OPINION: To build back better, make African trade greener

by David Luke & Lily Sommer | Africa Trade Policy Centre
Monday, 5 October 2020 10:26 GMT

Traders rearrange oranges in sacks at the end of a night-long curfew ordered by Kenya's President Uhuru Kenyatta to slow the spread of the coronavirus disease (COVID-19), in Nairobi, Kenya March 29, 2020. REUTERS/Njeri Mwangi

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Climate change - and demand for greener products - threaten Africa, but smart decisions now can set it up for future success

David Luke is coordinator of the African Trade Policy Centre at the UN Economic Commission for Africa and Lily Sommer is a trade policy expert at the centre.

Broad consensus is emerging around the silver-lining opportunity to “build back better” from the COVID-19 crisis by creating more sustainable, resilient and inclusive societies.

But in the broader context of climate change, what does this mean for Africa, which produces just 2-3% of global carbon dioxide emissions from energy and industrial processes? 

In building back better, Africa can take strategic advantage of the landmark African Continental Free Trade Area (AfCFTA) agreement to advance the green transition agenda. Covering goods, services, investment, competition policy, intellectual property rights and e-commerce, AfCFTA offers several pathways forward for Africa.

The United Nations Economic Commission for Africa (UNECA) projects that the AfCFTA could boost intra-African trade by 52% by eliminating import duties, and double this trade by reducing non-tariff barriers.

However, such benefits are threatened by climate change and variability which are set to hit Africa hard, raising temperatures more than global averages and producing extreme weather events. Climate effects can reduce agricultural production and yields, damage physical infrastructure, disrupt supply, transport and distribution chains and also harm the biodiversity and natural attractions on which tourism in Africa depends.

The green agenda aims to avoid, halt and reverse the adverse impact of climate change. AfCFTA intersects the green agenda through specific provisions in its protocols, and the strategies adopted to drive implementation.

First, AfCFTA protocols can be designed and made operational in support of green growth. Phase I protocols on trade in goods and trade in services, though finalised, can be operationalised with environmental considerations at their core.

In finalisng their tariff schedules, member states should not put environment-friendly technology (such as wind turbines or photovoltaic systems) on sensitive or exclusion lists. Two of the five priority sectors for services liberalisation – transport and tourism – offer natural entry points for environmental considerations. And whenever more sectors are added, environmental services must be top priority.

Phase II negotiations on investment, competition policy and intellectual property rights (IPRs), and phase III negotiations on e-commerce, are yet to start, presenting an opportunity to embed environmental considerations within these protocols. Indeed, climate change is closely intertwined with phase II and III issues.

Incentives can be crafted to facilitate investment in green-friendly infrastructure, energy and research and development. A fine balance is needed to ensure competition regulations promote green innovation without environmental regulations harming competition. Appropriate IPRs are critical to incentivise the development and diffusion of green technologies as well as the protection of biodiversity and traditional knowledge.

E-commerce rules will in turn be required to ensure extensive “last-mile” services with short delivery frames that do not exacerbate emissions, and to fast-track the use of efficient, digitalized logistics.

Second, with the green transition agenda gaining momentum, AfCFTA will be implemented in an irreversibly changed international trade landscape, notably with the European Union (EU) commitment to a Green Deal which aims to halve its carbon emissions by 2030 and achieve net-zero emissions by 2050.

Regional and global supply chains will be increasingly required to respond to consumer preferences for climate-friendly and sustainable production processes. As penalties increase, non-compliance will not be a viable option.

Similarly, AfCFTA reforms will have to be environmentally friendly to ensure Africa can produce and trade in a new green world. This means enforcing environmental standards throughout the economy, from building robust infrastructure to producing drought-resistant crops.

The ECA and the African Union Commission are working jointly with countries on AfCFTA implementation strategies that guide how natural resources can be used to develop green and blue economy value chains.

The EU has also committed to a new Africa strategy with the African Union (AU). In making drastic changes to its own climate policy, the EU will now bring climate considerations to the forefront of discussions with the AU on a mutually beneficial partnership.

This will require action on the old slogan of “trade, not aid” to support climate-conscious conditions for trade and investment and facilitate sustainable and resilient growth and decent job-creation for Africans. It will also require a radical change in the partnership, with the EU working with Africa as one entity rather than as a collection of sub-regional arrangements. This is critical for coherent support of Africa’s integration agenda.

Africa and Europe have a common interest in the success of the AfCFTA and strong recovery from COVID-19. Home to six of the ten fastest-growing economies in the world, Africa has enormous potential as a green investment arena and market for Europe. 

EU climate diplomacy has until now focused mainly on Group of 20 and least-developed countries as well as small island developing states.

The EU’s new Africa strategy can be used as a platform to facilitate a strong alliance to support climate-friendly trade and investment in the AfCFTA framework.  Climate mitigation cannot be achieved in isolation and Europe’s Green Deal should support Africa’s green transition.

This is part of a series produced for the United Nations University Institute for Natural Resources in Africa (UNU-INRA) and the German Economic Cooperation and Development ministry on green transformation post COVID-19. The views expressed do not necessarily represent those of the institutions involved in the project.