across Africa, and will support much needed development.
Estimates by the Economic Commission for Africa (ECA), motivate, that the AfCFTA, has the
potential to boost intra-African Trade by 52,3%, through the elimination of Import Duties and
furthermore, to double intra-African Trade, if non-Tariff Barriers are reduced.

The evolution of an African Continental Free Trade Area has been the subject of research by
numerous Global and African organisations and consultants.

In a study conducted in October 2017 by Dr. Evious K. Zgovu, it established the state of play
concerning customs procedures, customs cooperation, trade facilitation and transit systems
currently in use African Union (AU) State Parties and the Regional Economic Communities
(REC’s). Specifically, the study analyses the extent to which State Parties comply with
international best practices enshrined in relevant international agreements, conventions,
standards and recommendations on Customs procedures, cooperation, trade facilitation and
transit systems. Specific objectives and full terms of reference of this technical study are
reported in Annex I of the study. The findings of this study, assists the Continental Free Trade
Area Negotiation Forum (CFTA-NF), TWG (Technical Working Groups) on Customs Procedures
and Trade Facilitation and State Parties and Customs Territories involved in the CFTA
negotiations, in preparing for and facilitating drafting of proposals and negotiations on
Customs instruments. The findings are also a source of data for the African Union Commission
to determine and facilitate strategic interventions or activities in the implementation of the
Continental Free Trade Area. Source - African Union CFTA Unit - Situational Analysis of
Customs Procedures and Cooperation, Trade Facilitation and Transit Instruments in the AU
State Parties and REC’s STUDY (REF: AUC/CFTA/STUDY Nr. 01 / 2017).

2.2 Status update on AfCFTA Ratification

According to Article 23 of the Agreement establishing the African Continental Free Trade
Agreement (AfCFTA), entry into force occurs 30 days after the 22nd instrument of ratification
is deposited with the Chairperson of the African Union Commission (AUC) – the designated
depositary for this purpose. This milestone has been achieved and the Agreement entered
into force on the 30th of May 2019 for the 2416 countries that had deposited their instruments
of ratification by that date.

The operational phase of the AfCFTA was launched during the 12th Extraordinary Session of
the Assembly of the Union on the AfCFTA in Niamey, Niger on the 7th of July 2019.

16 For clarity’s sake, Not the same State Parties as those who participated in this study. 13 | P a g e
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36 countries had deposited their instruments of ratification. This report indicates subsequent
progressive developments.

As of the 31st of March 2021, the status was established as follows:

No Country No Country

1. Angola 19. Malawi

2. Burkina Faso 20. Mali

3. Cameroon 21. Mauritania

4. Central African Rep. 22. Mauritius

5. Chad 23. Namibia

6. Congo 24. Niger

7. Côte d’Ivoire 25. Nigeria

8. Djibouti 26. Rwanda

9. Egypt 27. Sahrawi Arab Democratic Rep.

10. Equatorial Guinea 28. São Tomé & Príncipe

11. Eswatini 29. Senegal

12. Ethiopia 30. Sierra Leone

13. Gabon 31. South Africa

14. Gambia 32. Togo

15. Ghana 33. Tunisia

16. Guinea 34. Uganda

17. Kenya 35. Zambia

18. Lesotho 36. Zimbabwe

Source: Updated Modalities and detail of 21 Sep 2017 Compromise for G-7 Special Needs

Source: tralac website: https://www.tralac.org/ 14 | P a g e

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The start of trading under the AfCFTA Agreement commenced on the 1st of January 2021, in
line with a Decision and Declaration adopted during the 13th Extraordinary Session of the
Assembly of the Union on the 5th of December 2020.

There has been considerable progress in concluding the legal instruments of the AfCFTA but
essential aspects (the Schedules of Tariff Concessions, the Rules of Origin, and the Schedules
of Specific Commitments on Trade in Services) are still outstanding17. Without these elements
there cannot be any trade under the AfCFTA. This does not mean that, in the meantime, there
will be no intra-African trade. Such trade will continue, but under existing arrangements such
as the MFN rules of the WTO or as provided for by specific Regional Economic Community
(REC) arrangements. Article 19 of the AfCFTA Agreement states explicitly that the RECs will
co-exist with the AfCFTA.18

Source: tralac website: https://www.tralac.org/

The uncertainties as related to status of submissions and conclusions of schedules of tariff
concessions is regarded as a critical factor hindering customs administrations to conclude
their implementation programmes.

As regards the question as to whether any trade has yet taken place under the AfCFTA?
According to the EIF (Enhanced Integrated Framework), Ethiopian Airlines, DHL and the
African Electronic Trade Group partnered to ship the first goods under the AfCFTA.

On 1 January 2021, the African Electronic Trade Group transported goods produced in
eSwatini to various countries that had signed and ratified the AfCFTA, including South Africa
and Ethiopia. According to the AfCFTA Secretariat, on 4 January, a shipment of beverage and
cosmetic products under the AfCFTA documents and rules took place from Ghana to South
Africa and Guinea. However, for such trade to take place, it would have to have been between
Countries that have both fully implemented the AfCFTA Agreement. The absence of any
authoritative information source, particularly on status, is alarming and will lead to Traders’
confusion and suspicions.

Source: https://trade4devnews.enhancedif.org/en/op-ed/implementing-afcfta-2021.

It is clear thus, that the shifting landscape will require careful and consistent observation by
all Stakeholders and that the Customs Authority is the conduit to receipt of preferences to be
extended under any trade conducted.

17 Determination from several sources of status can even contradict one another, as per example.
18 As of February, 41 State Parties had submitted their schedules of tariff concessions, including customs unions members

from the Central African Economic and Monetary Community, the Southern Africa Customs Union, the EAC and the
Economic Community of West African State Parties. However, not all customs processes are fully in place. Only a few
countries, such as Cameroon, Egypt, Ghana, and South Africa, have in place the needed customs procedures as required
by the relevant AfCFTA provisions. More importantly, it is even more urgent that countries that are part of a customs
union but have not yet ratified the AfCFTA do so, in order to ensure coherence in trading under the AfCFTA into the
future. Source: https://trade4devnews.enhancedif.org/en/op-ed/implementing-afcfta-2021

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2.3 General Background

African Union (AUC) State Parties that have commenced with the process towards becoming
contracting Parties to the AfCFTA Agreement in accordance with Article 22, are the focus of
the magnificent objectives of the Agreement. Such Parties are defined as a “State Party” in
terms of Article 1(V), that being those who have ratified or acceded to the Agreement.

The African Continental Free Trade Area (AfCFTA) will cover a market of 1,2 billion people,
and a Gross Domestic Product (GDP) of $2,5 trillion, across all 55 State Parties of the AUC. In
terms of numbers of participating countries, AfCFTA will be the world’s largest Free Trade
Area, since the formation of the World Trade Organisation (WTO).19 Of paramount
importance for implementation planning by Customs Administrations, is an awareness,
comprehension, interpretation, and analysis of the respective components of the AfCFTA
Agreement, as displayed in the diagram hereunder:

Source: Africa Union website: https://africa-eu-partnership.org/en/afcfta

Furthermore, awareness by Customs Authorities, and Traders in understanding that
implementation initiatives and processes by State Parties, will be a constant and progressively
developing landscape, due to phasing and various negotiations to be concluded, will require
consistent monitoring which will establish for State Parties, those whom they can commence
trading with under full AfCFTA objectives and terms.

2.4 Specific Background

Article 4(a), (d), and (e), of the AfCFTA, in addressing specific objectives deal with:

i. Progressively eliminating Tariffs and non-Tariff Barriers to Trade in goods.

ii. Cooperation in all Trade-related areas.

iii. Cooperation on Customs matters and the implementation of Trade Facilitation
matters.

19 Source: https://au.int/en/documents/20180316/afcfta-questions-answers 16 | P a g e
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As previously mentioned, this study deals specifically with the Customs Authority in each
State Party who is Party to the AfCFTA Agreement, and their needs and challenges to
implement the Customs-related, binding obligations criteria of the Agreement.

Article 4(g) of the AfCFTA Agreement sets out as one of the Specific Objectives of the
Agreement, that the State Parties shall establish and maintain an institutional framework for
the implementation and administration of the AfCFTA.

From the outset, it is clear that the Trade-related provisions of the Agreement will not be
realised unless the Customs Authority is fully capacitated to implement.

The Customs Authority is, however, reliant on performance obligations of other National,
Regional, and Continental Stakeholders.

By way of example, State Parties must develop and submit:

i. Schedules of Concessions20 for Trade in goods. These details, for each State Party
or – as the case may be - Customs Union, the particular 90% (or 85% as to selected
LDC’s) of products which are to be liberalised for each State Party, as well as the
sensitive products which are to be liberalised over a longer time period and the
excluded products, which are to be temporarily exempted from Liberalisation21.

ii. A related component to the Schedules of Concessions for Trade in Goods, is the
list of product-specific Rules of Origin which, alongside the General Rules of Origin,
will enable the application of preferences under AfCFTA. The list of product
specific Rules of Origin is being developed as part of AfCFTA built-in agenda.

Thereafter:

iii. AfCFTA Committees will then convene and begin facilitating the implementation
of the agreement, including the provision of Capacity-building to assist State
Parties with domesticating implementation.22

As mentioned, The African Union Commission therefore has a distinct and relevant
interest in the capacity of Customs Administrations of State Parties to successfully
implement the AfCFTA. Of pertinent relevance, is the participation of Trade and Private
Sector Stakeholders. Participation and involvement of the Private Sector is necessary to
ensure that the AfCFTA is shaped to assist the Business Community to Trade in Africa
towards achieving the vision that all aspire to. The 11th Ordinary Session of the AUC Sub-
Committee of Directors General of Customs (Uganda, September 2019) addressed the
entry into force of the Agreement establishing the African Continental Free Trade Area
(AfCFTA). Of significance was the consideration relevant to Customs Administrations.

20 These are to be submitted in conformance with the agreed modalities which are currently not provided anywhere within

the Agreement, its Protocols, Annexes or Appendices. However, the example of agreed modalities is provided as an

Addendum in this report.
21 African countries that ratify the agreement consent to liberalize 90% of tariff lines. This means that countries will reduce,

and ultimately eliminate, tariffs on 90% of products traded under the AfCFTA. LDCs are expected to accomplish this over
a 10-year period, and non-LDCs over a five-year period. Sensitive products, of up to 7% of tariff lines, will be fully
liberalized over 13 years for LDCs and 10 years for non-LDCs. Finally, 3% of tariff lines will be excluded from tariff
liberalization.
22 Source: https://au.int/sites/default/files/documents/36085-doc-qa_cfta_en_rev15march.pdf

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2.5 Implications to Customs Administrations.

The recommendations of the Sub-Committee mentioned above were:

i. Customs Administrations play a more central and proactive role in upcoming
processes in implementation of the AfCFTA.

ii. State Parties develop country-specific programmes including engaging with the
Private Sector for implementation of the AfCFTA, and

iii. AUC collaborates with the WCO and other development Partners to develop
specific Technical Assistance and Capacity Building to African Customs
Administrations for the effective implementation of the AfCFTA.

