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How will Phase II of the AfCFTA be negotiated, ratified and implemented?

By Gerhard Erasmus
27 Mar 2020
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How will Phase II of the AfCFTA be negotiated, ratified and implemented?

The African Continental Free Trade Area (AfCFTA) aims to establish a comprehensive new trade regime for Africa. The Preamble to the AfCFTA Agreement refers to “the need to establish clear, transparent, predictable and mutually-advantageous rules to govern Trade in Goods and Services, Competition Policy, Investment and Intellectual Property among State Parties....

Negotiations on Phase II of the AfCFTA are about to start. They will deal with the adoption of the Protocols required for investment, competition policy and intellectual property rights. How will these Protocols be negotiated and implemented and what will the relationship between Phase I and Phase II Protocols be? We look to the AfCFTA Agreement for answers to these questions.

The Preamble to the AfCFTA Agreement sets the bar for the content and effect of the Phase II Protocols quite high; they must contain “clear, transparent, predictable and mutually-advantageous rules” to govern the relevant disciplines. However, there have been indications suggesting that these additional instruments will only provide for cooperation arrangements.

Article 7 of the AfCFTA Agreement deals with Phase Il Negotiations:

  1. In pursuance of the objectives of this Agreement, Member States shall enter into Phase Il negotiations in the following areas: intellectual property rights; investment; and competition policy.

  2. The negotiations referred to in paragraph 1 of this Article shall commence after the adoption of this Agreement by the Assembly and shall be undertaken in successive rounds.

Article 8 discusses the Status of the Protocols, Annexes and Appendices

  1. The Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Property Rights, Competition Policy, Rules and Procedures on the Settlement of Disputes and their associated Annexes and Appendices shall, upon adoption, form an integral part of this Agreement.

  2.  The Protocols... and their associated Annexes and Appendices shall form part of the single undertaking, subject to entry into force.

Comment:

  • The negotiations to conclude the Phase II Protocols should have started once the AfCFTA Agreement had been adopted by the AU Assembly. Adoption happened at the Extraordinary Summit in March 2018 in Kigali.

  • The AfCFTA Agreement is a compendium of legal instruments. It consists of the AfCFTA Agreement (the first and anchor instrument) and the Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Property Rights, Competition Policy, Rules and Procedures on the Settlement of Disputes, and their associated Annexes and Appendices.

  • The legal text says that one, integrated Agreement and single undertaking will exist once all these instruments have entered into force. However, the intention is that Phase I Protocols (on trade in goods and services and on disputes) will be implemented as soon as they are ready. Without this being stated explicitly, the notion of an early harvest seems to have been accepted as part of the AfCFTA negotiating process. The Doha Ministerial Declaration explains an early harvest to mean that “... agreements reached at an early stage may be implemented on a provisional or definitive basis”.[1]

  • The AfCFTA Agreement and Phase I Protocols are already in force since 30 May 2019 (when the 22nd instrument of ratification was deposited[2]), but the negotiations on tariff reductions, rules of origin and the specifics for trade in the priority services sectors have not been completed. It was hoped that preferential trade under the AfCFTA would commence on 1 July 2020. That date might now (also as a consequence of COVID-18) be postponed.

  • The Protocols and their associated Annexes and Appendices constitute, once in force, a single undertaking. The single undertaking concept (which is not defined in the definitional clause of the AfCFTA Agreement) is a guiding principle in multilateral trade negotiations. The Doha Ministerial Declaration states that “... the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as part of a single undertaking.” This concept has also been used to refer to the requirement that WTO members must join all the WTO agreements. The only exceptions are the plurilateral agreements.[3]

Article 23 of the AfCFTA Agreement deals with the entry into force of the AfCFTA Agreement, as well as of Phase I and Phase II Protocols:

  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

  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.

Comment:

  • Only State Parties are bound by these legal instruments. For this to come about, they must ratify these instruments or accede to them.

  • The African Union is not a party to the AfCFTA.

  • The AfCFTA Agreement and Phase I Protocols entered into force on 30 May 2019. However, implementation must wait till outstanding issues (which are still being negotiated) have been agreed.

  • The Agreement and Phase I Protocols have been ratified as a single package. The 29 countries that have submitted instruments of ratification are bound by the Agreement as well as the Phase I Protocols.

  • Phase II Protocols are still to be negotiated. They must also be ratified by 22 AU Members before they will (30 days after the 22nd instrument of ratification has been deposited) enter into force. This duplicates the ratification procedure for Phase I Protocols.

  • Ratification is the international act whereby a sovereign state indicates its consent to be bound by an international agreement. It usually involves a formal statement being deposited by the Ministry of Foreign Affairs, on behalf of the State in question, with the entity designated to be the depositary. In the case of the AfCFTA the Chairperson of the AU Commission is the depositary.[4]

  • AU Members who want to become State Parties after the Agreement and Phase I Protocols have entered into forces, must accede to these instruments. “Accession” is the act whereby a state accepts to become a party to an International Agreement that has already entered into force. It then has the same legal effect as ratification. An instrument of accession needs to be deposited with the depositary.

  • AU Members who want to become Parties to the Phase II Protocols after they have entered into force, must accede to them.

  • Will all those States that have ratified/acceded to the Phase I legal instruments become State Parties to the Phase II instruments? The wording of Article 23 of the AfCFTA Agreement suggests that is not the case. Separate ratification/accession instruments are required for Phase II Protocols. If this interpretation is correct, then the overall arrangement will not be a single undertaking in the sense described above. This aspect may still be clarified by AU assembly decisions.

  • Would it be possible for certain AU Members to become parties only to Phase II Protocols? The context suggests otherwise. It would not make sense and such a state of affairs would lack the “anchor” for the overall regime which the AfCFTA Agreement provides.

  • The implementation of Phase I and Phase II Protocols requires final legal instruments in the sense of them being agreed, adopted and in force. The domestic steps required within the respective State Parties will depend on the nature of the obligations to be complied with. The protection of investors will, for example, need national investment laws/investment codes. The same applies to intellectual property rights. Domestic institutions will also be required for many of these disciplines.

  • What could an AfCFTA Protocol on Competition Policy provide for? It must be noted that the title of this Protocol has been carefully chosen; it is specifically about Competition Policy. The AfCFTA has not created supra-national institutions and there are no indications at all that a continental competition commission will be established. Nor will there be one single African competition policy. This would require convergence in policy areas which does not exist in Africa. So, the competition policy referred to here will be national competition policy; in those State Parties with the required commissions.

  • There is still a lot to be done before the AfCFTA will be complete. Designing and implementing the AfCFTA is a process, not a once-off event.


[1] Walter Goode, Dictionary of Trade Policy Terms, Cambridge University Press, 5th edition, 2007 at 140.

[2] As required by Art 23 pdf AfCFTA Agreement (973 KB)

[3] Goode op cit at 389.

[4] Art 24(1) AfCFTA 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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