The role of Rules of Origin in promoting industrialisation

This policy brief investigates the issues of rules of origin (RoO), their implications in a free trade area, and their role in promoting industrialisation and forging regional value chains (RVCs) under the African Continental Free Trade Area (AfCFTA) agreement, with the main focus on the cotton and textile and clothing sector. The policy brief first looks at the cotton to textile and clothing value chain, including the general cost drivers at each segment of the value chain, which have major implications on the productive and industrial capacities of countries. Second, it looks into the purpose of the RoO in the AfCFTA and its impact on intra-regional trade flows and the way the set policies can affect regional integration and the RVCs. Last, possible applications of the RoO, their implications for industrialisation in the AfCFTA, and the approaches by industry and governments are laid out.