Building capacity to help Africa trade better

To Cooperate or to Harmonise?


To Cooperate or to Harmonise?

To Cooperate or to Harmonise?

There is a long pro-integration tradition in Africa. It emphasises the need for a collective voice on matters impacting the continent’s standing in the world, and it suggests that the economic development of member states of regional trade arrangements will be enhanced through joint policies, effort, and solidarity.

Regional integration makes sense in and for Africa. It has the largest number of least developed countries (LDCs) in the world, with many land-locked states and island economies. These countries have small domestic markets, undiversified economies and a notable infrastructure deficit. They need to tackle their problems collectively, pool resources where possible and agree on market access deals. Divisions created by geography, history, poor infrastructure, and inefficient policies are an impediment to economic growth. Regional integration allows countries to overcome costly divisions by integrating goods, services, and factors’ markets, thus facilitating the flow of trade, capital, energy, people, and ideas. However, Africa cannot overcome its economic and developmental challenges if it ignores the benefits to be had via global integration. At present, less than 20% of the goods produced in Africa are sold to Africa.

One of the additional aspects to consider is that African Governments are keen to protect their sovereignty and policy space. This spells trouble for regional integration schemes. Economic integration among sovereign states happens when they adopt binding international agreements about how they will do things collectively. The member states are sacrificing sovereign policy space since they cannot act unilaterally any more in respect of the matters where they have accepted obligations to liberalise trade, not to discriminate and to respect obligations about domestic measures and policies. Even exceptions to these obligations come with terms and conditions, such as for trade remedies and safeguards.

In a Free Trade Area (FTA), the first level of economic integration, the member states retain policy space over some matters. They may use the import tariff for implementing national industrialisation policies and may conclude trade agreements with third parties. However, over essential aspects such as tariff liberalisation, standards, and rules of origin they are bound by their obligations. What happens when the FTA in question harbours ambitions about higher levels of integration and forming a modern and comprehensive arrangement?

In the African Continental Free Trade Area (AfCFTA), the State Parties are at the point where they have to take final decisions about this question. They must decide whether they will pursue proper integration governance (through harmonisation of rules for specific disciplines) or opt for mere cooperation. What should the legal instruments for additional AfCFTA Protocols (on competition, investment, and the protection of intellectual property rights[1]) provide for in terms of policymaking, operational decisions, and execution? What are the parameters for national regulators with jurisdiction over services sectors for which the State Parties have already agreed on market access principles and procedures? These answers have to be worked out soon; during the next phase of AfCFTA negotiations (which has begun some time ago) and in order to conclude the outstanding matters required for the start of trade in services under AfCFTA rules.

The relevant provisions in the founding Agreement dealing with additional Protocols suggest different approaches. Article 4 of the AfCFTA Agreement says the State Parties shall cooperate on investment, intellectual property rights and competition policy. In Article 7 it is stated that “in pursuance of the objectives of this Agreement, Member States shall enter into Phase II negotiations in respect of intellectual property rights, investment, and competition policy”. (Emphasis added.) And the objectives of the AfCFTA include the creation of “a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent... to facilitate investments... enhancing the competitiveness of the economies of State Parties[2]

It is thus left to the negotiators to decide what will be most advantageous for the AfCFTA. There are strong arguments in favour of optimal outcomes. A mere cooperation model is not only often unsuitable for the challenges of the 21st century but must spell out how and in terms of what procedures the State Parties will cooperate and about what. What is not explicitly provided for remains with the State Parties, as in a positive list approach. New institutions might be required. Follow-up action takes time and often requires subsequent rounds of negotiations. This is not a suitable modus operandi for modern integration initiatives.

What should rather be pursued, given the challenge to prevent fragmentation and to lay the foundation for deeper integration later? An ambitious integration arrangement such as the AfCFTA cannot function optimally and seamlessly with different national rules for areas such as transport, standards, customs procedures, IP rights, competition, and investment. There are good reasons why in each of these areas harmonisation is to be preferred.

Harmonisation is not the same as uniformity and is discipline specific. It is about agreeing on essential principles which the participating states must respect and implement. This may involve technical standards or rules for regulators overseeing services sectors and services providers. This prevents fragmentation and unpredictability. The Member States are jointly responsible for determining the manner in which harmonisation will be agreed, formulated, published, and adhered to.

For the AfCFTA to be effective, it should be accompanied by harmonisation of rules and practices in respect of disciplines essential for the tasks the State Parties have set for themselves.

[1] These are the Protocols mentioned in the AfCFTA Agreement. Additional such instruments have since been added, for digital trade, SMEs, and women.

[2] Art 3 AfCFTA Agreement.

About the Author(s)

Gerhard Erasmus

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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