This study therefore takes these recommendations into account, and was conducted via
cooperation with the AUC, the WCO ROCB ESA Region, and GIZ, towards identification of the
needs and challenges of Customs Authorities in a pilot project sample of 24 of the 55 State
Parties. Whilst the study identified Capacity Building as a major obstacle in successful
implementation, it does not fully address the scope of Capacity Building dynamics and
associated criteria. However, it specifically addresses the broad scope of needs and
challenges, in the implementation of the AfCFTA. It further addresses the Capacity of Customs
Leaders to ensure their competency in Change Management, through provision of an AUC
Module, providing a Strategic Leadership approach, specifically directed at the
implementation of the AfCFTA.

“In the vision of African Customs Administrations attaining recognition as Globally modernised
administrations and supported in a related study, the findings show significant differing levels
of advancement in terms of formulation and implementation of harmonized standards for
customs across different REC’s and their member countries.

As the REC’s and member countries have moved at different speeds introducing and
harmonising Customs standards across their membership, continental customs standards
under the CFTA could present adoption and implementation challenges for member countries
that have yet to introduce most of the other customs standards at the Regional level - which
affords a ‘learning ground’ opportunity before embarking on continent-wide standards.”23

23 Source - African Union CFTA Unit - Situational Analysis of Customs Procedures and Cooperation, Trade Facilitation and
Transit Instruments in the AU State Parties and REC’s STUDY (REF: AUC/CFTA/STUDY Nr. 01 / 2017)

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3. AfCFTA Synopsis – Implementation Background

One of the most striking developments in Trade relations in recent years has been the
worldwide proliferation of Regional Agreements under which groups of countries have agreed
to reduce Trade Barriers among themselves. By their very nature, such arrangements favour
Imports from Members of the group, and discriminate against Imports, from other Countries.

This departure from the MFN principle is permitted by Article XXIV of GATT. Although the
text of Article XXIV is the same under GATT 1994 as under GATT 1947, a Uruguay Round
understanding has clarified several points in the Article that have, in the past, given rise to
difficulties.

The rules of Article XXIV are designed to ensure that countries which form Regional
Agreements, move to genuine Free Trade among themselves and provide adequate
compensation for any damage done to the Trade interests of other WTO Members. The rules
distinguish between two technically different forms of arrangement, the Customs Union, and
the Free Trade Area, as mentioned.

Both these involve the removal of Trade Barriers among their Members, however the
Member Countries of Customs Unions, all charge the same rates of Import Duty on Imports
from non-members (Article XXIV8a(ii)), while Members of Free Trade Areas, retain their own
National Tariffs.

Article XXIV requires that Customs Unions set their common Import Duties and other
Regulations affecting Imports into the Union, at a level not higher or more restrictive on the
whole, than the overall level (“General Incidence”) of those of the original Members before
the Union was formed (Article XXIV5(a)). Compensation must be provided for any increases
(Article XXIV6).

Various criteria may need to be considered for selecting Tariff lines to be excluded from
Liberalisation. The overall objective of African Countries, in conducting this exercise, may be
to foster their economic development and poverty reduction efforts. Trade Policy could play
a part through its support to the efforts to diversify the productive structures, and support to
“Infant-Industries” in Sectors with potential growth prospects.

The macro-economic framework is crucial in the identification of existing challenges,
opportunities, and risks at the National level. It is only through an AfCFTA situation analysis
that a country can assess its readiness to implement the agreement, and implementation
comes with adjustment risks, such as loss of revenue, which require mitigation actions.

However, fiscal policies concerns might further dictate the choice of products which might be
excluded from liberalisation. Hinkle and Hoppe State Parties: “some African Countries are
very heavily dependent on their Tariff Revenue for their fiscal base.” (2005).

It was not until the formation or change of the AU to the AUC in 2002, that the momentum
of realising the Continental integration goal, was rekindled. In focusing on this goal, within
its objectives, the AUC Constitutive Act, Article 3, states that the AUC aims to “accelerate the
political and economic integration of the Continent”.

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The AUC adopted action plans, such as the “Lagos Plan" for Economic Development of Africa,
which consisted of Regional Development Plans, which would include the formation of an
African Common Market.

Freedom of Transit is imperative. Some African countries are landlocked, and it is necessary
that they enjoy the benefits of the AfCFTA. Goods in Transit should not be delayed at the
Border unnecessarily. Customs Authorities on the Continent are encouraged to look beyond
Annex 2 of the Protocol on Trade, and further aspire towards full implementation of Annex
4 (Trade Facilitation), and Annex 8 (Transit), as well as the others. Please also refer to the
Istanbul Convention which additionally covers Transit Facilitation.24

Mutual Administrative Assistance under Annex 3, as defined, points mainly to Customs
Administrations cooperating on matters relating to:

a) Application of Customs Laws, and

b) Prevention, investigation, and repression of Customs offences.

However, “Customs Cooperation” is more broadly defined to include:

a) Simplification of Procedures.

b) Improvement of Trade Facilitation (Annex 4), and

c) Importantly, establishing International Customs Standards !!

Customs Leaders should be made aware that the WCO SAFE Framework of Standards (2018
version25), also contains provisions under Section VII related to Mutual Recognition, and these
extend to such recognition as Authorised Economic Operators and Customs Controls.

The objective of drawing focus here is to indicate that, within any implementation plan
relevant to Annex 3, duplication may be avoided in that the provisions of the WCO SAFE
Framework of Standards can also be included in such Agreements. By way of example, when
facilitating the “Approved Exporter” under AfCFTA, these could be designated AEO’s
simultaneously.

This mutual cooperation under the AfCFTA can extend further and meet other International
Customs Standards. When considering Capacity Building interventions and Curriculum, it too
can extend to the Customs Security obligations of the WCO SAFE Framework of Standards.

The provisions of Annex 3, Article 3, by reference to the WCO Harmonised Convention26, is
again an example of the wide reach of the Annex to Global Customs Standards.

It will be noted that other Articles extend to:
o Valuation
o Automation
o Advanced Exchange of Information
o Technical Information, and the like.

24 http://www.wcoomd.org/en/topics/facilitation/instrument-and-tools/conventions/pf_ata_system_conven.aspx
25 http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/instruments-and-tools/tools/safe-

package/safe-framework-of-standards.PDF?la=en
26 WCO Harmonized Convention - http://www.wcoomd.org/en/topics/nomenclature/instrument-and-

tools/hs_convention.aspx

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The observation of the above is that separate Capacity Building initiatives can be targeted at
the specific implementation of this Annex, which is also recommended to be implemented in
synergy to Annex 4, dealing with Trade Facilitation.

Article V of GATT provides for freedom of Transit and State Parties that: “there shall be
freedom of Transit through the territory of each Contracting Party, and further, that “except
in cases of failure to comply with applicable Customs Laws and Regulations, such traffic
coming from or going to the territory of Contracting Parties, shall not be subject to any
unnecessary delays or restrictions and shall be exempt from Customs Duties and from all
Transit Duties or other charges imposed in respect of Transit, except charges for
transportation or those commensurate with Administrative expenses”.

The Regional Trade Agreements between nations, which can be seen as being in line with
Article XXIV of the General Agreement on Tariffs and Trade (GATT), provides that a Trade
Agreement between two Parties must, in principle, be reciprocal, must be neutral in a sense
that it prevents Barriers to Trade with third Parties, and ultimately, must have an extended
coverage.

Most Favoured Nations

GATT’s most important principle is that of “Trade without discrimination”, in which each
Member Nation opens its markets equally to each other. As embodied in unconditional “Most
Favoured Nation” Clauses, it means that, once a Country and its largest Trading Partners agree
to reduce a Tariff, that Tariff reduction is automatically extended to every other GATT
Member.

GATT includes a long Schedule of specific Tariff Concessions for the contracting WTO Member
nations, representing Tariff rates that each Country had agreed to extend to others.

It further lays out the conditions whereby Regional Trade Agreements can be ranked lower to
“Most Favoured Nations”, which is a principle contained in Article 1 of GATT, with the
intention to preventing Regional Trade Agreements, from becoming Barriers to the
development of International Trade. On the contrary, the Regional Trade Agreements,
become steppingstones towards open Trade. The main outcome of the Regional Trade
Agreements should be the elimination of Duties and non-Tariff Barriers on “substantially all
Trade”, according to Article XXIV (8). One of the main reasons which led Countries to enter
into Regional Free Trade Agreements (FTAs), was to eliminate the existence of the Tariff and
non-Tariff challenges they face, when trading with each other.

Article 24 of the World Trade Organisation Treaty allows continued Trade with Europe on Zero
Tariffs, whilst negotiating a Free Trade arrangement.

Article XXIV (5) of GATT, permits countries to form Trade blocs in the form of a Customs Union
or a Free Trade Area, thereby making an exception to the MFN Rule. They should maintain
Tariff-free Trade with each other for “substantially all” their mutual Trade without offering
the same access to their markets to all other WTO Members.

Any Free Trade arrangement may not worsen the terms of Trade for non-participants and
lead to higher Duties or more restrictions on Trade than before.

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Therefore, any Customs Union or Free Trade Agreement has to be notified to the WTO, giving
other WTO Members the opportunity to air their concerns, if any. Registration and
notification must also, in terms of Article 26 of the AfCFTA, be made to the Secretary General
in conformity with Article 102 of the Charter of the UN.

The main challenge of African Customs Administrations is how to consistently secure tax
revenues and ensure compliance within the Customs Control Legislative Framework, whilst
providing an appropriate level of Trade Facilitation.

Therefore, the developments of smart enforcement strategies which help to ensure these key
objectives (Revenue, Security and Fast Clearance) are of critical National importance.

Hoffmann et al states that “Risk Management, which is effective, is a precondition to find an
acceptable balance between the aims of Customs Procedures and the streamlined flow and
Trade of goods. Customs Operations, in many developing countries are characterised by
elevated levels of physical inspections, with resulting disruption of trade flow, however, with
little positive impact for the Regional Economy”.

Most Developed Economies are now making use of Customs Risk Management Models based
on the analysis of rich datasets without physically stopping Trade. These Models can lead to
reduced physical inspections without increasing the risk to Customs of, either losing income,
or allowing the inflow of illicit goods.

“Intra-Africa Trade currently stands at only around 17% of total Trade on the African
Continent. Intra-Africa Trade is highly concentrated within the existing Regional Economic
Communities, which overlap with each other, for example: more than half of intra-Africa
Trade takes place within the Southern African Customs Union (SACU) and all five of its
Members also belong to the larger Southern African Development Community (SADC). South
Africa is the largest economy in both blocs and plays a key role as the driver of Trade in these
Regional Economic Communities. It is therefore also a key driver of intra-Africa Trade”,
Hartzenberg (2019).

According to Boateng and Dankyi (2020), “the landmark African Continental Free Trade Area
(AfCFTA) agreement, which would be fully implemented in 2021, could potentially create a
Continental Free Trade Zone with a combined Gross Domestic Product (GDP) of US$3,4
trillion, according to the AUC”.

