The thirty-fifth Ordinary Session of the African Union (AU) Assembly, which took place in Addis Ababa on 5-6 February 2022, produced a detailed document containing several decisions and declarations. They deal with a wide range of AfCFTA and other AU matters.

There has been progress in several areas of AfCFTA negotiations and related tasks but negotiations on the outstanding aspects of trade in goods and services will continue. Decisions about Phase II negotiations have also been taken. In this Blog we briefly discuss decisions about the AfCFTA which do not address trade in goods and services.^[1]

The Assembly decision on the Permanent Structure of the AfCFTA Secretariat took note of the decision of the Executive Council of October 2021 on the Phase II Structure (265 positions) of the AfCFTA Secretariat for a 4-year phased period, in terms of a “merit-based and transparent approach for recruitment of the positions in the structure, which should be open to all African Union Member States”. It also welcomed the transfer of the coordination Unit of the AfCFTA from the Commission in Addis Ababa to the AfCFTA Secretariat in Accra, and the appointments of the four Director positions under the Phase I Structure of the AfCFTA. The Council of Ministers must make sure “merit, gender and geographic balance” will be adhered to.

On the Dispute Settlement Mechanism of the AfCFTA the Assembly reiterated the role of this institution in providing certainty and predictability in the resolution of disputes on the rights and obligations of State Parties and in clarifying the provisions of the Agreement establishing the AfCFTA. This will only happen if the State Parties will refer disputes about the application or interpretation of the AfCFTA legal instruments to the Dispute Settlement Body (DSB); something which they have not done before. Only State Parties have standing before the DSB of the AfCFTA. A permanent Roster of Panellists will be in place and the Appellate Body of the AfCFTA will be “a standing tribunal of final instance”. The AfCFTA Secretariat must ensure that the “appropriate budget provision is made available to enable the Dispute Settlement Mechanism to remain transparent, accountable, fair, predictable and independent in resolving disputes consistently with the provisions of the Agreement Establishing the AfCFTA”. 

On Phase II of the AfCFTA negotiations the Council of Ministers must establish Committees for Investment, Competition Policy, Intellectual Property Rights (IPR), Digital Trade, and Women and Youth in Trade. Guidelines and rules of procedure for negotiating these additional Protocols must be developed. There must be a Framework for implementing the AfCFTA Competition Policy. The Protocol on Investment has to promote, facilitate, and protect intra-African investments and create a harmonised and coordinated investment regime on the continent. The Assembly emphasised the need for a Committee on IPR to build upon on-going work within the continent. It recalled its earlier commitments to broaden inclusiveness in the operation of the AfCFTA “through interventions that support women, young Africans, small and medium sized enterprises as well as integrating small informal traders by implementing simplified trade regime”. The Protocol on Women and Youth in Trade must be included in the scope of the AfCFTA Agreement.^[2] The adoption of Phase II Protocols must be fast-tracked and apparently be done by September 2022.

In respect of Collaboration with Strategic Partners the Assembly expressed its appreciation for the financial and technical support provided by the African Development Bank (Afreximbank), and other partners in the implementation of the AfCFTA and the remainder of the AfCFTA negotiations. It welcomed the AfCFTA Strategy for Private Sector Engagement Plan and directed the AfCFTA Secretary-General to intensify collaboration between the AfCFTA Secretariat and the private sector.

Regarding AfCFTA Implementation Tools the following was recorded:

1. The launch by Ghana of the Pan-African Payments and Settlement System (PAPSS) was noted….” leading to the operational phase of PAPSS, piloting and execution of transactions in the West African Monetary Zone (WAMZ)”. The AfCFTA Secretariat and the Afreximbank in consultation with Member States and Governors of the Central Banks, must deploy the System to cover the entire continent and finalise the required regulatory frameworks.

2. The AfCFTA Secretariat and the Afreximbank should undertake all steps, including private sector fund structures, for the full operationalisation of the AfCFTA Adjustment Fund and avail this facility to State Parties. The AfCFTA Adjustment Fund consists of a base fund, a general fund, and a credit fund. The base fund consists of contributions from state parties granting assistance capital in respect of tariff revenue losses as they are progressively eliminated. Trade finance will be provided to the private sector.^[3]

3. The Assembly commended the AfCFTA Council of Ministers, the AfCFTA Secretariat and Afreximbank for mobilising a facility of US$ 1 billion for the development of the AfCFTA Automotive Fund, to support industrialisation in Africa. One of the General Objectives of the AfCFTA is to “promote industrial development through diversification and regional value chain development, agricultural development and food security”.^[4]

4. A Trade and Industrial Development Advisory Council has been established by the AfCFTA Council of Ministers. The AfCFTA Secretariat announced the inauguration of a 14-member AfCFTA Trade and Industrial Development Advisory Council, which will provide advice on trade integration and transformative industrialisation as part of efforts towards the implementation of the AfCFTA.^[5]

The Assembly also approved the recommendation of the Council of Ministers Responsible for Trade to convene an Extraordinary Assembly Meeting, dedicated to the AfCFTA. No date has yet been decided.

^[1] For trade in goods and services under AfCFTA rules, see the relevant other Blogs in this Newsletter.

^[2] In terms of Art 1 of the AfCFTA Agreement such Protocols form an integral part of the AfCFTA Agreement. New Protocols must be adopted and must enter into force in terms of the procedures mentioned in Arts 22 and 23 of the AfCFTA Agreement.

^[3] https://www.ghanaweb.com/GhanaHomePage/NewsArchive/AfCFTA-Adjustment-Fund-Fund-manager-agreement-for-base-fund-signed-1477091

^[4] Art 3(g) AfCFTA Agreement.

^[5] https://www.africannewspage.net/2022/02/26/afcfta-secretariat-inaugurates-advisory-council-on-trade-industrial-development/