Blog

South Africa to ratify Tripartite FTA and Continental Free Trade Area Agreements

By Gerhard Erasmus
17 Sep 2018
Share on
South Africa to ratify Tripartite FTA and Continental Free Trade Area Agreements

The South African Parliament is in the process of ratifying the Tripartite FTA Agreement. South Africa signed the TFTA in July 2017. The aim behind this Agreement is eventually to bring 26 African countries into a single free trade area.[1] They must, of course, first ratify the Agreement or accede to it before any obligations can bind them as Parties thereto. Sovereign states are not bound by Agreements to which they have not consented.

The stated reason behind the recent South African decision was that Pretoria “wanted to move swiftly towards ratification to signal its commitment to regional integration. Once it entered into force the agreement would allow SA to increase its share of the African market and provide it with access to a larger, more integrated and growing regional market”.[2] (Emphasis added.)

South African officials have also said that Pretoria plans to ratify the Continental Free Trade Area Agreement (AfCFTA) before the end of January 2019.

These decisions signify a change in earlier policy; which wanted the negotiations for these trade arrangements to be completed before they would be ratified. The new approach may alter the political dynamic in these two processes (and how they relate to each other) quite directly. Pretoria’s latest decisions indicate the recognition of the growing importance of African markets for South Africa. Pretoria wants to ensure it remains directly involved in further negotiations about intra-African trade and integration.

The early entry into force of the AfCFTA (before negotiations are complete) may, however, add to legal uncertainties. The texts of the AfCFTA as adopted in March 2018 may even require adjustments and new procedures. The recent South African decisions have been taken under the stewardship of the new South African President, Mr Cyril Ramaphosa.

It has proven difficult to finalize the TFTA negotiations. The original decision to undertake this exercise was announced at a special Summit of COMESA, the EAC and SADC in October 2008. After several years of negotiations, the TFTA was “launched” in June 2015 at a meeting of the participating states in Sharm el Sheikh. The negotiations to finalise the tariff schedules and the applicable rules of origin have seen some progress but are still to be concluded.[3]

The Continental Free Trade Area (AfCFTA) process has already surprised many with the speed with which matters are being dealt with. Within a short period (as these matters go) after negotiations kicked off in 2016,[4] the AfCFTA was formally “launched” in March 2018 at an extra-ordinary African Union (AU) Summit in Kigali. Forty-four of the 55 AU members then signed the text. The first ratifications were announced soon thereafter.

This is no mean feat; it apparently means 55 African governments (at different levels of economic development) have reached such a degree of consensus that it was considered opportune to “adopt” the texts of 4 detailed legal instruments: The Agreement establishing the AfCFTA, as well as the Protocols on Trade in Goods (to which 9 Annexes and several Schedules and Guidelines have been added), Trade in Services (with its own sector regulation provisions), and Dispute Settlement (with detailed Rules and Procedures). Many officials have worked very hard to make this possible.

It is now said that the AU wants this Agreement and the 3 Protocols negotiated during Phase I, to “enter into force” around the end of January 2019 or soon thereafter. For that to happen 22 ratifications must first be deposited.

What do these developments signify and what are the implications? There seems to be symbolic and strategic reasons behind the latest decisions. The former indicate support for African integration endeavours. The new South African President is a supporter of these endeavours. The latter is about ensuring access to African markets and being able to determine the conditions under which that will happen. Pretoria must be at the negotiating table.

Where does the AfCFTA process now stand? It signifies, under AU guidance, a new approach to the African trade and integration discourse. The AU’s involvement in formal trade and continental integration has produced a bigger historical and political canvass and a different set of players.[5] We are witnessing a continental debate about issues previously conducted in certain Regional Economic Communities (RECs) only.

All African economies are now for the first time sitting around the table, as they negotiate a continental plan for boosting intra-African trade. The stakes are different, and the other side does not consist of EU representatives or other outside parties. As a matter of fact, theoretically there is no “other side”.

However, important technical issues remain outstanding. They can be explained by quoting the relevant AfCFTA provisions. Article 22 deals with Adoption, Signature, Ratification and Accession:

  1. This Agreement shall be adopted by the Assembly.[6]

  2. This Agreement shall be open for signature and ratification or accession by the Member States[7], in accordance with their respective constitutional procedures.

Article 23 is about Entry into Force of the AfCFTA Agreement:

  1. This Agreement and the Protocols on Trade in Goods, Trade in Services, and Protocol on Rules and Procedures on the Settlement of Disputes shall enter into force thirty (30) days after the deposit of the twenty second (22nd) instrument of ratification.

  2. The Protocols on Investment, Intellectual Property Rights, Competition Policy and any other Instrument within the scope of this Agreement deemed necessary, shall enter into force thirty (30) days after the deposit of the twenty second (22nd) instrument of ratification.

  3. For any Member State acceding to this Agreement, the Protocols on Trade in Goods, Trade in Services, and the Protocol on Rules and Procedures on the Settlement of Disputes shall enter into force in respect of that State Party on the date of the deposit of its instrument of accession.

  4. For Member States acceding to the Protocols on Investment, Intellectual Property Rights, Competition Policy, and any other Instrument within the scope of this Agreement deemed necessary, shall enter into force on the date of the deposit of its instrument of accession.

