Building capacity to help Africa trade better

What does the AfCFTA want to be and what could it become?


What does the AfCFTA want to be and what could it become?

What does the AfCFTA want to be and what could it become?

Do the legal instruments of the African Continental Free Trade Area (AfCFTA) contain a philosophy or strategy about deeper continental integration? What might this be? Is the AfCFTA a continuation of earlier African Union (AU) approaches for promoting continental integration or does it hint at a new modus operandi?

The AfCFTA cannot be discussed without recognising the history and discourse that have accompanied the African integration debate, but it constitutes a blueprint for a trade arrangement with a specific and different design. It is primarily a trade agreement, not (like the Abuja Treaty) a grand design to evolve into an African Economic Community at a pre-determined date. Its scope is different, more comprehensive, and modern. It is based on “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, by resolving the challenges of multiple and overlapping trade regimes to achieve policy coherence, including relations with third parties”.[1]

The implementation of the AfCFTA legal instruments entails an open-ended process. There are no provisions about meeting deadlines for a next phase of deeper integration. The AfCFTA is not designed to be an international organisation.[2] Officials refer to the AfCFTA Agreement as a “framework agreement”.

The AfCFTA establishes a preferential trade arrangement in the form of a Free Trade Area (FTA), not a Customs Union (CU). If it remains an FTA for several decades, that will not incur any violation of the obligations accepted by the State Parties. And it will be another FTA on the continent, alongside those existing in some of the Regional Economic Communities (RECs).[3]

The differences between a CU and an FTA are important. They are about the depth of integration and the consequences of the associated legal obligations. In an FTA the individual State Parties enjoy the benefits of preferential trade in goods, with the other member states of that FTA, under specific rules of origin, but they remain in control of national trade policies and tariff setting. The member states of an FTA will continue to implement obligations accepted through membership of earlier trade deals and are free to conclude new FTAs with third parties. In a CU this is not possible; the common external tariff requires collective decision-making about tariff changes by the member states and joint negotiations when concluding trade in goods agreements with third parties.

The AfCFTA Agreement is deliberately vague in respect of what the AfCFTA could become. The AfCFTA’s list of (long-term) General Objectives[4] mention the possibility of creating “a liberalised market for goods and services through successive rounds of negotiations”. Such negotiations will be state driven, as the AfCFTA is. It will also “contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the State Parties and RECs” and will “lay the foundation for the establishment of a Continental Customs Union at a later stage”. (Emphasis added.)

For the foreseeable future the AfCFTA “shall be governed” by principles such as being member-driven, the preservation of the acquis, reciprocity, consensus decision- making, and the best practices in the RECs, in the State Parties and International Conventions binding the African Union.[5]

The AfCFTA is also a flexible arrangement. Article 23 of the AfCFTA Agreement foresees the adoption of “any other Instrument within the scope of this Agreement deemed necessary”. The State Parties have already decided to add Protocols on E-Commerce and on Women and the Youth. They will be negotiated during subsequent phases. Another indication of a “functional flexibility” is the fact that non-State Parties (AU Member States that have not yet become State Parties through the ratification or accession procedures of Article 23 of the Agreement) are actively participating in the negotiations to adopt the AfCFTA tariff schedules and Rules of Origin. Tariffs and non-tariff barriers (NTBs) will be eliminated “progressively”.[6] Nothing shall prevent two or more State Parties “from extending to one another preferences which aim at achieving the objectives of this Protocol among themselves, provided that such preferences are extended to the other State Parties on a reciprocal basis”.[7]

The AfCFTA Agreement recognises the importance of existing trade arrangements and of global trade. This is not surprising; only 16% of the goods exported by African nations are destined for other African markets. The REC FTAs will continue, and it is explicitly stated that trade agreements with third parties may be concluded, provided that any advantage, concession, or privilege granted to a Third Party is extended to other State Parties on a reciprocal basis.[8]

The AfCFTA is a pragmatic arrangement. It has been designed to serve the interests of the State Parties. It may be around in its present format for a long time.

[1] Preamble, AfCFTA Agreement.

[2] It is only of the Secretariat (the administrative arm of the AfCFTA) that a legal personality of some kind is mentioned. The Secretariat shall be “a functionally autonomous institutional body within the African Union system with an independent legal personality”. (Art 13 (3) AfCFTA Agreement.) What this means is not clear.

[3] The clearest indication hereof is Art 8(2) of the AfCFTA Protocol on Trade in Goods: The 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”.

[4] Mentioned in art 3 AfCFTA Agreement.

[5] Art 5 AfCFTA Agreement.

[6] Art 2 AfCFTA Protocol on Trade in Goods.

[7] Art 4(3) AfCFTA Protocol on Trade in Goods.

[8] Art 4(2) AfCFTA Protocol on Trade in Goods.

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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