Building capacity to help Africa trade better

The AfCFTA will grow gradually and via measures taken in different Forums


The AfCFTA will grow gradually and via measures taken in different Forums

The AfCFTA will grow gradually and via measures taken in different Forums

What must the African Continental Free Trade Area (AfCFTA) actually bring about? How will this happen and when? The AfCFTA will be “ready for business” once he outstanding negotiations about tariff reductions, rules of origin and trade in five priority services areas are completed. This will finally happen in 2021. The AU Summit of 5 December 2020 announced that trade in goods can begin on 1 January 2021 based on interim arrangements, while the outstanding Phase I negotiations will continue as part of a built-in agenda.

The implementation of specific obligations about trade liberalization and market access commences once the rulebook has finally been written. Implementation of legal obligations is a State Party responsibility. Decisions about investment, production, retail, and commercial presence are, on the other hand, taken by firms and in the private sector; in the State Parties and in third states. And then there is a third level of action, to “lay the foundation for the establishment of a Continental Customs Union at a later stage”.[1]

The AfCFTA will not usher in sudden changes; it takes time to establish a Free Trade Area (FTA), particularly if a continent-wide market is envisaged. The AfCFTA Agreement says the State Parties “shall progressively eliminate tariffs and non-tariff barriers” and “progressively liberalize trade in services”.[2]

The AfCFTA is designed to be a member-driven arrangement. There will not be supra-national institutions. The State Parties will be in control and will, in their role as members of the Council of Ministers, take decisions, based on consensus, on practical matters and the implementation of the AfCFTA instruments. The Council of Ministers will normally meet twice a year. The African Union (AU) Assembly will provide “oversight and strategic guidance on the AfCFTA”.[3] It will be the forum where the long-term ambitions to “deepen the economic integration of the African continent[4] will have to be kept alive.

There will also be a Committee of Senior Trade Officials from the State Parties and a full-time Secretariat. The latter will be based in Accra, Ghana and is expected to perform several administrative and support functions, building capacity where needed, and disseminating official information and notifications about national measures. The Secretariat will ultimately be responsible for ensuring transparency, the steady flow of and reliable access to official information about State Party policies, laws and measures. This should include information about all trade related measures, not fragmented pictures thereof as pertaining to specific REC configurations.

Trade liberalization will take place through the simultaneous pursuit of the AfCFTA agenda and those of the RECs. The REC FTAs are the building blocks of the AfCFTA.[5] They will continue to exist and to pursue their own agendas.[6] This parallel arrangement has several important implications. One is that importers and exporters of goods will structure their transactions in accordance with the jurisdictional facts pertaining to a particular operation. Goods will be exported from one country to another in terms of the most attractive options.

Overlapping membership in existing RECs, coupled with simultaneous membership of the AfCFTA, will require careful choices about preferences but also about rules of origin, technical standards and governance generally. By way of example: Most East African Community (EAC) member states also belong to COMESA, while Tanzania is also a member of SADC. South African products can be exported to Tanzania under SADC’s preferences, but not to Kenya. Once the AfCFTA is in operation, preferential trade in goods between South Africa and Kenya may become possible, but not necessarily at the same tariff rates and in terms of the same rules of origin applicable to trade with Tanzania. If a firm is domiciled in a COMESA or EAC member/partner state, it enjoys standing before the respective regional Courts of Justice. In SADC there is no such court.[7]

The AfCFTA benefits will depend on what its tariff schedules and rules of origin finally provide for. This requires detailed negotiations and working out various combinations of concessions. Members of customs unions negotiate en bloc to protect the integrity of the common external tariff. Members of REC FTAs make individual offers. REC FTAs and customs unions will continue to exist and trade will continue amongst the respective member states as before. The contribution of the AfCFTA is to add tariff preferences between those Member States of the African Union (excluding Eritrea) that are currently trading under WTO rules (at most favoured nation (MFN) tariffs).

The more tangible benefits of the AfCFTA may lie not in the tariff concessions of the AFCFTA, but elsewhere. Better customs administration and trade facilitation, and improved domestic governance will be even more important contributions of the AfCFTA. It must be hoped governments will start to actively utilize trade remedies, safeguards and exception clauses, as opposed to reverting to unilateral restrictions. Rules-based governance will bring much needed certainty and predictability to integration and trade in Africa. The Secretariat could play a vital role in spreading this message.

Trade in services will, for all practical purposes, be a new chapter in African integration. When compared to trade in goods, the liberalization of trade in services is at a much lower level in the RECs. The AfCFTA Protocol on Trade in Services may perform a more extensive enabling function.

[1] Art 3(d) AfCFTA Agreement.

[2] Art 4 AfCFTA Agreement.

[3] Art 10 AfCFTA Agreement.

[4] Art 3(a) AfCFTA Agreement.

[5] Art 5(b) AfCFTA Agreement.

[6] Art 19(2) AfCFTA Agreement and Art 8 (2) Protocol on trade in Goods.

[7] The SADC governments abolished the SADC Tribunal in 2011 after it had ruled against Zimbabwe for expropriating private land without compensation.

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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