Building capacity to help Africa trade better

Will there be a Phase III for the AfCFTA?


Will there be a Phase III for the AfCFTA?

Will there be a Phase III for the AfCFTA?

The logic and the design of the African Continental Free Trade Area (AfCFTA) confirm that this is not an event. It is an ambitious project and a process. That is why its institutions are so important. They should coordinate national and regional economic community (REC) efforts to ensure implementation on a continental scale and for many policy areas.

The dynamic nature of this enterprise has a further implication: the present collection of legal instruments is the first salvo; more are foreseen and will be necessary. Article 8(3) of the AfCFTA contains the first indication that additional legal instruments have been foreseen from the outset. It provides as follows: “Any additional instruments, within the scope of this Agreement, deemed necessary, shall be concluded in furtherance of the objectives of the AfCFTA and shall, upon adoption, form an integral part of this Agreement.” (Emphasis added.)

Article 23 (2) and (4) provides for the procedure how additional AfCFTA legal instruments will come about:

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.

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. (Emphasis added.)

Comment and Questions:

  • Article 23(2) and (4) anticipate that additional AfCFTA legal instruments will be of the same type as the Protocols.

  • They shall, upon adoption, form an integral part of the AfCFTA Agreement.

  • Adoption (which is not defined in the definitional clause of the AfCFTA Agreement) presumably refers to the procedure in terms of which the AfCFTA Agreement was adopted, namely through a formal decision by the Assembly of Heads of State and Government of the AU. However, adoption may also be undertaken by the State Parties involved in the negotiations for concluding new Protocols. It makes little sense to keep including countries which do not associate themselves with the AfCFTA as a focussed legal pact. It will delay momentum. If the AU Assembly (which takes decisions on the basis of consensus) must decide about the adoption of new AfCFTA Protocols, non-members will have a say about developments in the AfCFTA. That is not only impractical, but also incompatible with the sovereignty of states. If the AfCFTA remains within the realm of political aspiration, it will not bear the necessary fruit.

  • The point of deciding the true nature of the AfCFTA has to be reached rather sooner than later. An free trade agreement (FTA) is essentially an exception to the most favoured nation (MFN) rule of the General Agreement on Tariffs and Trade (GATT) and has to meet certain criteria in order to be WTO compatible. It creates legal obligations for the member states on two levels; among the FTA members and vis-à-vis the other Members of the WTO.

  • It is important to take note of the responsibilities of the Council of Ministers, which is composed of the Ministers of Trade of the State Parties. (Only those AU Members who have ratified the AfCFTA instruments or have acceded to them, are State Parties.[1]) Article 11(3) of the AfCFTA Agreement expressly states that the Council “shall take measures necessary for the promotion of the objectives of this Agreement and other instruments relevant to the AfCFTA”. Article 11(5) provides: “Decisions taken by the Council of Ministers, while acting within its shall be binding on State Parties. Decisions that have legal, or financial implications shall be binding on State Parties their adoption by the Assembly.”

  • Future AfCFTA legal instruments can be negotiated and must enter into force through ratification. Subsequent accession is also possible. This procedure cannot be bypassed since the new legal instruments will essentially be treaties concluded by sovereign states; and because there is no supra-national AfCFTA institution with the power to adopt binding new instruments on behalf of the State Parties.

  • There are prior requirements for concluding these new AfCFTA legal instruments. They must fall “within the scope of the AfCFTA Agreement” and must be “necessary”. Who will determine whether new instruments are necessary and what is the relevant test? And when will they fall “within the scope of the AfCFTA Agreement”?

  • The AfCFTA has a broad scope and many ambitions. The Preamble to the Agreement refers to matters such as the integration of Africa’s markets and a continental market for the free movement of persons, capital, goods and services. Article 3 mentions the General Objectives of the AfCFTA. They add the facilitation of investments, laying the foundation for a Continental Customs Union at a later stage, sustainable and inclusive socio-economic development, gender equality, industrial development, food security, and resolving the challenges of multiple and overlapping memberships.

  • Not all of these objectives are equally urgent or susceptible to precise formulation in legally binding Protocols, which is a specific form of international agreement. A matter such as industrial development is essentially a national policy area. The present Coronavirus pandemic and the challenges around climate change will force themselves onto national, regional and continental agendas. Africa will need international partners for tackling these problems.

  • The RECs will be connected to this process. Article 19 (2) of the AfCFTA Agreement says: “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”.

  • Technical disciplines such as e-commerce have already been recognized as belonging on the agenda for Phase II.[2]

To answer the question posed above as to whether the AfCFTA will have a Phase III: a third Phase is not necessary. What is vital is to conclude the outstanding negotiations for Phase I and to proceed with Phase II. Implementation of the AfCFTA legal instruments should start as soon as possible. This includes the measures and institutions needed within the State Parties in order to commence trading and attracting private investors. The Secretariat has been given many responsibilities. It should start functioning. Implementation is the priority now; in order for this ship to leave port.

[1] Art 1(v) pdf AfCFTA Agreement (973 KB)

[2] See the report on the 6th Meeting of AU Ministers of Trade (AMOT) of 4 June 2018. https://www.tralac.org/news/article/13122-sixth-african-union-ministers-of-trade-amot-meeting-concludes-in-dakar.html

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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