Free Trade Agreement Benefits African Blenders

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CAPE TOWN, South Africa – The African Continental Free Trade Agreement that went into force in May benefits Africas lubricants blenders by reducing tariffs and other barriers to doing business with other countries within the continent, industry insiders said Nov. 6 at a conference here.

The free trade agreement aims to establish a single market for goods and services on the African continent. The agreement will allow free movement of business travelers and investments and create a single customs union aimed at encouraging intra-African trade and investments. According to the African Union website, the agreement was adopted in March 2018 and went into force on May 30 of this year. The last of the continents 54 countries signed onto the agreement on Oct. 7.

The AfCFTA, by reducing tariffs, will push the competitiveness of products [produced within the zone]. So, a lubricant product that is blended and processed in Africa will be able to be traded across the border duty-free, said Tomi Tsowou, the United Nations Economic Commission for Africas economic affairs officer, who made a presentation on the free trade agreement at the ICIS African Base Oils & Lubricants Conference held here. So, those products will be then more competitive when you source them [from] Africa. That will attract more investments and oblige investors to produce lubricants in Africa rather than still importing lubricants to the country.

The free trade agreement calls on participating countries to progressively eliminate tariffs and non-tariff barriers to goods traded between member states. Cliff Classen, director at Clasco Marketing and chairman of the conference, said stakeholders in African lubricant markets are excited about the agreement. We will not have all these restrictions and tariff barriers, and all the amount of documentation that people have to encounter, Classen said. While he emphasized that South African blenders would like to trade with other parts of Africa, he said South Africans would also love to see what other regions in Africa have to offer their various neighbors and neighboring countries. He added that the free trade agreement also encourages investment because a company can now set up a blend plant in Botswana and be able to trade with countries further afield.

Siva Konar, sales and managing director for Lubrizol in the African region, explained on the sidelines of the conference that from a lubricant perspective, there is that potential for duty-free movement of lubricants, provided that there is material change, and there is agreement from all the countries.

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