The study purposely covered only three RECs, COMESA, EAC and SADC that form the Tripartite
Free Trade Area (TFTA). The reason for this can be found in report where it reads:

“as part of efforts to address the challenges of Intra-African trade, and the need to come up
with strategies to improve Africa’s trade performance, the African Union Summit of Heads of
State and Government in January 2012 adopted an Action Plan for Boosting Intra-African
Trade (BIAT) and a Framework for the fast-tracking establishment of a Continental Free Trade
Area (CFTA) by an indicative date of 2017, based on the progress made in the Tripartite Free
Trade Area (TFTA) involving the East African Community (EAC), the Common Market for
Eastern and Southern Africa (COMESA) and the Southern African Development Community
(SADC).”

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The AfCFTA Agreement, once fully implemented, would be the largest in the world. The
AfCFTA is one of the projects of the flagship of the First Ten-Year Implementation Plan (2014-
2023) under the AUC’s Agenda 2063.

AfCFTA was designed to create a single market of goods and services and to promote socio-
economic development together with structural transformation of the State Parties, meaning
that the Agreement is in place to assist the country with a poor system of Trade Facilitation,
to be uniform with other developed countries. The approach and outcomes will thus:

Initiate a single market, deepening the economic integration of the continent.

Establish a liberalised market through multiple rounds of negotiations.

Encourage industrial development through diversification and Regional value chain
development, agricultural development, and food security.

Resolve challenges of multiple and overlapping memberships.

Foster opportunities for African Customs Administrations to become fully modernised
according to Global standards.

The European economies are doing well because they are supported by a Continental Free
Trade Policy, therefore, the AUC role in AfCFTA, can mimic Trade Liberalisation initiatives
from the EU. Trade Liberalisation is one of the aspects of developing countries which can
be used to build a strong market economy. If the AUC drive and application towards the
AFCFTA can maintain the best possible guarantees of compliance with the rules of fair Trade,
this will be key to its market efficiency. In Europe and other Asian countries, the Customs
Administration does play an essential role in this area, even though it may not have
previously been used to its full potential.

Global organisations such as the WTO27, WCO28 and the like, seek to harmonise Trade
processes, and Origin Administration is a primary objective, due to the proliferation of
numerous Trade Agreements29.

The WCO holds a duty to standardise procedures of Customs Administrations Internationally
and is constantly developing tools and instruments to support Customs Administrations and
improve International Trade. One of those instruments, is the WCO Revised Kyoto
Convention (RKC)30.

27 The World Trade Organization (WTO) is the institution responsible for managing Global Trade negotiations and settling
Trade disputes between countries. According to the WTO, their purpose is to “to help Trade flow as freely as possible —
so long as there are no undesirable side effects”.

28 The World Customs Organisation (WCO), is an International organisation, headquartered in Brussels, Belgium and plays
a critical role in the discussion, development, promotion and implementation of modern Customs Systems and
Procedures.

29 See Special Annexes to WCO RKC.
30 The RKC’s key elements include the application of simplified and harmonized Customs procedures in a predictable and

transparent environment, the optimal use of information technology, the utilization of risk management for efficient
Customs control, a strong partnership with the trade and other Stakeholders, and a readily accessible system of
appeals.

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The primary objective of the WCO is to enhance the efficiency and effectiveness of Member
Customs Administrations thereby assisting them to contribute successfully to National
development goals and particularly, Revenue Collection, National Security, and Trade
Facilitation.

The RKC is the International Convention on the “Simplification and Harmonisation of
Customs Procedures”, but moreover, its goal is to promote and facilitate effective and
legitimate International Trade.

As it is necessary to achieve non-Preferential Origin Rules that are objective,
understandable, and predictable, and thus the WCO RCK seeks to address uniformity in the
application of the Rules of Origin.

At this juncture, it would be prudent to touch on recent WCO developments, in recognition
of the AfCFTA and the WCO’s continued role in the simplification and harmonisation for
interpretation of Rules of Origin, through its Global standard instruments, such as the
Revised Kyoto Convention. Please take note, by way of example, the following as extracted
from the WCO news and media information portals.

“On 10 February 2021, the WCO Secretary General Dr. Kunio Mikuriya met with
H.E Dr. Isaac W. Nyenabo II, the Ambassador of the Republic of Liberia in Brussels
at the Headquarters of the WCO, following the deposit on 14 December 2020 of
the country’s act of ratification of the International Convention on the
Simplification and Harmonization of Customs Procedures (Revised Kyoto
Convention - RKC). Liberia now becomes the 125th Contracting Party to this
Convention and it has entered into force for the country on 14 March 2021.

During his meeting with Ambassador Dr. Isaac W. Nyenabo II, Secretary General
Mikuriya highlighted that, in support of Liberia and the African Continental Free
Trade Agreement (AfCFTA), (Emphasis added) the RKC is a powerful instrument
and if correctly implemented can contribute to boost trade, improve revenue
collection, safety, and security controls. Secretary General Mikuriya seized this
opportunity to reaffirm WCO’s commitment to supporting African Customs
administrations through its Capacity Building initiatives.

It should be noted that this international instrument is considered as forming the
basis for effective, efficient, and modern Customs procedures.

Having entered into force on 3 February 2006, the Revised Kyoto Convention (RKC)
is a WCO legal instrument regarded by the entire international Customs
Community as a blueprint for modern Customs procedures in the 21st Century,
which supports countries’ efforts towards the efficient and harmonious
implementation of the World Trade Organization’s Trade Facilitation Agreement
(TFA) that entered into force on 22 February 2017. With the accession of the
Republic of Liberia and Turkmenistan, the RKC now has 126 Contracting Parties.

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The World Customs Organization (WCO) further hosted the 39th Session of the
Technical Committee on Rules of Origin (TCRO) on 2 February 2021. Chaired by
Ms. DING Nan (China) and with a welcome from the Deputy Secretary General, Mr.
TREVIÑO CHAPA, the meeting was attended by more than 100 participants from
around the world. This included observers from the WTO, UNCTAD and the ICC.

The meeting was updated on intersessional developments in relation to the WCO
Action Plan on Preferential Rules of Origin, the Revenue Package, Capacity
Building, and the practical application of rules of origin, including implementation
of Advance Ruling systems. Particular coverage of the progress of the work under
the Comprehensive Review of RKC on Specific Annex K was given.

In addition, the availability of virtual Capacity Building was emphasised, and
Members were reminded that they could request targeted training in all rules of
origin related matters. The Secretariat will continue to provide technical
assistance on national, Regional and Global levels.

In attendance, representative of the WTO Secretariat, Mr. Darlan MARTI, briefed
the Technical Committee on the activities of the TCRO and the developments which
had taken place at the WTO with respect to rules of origin.

He noted that WTO Members continued to hold discussions in two primary areas,
the preferential rules for origin in non-reciprocal trade preferences for Least
Developed Countries (LDCs); and the Non-preferential rules of origin, in particular
notifications and transparency. During this time, there was the celebration of the
25th anniversary of the WTO Agreement on RoO.

In her closing remarks, the Deputy Director of the Tariff and Trade Affairs
Directorate, Ms. Gael GROOBY reminded the delegates that the WCO, will host its
Second Global Origin Conference, from 10 to 12 March 2021, in a virtual format,
with the funding from Korea Customs Service. She invited and encouraged
Members to take part in this flagship event to make it a resounding success in
terms of participation, high-level speakers and the richness of the themes and
debates at a Global level as well as in the interactions between Customs, private
sector and academia.”

3.1 Rules of Origin Capacity is the Key to Success of the AfCFTA

The success and primary objectives of the AfCFTA, are foundational upon the Customs
Administration in the Exporting Country, generating compliant Proof of Origin, which will be
acceptable to the Customs Administration of the Importing Party or Country, in accordance
with preferences to the Importer, in terms of the Agreement.

A fundamental and concerning observation from the survey conducted was the absence of
planning for implementation of the AfCFTA by a number of Customs Administrations.

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As such, a detailed analysis of the Customs-related Articles within the Agreement itself, the
Protocols and Annexes has been conducted and provided in this report and related capacity
module, which, should serve as a Priority Implementation Checklist for Customs Leaders, in
implementation compliances, and associated yet highly relevant additional information
thereto. The MFN Origin of a product is used to determine the Import Duty payable, and
whether it is subject to an Anti-Dumping or Countervailing Duty.

It is further used for the compilation of trade statistics. Both of these, Preferential and Non-
Preferential, are going to be of significant importance for the AfCFTA, particularly when each
country has complied with Annex 1(1) of the Protocol on Trade in the AfCFTA.

It is crucial to establish whether goods are entitled to the payment of reduced, or zero Import
Duties. The Declaration to Customs evidencing compliance to classify the goods under the
correct WCO Harmonised Coding System, the correct Valuation, and correct Origin, will
ensure the correct duties can then be calculated. Even if the goods are Duty Free, the correct
Origin Declaration assists in Trade Statistics.

Customs will play a critical role, even if the Concessions in Annex 1(1) to the Protocol on Trade
have not been finalised. When State Parties comply with this Annex and submit the lists of
goods which require Concessions on Tariff, such goods could still have quotas on them. This
means that Customs will not only be tasked with verifying the Origin but will also be
implementing the quotas associated with the goods on the list.

3.2 Determination of Origin and compliance to the Rules thereof.

When addressing the challenges in implementation of the AfCFTA, the Customs Authority
Leadership will be reliant on internal Capacity to interpret Rules and confirming Origin to
Exported products. A brief summary of such Rules and their complexities is reflected
hereunder. (See Article 4, 5 and 6 of Annex 2 to the Protocol on Trade)

a) A product shall be considered as originating from a State Party if it has been [wholly
obtained], in that State Party. This condition is usually satisfied by raw materials and
agricultural products, as well as secondary products manufactured locally.

These include products of mineral resources, other non-living natural resources extracted
from the ground, seabed, below sea, plants and plant products, live animals, and
products obtained from live animals.

b) A product must have undergone [substantial transformation] in that State Party within
the meaning of Article 6 of the Annex. These products will be considered as sufficiently
worked or processed when they fulfil one of the following criteria:

i. Value-added

ii. Non-originating material content

iii. Change in Tariff heading or specific processes.

iv. Receipt processed.

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In line with Article 6 of Annex 2, the product is described as “manufactured with materials”
(materials containing local and imported input) and must be substantially transformed in the
preferential Trade Partner country, in compliance with the respective RoO, before the
product can be regarded as an originating product.

3.3 How would the Rules of Origin work?

By granting each other Trade Preferences, in compliance with the objectives of the AfCFTA
Agreement, State Parties would source more intermediate and final goods among
themselves, rather than Import from abroad.

The Technical Test requires that a specific process must be conducted locally, before the
product can be considered “originating”, thus, the product, resulting from a process operation
in the Exporting country, must have its own specific properties and composition, which did
not exist prior to the process or operation.

An example of this is Toyota, who manufactured a vehicle in South Africa and sell it to a Buyer
in Nigeria. The vehicle incorporates importing of tyres, engines, and so forth, however the
vehicle has its own final properties, which are different from the imported input (raw)
materials.

