Page 22 - Abyssinia Business Network ABN August 2019

The African interplay between the regional varying as a function of the country
integration of Africa, structural and sector considered, their input–
Continental transformation and the role output structure,the complexity of
of rules of origin, this chapter production and the governance and
Free adopts a case-study approach, geographical features of the value
chain. Nonetheless, some general
focusing on how the African
Trade Area, Continental Free Trade Area principles can be drawn from
could affect selected regional the analysis. First, it is important
value chains and how rules of that rules of origin be as business
regional origin shape the space in which friendly as possible, in the sense of
this process takes place. In this minimizing the cost of compliance,
value chains respect, although the selection of for any given level of restrictiveness
the sectors analyzed is inevitably adopted. Second, rules of origin
and subjective, it was informed by four should be simple (in the sense of
broad criteria: sectoral coverage, being clear and understandable),
rules of origin relevance to intra-African trade, transparent, predictable and trade-
importance for continentally facilitating and should be applied
agreed policy frameworks and/ in an impartial manner. Third, it is
or national development plans, of paramount importance that rules
and representation of distinct of origin formulation be informed
legal elements of the formulation by a thorough understanding of the
Addressing these issues and assessing and implementation of rules of productive sectors involved and by
the impact of different rules of origin origin. due consideration of the structural
in Africa is a challenging Endeavour asymmetries across the countries in
for three reasons. First, it implies The advantage of a case- the Continental Free Trade Area.
considering the impact of rules of study approach over other
origin in an increasingly complex methodologies is that it does not The chapter consists of six
context of international trade, where rely as much on systematic case studies that are presented
the emergence of regional and global data that is difficult to obtain; in increasing order of sectoral
value chains has made producers moreover, it speaks more complexity, namely tea, cocoa and
interdependent across countries, clearly to the economics of chocolate products, cotton textiles
through trade in intermediate products. each regional value chain. A and apparel, beverages, cement and
Second, the limited access to legal caveat applies, however, to the automotive industry. The final
texts and the lack of data on preference the case-study approach, as it section contains a synthesis of the
utilization for most regional economic does to other ex ante simulation discussion, with suggested policy
communities in Africa make a thorough techniques such as computable recommendations.
assessment even more challenging. general equilibrium models. By
Third, there are a number of technical construction, the case study looks Tea value chain
and analytical complexities involved solely at the impact of rules of
in accurately quantifying the effects of origin on existing trade relations The tea value chain is a compelling
rules of origin on trade. For example, (i.e. the intensive margin); it is example of the key channels
the same legal formulations can have considerably more difficult to through which the current trade
Different impacts across various assess how a given set of rules regimes of Africa including in
sectors; further, there are several affects the entry barriers and relation to rules of origin affect its
econometric issues related to the opportunities for new entrants integration and transformation
identification of the impact of rules of (i.e. the extensive margin). agenda. It also provides some
origin. insights into the prospects that the
Overall, the chapter finds that the African Continental Free Trade

To overcome these constraints and impact of rules of origin is highly Area may have in reshaping the
provide more concrete insights into the context specific, scope for the emergence of regional

20 Abyssinia Business Nework ነሃሴ 2011 / August 2019