Ministry of Trade and Industry has encouraged local firms to start utilising the African Continental Free Trade Area (AfCFTA) Guided Trade Initiative (GTI).
GTI is a pilot initiative to accelerate trading by enabling commercially meaningful trading and test the operational, institutional, legal and trade policy environment under the AfCFTA, a market that embraces 54 countries with 1.3 billion people and a combined gross domestic product of $3.4 trillion.
In a written response on Tuesday, Ministry of Industry and Trade spokesperson Patrick Botha said, so far, they have engaged a number of companies that expressed interest to participate in the initiative.
He said: “Malawi’s goods and services schedule of specific commitments were adopted and the ministry is currently continuously engaging the private sector to start utilising the initiative.
“The ministry and AfCFTA secretariat will be helping them with export guidance under GTI once they are ready.”
According to AfCFTA, the legal basis for the implementation of the initiative is the ministerial directive on the application of provisional schedules of tariffs concession issued on October 10 2021, which provides the basis to start commercially meaningful trade under the AfCFTA preferential rules.
PressCane Limited chief executive officer Bryson Mkhomaanthu, whose firm is expected to benefit from the initiative, said in an interview on Tuesday that this is a strategic platform to expand its ethanol and renewable energy product exports into Africa’s rapidly growing markets.
He said for this initiative to yield maximum benefit, there is need to collectively address logistics inefficiencies, harmonise standards and resolve residual tariff and non-tariff barriers.
He said: “Our production capacity and strong sustainability positioning place us in a good position to meet export demand.
“We are particularly encouraged by the institutional support and market access tools being offered under the GTI. As a participant in the pilot, we are committed to working with the government and partners to make this initiative a success.”
The development comes amid revelations that differing positions on rules of origins are proving to be a sticking point in finalising negotiations and hindering full implementation of AfCFTA.
But Botha said Malawi has been part of the negotiations on rules of origin and has been contributing on all product lines where negotiations were concluded.
He said: “The country’s position has been to recommend goods to be wholly obtained in the region or at least meet a minimum of 30 percent local value content for most of the products.
“Malawi has also undertaken training workshops to enhance the capacity of its customs officials in applying preferential rules of origin under the AfCFTA.”
According to global think-tank ODI Global, delayed negotiations and subsequent lack of full implementation of the AfCFTA is hindering its potential to support industrialisation as more restrictive rules of origin often lead to higher compliance costs for businesses, resulting in low preference utilisation rates by firms.
In its update on AfCFTA implementation challenges, ODI global said the negotiations are partly complicated by differences between the rules of origins of existing regional economic community free trade areas that continue to function under the AfCFTA.
The rules of origins to export under the Africa Growth Opportunity Act allows for single transformation rules for least developed countries, meaning apparel can be made using fabric originating anywhere in the world while the Everything But Arms requires double transformation for a product to be deemed an originating good, making this more restrictive.
The AfCFTA is a trade pact that creates a harmonised and integrated continental market of 1.2 billion people in 55 countries with a combined gross domestic product valued at $3.4 trillion.
The Malawi Government recognises the AfCFTA as an opportunity to achieve its goal of expanding and diversifying the export products and services at regional and global levels under the National Export Strategy II.