Customs Officers involved in the successful implementation of the AfCFTA, will need to be
well trained and skilled to accurately determine the composition of input (raw) materials in
the finished or manufactured goods, without depending entirely on a third-party for such
knowledge.

The Customs Classification Test, also called “the change in Tariff Heading test”. The process
or operation performed on a product in an Exporting Country results in the product imported
being classified under a different Heading of the HS Customs Tariff Classification System.

An example: imported cotton (HS Code 5204.11) from Mali to South Africa, and South Africa
uses the cotton to manufacture garments. The garments will then be classified under HS Code
6202.11. The Customs Authority will then have the professionally trained Customs Officers to
handle the classification of the products, according to the General Rules of Interpretation.

The Economic Test also known as “value-added test” is important in determining compliance
in terms of RoO. It is the most common form of economic test, and as a rule, it stipulates that
a product can be considered as having Local Origin, provided the foreign inputs do not exceed
a certain threshold.

3.4 References in the AfCFTA Agreement, Protocol on Trade, and the Annexes thereto, for
the Customs Administrations to take note of for Implementation Planning.

We now look at the Agreements etc. to determine customs authority compliances which
could also present challenges. Although it will be a requirement for Customs Administrations
to avail themselves of the complete content of the AfCFTA Agreement, i.e., the Protocols,
Annexes, and Appendices, a summary is provided below on the most relevant Articles in
these, the contents of which must be observed by Customs Administrations.

3.5 Agreement establishing the African Continental Free Trade Area

The Agreement consists of a Preamble, and 7 Parts.

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Part I - Definitions (Article 1)

Familiarity with the definitions is crucial in order to interpret the Articles in the Annexes and
Main Agreement.

Part II - Establishment, Objectives, Principles, and Scope (Articles 2 to 8)

1. Specific objectives (Article 4) - From a Trade perspective, this Article would form the basis
upon which the General Objectives (Article 3) to the Agreement would be achieved, e.g.,
the elimination of Tariff and non-Tariff Barriers to Trade in goods, Cooperation in Customs
matters and the implementation of Trade Facilitation measures, etc.

2. Article 5 – REC’s Free Trade Areas (FTAs) as building blocks for the AfCFTA (Please see
comments on Annex 2 hereunder:)

Article 5 encourages State Parties Customs Authorities to cooperate in the use of
Simplified Harmonisation in Customs Procedures, particularly relevant to International
Standards. The benchmark is set with International Instruments like the WCO Protocols,
and the WTO Agreement on Trade Facilitation.

3. It is imperative that the Customs Leadership understands that the RoO of Annex 2 (See
Addendum iv), are not yet finalised and, as an interim measure, the RoO pertaining to
existing Regional Trade arrangements (Refer to Article 42(3)), will be utilised to confer
Origin on qualifying products. This phasing of outstanding issues per Article 42, is highly
relevant and will need to be understood by Customs and Traders alike, in case of any
impacts and shifting compliances.

4. Traders will require Trade delivery into new markets to be certain and predictable. In case
of future rule changes, which could render a previously qualifying product no longer
qualifying, which could impact on Exports in process31.

Traders may be cautioned against concluding deals which could be impacted and, as such,
the AUC may require a timeline, as to the effective date of application of the introduction
of future rules.

5. Status of the Protocols, Annexes, and Appendices (Article 8) - This Article provides that
the Protocols as listed and the Annexes and Appendices thereto shall, upon adoption,
form an integral part of the Agreement. They can therefore never be considered in
isolation of the objectives, specific objectives, principles, and scope of the Agreements
provided in Articles 3 to 6. Customs Leaders should never lose sight of the overall
objectives. Whilst Annex 2 relating to RoO is significant, all Annexes are of Customs
relevance.

Part III - Administration and organisation (Articles 9 to 15)

1. Customs Leaders should be aware of the governing structures as provided in the AfCFTA
Agreement and where their participation may be applicable and relevant.

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Part IV - Transparency (Article 16 and 17)

1. Customs Leaders are aware that their State Parties have been participating in existing
Trade arrangements and should thus have institutional Capacity.

2. Article 16 however, dealing specifically with the Publication of Legislative
implementation is of paramount importance.

3. Article 17 Compliances of the notification of Legal Publications relating to the Agreement,
must be notified to the Secretariat, in order to share same with other State Parties.

Part V - Continental Preferences (Article 18 and 19)

1. Continental Preferences (Article 18) - State Parties, are in accordance with this provision,
required to accord each other’s preferences on a reciprocal basis, not less favourable to
that which are afforded Third Parties. It further provides that State Parties shall continue
with their obligations under Agreements which they might have with Third Parties.

2. In brief, this entails that a State Party cannot give a lower preference to a Third Party,
than it would afford a State Party Member under the AfCFTA. Anomalies detected must
be pointed out to Trade Authorities by the Customs Authority and traders.

3. Conflict and inconsistency with Regional Agreements (Article 19) - To the extent that
there might be conflict or inconsistency with other Agreements in the REC’s, the AfCFTA
will prevail, unless the AfCFTA provides otherwise. This Article also provides that a higher
level of integration, may be achieved by State Parties.

4. Should Customs Leaders detect a conflict, they should be aware that the provisions of
AfCFTA, will prevail. However, it must again be stressed, that the outstanding issues of
AfCFTA, are still in the process of being concluded.

Part VI – Dispute Settlement (Article 20)

1. Disputes of this nature will be Trade-related. Customs Disputes are contained in Article
40 of Annex 2, which ultimately refer back to this Article.

Part VII – Final Provisions (Articles 21 to 30)

1. Entry into force (Article 23) - Paragraph 1 provides that, the Protocol on Trade in Goods,
Trade in Services, and Protocol on Rules and Procedures on Settlement of Disputes, shall
enter into force 30 days after the deposit of the 22nd instrument of ratification.

2. Paragraph 3 provides that, inter alia, the mentioned Protocols shall, for a State Party,
enter into force on the date of the deposit of its instrument of accession.

3. Customs Authorities are reliant on other inter-governmental agencies to conduct these
compliances, in order for them to be implemented. The provisions of Articles, in Part VII
of the Agreement, should give the Customs Authority a general awareness of the process
conducted by Trade Authorities, to arrive at the final ratified documents and submissions
of accession to the Agreement. Article 28 however, provides for review after 5 years,
which could have Customs-related impacts. Likewise, Article 29 deals with future
amendments.

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3.6 Protocol on Trade in Goods
Reference to the Protocols is in Article 8 of the Agreement.
Protocol consists of the Preamble, and 10 Parts, and includes 9 Annexures.

All Annexes are part of the Protocol on Trade and each Annex must be scrutinised for Customs
Compliances and obligations.

Source: International Trade Centre: “A business guide to the African Continental Free Trade
Area Agreement.

Cognisance must be taken that these arrangements are those falling outside the
Administrative Cooperation provided for in Part IV of Annex 3, for the purposes of Origin.
Customs Authorities should understand that, whilst Annex 3 provides for general Mutual
Cooperation, Annex 2, goes further to provide Mutual Assistance in ensuring compliance in
Origin criteria. Annex 3 would generally be implemented, through the International Relations
Division of a Customs Authority with individual State Parties.

Part I – Definitions, Objectives, and Scope (Articles 1 to 3)

1. Definitions (Article 1)

Customs Authorities must be clear as to the definitions for interpretation purposes, and
particularly the Schedule of Tariff Concessions, without which they cannot implement the
AfCFTA.

2. Objectives (Article 2) - This Article refers back to the objectives in Article 3 in the main
Agreement. The primary objective is to boost intra-Africa Trade through specific
measures, such as the elimination of Tariff and non-Tariff Barriers, efficiency of Customs
Procedures, Trade Facilitation and Transit, Cooperation in the area of Technical Barriers,
development of Regional and Continental Value Chains, and enhancement of socio-
economic issues. In the spirit of the Agreement, the Customs Authority will, in
implementation of the Annexes, seek to assist Traders, especially in Trade Facilitation.
The Customs Authority should do all in their power to assist Traders.

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3. Scope (Article 3) - Paragraph 1 highlights that the Protocol will apply in Trade between
the State Parties. Paragraph 2 lists the Annexes of the Protocol, which will, upon adoption,
become part of the Protocol. In this regard all 9 Annexes, which will be noted separately,
have been adopted.

Cognisance must however be taken that, although the Annexes have been adopted, there
may be certain aspects thereof respectively which still need to be finalised.

Part II – Non-Discrimination (Articles 4 to 6)

1. Most Favoured Nation Treatment (Article 4) - This Article refers back to Article 18 of the
AfCFTA Agreement, which provides for the treatment that State Parties must afford each
other, on the basis of extending preferences to each other, whilst maintaining their Trade
commitments prior to the entry into force of the AfCFTA Agreement. For Customs
Authorities it is important to note that Trade under the REC arrangements will continue.
However, Trade under AfCFTA will extend beyond the REC’s.

2. National Treatment (Article 5) - The objective of this Article is to place similar products,
imported from other State Parties, on an equal footing with those of domestic products,
by affording such imported products no less favourable treatment, than that granted to
domestic products, after Clearance by Customs. Reference is made to Article III of GATT
1994, affecting the sale and conditions for sale of such products. Once again, this refers
to the Schedule of Tariff Concessions in which the modalities32 will address equally, as to
local and imported products, of a similar kind. This requires a Customs awareness.

3. Special and Differential Treatment (Article 6) - This Article deals with the flexibilities State
Parties will afford each other in the Trade Offers, by consideration of limitations which
some State Parties may have. In this regard, consideration is given to Trade Offers from
LDCs and DCs, as well as sensitive industries. The Customs Authority must be aware,
although one State Party grants preference to a product, other State Parties may not
necessarily grant a similar treatment to the same product. Thus, the Agreement also
allows for different phase-in periods for lesser developed Countries.

Part III – Liberalisation of Trade (Articles 7 to 13)

1. Import Duties (Article 7) - Reference is made in paragraph 1 to the elimination of Import
Duties and charges having an equivalent effect on goods originating in a State Party in
accordance with the Trade Offers made by State Parties, to which commitments were
made, in terms of Annex 1, to the Protocol on Trade. Therefore, this forms the basis of
the preferential treatment State Parties will accord each other under the Agreement.

Paragraph 2 places a cap on any increase of Import or equivalent charges on products
which are subject to Liberalisation, i.e., the phase down of Duties. Paragraph 3 defines for
the purposes of the Agreement, what is included in the term “Import Duty or equivalent
charge”. The exclusion covers in main the various obligations under GATT.

32 The Modalities are not yet specified anywhere in the AfCFTA. An example is however provided as an Appendix to this
report.

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The Customs Authority must be aware that adopted Tariff Concessions by the Assembly,
will form part of Annex 1 as an Appendix. Export traders would need to have visibility of
same and may need assistance to understand phase-in and excluded criteria according to
the HS Tariff.

As these Tariff Concessions are adopted, they will then become part of the Agreement
and will need to be updated and reflected in the Schedules to the Customs Legislation and
visible to traders, for assistance and guidance as to the interpretation of qualifying
products.