  5. The Depositary shall inform all Member States of the entry into force of this Agreement and its Annexes.

Under South African law, ratification is the “act undertaken on the international plane, whereby a State that has signed the treaty confirms its consent to be bound by a treaty. This is done by depositing an Instrument of Ratification with the depositary. This should not be confused with the act of ratification at a national level which a State may be required to undertake in accordance with its own constitutional provisions.”[8] (Emphasis added.)

In South Africa, Agreements that require ratification or accession fall within the ambit of Section 231(2) of the Constitution of the Republic of South Africa of 1996.[9] Parliament must approve that South Africa ratify or accede to such agreements. All agreements that require parliamentary approval must be submitted to cabinet for consideration and approval.[10]

If an agreement “enters into force” before the negotiations are finalized, uncertainties are introduced, and vital aspects cannot be implemented. Dispute settlement becomes an uncertain matter because the obligations of the Parties have not been finalized. If tariff schedules and rules of origin are still outstanding, not a single item can be traded across the borders of the AfCFTA “Parties” because the tariffs and the rules for determining when preferences apply in an FTA, do not exist. Customs officials will implement the tariff book predating the “agreement”. The national Tariff Book can only be updated once the state in question is bound by new international tariff commitments, as agreed.

If 22 ratifications are deposited by the end of January 2019, an AfCFTA of a certain kind will be “in force” 30 days later. However, all indications are that essential aspects (tariff schedules and rules of origin) will still be outstanding. Under such conditions no goods can be traded under this Agreement. It can even be argued that an instrument such as the Protocol on Trade in Goods does not exist if it does not contain tariff schedules and rules of origin.[11] It cannot be “ratified” if it does not exist.

How long will it take to agree on the tariffs and rules of origin of the AfCFTA? We do not know. There is no indication of any deadline in the text because the AfCFTA was not designed to enter into force in a piece-meal fashion. The TFTA process (involving only 26 countries) is taking years to finalize these two issues.

So, what will then be “in force” in early 2019? It cannot be the Agreement, because it has been defined as “this Agreement Establishing the African Continental Free Trade Area and its Protocols, Annexes and Appendices which shall form an integral part thereof”.[12] Some of these elements remain outstanding under the scenario sketched here.

The “obligations” contained in this Agreement will only bind the Parties thereto. Could the first team of 22 adopt amendments to their Agreement and decide on a new workplan and procedure with regards to, for example, tariff negotiations? That will result in another controversy. If an important African economy does not count under the first 22 Parties and is told that it can only “accede” at some future point to a final product decided by the first 22 “Parties”, it could use several counter arguments. One of them is contained in Article 5: The AfCFTA shall be driven by Member States of the African Union.

Are these the indications of the first dispute involving the AfCFTA? There might not yet be an AfCFTA Dispute Settlement Protocol in place, but other fora do exist. Political pressure and objections too can be expected.

Pliny the Elder might have been right (then) when he wrote “Semper aliquid novi Africam adferre”. (It is popularly rendered as “ex africa semper aliquid novi” [Always something new out of Africa].) Even he might have had difficulties predicting this one, or how to resolve the new problems. No trade under the AfCFTA will automatically follow after “entry into force” as long as essential elements (tariff schedules and rules of origin) remain outstanding. The political pressure to collect 22 ratifications as quick as possible may even add to the problem.


[1] ‘Deal being inked to allow 26 African countries access to better trade terms’. BusinessDay, 8 August 2018. https://www.businesslive.co.za/bd/world/africa/2018-08-08-deal-being-inked-to-allow-26-african-countries-access-to-better-trade-terms/. See also tralac’s TFTA resources page.

[2] Ibid. 

[3] It was said in Parliament that negotiations on rules of origin were 60% completed and were expected to be concluded in mid-2019. See  pdf TFTA Ratification: dti Presentation to Portfolio Committee on Trade and Industry - 21 August 2018 (559 KB)

[4] According to the AU, the first meeting of the negotiating forum was in January 2016. The decision to negotiate the AfCFTA was taken January 2012:  pdf Declaration on Boosting Intra-African Trade and The Establishment of a Continental Free Trade Area (CFTA) (91 KB)

[5] The linkages to the pdf Abuja Treaty (145 KB) is part of the new context.

[6] The Assembly of the AfCFTA is defined as the Assembly of Heads of State and Government of the African Union. Adoption took place in March 2018 in Kigali.

[7] The Member States are the Member States of the African Union. See Art 1 of the  pdf AfCFTA Agreement (Legally scrubbed) (4.67 MB)

[8] Office of the Chief State Law advisor,

http://www.dirco.gov.za/chiefstatelawadvicer/ratification.html

[9] An international agreement binds the Republic only after it has been approved by resolution in both the National Assembly and the National Council of Provinces, unless it is an agreement referred to in subsection (3).

The agreements referred to in subsection (3) are of a technical, administrative or executive nature, or an agreement which does not require either ratification or accession.

[10] Office of the Chief State Law advisor.

[11] A Protocol is defined as an instrument attached to this Agreement, which forms an integral part of the Agreement. Art 1 AfCFTA.

[12] Ibid.

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

Leave a comment

The Trade Law Centre (tralac) encourages relevant, topic-related discussion and intelligent debate. By posting comments on our website, you’ll be contributing to ongoing conversations about important trade-related issues for African countries. Before submitting your comment, please take note of our comments policy.

Read more...