AfCFTA Phase II and III Negotiations – Update
The scope of the Agreement establishing the African Continental Free Trade Area (AfCFTA) covers trade in goods, trade in services, investment, intellectual property rights (IPRs) and competition policy (Art. 6 of the AfCFTA Agreement). Additional legal instrument maybe negotiated to further the objectives of the Agreement (Art. 8 of the AfCFTA Agreement).
The AfCFTA Negotiations are scheduled in phases. Phase I cover trade in goods and trade in services. Phase II covers IPRs, investment and competition policy. In February 2020, the African Union (AU) Assembly of the Heads of State and Government adopted a decision to commence Phase III on E-Commerce, immediately after Phase II Negotiations.
The negotiated issues shall be constituted into legal instruments i.e. Protocols which shall form an integral part of the AfCFTA Agreement upon adoption (Art. 8 of the AfCFTA Agreement). Phase I negotiations produced the AfCFTA Agreement, Protocol on Trade in Goods, Protocol on Trade in Services and Protocol on Rules and Procedures on the Settlement of Disputes and their annexes and appendices. These legal instruments entered into force on 30 May 2020. However, negotiations on some issues of Phase I are ongoing i.e. rules of origin, schedules of tariff concessions, and schedules of specific commitments on the five priority service sectors (business services; communications; finance; tourism and transport). These outstanding issues are expected to be concluded by June 2021. Trade in goods under the AfCFTA commenced on 1 January 2021 based on legally implementable and agreed tariff schedules and concessions, rules of origin and customs declaration.’
The outcomes of the negotiations of Phase II and III issues shall be constituted into Protocols on IPRs, Investment, Competition Policy, and E-Commerce and shall form part of the single undertaking upon subject to entry into force (Art. 8 of the AfCFTA Agreement). The Protocols will have to be adopted by the AU Assembly and ratified according to the constitutional rules and procedures of member states. The Protocols will enter into force 30 days after the deposit of the 22nd instrument of ratification (Art. 23.2 of the AfCFTA Agreement). For acceding member states, the Protocols shall enter into force on the date of the deposit of the instrument of accession.
Who will negotiate AfCFTA Phase II and III negotiations?
AfCFTA negotiations are between the AU Member States, and the AfCFTA legal instruments shall be binding on State Parties. State Parties are those AU Member States which ratified the AfCFTA legal instruments and deposited their instruments of ratification with the AfCFTA Depositary, the Chairperson of the AU Commission.
Phase II (and III) negotiations shall be entered by all the AU Member States and undertaken in successive rounds (Art. 7 of the AfCFTA Agreement). Article 4 of the AfCFTA Agreement stipulates that State Parties shall ‘cooperate on investment, intellectual property rights and competition policy’. The Agreement does not explain what cooperation on IPRs, investment and competition policy means.
Deadline for Phase II and III negotiations
Phase II negotiations were initially scheduled to be concluded by December 2020 and Phase III negotiations to commence immediately after the conclusion of Phase II. This deadline was missed due to the coronavirus pandemic. The AU Assembly has set 31 December 2021 as the deadline for the conclusion of Phase II and III negotiations.
What will be included in Phase II and III legal instruments?
Details of substantive provisions that will feature in Phases II and III legal instruments are not yet clear. The legal instruments should contribute and further the objectives of the AfCFTA. Other tralac Blogs provides a list of issues the AfCFTA Protocols IPRs, Investment, Competition Policy and E-Commerce could consider to contribute to the aims of the AfCFTA.
One of the guiding principles of the AfCFTA is the preservation of the acquis (Art. 5 of the AfCFTA Agreement). The principle means building on what exists. In Phase II and III context, this means building on what has been achieved or exists in regional economic communities (RECs) in relation to IPRs, investment, competition policy and e-commerce. AMU, COMESA, ECOWAS SADC, and have adopted regional investment agreements. AU member states have adopted a non-binding Pan-African Investment Code to guide AU member states when negotiating investment treaties. COMESA, EAC, SADC, ECOWAS and ECCAS have adopted regional competition regimes. On IPRs, there are two African intellectual property organisations, namely Organisation Africaine de la Propriété Intellectuelle (OAPI) and African Regional Intellectual Property Organisation (ARIPO). The AU and NEPAD efforts to establish a Pan-African Intellectual Property Organisation have not materialised. There is not yet an African regional (REC) regime on e-commerce.
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