2. Schedules and Tariff Concessions (Article 8) - This Article has reference to Annex 1 to the
Protocol on Trade for the application of Tariff Preferences. In order to give effect thereto,
consideration must be given to this Article, in conformity with the adopted Tariff
modalities.

The Article further alludes to conclusive developments on the modalities, which are still
outstanding and must still be finalised. The modalities33 are the terms, which informs on
how the changes to the Preferential Import Duty structure will be affected until final and
full implementation status is attained. Refer to the above points, as to guidance and
insight for customs leaders, please take note that this provision of Tariff Concessions by
State Parties, will be an ongoing process.

3. Export Duties (Article 10) - The Article provides for the imposition of Export Duties on a
non-discriminating basis. Customs Authorities should be aware that Export Duties as
applicable, and, as the case may be, when provided for in Customs Legislation, will still be
in force and of effect.

4. Elimination of Non-Tariff Barriers (NTB) (Article 12) - This Article provides for the
inclusion of Annex 5 in accordance with which non-Tariff Barriers are identified,
categorised, monitored and eliminated. As mentioned, the Protocol on Trade has several
Annexes which are of relevance to the Customs Authority. However, Customs Authorities
should be aware of potential NTB’s and the elimination thereof when identified. They
must be proactive in elimination.

5. Rules of Origin (Article 13) - This Article provides for the inclusion of Annex 2, setting out
the criteria and conditions for goods to be considered as originating for preferential
treatment purposes.

6. The Customs Authority must be in a position to generate a compliant Certificate of Origin
(CoO) which will be utilised for preferential treatment in an Import State Party and
administer the granting of preferences for Imports from other State Parties, for which a
Proof of Origin, has been issued. Annex 2 provides the Rules to confer Origin. Technical
Capacity is required to interpret and apply these Rules.

33 A particular mode in which something exists or is experienced or expressed. • a particular method or procedure: the
modalities of troop withdrawals. • a particular form of sensory perception: the visual and auditory modalities. Apple
Dictionary.

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Part IV – Customs Cooperation, Trade Facilitation and Transit (Articles 14 to 16 of the
Protocol on Trade)

1. Customs Cooperation and Mutual Administrative Assistance (Article 14) - This Article
provides for the inclusion of Annex 2, setting out appropriate actions for State Parties in
terms of such cooperation and assistance.

2. Trade Facilitation (Article 15) - This Article provides for the inclusion of Annex 4, to the
Protocol on Trade, for appropriate measures to be taken on Trade Facilitation. Similarly,
the Parties have agreed that they will provide Trade Facilitation and will therefore need
to implement this Annex.

3. Transit (Article 16) - This Article provides for the inclusion of Annex 8 to the Protocol on
Trade, for appropriate measures to be taken regarding Transit of means of transport. It is
clear that various shipments under AfCFTA will be conveyed across other State Party
territories. If the Transit provisions are not facilitated, this could be detrimental to the
Traders in the transaction. Should this be the case, the objectives of the Agreement will
not be achieved.

Part V – Trade Remedies (Articles 17 to 20)

Part VI – Product Standards and Regulations (Articles 21 and 22)

An awareness as to the competency of Customs Authorities in interpretation of other
Customs-related Articles in Annex 6 is evidenced here, such as the impact of Technical Barriers
to Trade.

Part VII – Complementary Policies (Articles 23 to 25)

Customs Leaders must take cognisance of the following:

1. Special Economic Arrangements/Zones (Article 23) - Paragraph 1 of this Article promotes
the establishment of Special Economic Arrangements/Zones for the purposes of the
acceleration of development.

2. Reference is made in paragraph 2 of the Regulations, which, are yet to be developed and
concluded by the Council of Ministers. Note must be taken of Article 42 of Annex 2, which
lists these Regulations as still being outstanding. Paragraph 3 provides that products
manufactured in these Special Economic Arrangements or Zones shall be subject to the
Rules of Origin of Annex 2.

Part VIII – Exceptions (Articles 26 to 28)

These mainly contain non-Customs-related provisions, not relevant for implementation
challenges.

Part IX – Technical Assistance, Capacity Building and Cooperation (Article 29)

1. Technical Assistance, Capacity Building, and Cooperation (Article 29) - This Article
provides for the Secretariat to coordinate and provide Technical Assistance and Capacity
Building in matters relating to the implementation of the Protocol on Trade, enhance
cooperation for the implementation thereof, and to explore obtaining assistance with
resources for the implementation thereof.

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2. Customs Leaders will be aware of the need for personal competency and that of Officers
who are required to successfully implement the Agreement. The research has identified
Capacity Building as key strategy for implementation and furthermore, highlighted the
lack of Capacity in various Customs Administrations. This part of the Agreement is specific
to the attainment of such Capacity.

Part X – Institutional Provisions (Articles 30 to 32)

1. Implementation, Monitoring and Evaluation (Article 31) - This Article provides for the
establishment of the Committee on Trade in Goods by the Council of Ministers, the
structure, and the reporting measures. The Committee in turn have the Authority to
establish subsidiary bodies to assist in the discharge of their functions.

This Article must be read with Article 38 of Annex 2, which provides for the establishment
of the Sub-Committee on Rules of Origin.

Customs Leaders must be aware of the governing structures which implement as well as
their own obligation to participate.

3.7 Annex 1 – Schedule of Tariff Concessions

At present this Annex consists of 2 paragraphs:

Paragraph 1, provides for State Parties to develop Schedules of Tariff Concessions in
accordance with the approved modalities. This paragraph must be referenced to Article 8 of
the Protocol on Trade, which guides as to how this must be accomplished. Note must be taken
that this has not yet been finalised.

Paragraph 2, provides that the Schedules of Tariff Concession shall, once it is adopted by the
Assembly, be appended to this Annex. If all State Parties and Customs Unions have thus
completed their Schedules of Tariff Concession, all relevant appendices will eventually be
included in this Annex. For the entry into force for the Schedules of Tariff Concession, refer
to Article 23 of the Agreement.

With regard to the above two paragraphs, it is relevant for Customs Authorities that they can
implement the Agreement when their Schedule of Tariff Concessions is lodged, from the date
of deposit of the instrument, in accordance with Annex 1, to the Protocol on Trade. Trade
Officials will primarily be involved to establish the modalities which were approved at the
Summit Meetings, as relevant, and Customs will traditionally assist in verification of
information submitted, according to the agreed modalities. Of relevance is to monitor these
instruments of potential importing countries to provide Capacity to identify opportunities to
their Exporters.

3.8 Annex 2 – Rules of Origin

Reference to this Annex is in Article 13 of the Protocol on Trade.

This Annex consists of 5 Parts and Appendices.

This Annex of the Protocol on Trade, impacts in totality on the responsibilities, obligations,
and functions of the Customs Authority of the respective State Parties.

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However, a methodical approach to dissection and analysis of the Agreement itself, will be
helpful in comprehensive implementation.34

The Role of the Customs Leadership in implementation will be substantially improved by the
detailed examination of the Customs-related criteria as extracted and explained. This brief
insight to Technical terminology and concepts that could find application in confirming Origin,
does appear daunting at first.

NB!! The implementation of the Annex requires specific Technical knowledge,
comprehension, and competency to confer Origin to a product in terms of the Rules.
If the designated Competent Authority who issues the CoO, is not the Customs
Authority, they will need special training and Capacity Building to apply the rules of
this Annex. The definitions of Annex 2 are particularly important.

Part I – Definitions (Article 1)

1. Reference is made to Article 42 (1) of this Annex regarding the definition of “Value
Added” in Article 1(x) which is still an outstanding issue. The concept refers to the
criteria set for sufficiently worked or processed in Article 6(1)(a) of this Annex. Note that
the text to the definition is in italics.

2. To the Customs Leadership – it is again stressed that there are a number of outstanding
issues pertaining to some definitions. However, the RoO of the REC would, in the interim,
be applicable35.

3. As a norm the Customs Authority will be the responsible Authority to issue Certificates of
Origin and to grant preferences within the provisions of Customs Law.

4. However, with reference to the definitions in Article 1(g):” Customs Authority”, and that
in Article 1(I):” Designated Competent Authority”, it should be noted that for some State
Parties the “Designated Competent Authority” responsible for the issue of Certificates of
Origin could be an Authority other than the “Customs Authority”.

5. Note must also be taken that the definition to Article 1(m):” Generally, Accepted
Accounting Principles” (GAAPs), is still in italics. A cross reference to this is found in Article
42(1)(e), which lists the drafting of additional provisions in Annex 2, as one of the
outstanding issues. This again accentuates concerns of relevant outstanding issues.

6. Article 42(1)(b) also alludes to the drafting of additional definitions in this Annex.
Customs Leaders should be aware in the event that such additions may impact the
Customs Authority.

34 Source: International Trade Centre: “A business guide to the African Continental Free Trade Area Agreement.
35 As the existing REC RoO are the foundation for implementation of the AfCFTA, Customs Authorities and Traders alike will

need to be familiar with existing REC rules which, may in themselves present interpretation challenges. By way of
example, there is much in the SADC Annex 1 which is not complete or missing, example; Invoice Declarations, cumulation,
aspects of certification, etc. To be more specific one would have to put it next to the AfCFTA Annex 2 and note the
shortcomings.

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Part II – Purpose, Objectives, and Origin Conferring Criteria (Articles 2 to 16)

1. Consideration must first, and foremost, be given to the objectives, as contained in Article
3, when dealing with trade, under the Protocol on Trade. It should be borne in mind that
the Liberalisation of Trade in goods from Import Duties, is just one of the steps of the
overall objectives of the Agreement. Customs must be seen to facilitate trade in order to
achieve these objectives. It is imperative that legitimate traders are assisted as far as
possible.

2. With reference to Article 4, Customs Leaders will, from examination of the Articles of
Annex 2, begin to appreciate the knowledge & comprehension component of their
required competency, to be able to confirm Origin according to the Agreement.

3. It must be noted that the list of products considered as “wholly obtained” provided in
Article 5 is an exhaustive list. If a product cannot be read into one of the categories it
cannot be considered as a “wholly obtained” product for purposes of this Annex.

4. Reference is made in Article 5(2) to the terms “their vessels” and “their factory ships” as
referred to in Articles 5(h) and (i) for which two proposals are on the table.

This matter is also listed in Article 42(1)(a) as one of the outstanding issues agreed to.

The effect of this is that in the absence of a clear decision on one of these proposals, in
accordance with Article 42(3) of this Annex, the versions thereof as contained in existing
Trade Regimes of State Parties must be applied in order to Facilitate Trade. As an example,
SADC countries would apply that version contained in the SADC Agreement. Note that the
proposals are in italics. This is again still flagged as an outstanding item. However, the
interpretation in the REC will be applicable in the interim. Thus, the specific
interpretation, yet to be concluded, is what designates “their ships or vessels” to achieve
“wholly owned” compliance.

