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What is still required for a complete AfCFTA Deal?

By Gerhard Erasmus
17 May 2019
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What is still required for a complete AfCFTA Deal?

The African Continental Free Trade (AfCFTA) Agreement promises an ambitious new continent-wide trade arrangement for Africa. The Preamble says there will be “clear, transparent, predictable and mutually-advantageous rules to govern Trade in Goods and Services, Competition Policy, Investment and Intellectual Property. This is an undertaking to eventually provide a comprehensive rules-based trade deal. Good progress has been made but there is still a lot to be done.

This arrangement will be anchored in international agreements. The first task is to conclude the negotiations for the adoption of all outstanding legal instruments. Phase I negotiations are well advanced. They cover trade in goods, trade in services and dispute settlement. However, some important matters (tariff schedules, rules of origin and sector commitments for priority services) are still to be finalized. Phase II negotiations will focus on investment, competition and intellectual property rights. They have not yet commenced.

The fact that trade in services is included, is significant. Services are important for African countries – in terms of their contribution to GDP, employment, and enhancing manufacturing competitiveness. If properly accommodated services will facilitate trade in goods through better transport, communications, finances, improved customs procedures etc. A comprehensive trade arrangement also stands a better chance to attract investment. The negotiations on schedules of specific commitments for transport, communications, tourism as well as financial and business services must be completed.

The AfCFTA provides for a number of institutions. The Secretariat is still under construction. It shall be established by the African Union Assembly, which shall decide its nature, location and approve its structure and budget. The “role and responsibilities” of the Secretariat shall be determined by the Council of Ministers of Trade. The Secretariat shall be a “functionally autonomous” institution within the AU system but with an independent legal personality. (The AfCFTA is not endowed with legal personality.) Exactly what this will mean is not yet clear.

The Secretariat will play a supporting role with respect to many aspects of the AfCFTA, including the settlement of disputes between the Parties. It shall keep the Dispute Settlement Body (DSB) informed about the implementation of rulings, may provide legal advice and assistance, and must assist Panels in the performance of their tasks.

There will be a number of second tier AfCFTA institutions. The Council of Ministers shall establish the Committee on Trade in Goods, which will have subsidiary bodies. The Council of Ministers shall also establish the Committee on Trade in Services, with subsidiary bodies.

Additional institutions have been mentioned. The African Trade Observatory is an important one. It will provide policymakers, investors and stakeholders with reliable trade data and statistics. This will enable them to identify market opportunities, will facilitate the effective monitoring of the implementation of the Agreement once in force, and will promote planning and policy making.

The AfCFTA will be member-driven. For trade in goods the commitments of the State Parties appear in tariff schedules and in the rules of origin. Provisions on customs procedures, trade facilitation, the notification of national trade regulating measures (transparency is essential for rules-based trade), the monitoring of compliance, new negotiations, trade remedies and safeguards, standards, non-tariff barriers, the regulation of service providers, as well as dispute settlement are typical of trade agreements. They also contain provisions on limitations and exceptions. National legislation for all these matters is essential.

The implementation of international agreements requires follow-up steps by the State Parties. Trade agreements are, as a rule, not self-executing. The State Parties must adopt domestic measures to ensure reciprocal benefits will materialize. This includes amendments to the national tariff book and regulations for service providers. New rules of origin and attendant certificates must be enacted to allow preferential trade, while new import permit measures and tariff rate quotas could be required.

Most of the State Parties are members of Regional Economic Communities in the form of Free Trade Areas and Customs Unions. These trade regimes will also have to be aligned to AfCFTA outcomes. The Common External Tariffs of Customs Unions should, for example, be adjusted as required.

Trade Agreements do not guarantee increased trade. Implementation is ultimately about ensuring active private sector participation. Importers, exporters, investors and service providers should be able to access reliable information and data. The relevant technical information and legal instruments should be disseminated by governments and the Secretariat. In the case of trade remedies (anti-dumping and countervailing) and safeguard measures, national investigating authorities, legislative frameworks and judicial review procedures must exist. Most African states do not presently have them.

The completion of these tasks will not only support the implementation of the AfCFTA. African nations’ involvement in global and regional trade will also benefit. Rules-based trade governance will be improved.

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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