Building capacity to help Africa trade better

Does the AfCFTA have a formula to tackle Africa’s Non-Tariff Barriers?


Does the AfCFTA have a formula to tackle Africa’s Non-Tariff Barriers?

Does the AfCFTA have a formula to tackle Africa’s Non-Tariff Barriers?

Whereas tariffs are the taxes or duties imposed on imported goods, non-tariff barriers (NTBs) refer to restrictions resulting from prohibitions, conditions, or requirements that make the importation or exportation of products difficult and/or costly. NTBs include unjustified and improper application of non-tariff measures (NTMs) such as sanitary and phytosanitary (SPS) or technical measures. NTBs can arise from official measures in the form of laws, regulations, policies, restrictions, labelling requirements, private sector business practices, or prohibitions. They can be used to protect domestic industries from competition.[1]

When one speaks to freight forwarders, importers and exporters in Africa they will tell you NTBs and Trade Facilitation issues pose massive challenges to intra-African trade and integration. Many consider them the biggest obstacles to achieving the objectives of the African Continental Free Trade Agreement (AfCFTA) and deepening integration in the Regional Economic Communities (RECs). It is not the conclusion of formal agreements per se but what actually happens at border posts and with respect to NTBs that counts. What will the AfCFTA do about NTBs and what will be new?

The AfCFTA Protocol on Trade in Goods defines NTBs as “barriers that impede trade through mechanisms other than the imposition of tariffs”. Annex 5 to this Protocol deals with NTBs in detail and provides “a mechanism for the identification, categorization and progressive elimination of NTBs within the AfCFTA”. It provides for institutional structures for the elimination of NTBs, the general categorisation of NTBs, reporting and monitoring tools, and the facilitation of resolution of identified NTBs. How will NTBs in practice be eliminated or “resolved” under Annex 5? What are the basic obligations of the AfCFTA State Parties with respect to the elimination of NTBs under Annex 5?

The AfCFTA State Parties[2] must “progressively eliminate tariffs and non-tariff barriers to trade in goods”.[3] Article 3 of Annex 5 provides for the general categorisation of NTBs to include government participation in trade and restrictive practices tolerated by governments, customs and administrative entry procedures, Technical Barriers to Trade, Sanitary and Phytosanitary Measures, specific limitations and charges on imports.

An NTB Sub-Committee (composed representatives from State Parties) shall be established to develop “working procedures” for the implementation of Annex 5, to monitor its implementation and undertake periodic reviews regarding elimination.[4] The State Parties shall also establish National Monitoring Committees and National Focal Points on NTBs.[5]

This system shall function in close collaboration with the NTB Monitoring Mechanisms of the RECs. Article 10 of Annex 5 states that the NTB Units and National Focal Points of the RECs shall work closely with the NTB Sub-Committee of Annex 5. They shall support the NTB Coordination Unit at the Secretariat in the resolution of inter-REC NTBs. State Parties are encouraged to resolve NTBs raised at intra-REC level by using the resolution mechanisms in place in each REC.[6] This system (called a mechanism) “shall be accessible to State Parties’ Economic Operators, National Focal Points, REC Secretariats, academic researchers and other Interested Parties”.[7] However, disputes arising from the implementation of Annex 5 are to be settled in accordance with the AfCFTA Protocol on Dispute Settlement.[8] Only AfCFTA State Parties may institute disputes; private parties have no standing to do so. It is unlikely that the State Parties will declare formal disputes against each other; African governments never take each other to court over non-compliance with trade-related obligations. In the few instances where regional courts have ruled on trade disputes, the applications have been brought by private parties.[9]

Appendix 2 to Annex 5 explains the Procedure for Elimination and Co-operation in the Elimination of Non-Tariff Barriers. The essential feature of this system is anchored in the fact that the State Parties must exhaust existing online notification NTB channels at REC level before escalating a complaint or trade concern to the AfCFTA level.[10] Additional procedures are available to resolve disputes. They include assistance by the AfCFTA Secretariat and the use of a Facilitator, to be appointed under certain circumstances. Mutually agreed solutions are to be sought. Where a State Party fails to resolve an NTB after a factual report has been issued and a mutually agreed solution has been reached, the requesting State Party may resort to the dispute settlement stage.[11] Confidential information shall be protected.

This is not an effective rules-based system with legal remedies for private parties, despite the fact that NTBs often involve due process failures. Private parties (freight forwarders, transport companies and firms) may do much better by investigating enforceable legal remedies in the Courts of Justice of those RECs where this is possible.[12]

There is also a linkage to Trade Facilitation, which is dealt with in Annex 6 of the AfCFTA Protocol on Trade in Goods. Appendix 1 to Annex 5 contains a General Categorization of Potential Sources of Non-Tariff Barriers which, for example includes customs valuation, customs formalities and import licensing, rules of origin and a category – “other”.

The basic design of the AfCFTA will determine how the AfCFTA Agreement, its Protocols and their Annexes will be implemented. This is a Member-driven arrangement.[13] It does not have supra-national institutions to act on behalf of the collective and to ensure compliance. Individual State Parties have to implement the obligations that have been negotiated.

Another important feature of the AfCFTA is that those State Parties that already belong to Regional Economic Communities (RECs) or other African trading arrangements consisting of Free Trade Areas (FTAs) shall continue to trade under these existing arrangements.[14] Article 8(2) of the Protocol on Trade in Goods is quite clear:

State Parties that are members of other RECs, which have attained among themselves higher levels of elimination of customs duties and trade barriers than those provided for in this Protocol, shall maintain, and where possible improve upon, those higher levels of trade liberalisation among themselves.” (Emphasis added.)

The main action with regard to NTBs will be under other African trade arrangements. Only those AfCFTA State Parties presently trading under Most Favoured Nation (MFN) rules, will implement the AfCFTA as an FTA. There is still some distance to cover before one of the most serious obstacles to boosting intra-African trade and integration will be removed.

[1] https://www.tradebarriers.org/ntb/non_tariff_barriers

[2] Only those African Union (AU) Members that have ratified the AfCFTA Agreement or have acceded to it, are State Parties.

[3] Art 4(a) AfCFTA Agreement.

[4] Art 4 Annex 5.

[5] Art 6 (2) Annex 5.

[6] Art 12(3) Annex 5.

[7] Art 12(7) Annex 5.

[8] Art 16 Annex 5.

[9] About the only true such case is the Polytol decision of the COMESA Court of Justice, rendered in 2012.

[10] Par 1 Appendix 2.

[11] Par 2.2.3(d) Appendix 2.

[12] COMESA, the EAC and ECOWAS have such Courts. The SADC Tribunal has been abolished in 2011 after it gave a ruling against Zimbabwe for expropriating private property without compensation.

[13] Art 5 AfCFTA Agreement.

[14] Art 19(2) 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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