5. Article 6(2) alludes, “in order for products to be considered to be “sufficiently worked or
processed”, they must satisfy the specific rules set out in Appendix IV”. This Appendix is
also listed in Article 42(1)(c) of this Annex as one of the outstanding issues still to be
addressed. Reference in this regard should also be made to the understanding in Article
42(3) to apply the specific rules, as set out in the existing Regional Trade Regimes. Note
must also be taken of the outstanding issue of the “absorption principle” referred to in
Article 42(1)(e) which still has to be taken up in this Annex.

6. Customs Leaders must understand that, in order to apply the “sufficiently worked” rule,
Appendix IV must be consulted. However, once again, these are unfinalised criteria in
relation to the Rules of Origin. (Article 42(3).

7. Regarding Article 7, working or processing not conferring origin, a special note should be
taken of paragraph 1(o) in that any combination of the aforementioned processes listed
in this Article can, under no circumstances, be considered as “originating” for the
purposes of this Annex. In this regard, as well as for the purposes of Article 6(1), in the
event that a product does not meet the “origin criteria”, it will retain the origin it had
before these criterions were considered.

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8. With reference to Article 8(4) regarding “cumulation” within the AfCFTA, it must be kept
in mind that this process refers to products already originating in one of the State Parties.
It will thus not be necessary for such products, when worked or processed in another State
Party, to comply with the “Origin” criteria as set out in Article 6.

However, if any working or processing is conducted thereon, in another State Party, it will
attain the origin of that State Party, provided such working or processing exceeds the
operations of Article 7, which are considered as “not conferring origin”. If not, it will retain
the origin applied to the product prior to such working or processing.

Article 8 of the Annex therefore clarifies that cumulation of Origin, between State Parties
will aid in the implementation of AfCFTA. The effect thereof is that, for this purpose, all
State Parties are considered as a Single Territory.

Raw materials or semi-finished goods originating in any of the State Parties and
undergoing working or processing in another State Party, shall be deemed to have
originated in the State Party where the final processing or manufacturing took place. This
will be a further process in determining Origin and compliance.

Whilst Customs Leaders will identify technical terminology in the above three paragraphs.
It is again pointed out that the whole of Annex 2, subject to provisions of Article 42(3),
which is not yet finalised, will be applicable to the Customs Authority. Notwithstanding
this, it is further pointed out that current REC’s do not mention the “absorption principle”.
As such, this terminology or Rules of application may be unfamiliar to some current
Customs Officers.

9. Article 9 provides for “goods produced in Special Economic Arrangements/Zones” to be
considered as originating for the purposes of this Agreement and states that goods
produced in a Special Economic Zones, shall be treated as originating goods, provided they
satisfy the rules in Annex 2, and which entitles it to be used to determine compliance as
well. State Party Customs Administrations can request and exchange information, should
there be any Declaration which Customs require further information on, from the
Exporting Country. Note should be taken that the text of this Article is in italics. Reference
is made to the Transitional arrangements of Article 42(1(d)) which lists the drafting of
Regulations for this purpose as still outstanding. Reference must also be made to Article
23 of the Protocol which encourages the development of such facilities.

This is again another unfinalised matter. However, due cognisance must be taken of the
provisions of Article 23(2) of the Protocol on Trade, which evidence that Regulations must
still be developed. This must be read in conjunction with Article 9 of Annex 2.

10. Article 10 of the Annex states that State Parties cooperate and share information36 and
undertake to treat such information with utmost confidentiality and use such information
only for the purpose for which it was requested. Customs will share such sensitive
information to assist them to prevent, investigate, and suppress Customs Offences.

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11. Article 11 of the Annex on Technical cooperation State Parties that Technical cooperation
will enhance Customs capacities through joint training, sharing of resources and facilities,
sharing of Technical and Scientific data, which is extremely valuable for today’s Customs
Administrations.

Fortunately, with the harmonisation of Systems and streamlining of Customs activities
across Borders, the importance of cooperation cannot be emphasised enough for the
realisation of the implementation of AfCFTA.

12. Neutral elements provided for in Article 15, may pose in-depth audit functions, when
considering operational impacts for the purposes of this Annex, the value thereof in
determining the origin of a product. It is of paramount importance that required skills and
capacity be applied to such considerations.

13. The Principle of Territory in Article 16, provides for operations which may be carried out
to originating products and circumstances in which, when goods are moved through the
territories of other State Parties or outside the territory of State Parties, the origin status
thereof, will not be affected.

The main consideration in this regard is that goods must remain under Customs Control.
Once a product is released from Customs Control the burden of proof is on the Importer
that the origin of the product had not been affected.

Part III – Proof of Origin (Articles 17 to 33)

1. Article 17 provides that Proof of Origin under the Annex, can be in the form of a Certificate
of Origin in the format provided in Appendix I, or an Invoice Declaration made out by an
Exporter in the text provided in Appendix II. Note must also be taken that in accordance
with Article 28, goods imported by private persons or in small values are exempted from
the requirement from the submission of Proof of Origin, subject to specific value limits,
provided that the products are originating.

2. The format of the Certificate of Origin provided in Appendix I, consists of:

(a) Notes for the Completing of the AfCFTA Certificate of Origin.

(b) General requirements to consider when completing the Certificate.

(c) The format for a AfCFTA Certificate of Origin.

(d) Arrangements for Verification of Origin, on the reverse of the Certificate of Origin.
Note should be taken that Certificates of Origin must be serially numbered.

For this purpose, pre-printed Certificates must be made available by the Designated
Competent Authority, to Exporters, for completion and submission, together with the
necessary documentary proof, for certification. Also refer to Article 33, pertaining to
Discrepancies and Formal Errors, to the Origin documentation.

3. Note should be taken of the reference in Article 42(1)(f) on the matter of drafting of
AfCFTA Rules of Origin Manuals/Guidelines.

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One such Guideline would be that which would apply to the granting of Approved
Exporter37 status, in accordance with Article 20, read in conjunction with Article 19. Keep
in mind the wording of such a Declaration provided in Appendix II.

4. Articles 21 to 23, 25 and 26 covers the issue of Certificates, the scrutiny of supporting
documents and the issue of retrospective/duplicate/replacement Certificates of Origin. If
the main objectives of the Agreement are to be achieved, it is critical that Exporters be
afforded the necessary support in obtaining the required documentation.

5. As a rule, in accordance with Article 30, Direct Transport; it is a requirement for the
purposes of this Annex that products Traded thereunder, be transported directly between
the State Parties or through their territories. The Article further gives guidance as to
circumstances in which consideration may be given in the event of goods moving through
other State Parties’ territories, and considerations to be given thereto. The provisions of
this Article should not be confused with that of Article 16 where the Principle of
Territory comes into play.

6. Article 31 provides for cumulation between State Parties, supported by Proof of Origin
from the Export country. Also refer to Article 8 and the format of such Proof of Origin.
Article 31, further provides for a Supplier or Producer Declaration, the format of which is
provided in Appendix III. This Declaration provided is in Part A thereof. For the Supplier or
Producer to attest to the compliance with origin requirements to the Exporter, which
makes it a supporting document in the process of application for Certification of Origin,
or for it to be retained as Proof of Origin in the event of endorsement when setting out
an Invoice Declaration. In Part B of Appendix III, Suppliers or Producers may in the event
of not being in compliance with the Origin requirements, nevertheless declare the
components or materials which are not of AfCFTA origin for preferential purposes, which
would then allow for consideration, should the product be further worked or processed
at a later stage.

Part IV – Administrative Cooperation (Articles 34 to 38)

1. In accordance with Article 34, Customs Administrations need to notify each other through
the Secretariat of: addresses, stamps used, signatures, offices for issuance of Certificates
of Origin, list of Approved Exporters, etc. This would facilitate direct communication
between Customs Administrations in ensuring compliance with the requirements of the
Annex in the verification of origin requirements.

2. Articles 35 and 36 pertains to Mutual Assistance and verification of Proof of Origin
between State Parties. Note should be taken of the reliance of Customs Authorities in
Importing countries would have on their counterparts in Exporting countries, to ensure
proper verification of origin, which will substantially impact on Import Duties, which are
sacrificed in the process. Generally, it is incumbent upon Customs in Importing countries
to accept valid Proof of Origin issued by a State Party.

37 State Parties in pursuance of an AEO Programme, should consider that such Programmes should also cater for such a
designated organisation, under the AfCFTA.

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The Articles allude to processes to be followed so as not to overburden Customs
Administrations, by allowing verifications to take place in cases where doubt exists.

Part V – Final Provisions (Articles 39 to 42)

1. For the Customs Authority, Article 39, is crystal clear in that, all Appendices annexed to
this Annex, form an integral part thereof. Thus, they must conclude that every
document, Declaration, format, and the like, as reflected within any Appendices, must
be drafted, printed, issued, certified in strict compliance thereto.

2. As mentioned, Disputes in Article 40, are resolved according to the settlement
mechanism provided within the Protocol on Rules and Procedures on the Settlement of
Disputes.

3. Finally, Articles 41 and 42, again point to Reviews and Amendments, which are likely to
occur, and the fact that Transitional Arrangements in relation to much of the critical
criteria of Annexes implementation criteria under AfCFTA, is agreed and implemented
fully by all State Parties.

4. The above mentioned are of Customs relevance when consideration is given to
implementation needs and challenges after review of the Annex.

3.9 Annex 3 – Customs Cooperation and Mutual Administrative Assistance

The Headings to Articles in Annex 3, are reflected to resonate with all aspects in this report
which directly relate to findings addressing Customs Cooperation and Mutual Administrative
Assistance38. Of importance for Customs Authorities is to bear in mind that, within the other.

Annexes of the Protocol on Trade, there are also specific Articles dealing with the exact same
topics of Customs Cooperation and Mutual Assistance. An example is Part IV of Annex 2 –
Administrative Cooperation. Therefore, when considering implementation of Annex 3, a
broader approach is required to incorporate such similar Articles, in other Annexes. (See
Article 35 Mutual Assistance, in Annex 2, which will thus resonate to Annex 3).39

Article 12 = Communication of Customs Information

Almost half of the State Parties in the survey have/do not have agreements or Memoranda
of Understanding (MoU’s) with other Customs administrations to monitor or control transit
goods.

38 See WTO ATF Article 8 - Each Member shall ensure that its Authorities and agencies responsible for Border controls and
procedures dealing with the importation, exportation, and Transit of goods cooperate with one another and coordinate
their activities in order to facilitate Trade. See also Article 12 of the WTO ATF please.

39 The 2018 version of the WCO SAFE Framework of Standards augments the objectives of the SAFE Framework with respect
to strengthening cooperation between and among Customs Administrations, for example through the exchange of
information, mutual recognition of controls, mutual recognition of AEOs, and mutual administrative assistance. In
addition, it calls for enhanced cooperation with government agencies entrusted with regulatory authorities over certain
goods (e.g., weapons, hazardous materials, and passengers), as well as entities responsible for postal issues. The
Framework now also includes certain minimum tangible benefits to AEOs, while providing a comprehensive list of AEO
benefits.

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The study recommends that the CFTA should encourage State Parties to reach agreements or
have MoU’s for enhanced Customs control of transit goods and in compliance with
international best practices set in international agreements, e.g., the WTO TFA.

