Building capacity to help Africa trade better

“But how do they settle their trade disputes if they never litigate against each other?”


“But how do they settle their trade disputes if they never litigate against each other?”

“But how do they settle their trade disputes if they never litigate against each other?”

This question was asked by someone (yes, it was a lawyer) participating in a recent tralac seminar. It was in response to a discussion in which we pointed out that sub-Saharan African States never litigate against each other over trade issues. This question echoed a valid concern, namely that without proper dispute settlement intra-African trade might be a messy and unpredictable process. The expected benefits may not materialize.

African Governments do not treat all their disputes with each other as of the same gravity or requiring the same settlement procedure. They often litigate against each other over border disputes, but not over trade agreements. In some instances, they will bring “elder statesmen” into the picture. An example is the Panel of Elders and Mediation Reference Group of the Southern African Development Community (SADC) Mediation and Conflict Prevention and Preventative Diplomacy structure. It was established by the SADC Heads of State and Government in 2014. This arrangement (which is not compulsory) is aimed at strengthening SADC’s mediation capacities and prevent violent conflict. It is based on a similar arrangement adopted earlier in the African Union.

African Governments subscribe to the benefits to be had, in principle, through formal inter-State dispute settlement mechanisms in their trade arrangements. The relevant treaties contain detailed dispute settlement provisions. During Phase I of the AfCFTA negotiations the participating Member States of the African Union (AU) soon agreed on the content of the Protocol on Rules and Procedures on the Settlement of Disputes as part of the AfCFTA Agreement. It was decided to copy the WTO model and provides for Panels and an Appellate Body. Private parties will not have locus standi under this Protocol, their Governments must act on their behalf. This is unlikely to happen any time soon. The Courts of the Regional Economic Communities (RECs), on the other hand, can exercise jurisdiction over all kinds of issues. Private parties enjoy standing before them.

International disputes can also be resolved through alternative dispute settlement arrangements such as good offices, conciliation, and mediation. Good offices involve a procedure whereby a third party brings the conflicting parties together without participating in the negotiation, whereas in ‘mediation’ the conflicting parties submit their disputes to a third party who facilitates the negotiation process and participates in the negotiation to reach a settlement. These procedures are seldom used to settle trade related disputes.

Trade (and other) disputes can be resolved through consultations. The AfCFTA Trade dispute settlement Protocol provides for consultations, but they constitute the first stage in the AfCFTA’s formal dispute settlement mechanism. The first requirement for activating this procedure is that a formal dispute about a violation of an obligation in one of the AfCFTA legal instruments must be declared. The complaint must be lodged in terms of the procedure provided for in this Protocol. If the consultations under this Protocol fail to bring about a settlement, the State seeking a settlement can request that a Panel of experts be appointed to propose a solution. Appeals can be lodged with the Appellate Body and its rulings are final and binding. State measures found to be in violation of the trade agreement in question must be withdrawn.

So, what is the answer to the question posed above? Should disputes about the implementation of trade agreements be treated differently? The first hurdle is the unwillingness of African Governments to declare trade related disputes against each other. There seems to be a believe that trade measures are about an area of sovereign policy space demanding deferential treatment. To declare a dispute against another government because its policy measures are considered to be illegitimate, apparently constitutes offensive behaviour. The Government in question should be “assisted” in working out a solution with the other State Parties.

The result is that Stare practice under trade and economic integration agreements will not developed as agreed. In principle only those exceptions provided for in the texts of trade agreements (in the form of general exceptions, security exceptions, balance of payments exceptions or trade remedies) can be invoked when State Parties want to deviate from their obligations. But exception clauses are conditional. The State Parties invoking them must demonstrate how they have designed their measures in order to comply with the required conditions.

The resolution of trade disputes brings certainty about the lawfulness of State measures taken when trade agreements are implemented. Private parties (the real traders, importers, exporters, and investors) will benefit from the legal certainty generated by these procedures. This is an essential feature of trade related disputes; they clarify what constitutes acceptable State Party behaviour, when exceptions will be permissible, and how trade remedies and safeguards are to be administered. And the deeper the regional integration endeavour, the greater the need for rules of conduct and procedures to settle differences.

Economic integration involves a deliberate journey on a road of diminishing sovereign policy space. Trade and economic integration disputes are indeed sui generis; they are not about once-off events. They are about a process which requires growing adherence to the rules of the game and involves the behaviour of all the State Parties. Clarity and predictability are necessary. If dispute settlement is not part of this process the practical and legal uncertainties will undermine the benefits to be had. The collective advantages are dependent on the acceptance of disciplines about what constitutes acceptable State action. If the subsequent implementation of obligations to liberalize trade results in costs and involves adjustments, they should be addressed via the rules of the game (such as safeguards) which are applicable to all.

African trade and integration agreements are not easy to conclude, as the AfCFTA negotiations demonstrate. There will be winners and losers. This has to be recognized when legal texts are negotiated and adopted. It might be necessary to grant Least Developed Countries (LDCs) longer implementation periods (as the modalities for the AFCFTA tariff schedules allow) but the goal should remain one of adjustment towards compliance. LDCs should be assisted in their efforts to comply with their commitments, not to escape the consequences of having joined long-term arrangements to bring collective benefits. There should not be a sub text suggesting that disputes will never be declared. Formal dispute settlement does not prevent State Parties from working out compromises; it provides a better and rules-based context for doing so.

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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