Building capacity to help Africa trade better

Should the State Parties use the AfCFTA Dispute Settlement Mechanism?


Should the State Parties use the AfCFTA Dispute Settlement Mechanism?

Should the State Parties use the AfCFTA Dispute Settlement Mechanism?

The African Continental Free Trade Area (AfCFTA) Agreement contains a detailed dispute settlement Protocol.[1] It is modelled on the Dispute Settlement Understanding (DSU) of the World Trade Organisation (WTO). Article 4 of this Protocol says

the dispute settlement mechanism of the AfCFTA is a central element in providing security and predictability to the regional trading system … [and] shall preserve the rights and obligations of State Parties under the Agreement and clarify the existing provisions of the Agreement in accordance with customary rules of interpretation of public international law.

Only AfCFTA State Parties have standing to file claims under this Protocol, which can be heard and decided by Panels and the Appellate Body of the AfCFTA. Since violations of obligations regarding trade in goods and in services in most instances impact on private firms, it is for the national governments of the relevant countries (if they are members of the WTO or the AfCFTA) to litigate against States adopting and implementing measures in violation of their obligations. This is standard practice; hundreds of cases have been decided under the DSU of the WTO since 1995, when the WTO was launched.

Whether the State Parties to the AfCFTA Agreement will actually declare disputes against each other in respect of the interpretation or implementation of the legal instruments of the AfCFTA, is another matter. They have not done so in respect of trade issues in terms of any of the Regional Economic Community (REC) Agreements under which they have been trading with each other for decades now. Some of these RECs (e.g. the EAC, COMESA and ECOWAS) have their own Courts. (The SADC Tribunal was abolished in 2010 after it had ruled against Zimbabwe for expropriating private land without compensation.) These Courts are frequently rule on applications brought by private parties, which often deal with human rights issues. There have been a few cases about trade measures of Member/Partner States.[2] It is likely that there will be more such cases.

When States never use the courts which they have established as part of their trade and integration arrangements, the legal certainty and predictability generated through adjudication will remain absent. This is unfortunate because it undermines the rules-based nature of these arrangements and of investor confidence. It also puts deeper integration schemes in jeopardy.

That raises the obvious question: Why do African Governments not litigate against each other over trade issues? (They will do so when border issues are at stake.) It has been said that it is a sign of disrespect for other sovereign African States to “drag them to court”. This does not sound convincing. Litigation need not be acrimonious. Lingering disputes and accusations about mala fides cannot be good for mutual respect or for trade. It would be better to get uncertainty about the relevant legal obligations out of the way and continue with business as before. And formal consultations are in any case the first phase of a dispute settlement procedure.[3] Apparently African governments use consultations for managing the status quo and finding “political solutions”. When this happens there is no transparency and no legal precedent for planning and executing commercial transactions.

However, formal dispute settlement in the African context is a complicated matter. The Parties to these arrangements face difficult domestic challenges which they prefer to address by exercising national policy space over the use of trade instruments such as the import tariff. Legal obligations to liberalise trade makes this problematical. Governance capacity is another challenge. Only two African countries have operational trade remedy and safeguard systems in place.[4] Competition regulation is another such example. If trade remedy and competition would be in place, it will be possible to deal with unfair trade practices by firms and surges in the importation of goods in a predictable and rules-based manner. The national regulation of services and service providers is central to the implementation of obligations regarding the liberalisation of trade in services but function in terms of national laws. Hopefully the AfCFTA will see concerted efforts to improve trade governance. It has, for example, a detailed Annex on trade remedies and safeguards and provisions to coordinate the regulation of services traded under the AfCFTA.

Will the AfCFTA regime bring about a new approach and a willingness to use continental dispute settlement mechanisms? The judgments of the REC Courts show that dispute settlement can bring clarity, certainty, and guidelines about compliance. There is a growing body of case law on matters such as the interpretation of African trade agreements and how the Vienna Convention on the Law of Treaties can be used, the nature of obligations when deeper integration regimes such as customs unions are implemented, variable geometry, national treatment and whether specific Parties to a REC regime can suspend obligations inter partes because obligations are not “cast in stone”. At least two cases can be cited: the rulings by respectively the COMESA Court of Justice in Polytol Paint and adhesives Manufacturing Co. Ltd versus the Republic of Mauritius[5] and by the EAC Court of Justice in British American Tobacco versus the Attorney General of Uganda.[6] The former dealt with a bilateral increase in tariffs in violation of a decision by COMESA structures to liberalise trade in goods. The latter discussed excise duties in a customs union imposed on products imported from a Partner State but not on like domestic goods. These are issues that frequently arise in the pursuit of economic integration and trade liberalisation on the continent. They will have to be decided in the AfCFTA context too.

[1] Its formal title is Protocol on Rules and Procedures on the Settlement of Disputes. It was adopted during Phase I of the AfCFTA negotiations and is in force since 30 May 2019. It applies to all the AfCFTA legal instruments.

[2] See discussion of a judgment of the COMESA Court of Justice and the EAC Court of Justice.

[3] Art 6(1) of the AfCFTA Dispute Settlement Protocol reads: Where a dispute arises between or among the State Parties, in the first instance, recourse shall be had to consultations, with a view to finding an amicable resolution to the dispute.

[4] Egypt and South Africa.

[5] Reference Number I of 2012.

[6] Reference No 7 of 2017. Judgment delivered on 26 March 2019.

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.

Leave a comment

The Trade Law Centre (tralac) encourages relevant, topic-related discussion and intelligent debate. By posting comments on our website, you’ll be contributing to ongoing conversations about important trade-related issues for African countries. Before submitting your comment, please take note of our comments policy.



Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010