Building capacity to help Africa trade better

African Responses to Global Crises


African Responses to Global Crises

African Responses to Global Crises

How do African governments and Africa collectively respond to the crisis in the global trading system? Are joint policies being developed? By whom? How will such a process be coordinated and be executed?

Right now, Africa’s collective attention is on the formation of the African Continental Free Trade Area (AfCFTA). It is postulated as Africa’s answer to the challenges of the moment. The process for obtaining the 22 ratifications required for the entry into force of the AfCFTA Agreement,[1] is a priority.

The AfCFTA is a bold initiative to boost intra-African trade. It is designed to be much more than a traditional Free Trade Area (FTA) for liberalizing trade in goods. When completed, there will be six Protocols (in addition to the overarching AfCFTA Agreement)[2] to liberalise trade in goods and certain services, provide for dispute settlement, rules on investment, competition, and intellectual property rights.

What collective structures will be established as part of the AfCFTA and how will they function? What mandates do they have? How soon may joint action be expected? The AfCFTA institutions consist of the Assembly (which is the Council of the African Union), the Council of Ministers of the State Parties, the Committee of Senior Trade Officials from the State Parties, and the Secretariat.[3] None enjoys supra-national decision-making powers.

The general objectives of the AfCFTA are listed in Article 3 of the AfCFTA Agreement:

  • To create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent.

  • A liberalised market for goods and services through successive rounds of negotiations.

  • To contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the State Parties and RECs.

  • To lay the foundation for the establishment of a Continental Customs Union.

  • To promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation.

  • To enhance the competitiveness of the economies of State Parties within the continent and the global market.

  • To promote industrial development through diversification and regional value chain development, agricultural development and food security.

  • To resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

Will the AfCFTA also be a platform for Africa’s engagement with third parties and multilateral bodies such as the WTO? Will Africa in future engage the European Union (EU), debate the conclusion of Economic Partnership Agreements (EPAs), deal with the consequences of Brexit, propose a post AGOA deal (or deals) with the USA, decide on how to revive the Doha Development Agenda, and do so with a collective voice? Will external parties agree to such a modus vivendi? Will African governments cede national sovereignty to continental structures to enter into binding trade agreements on their behalf?

The answers to the questions depend on what “engagement” means but such powers have not expressly been agreed as part of the establishment of the AfCFTA. The provision on the general objectives of the AfCFTA does not mention collective political initiatives for engaging third parties or external international institutions. The AfCFTA does not, therefore, have an explicit mandate to do so.

Elsewhere in the AfCFTA Agreement it is stated that the Council “… as the highest decision-making organ of the AU, shall provide oversight and strategic guidance on the AfCFTA, including the Action Plan for Boosting Intra-African Trade (BIAT).[4] Article 4 mentions, as one of the AfCFTA’s specific objectives, that the State Parties shall “establish and maintain an institutional framework for the implementation and administration of the AfCFTA”.

Africa’s development of a collective voice is more likely to be implied in the aim to advance African integration to the level where, eventually, a continental Customs Union (CU) will be formed. Customs Unions have a common external tariff (in addition to a single customs territory) and decide jointly (or through supranational bodies) about tariff setting, tariff management, and about trade policies vis-à-vis third parties. This must include the harmonization of services policies and domestic regulatory instruments.

Continental integration to a CU level is highly ambitious goal with far-reaching implications for national sovereignty. A structured and explicit debate on its achievement will only become a realistic endeavour once the practical implementation of the AfCFTA has reached advanced stages. Article 3 of the AfCFTA Agreement indicates that intra-African trade liberalization will require “successive rounds of negotiations”. There is no timeframe for the establishment of the Continental CU. The process “to lay the foundation for the establishment of a Continental Customs Union [will be] at a later stage.”[5]

The implementation of the AfCFTA will not be a uniform process of which the primary aim will be to dissolve the RECs into the Continental CU. Article 19 of the AfCFTA provides that:

State Parties that are members of other regional economic communities, regional trading arrangements and custom unions, which have attained among themselves higher levels of regional integration than under this Agreement, shall maintain such higher levels among themselves.” (Emphasis added.)

If Africa wants to embark on a road towards the establishment of an integrated union with the powers to speak with one voice about global affairs and their impact on the continent and on African countries, there should be a specific strategy about how to make that possible. The RECs and CUs (like SACU) are actively pursuing their own integration strategies. They also have plans to negotiate new trade agreements with third parties.[6] If not reorganized and re-focused through new legal obligations, the diverse and ongoing activities of the RECs will make future continental integration politically more difficult and technically more complicated.

The achievement of continental integration and a “one-voice Africa” will need specific follow-up initiatives, tailor-made continental institutions and detailed policies about complicated issues. this challenge cannot be avoided, the ceding of sovereignty is a highly risky and sensitive matter. African nations have different needs. In the WTO, for instance, we may soon see initiatives to conclude plurilateral agreements about e-commerce and new trade related disciplines. Some African states will find it difficult to ignore such developments.[7]

The power to make collective pronouncements on external trade relations, which some suggest the AfCFTA Council may already enjoy, is not listed in the AfCFTA Agreement. The State Parties (not the AU) will have to grant the powers and mandates to make this possible.

[1] Art 23, pdf Agreement Establishing the AfCFTA (4.67 MB) .

[2] The legally-scrubbed text of the AfCFTA Agreement (as at May 2018) includes three Protocols: on Trade in Goods, Trade in Services, and Rules and Procedures on the Settlement of Disputes. The remaining three Protocols (on Intellectual Property Rights, Investment, and Competition Policy) are to be finalised as part of the Phase II Negotiations (see Art 7 AfCFTA Agreement).

[3] There will also be technical bodies for specific Protocols and a Dispute Settlement Body. The latter consists of the State Parties, when acting under the Protocol on Dispute Settlement.

[4] Art 10(1) AfCFTA Agreement.

[5] Art 3(d) AfCFTA Agreement.

[6] Mauritius, the EAC and SACU are examples.

[7] At the Buenos Aires Ministerial Council of September 2018 Nigeria supported a decision to explore an e-commerce agreement.

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.

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