Building capacity to help Africa trade better

How will historians and economists one day look back at the AfCFTA?


How will historians and economists one day look back at the AfCFTA?

How will historians and economists one day look back at the AfCFTA?

Right from its inception there have been high expectations, here and abroad, about how the African Continental Free Trade Area (AfCFTA) would unlock Africa’s potential to increase intra-Africa trade, attract investment for industrialization and infrastructure development, and improve trade governance. How could the benefits and effects of this enterprise be measured?

Trade data analysis will be an important yardstick. However, a future assessment of the AfCFTA as a comprehensive trade regime will have to go beyond trade data analyses. It will also need benchmarks and criteria to determine whether trade governance has improved. Have digital trade procedures for example been introduced and NTBs been removed? How many State Parties have implemented the required procedures?

An evaluation of the AfCFTA as a content-wide Free Trade Area for trade in goods will become possible once the relevant trade data can be analyzed and all the relevant Protocols (including their Annexes and Appendices) are implemented. Trade data will have to be recorded by national customs officials at the relevant border posts in terms of the new tariff columns dedicated to AfCFTA trade flows; for goods which are presently traded under MFN rates. Such data is not yet available because trade under AfCFTA rules has not started. It will hopefully begin soon; recently the member states of the Southern African Customs Union (SACU) have also submitted their tariff offers. The Guided Trade Initiative (GTI) will then become redundant.

The commencement of trade in services will take longer and will, in the beginning, be limited to the five priority areas agreed upon.[1] The effective liberalization of trade in services will depend quite directly on the extent that regulatory harmonization among the State Parties will happen. The AfCFTA Framework Document on Regulatory Cooperation is still to be finalised. The harmonization of national regulatory regimes may turn out to entail a mosaic of bilateral commitments, which will make the measurement of benefits on a large scale challenging.

The future determination of whether the AfCFTA has achieved its aims puts the focus on a crucial question: What exactly must this ambitious trade arrangement achieve and how? Are all priority areas (including climate change challenges and digitalization) adequately addressed? Additional building blocks will have to be added to the AfCFTA over time. The AfCFTA needs a plan for doing so. There is a provision in the Agreement which provides that other Instruments within the scope of the AfCFTA Agreement “deemed necessary” can be added.[2]

Additional questions will be asked – whether effective decision-making has been part of the subsequent practice in AfCFTA institutions and whether compliance with obligations has been monitored. Were remedies available, in particular to private parties? Private firms are the real traders and investors, and should be a priority audience in any investigation about how the AfCFTA has fared. 

Since the AfCFTA is a member-driven arrangement, State practice will have to be investigated in some detail. The AfCFTA does not have supra-national institutions which can enforce compliance and ensure predictable outcomes. What have the State Parties done to achieve the objectives of the AfCFTA? Did they bring national legal systems in line with new obligations and have the required institutions been established? The AfCFTA Agreement is defined to mean the “Agreement Establishing the African Continental Free Trade Area and its Protocols, Annexes and Appendices which shall form an integral part thereof ”.[3] The State Parties are those African Union Member States that have ratified or acceded to the AfCFTA Agreement and for which the Agreement is in force.[4] No reservations shall be made to this Agreement.[5]

A future assessment should also determine what happened in instances where violations of obligations have occurred, or where exceptions have been invoked. Domestic measures or national policies which invoke exceptions in the AfCFTA legal instruments must comply with the applicable conditions to be valid. The question as to whether this has happened is justiciable; if the AfCFTA is to be a rules-based arrangement such issues cannot be decided by national authorities or in political forums. The vital interests of importers, exporters, service providers and investors are at stake.

This does not mean that the AfCFTA is designed to be an inflexible arrangement. One of its biggest challenges will be to allow for flexibility among the 54 State Parties and to accommodate their different needs, while moving forward with the bigger scheme of things and deepening continental integration.[6] The AfCFTA is not a customs union and the State Parties are allowed national policy space over many matters, including the conclusion and continuation of trade agreements with third parties.[7] The explanation for the long delay in adopting final tariff schedules and rules of origin is that it is very difficult to agree on one set of rules for all the State Parties. An industrialized economy and a land-locked least-developed country have quite different needs and priorities.  

Will the State Parties (for the first time) use the procedures provided for in their mutually agreed Dispute Settlement Protocol to settle disputes about the interpretation and implementation of the AfCFTA legal instruments? If they would do so, there will be no logical reason for not following the same practice in respect of their Regional Economic Community (REC) legal instruments, which will continue to be implemented by the respective Member and Partner States.[8] The AfCFTA would then bring about better trade governance for Africa’s global and regional trade relations too.

Commentators generally believe the AFCFTA will bring major benefits, provided it is properly implemented.  What is proper implementation? Will there be one formula for “proper implementation”? Finding the right balance between collective, regional, and national needs in a manner that will also promote respect for the commitments that have been agreed, for transparency, and deeper integration may turn out to be the ultimate test faced by the AfCFTA. Progress will happen incrementally and at different speeds. Technical support and capacity building will have to be prioritized and be provided as part of the unfolding process which the implementation of the AfCFTA will entail. If the State Parties, AfCFTA institutions and donors get this balance right, a future assessment of the AfCFTA could contain some good news.

[1] Tourism, transport, communications, financial and business services.

[2] Art 23 (2) AfCFTA Agreement.

[3] Article 1(b) AfCFTA Agreement.

[4] Article 1(v) AfCFTA Agreement.

[5] Article 25 AfCFTA Agreement.

[6] Art 3 of the AfCFTA Agreement lists the long-term objectives.

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

[8] See Art 19(2) AfCFTA Agreement and Art 8(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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