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What happens to the RECs once the AfCFTA is in force?


What happens to the RECs once the AfCFTA is in force?

What happens to the RECs once the AfCFTA is in force?

Regional integration has been a prominent feature of inter-state cooperation in Africa for a long time. It is pursued for solidarity, historical, political and economic reasons. In addition, regional integration makes sense in Africa, where many small and land-locked countries lack the market size necessary for economic growth and industrialization.

Regional integration arrangements can reduce trade barriers among the Member States and result in economic development gains. This happens in a structured and more predictable manner for trade in goods when Free Trade Areas (FTAs) and Customs Unions (CUs) are formed.[1] The African regional integration debate has now moved to a higher level, by recognizing the importance of trade in services, and of other trade related disciplines such as investment, competition and intellectual property rights. The AfCFTA legal instruments will deal with all these disciplines in separate Protocols, albeit by only foreseeing cooperation arrangements in most of them.

The Preamble to the AfCFTA Agreement says the RECs are building blocks “towards the establishment of the African Continental Free Trade Area”. This Agreement also promises to resolve the challenges of overlapping REC membership. The African Union (AU) recognises eight RECs.[2] Not all of them have formed Free Trade Areas yet, which is required for liberalizing trade in goods.

Most African countries belong to more than one REC. The result is that different rules of origin, tariffs or standards could apply to the same product. The rules of origin in the Southern African Development Community (SADC) are, for example, stricter than those in other RECs. How will the AfCFTA address the problem of overlapping REC membership?

There is no specific plan. The AfCFTA’s objective to create “a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent... and to create a liberalised market for goods and services through successive rounds of negotiations.”[3] Successive rounds of negotiations will have to be pursued very deliberately and within agreed timeframes for this objective to be realized. The RECs and their Members will have to agree to such new arrangements which will, over time, dissolve their present FTAs and Customs Unions if comprehensively implemented.

There is no immediate plan for doing so. Article 19(2) of the AfCFTA Agreement contains an important provision about the future of the RECs. “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.)

The manner in which Article 19 is formulated means that customs unions such as the Southern African Customs Union (SACU) and those planned for in some of the RECS, as well as the Tripartite Free Trade Area (TFTA), once in force, shall also be maintained. Their members obviously consider them to be beneficial for their regional trade.

The second important point about Article 19 is that the “higher levels of regional integration” which shall be maintained in the post AfCFTA period, are not limited to tariffs. Article 19 of the AfCFTA Agreement endorses all the trade-related achievements of a particular REC. They will thus be preserved.

Are Members of the RECs allowed to deepen their mutual integration and to adopt additional REC instruments for this purpose? The RECs are, as a rule, international legal persons. The Parties’ rights and duties are enshrined in the agreements concluded for the purpose of establishing these arrangements. The AfCFTA does not suspend these gains. That would only happen when the Members in question so decide. Article 19 of the AfCFTA Agreement, by implication, recognises this state of affairs. The Members of the RECs are entitled to perform all those actions permitted under the applicable REC legal instruments, including the pursuit of deeper integration.

It would have been unrealistic (as well as ill-advised) for the AfCFTA negotiations to have endeavoured to do away with the tangible integration benefits generated by the RECs. These arrangements (especially those that are FTAs or CUs) have their own deeper integration agendas, which they will continue to pursue. Services are often part and parcel of their deeper integration achievements. So are associated commercial practices.

Until the outcomes of tariff and services negotiations in the AfCFTA are finally known, it will not be possible to speculate about how the relationship between RECs with advanced trade regimes and the AfCFTA could be re-directed to support the creation of one African market for goods and services. All indications are that the RECs will be around for some time to come. And they will probably grow in importance and in scope.

[1] See the tralac Working Paper, The AfCFTA as a Strategy and a Design, by this author.

[2] The Arab Maghreb Union (UMA), the Common Market for Eastern and Southern Africa (COMESA), the Community of Sahel-Saharan States (CEN-SAD), the East African Community (EAC), the Economic Community of Central African States (ECCAS), the Economic Community of West African States (ECOWAS), the Intergovernmental Authority on Development (IGAD), and the Southern African Development Community (SADC).

[3] Art 3 AfCFTA Agreement.

About the Author(s)

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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