Building capacity to help Africa trade better

How, according to the Founders, will the AfCFTA Agreement be implemented and the Continental Free Trade Area come about?


How, according to the Founders, will the AfCFTA Agreement be implemented and the Continental Free Trade Area come about?

How, according to the Founders, will the AfCFTA Agreement be implemented and the Continental Free Trade Area come about?

The objectives behind the AfCFTA are ambitious and wide-ranging. A careful reading of the texts of the founding instruments is necessary to understand the nature and sequencing of the various obligations, to figure out who must do what and how, and to appreciate the responsibilities of the State Parties as well as the Regional Economic Communities (RECs). Private firms will be the importers, exporters, service providers and investors but the rights and obligations will be those of the State Parties.[1] The AfCFTA is a typical member-driven trade arrangement.[2]

One of the important features of the AfCFTA is that it is a Framework Agreement. It means it will be implemented and be expanded over time as determined by the State Parties. The AfCFTA Agreement does not provide for organs with supra-national powers. Another feature is that the RECs, although not Parties to this Agreement, are given certain responsibilities with respect to attaining the AfCFTA goals. At the first Meeting of the Council of Ministers of the AfCFTA convened in Addis Ababa on 24-25 October 2019, where the RECs were represented by COMESA and the EAC, it was formally reported that “at regional level Summit had directed that AfCFTA Secretariat and RECs develop a framework of collaboration and was already being done.[3]

Article 3 of the AfCFTA Agreement lists the AfCFTA’s General Objectives. The ultimate aim is to “create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent.” However, implementation will be undertaken in stages: A “liberalised market for goods and services” will be established “through successive rounds of negotiations. Further liberalisation will require the explicit acceptance, by the State Parties, of new obligations to reduce tariffs and to remove non-tariff barriers (NTBs) and restrictions on external service providers.

The AfCFTA also wants to “lay the foundation for the establishment of a Continental Customs Union at a later stage”. Such a far-reaching step can only come about if the State Parties formally so agree and if they are prepared to abandon the trade related benefits and structures presently found in the RECs. Individual countries cannot belong to more than one customs union at the same time.[4]

It must, in addition, be pointed out that the AfCFTA Agreement expressly provides for the continuation of the REC regimes (and, by implication, all their trade-related legal disciplines); and for doing so as long as higher levels of integration prevail within these configurations. “State Parties that are members[5] 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.[6] (Emphasis added.)

All 55 Members of the African Union (AU) should eventually ratify the AfCFTA Agreement or accede thereto in order to bring about one integrated continental market. All the AU Members participate in the AfCFTA negotiations but only the State Parties are accepting obligations under this Agreement. It will not be easy for 55 countries at very different levels of economic development to agree on the same binding obligations which, by necessity, must result in the curtailing of national policy space hitherto enjoyed.

The AfCFTA objectives also require the removal of specific obstacles. They include “the challenges of multiple and overlapping memberships” in order to “expedite the regional and continental integration processes”. Exactly how this will happen is not spelled out, but it is stated that this will entail a process of “building on the initiatives and developments in the State Parties and RECs”.[7] Many African nations belong to more than one REC; there are no formal plans to resign from some of them. When the Tripartite Free Trade Area (TFTA) was launched in October 2008, the first official communique promised the amalgamation of COMESA, the EAC and SADC into one single operation and organization. It never happened. Instead, a formal principle was adopted which confirmed the existing acquis.[8] The AfCFTA recognises the “preservation of the acquis” as one of its principles.[9]

Article 4 of the AfCFTA Agreement provides for Specific Objectives and foresees a more gradual implementation pace and different categories of obligations. The State Parties shall:

  • progressively eliminate tariffs and non-tariff barriers to trade in goods;

  • progressively liberalise trade in services;

  • cooperate on investment, intellectual property rights and competition policy;

  • cooperate on all trade-related areas;

  • cooperate on customs matters and the implementation of trade facilitation measures;

  • establish a mechanism for the settlement of disputes; and

  • establish and maintain an institutional framework for the implementation and administration of the AfCFTA. (Emphases added.)

The highlighted terms signify that for many of its constituent elements the AfCFTA will not be built on immediately enforceable rights and duties. The State Parties will retain jurisdiction in areas where only cooperation is foreseen. The progressive elimination of tariffs and NTBs will be based on the schedules presently being negotiated and will be reinforced by the concept of variable geometry.[10]

The AfCFTA Protocols do contain provisions with specific obligations. Article 7 of the Protocol on Trade in Goods for example provides: State Parties shall progressively eliminate import duties or charges having equivalent effect on goods originating from the territory of any other State Party in accordance with their Schedules of Tariff Concessions. Each State Party shall “apply preferential tariffs to imports from other State Parties in accordance with its Schedule of Tariff Concessions”.[11] These obligations signify what an FTA is about.

The Tariff reductions and rules of origin applicable to the AfCFTA are still being negotiated. The same applies to the liberalisation of trade in services. These are complicated processes. Only when all tariff schedules, the rules of origin and services commitments are known, will it be possible to assess the extent and pace of trade liberalisation under the AfCFTA regime.

[1] The State Parties are those AU Members which have ratified the pdf AfCFTA Agreement (4.67 MB) or have acceded to it, and for which it has entered into force.

[2] Although Art 5 says the AfCFTA shall be governed by principles such as “driven by the Member States of the African Union”, only those AU Members which have become State Parties will have rights and benefits under this Agreement.

[3] AU/TI/AfCFTA/CoM/1/Final/Report

[4] A Customs Union is a legal arrangement in which substantially trade in goods has been liberalized among the Members and they have formed a single customs territory, all restrictive regulations of commerce have been eliminated, and a Common External Tariff (CET) has been established vis-à-vis third parties.

[5] Membership of the RECs and similar trade arrangements includes all the trade-related legal obligations flowing from such a relationship.

[6] Art 19(2) AfCFTA Agreement.

[7] Art 3(d) AfCFTA Agreement.

[8] The TFTA definition reads: Acquis is a French term meaning “that which has been agreed”. In the context of the Tripartite Free Trade Agreement it means that the negotiations should start from the point at which of the COMESA, EAC and SADC trade negotiations have reached. Tariff negotiations and the exchange of tariff concessions would be among Member/Partner States of the Tripartite FTA that have no preferential arrangements in place between them. This will both preserve the acquis and build on it.

[9] Art 5, AfCFTA Agreement.

[10] Variable geometry is provided for in Art 5, AfCFTA Agreement. It means some State Parties can liberalize faster than others; without being prevented from doing so by those opposing the acceptance of similar obligations. The latter are free to move at a slower pace.

[11] Art 8 Protocol on Trade in goods.

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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