3.10 The role of Customs in implementing Annex 4 of AfCFTA (Trade Facilitation)

As far back as 2012 the OECD noted that “Countries’ in differing situations should be taken
into account in interpreting figures and outcomes: trade facilitation and customs reform
endeavours did not start from the same point everywhere and some, though not all types of
expenses, are a function of the size of the concerned administrations. Furthermore,
notwithstanding the coherence and consistency in trade facilitation efforts called for by
multilateral agreements and institutions, there is flexibility in the approach and level of
ambition for pursuing and implementing some of the measures, such as single windows.

On the other hand, the interdependencies among the measures, clearly highlighted by the
OECD work on trade facilitation indicators [TAD/TC/WP(2012)24] mean that the weaknesses
in the implementation of some measures may limit the effectiveness of others”. Source - THE
COSTS AND CHALLENGES OF TRADE FACILITATION MEASURES - December 2012 - The OECD
Conference Centre, Paris. This evidences that a broad and uniform approach must be taken
by the State Parties customs authorities when approaching the Trade Facilitation Annex
implementation opportunity in AfCFTA.

Article 4 of the AfCFTA, states the importance of “cooperation on Customs matters and the
implementation of Trade Facilitation measures”. Having this as one of its specific objectives
underscores the role, the AfCFTA envisages in Customs Authorities in implementing Trade
Facilitation measures.

This is supported by an alternative study extract, “The high costs of Customs controls are
some of the manifestations of the challenges faced by Customs and other agents in the trade
facilitation chain in African countries (and elsewhere), which are clearly inimical to trade
development. The relatively high costs in the AU State Parties suggest weak Customs
capacities including limited technical skills and equipment, challenging policy institutional
setting and environment and non-conformity with international best practices, inter alia. It is
therefore very important that the current situation concerning customs procedures,
cooperation, and transit systems in the trade facilitation chain in Africa Union State Parties
be established to contribute towards realistic planning including negotiations and setting
achievable goals and standards, in consonant with international conventions, agreements and
recommendations. Source - African Union CFTA Unit - Situational Analysis of Customs
Procedures and Cooperation, Trade Facilitation and Transit Instruments in the AU State
Parties and RECs STUDY (REF: AUC/CFTA/STUDY Nr. 01 / 2017)

This Annex 4, therefore focuses on ensuring a smooth flow of trade in regard to the
movement of goods, international trade procedures, communication and all other activities
involving trade among Countries. According to Article 2, the objectives in Trade Facilitation,
are to expedite the processes involved in the movement of goods in terms of Border
Clearance, Release Procedures, as well as the Procedures in Imports and Exports.

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Methods adopted in ensuring Trade Facilitation are:

Article 6 - Advance Rulings40

Article 7 - Pre-Arrival Processing

Article 8 - Electronic Payments

Article 10 - Application of Risk Management Systems41

Annex 4 - Customs Cooperation and Mutual Administrative Assistance

All of the above are distinctly catered for in terms of compliance to the Article provisions of
the WTO ATF42.

This aspect looks at cooperation amongst Customs Administrations, who may collaborate to
simplify and improve Trade Facilitation with the intention to enhance the idea of the
Continents’ integration plan within Customs Regulations. Mutual Assistance within Customs
can take the form of proper application of Laws within Customs legal frameworks as well as
the prevention of potential Customs Offences.

According to Article 3 of this Annex, each State that is a Party or Member, is to adopt Customs
Tariff Nomenclatures and statistical Nomenclatures, which are in conformity with the
Harmonised System (HS), for example, follow the numerical sequence of the HS.

It also involved the establishment and usage of modern Data Processing Systems, to facilitate
efficient Customs Operations, which is in accordance with the issue of Rulings mentioned in
Article 6.

In Article 2 of Annex 4 the objectives have been identified as simplifying and harmonising
International Trade Procedures and Logistics to expedite the process of importation,
exportation, goods in Transit, as well as the Clearance of goods. Several measures have been
identified which Customs Officials will have to use in the implementation of Trade Facilitation.

Article 4 and 5 of Annex 4 identifies the Publication and enquiry of information. This is
consistent with Article 1, of the WTO Agreement on Trade Facilitation, which focuses on the
Publication and availability of information.

Article 6 deals with Advance Rulings which is also in line with Article 3 of the WTO ATF.

Advance Rulings are rooted in the Customs Trilogy: Classification of goods, Value of goods,
and Origin of goods. Importers need to know before embarking upon any contractual
negotiations, what they will have to pay in dues with respect to the Customs Trilogy43.

40 See Article 3 of the WTO Trade Facilitation Agreement.

41 See Article 7 of the WTO ATF 4.1 Each Member shall, to the extent possible, adopt or maintain a risk management system
for Customs control.

42 WTO members reached consensus on the Trade Facilitation Agreement (TFA) at the Bali Ministerial Conference in
December 2013.The TFA contains twelve Articles regarding Trade Facilitation and Customs Cooperation in Section I, ten
Articles on special and differential treatment for developing countries and least-developed countries in Section II and
two Articles on institutional arrangements and final provisions in Section III. The TFA deals almost entirely with Customs-
related topics.

43 The HS Classification, Valuation and Origin.

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This Article, in the context of the WTO ATF, is a written decision44 provided by a Member
customs authority to an Applicant, prior to the importation of goods covered by the
application, setting forth the treatment that the Member shall provide goods at the time of
importation regarding:

i. The goods Tariff Classification.

ii. The Origin of the Goods (ATF 3.9a)

In essence, the Article requires WTO Members, to issue Advance Rulings regarding Tariff
Classification and the Non-Preferential Origin of goods, and sets the rules stipulating the
issuance of Advance Rulings in a reasonable and time-bound manner, including cases where
Advance Rulings are issued and are valid for up to 6 months. In addition, pursuant to ATF
3.9.b, WTO Members are encouraged to issue Advance Rulings in other technical areas such
as Customs Valuation and requirements for relief or exemption from Customs Duties.

Chapter 3 of the General Annex to the RKC, contains a number of provisions geared towards
cooperation and coordination amongst Border Agencies. For instance, Transitional Standard
3.35 states that: “if the goods must be inspected by other Competent Authorities and Customs
also Schedules an examination, Customs shall ensure that the inspections are coordinated
and, where possible, conducted at the same time”.

This cooperation will lead to enhanced Border Security Management, expedited immigration
processing, import and export restrictions, and prohibition control, collection of revenue,
records of Cross-Border statistics, sanitary and phytosanitary measures, Technical Standards,
and obviously, Trade Facilitation. Other facilitating measures which Customs will need to
implement include pre-shipment inspections. Since Customs Authorities share information,
the exporting country will share inspection information with Customs in the importing
country. Similar objectives to the WTO ATF are embedded in the WCO RKC and more
specifically Chapter 6 and 7, which refers to Trade Facilitation through the conclusion of
Mutual Administrative Agreements, by Customs Administrations, as well as the use of ICT to
enhance Customs control, respectively. The views expressed under Annex 3, are relevant
here too.

Another objective of Trade Facilitation is to reduce the transaction costs of doing business in
International Trade. The specific costs include, cost of clearing goods for Import, Export,
Transit, and the associated Border controls. The main objective of Trade Facilitation is to
reduce the cost of Trade in goods. African governmental agencies have a fiduciary Duty, to
ensure that in their service to society, that this primary objective is achieved and indeed
monitored45.

44 See Article 3 of the WTO ATF - Each Member shall issue an advance ruling in a reasonable, time-bound manner to the
applicant that has submitted a written request containing all necessary information. If a Member declines to issue an
advance ruling, it shall promptly notify the applicant in writing, setting out the relevant facts and the basis for its decision.

45 The majority (29 out of 41) of State Parties in an AU CFTA study indicated they have National Trade Facilitation strategies
and National Trade Facilitation Committees (36 out of 41 in that study). The AUC has a strategy for implementing the
WTO TFA. The study recommends that the CFTA should use the AUC WTO TFA Implementation Strategy together with
similar strategies from the REC’s, State Parties, and international best practice to redevelop and implement a model
continental trade facilitation strategy that takes into account the Member State practical situations as well as the
dynamics in Global value chains, trade, and security challenges. Source: African Union CFTA Unit - Situational Analysis of

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3.11 The Role of Customs in implementing Annex 8 of the Protocol on Trade (Transit)

General Notes

The Annex consist of 17 Articles and 5 Appendices.

These notes relate only to selected provisions in the Annex, which are highlighted as a matter
of caution in the implementation thereof. Transit provisions and compliances are
fundamental to the successful implementation of the AfCFTA.

Effect to this Annex can only be given in Customs Law. In this regard note must be taken
of the obligation in Article 5, to license Transporters and Carriers, the requirement for Surety
in Article 6, the issue of the Transit Document in Article 7, the sealing of means of transport,
penal provisions, acquittal procedures, etc., in term of Article 9, etc.

Agreements under the other REC’s may also include an Annex on Transit, which could be of
value to those State Parties who have implemented such before and given effect thereto.

Reference in this regard is made to Article 15, of the SADC Protocol on Trade and to Annex
IV thereto. It is however noted that not all SADC State Parties have given effect thereto in
Customs Law.

This Annex in essence applies to the Customs Administration in conjunction with the Cross
Border Road Transport Agencies under the Department of Transport, or their equivalents, in
the State Parties.

A concern is Non-Tariff Barriers NTB’s as covered in Annex 5 of the Protocol on Goods.
Duplication of Border controls will lead to Border congestion, common on many African
Borders and will frustrate Trade Facilitation.

Presentation of means of transport and cargo to Customs office of departure,
examination, and verification of compliance with conditions of Appendix II in accordance
with Article 4.

Related references, International Instruments, and responsibilities.

Article 16, of the AfCFTA Protocol on Trade, provides for State Parties to take appropriate
measures regarding Transit in accordance with the provisions of Annex 8 thereto. We again
mention the Istanbul Convention and its Global provisions relevant to Transit.

In accordance with Article 12, the responsibilities under this Annex are assigned to the Sub-
Committee on Trade Facilitation, Customs Cooperation and Transit. This Sub-Committee is
established in accordance with Article 31, of the Protocol on Trade, by the Committee on
Trade in Goods and shall be composed of designated Representatives from State
Parties. Customs Leaders must identify those within, that may attend and serve on such
Committees.

Customs Procedures and Cooperation, Trade Facilitation and Transit Instruments in the AU State Parties and RECs STUDY
(REF: AUC/CFTA/STUDY Nr. 01 / 2017)

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Article 13 of this Annex, requires that the extent and timing of the implementation of the
provisions hereof, shall be related to the implementation capacities of State Parties, as
notified to the AfCFTA Sub-Committee of Trade Facilitation or under the WTO Agreement on
Trade Facilitation. Also refer to Article 29 of Annex 4 to the AfCFTA Protocol, regarding the
implementation of this Annex on Trade Facilitation.

Reference to International Instruments in the Annex can be found in -

• the definition of “Customs Transit” which define it as Annex A of the Istanbul
Convention and Specifically Annex E to the Revised Kyoto Convention, and

• the definition of “Security” alluded to in the General Annex Chapter 2 to the Revised
Kyoto Convention.

Definitions – Article 1

Although the definitions to the Annex include that, for “Vessel”, it only relates to the
definition of “Means of Transport” and does not have any relevance in the application of the
Annex.

General Provisions – Article 2

This Article provides for circumstances under which Transit facilitation may take place by
road. It should be kept in mind that this will have no relevance for Island State Parties in
which road transport “Transit” considerations are not applicable.

Notwithstanding the obligation of State Parties to afford each other the right of Transit, this
does not, in terms of paragraph 5 to this Article, prevent a State Party from taking necessary
steps to protect itself or to comply with International obligations, as provided for in Articles
26 and 27 of the AfCFTA Protocol on Trade.

Of significance to note, is that all Trade can make use of the AfCFTA Transit Procedures and
not only that to which Annex 1 and 2 to the AfCFTA Protocol on Trade apply.

Scope and Application – Article 3

It is important to note that in accordance with Article 3(3) this Annex applies only to Transit
goods being carried by road.

Approval of means of Transport – Article 4

This Article requires the licensing of means of transport that are used in Transit Trade which
requires it to be licensed with the appropriate licensing authority. For this purpose, a
Certificate set out in the format provided in Appendix III must be obtained.

AfCFTA Transit Document – Article 7

Of significance to note is that this Annex does not provide for a format for the AfCFTA Transit
Document. Paragraph 2 however, alludes to the requirement to conform to a standard
form approved by the Council of Ministers. It must be deducted that this aspect is still
outstanding. This should be Appendix VI. The Article only provides that it is the
obligation of Transiter to prepare the Transit Document in accordance with the notes set out
in Appendix I.

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A Transit document must be prepared for each consignment and derives the obligation for
the acquittal thereof, to ensure that the goods have been exported and were delivered at the
office of destination.

Transit Procedures - Article 9

Reference is made to paragraph 13 of this Article, which provides that, in the case of cargo
being examined enroute, for a report to be made out in accordance with Appendix IV,
providing details of the findings and new sealing numbers.

Regulations - Article 14

Reference is made to Article 14 which provides for the Council of Ministers to
adopt Regulations to implement this Annex. These regulations are provided in Appendix II to
this Annex.

It stands to reason that in pursuance of attaining a Global modernised Customs Authority
status, that many of the requirements will be achieved by comprehensive implementation of
all the Annexes to the Protocol on Trade. As this has wide reaching positive Customs
outcomes, the AUC must retain a sustained position of priority assistance and guidance to the
AUC State Parties, to reach these objectives. Duplications must be avoided as they are costly
and drain resources.

Securities are costly, and there should be consideration under the Mutual Cooperation
Agreements, to recognise Transporters who are approved AEO’s, to provide limited securities.

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4. The Research Survey – Conduct, Findings, and Recommendations

Customs Leaders are the Key to successful implementation of the AfCFTA. In pursuance of this
objective, they will need ongoing assistance as determined and concluded by the AUC
progressive Strategy. This will be a comprehensive programme to be approached in
measurable steps to achieve the strategic goals.

The AfCFTA Agreement aligns significantly with others that State Parties may be party to.
Thus, Customs Leaders should be in a position to draw on resources that are familiar with its
current scope. As alluded to numerous times in this report, the inconclusive criteria of the
AfCFTA and the constant changes, require that all retain a vigil upon them. The AUC Trade
information and updated status portals will be of significant assistance to Customs Authorities
and Traders to monitor and in turn give capacity to Trade.

In numerous studies concluded regarding the specific topic of how COVID-19 impacts on
Cross-Border Trade, it is clear that this pandemic has not only delayed, but even frustrated
the process of conducting this study.

Having to host “Webinar” meetings, as alternate engagements electronically, is reflective of
how the methodology to engage, has been adapted under these changed circumstances.

The Questionnaire Survey, as developed and circulated, contained 62 questions, of which 9
focused on respondent contact information. Some questions were designed as cross-
functional to verify the authenticity of all responses. As such, the findings were concluded
after condensing same to key responses, in order to evaluate certain challenges of a specific
category and nature. The questions utilised in the survey were developed after a detailed
analysis and interpretation of all Customs relevant Articles.

Each such relevant Article in the main Agreement and relevant Annexes thereto, were
evaluated to verify Customs implementation compliances and the potential relevance of
challenges to same. The Questionnaire, as was circulated, is provided as an Addendum to this
Report.

The survey responses, especially where Critical Crossfield Outcomes were evaluated, were
consolidated into final primary responses to perform analysis, and draw conclusions
supported by recommendations.

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Furthermore, a consolidated priority matrix Article analysis has been provided under the
heading in the report for the benefit of Customs Leaders, Traders, and key Stakeholders. This
will assist in developing a senior Leadership Priority Implementation Checklist.

The AUC Module for Capacity in AfCFTA implementation, has thus also been modelled to
address the needs and challenges identified.

The primary Questionnaire direct focus areas for the survey were:

a) Evaluation of reliance by Customs Authorities on outside Stakeholders, such as
conclusion of Tariff Concessions (Annex 1 Protocol on Trade).

b) Determination of the composition of a Customs Leadership Priority Implementation
Checklist and the management and performance measure thereof for
implementation.

c) Identification of Customs Leaders Capacity to manage change and to impart strategic
management guidance for implementation.

d) Evaluation of Private Sector and other relevant Stakeholders’ engagements,
sensitisation, Publications, and Capacity criteria.

e) Evaluation of Capacity in Origin Administration with consideration to:

i. Understanding and verification of Rules of Origin applicable in the 8 Recs’.

ii. Duplicate membership to respective REC’s.

iii. I.T. systems Capacity, type, and electronic interfaces, to administer, evaluate,
and capture risks, statistics, and the like foresight to E-Commerce and
digitisation.

iv. Capacity, knowledge, and comprehension of Human Resources in the use and
application of WCO HS Codes, Valuation and Origin determination46.

v. Capacity to appoint and mentor Leaders for career growth and sustainability
at Senior and Middle Management level.

vi. Capacity to act as the Designated Competent Authority, in all formalities and
deliverables for Traders.

f) Evaluation of Customs Authority compliances to provide:

i. Exporter registration and licensing systems and amendments thereto.

ii. “Approved Exporter” Processing systems.

iii. New movement Certificates.

iv. Printing and availability of prescribed AfCFTA CoO.

v. Transit Certificates.

46 According to GFA Finding 11: State Parties requested, as a matter of priority, for delivery of training to Customs officials
and other Stakeholders on: ▪ Tariff Classification and Customs valuation (specifically the WTO Agreement on Customs
Valuation); ▪ Reduction of non-Tariff Barriers (Annex 5 to the Protocol on Trade in Goods); ▪ General Introduction to the
AfCFTA Agreement, its Protocols and Annexes.

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vi. Expedited movements and clearances.

g) Capacity and awareness to meet the objectives and requirements of Customs-to-
Customs cooperation, Customs-to-Business cooperation, and Mutual Administrative
Assistance, as well as identification of internal Capacity thereto, and gaps as relevant.

h) Capacity to identify potential contravention gaps, ambiguities, and risk management
strategies, including penalty provisions.

i) Capacity and Training required of Post Clearance Audits (PCA) teams to complement
risk management strategies.

j) Capacity to resonate to the crucial role of the AUC and all AfCFTA Secretariat
compliances, responsibilities, and obligations.

k) Capacity to implement and give full effect to all Transit procedures, and Advance
Processing, Securities, and priority facilitation of same.

l) Capacity to comprehend all Leadership challenges, in addition to those of Customs
Administrations, related compliances being financial, systems, planning, Leadership
Capacity, political will, and the like, this with a view to verification of such additional
weak Customs-related areas of Capacity Building, being those associated with
Legislative, Technical, Operational, and resistance to change, etc.

m) Evaluation of Capacity to facilitate medical and urgent type consignments and to verify
NTB’s as may be encountered, which frustrate Trade Facilitation.

n) Evaluation of awareness that the Annexes of the Protocol on Trade, address other
Customs Cooperation issues, driving ongoing compliances, such as Trade Facilitation,
AEO, potential duplication, mutual cooperation and the like, to avoid duplication of
procedures and drawing the awareness to implementation in tandem with such Global
Instruments directed at meeting modernisation objectives.

o) Evaluation of Capacity to issue Advanced Rulings and process advanced clearances.

p) Evaluation of Capacity in cooperation at Border Posts and in Single Window or Smart
Borders.

q) Evaluation of extending current Capacity in existing REC arrangements, to meet the
objectives of AfCFTA implementation.

r) Evaluation of Capacity to implement the Legislative Framework incorporating AfCFTA
Compliances and Procedures.

s) Evaluation of Capacity to determine, analyse, and interpret all outstanding Agreement
issues, as currently either not agreed, or in process of readiness, to implement
additional provisions as may be concluded.

t) Evaluation and pursuance of an Ethical code of conduct towards implementation of
the AfCFTA.

As mentioned, the impact of the COVID-19 pandemic and its associated challenges in
conducting such research, were addressed by way of Webinar engagements and various
electronic means to secure participation and research information.

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Although effective, the experiences encountered resulted in delayed meetings, time
constraints, lack of direct physical engagement, and limited discussion forums etc., which had
a direct impact in imparting of information, normally achieved via Face-to-Face Workshops
and Forums. Nevertheless, 14 of the 24 Countries responded to the Questionnaire, thus a
response of 58%.

Ethics and Integrity of Customs Authorities can be considered as a foundation for successful
implementation of the AfCFTA. Please refer to the below diagram pertaining to the main
features of the RAD (Revised Arusha Declaration).

The main feature of the “Revised Arusha Declaration”47 is that it contains 10 Key Factors for
effective National Customs Integrity Programme, namely:

1. Leadership and Commitment

2. Regulatory Framework

3. Transparency

4. Automation

5. Reform and Modernisation

6. Audit and Investigation

7. Code of Conduct

8. Human Resource Management

9. Morale and Organisational Culture

10. Relationship with the Private Sector

The report recommends that any implementation of the AfCFTA should be foundational on
the observance of all Ethical Declarations to meet Global Standards.

For Customs Leaders, when planning and implementing changes, a detailed needs analysis
must be carried out before the most appropriate priority goals and measures can be selected.
For example, the number of Customs Declarations, rejections, and reasons for them, must be
measured using a different method than that used, for example, to evaluate the results of
physical controls.

The implementation plan must include a strategy of how to measure the different elements
of the change process. The survey and report were modelled in tandem with this approach.
Risk Management capacity will be key and allied to successful implementation of AfCFTA.

Customs Organisations are often exposed to the financial demands and constraints of its
ministry (that is, to achieve certain aims within a smaller budget) that can result in
rationalisation and other internal changes.

47

ttps://www.google.com/search?q=revised+arusha+declaration&oq=Revised+Arusha&aqs=chrome.0.0j69i57j0i22i30j69
i60l3.12621j0j7&sourceid=chrome&ie=UTF-8

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