Building capacity to help Africa trade better

Memoranda of Understanding (MoUs) in trade and integration arrangements


Memoranda of Understanding (MoUs) in trade and integration arrangements

Memoranda of Understanding (MoUs) in trade and integration arrangements

The Government of the United States has recently concluded a Memorandum of Understanding (MoU) with the AfCFTA Secretariat. It has also concluded one with Zambia and the Democratic Republic of the Congo (DRC). What are they about? How does an MoU differ from a formal international agreement? Are MoU’s legally binding and can they be enforced through dispute settlement procedures? Must they be referred to national parliaments in instances where constitutions give parliaments a role in the approval and ratification of international agreements?

This Blog provides a brief discussion of these issues. It focuses on the use of MoUs on the international plane; those concluded by states and international organizations. MoUs are also used in domestic legislation (when state agencies can conclude them[1]) and in private contracts and commercial arrangements. The law of the land will determine what their effects are and when they will be binding. Their binding nature of MoU’s normally depends on the intention of the parties and the wording used in the text.[2]

In international relations MoU’s are typically discussed in the context of establishing international arrangements between states. They are sometimes kept confidential, but the prohibition of secret treaties under the United Nations Charter has to be noted. MoU’s that are kept confidential (i.e., not registered with the UN) cannot be enforced before any UN organ, and it may be concluded that no obligations under international law have been created.[3]

As a matter of law, the title of MoU does not necessarily mean the document is binding or not binding under international law. To determine whether a particular MoU is meant to be a legally binding document (i.e. a treaty), one needs to examine the parties’ intent as well as the signatories’ position. A careful analysis of the wording will also clarify the exact nature of the document. The International Court of Justice has provided some insight into the determination of the legal status of such documents in the landmark case of Qatar v. Bahrain, 1 July 1994.[4]

One advantage of MoU’s over more formal international agreements is that they can often be put into effect without legislative approval and allow for technical matters to be addressed. The decision concerning ratification, however, is determined by the parties’ internal law and constitution. This is an important matter. Great care should be taken that the norms on transparency and legislative powers under a supreme national constitution are not circumvented by classifying international instruments as MoU’s, when in fact they are treaties in the normal sense of the word and contain legal obligations for the state parties involved. An MoU should not be enforceable under domestic law if the constitution of the land provides for specific procedures about the incorporation of international agreements as part of the law of the land. Separation of powers norms would otherwise be violated. In the South African constitutional system, which knows no unreviewable prerogative powers,[5] this question is justiciable.

Classification as an MoU will also depend on the subject matter covered by the agreement in question. In South African practice an MoU is described as “a less formal agreement, usually of an administrative or technical nature”.[6] The guidelines to determine whether agreements are of a technical, administrative, or executive nature (as mentioned by Section 231(3) of the South African Constitution) are that they do not require ratification,[7] have no extra-budgetary financial implications, and do not have legislative implications.[8]

What do the recently concluded American MoU’s mentioned above, deal with? Both are probably first steps in a new US strategy to establish a more prominent profile in Africa and to do so in a manner that will promote American international interests. They have been drafted as non-binding MoU’s.

The MoU on Cooperation for Trade and Investment between the AfCFTA Secretariat and the Government of the USA identifies the AfCFTA Secretariat and the Government of the United States of America as “the Participants”, not the Parties. The Section (not Article) on the Objectives reflects an intention to develop “cooperation aimed towards promoting sustainable trade and economic integration in Africa and between the Participants to the benefit of U.S. and African workers and businesses”, to “collaborate towards boosting competitiveness and attracting investment to the African continent “, and to promote “sustainable trade and economic integration in Africa and between the Participants to the benefit of U.S. and African workers and businesses”.

Section II of this MoU elaborates on the Cooperation Areas. It includes training related to industrial and regional value chain development, an inclusive trade environment in AfCFTA countries and the US, promoting economic advancement for women, youth, and underserved groups, the development of AfCFTA instruments to facilitate responsible digital trade, meeting the shared goals of the AfCFTA and, where applicable, the AGOA program, promoting the overall implementation of the AfCFTA Agreement, the encouragement of partnerships between the private sectors of the AfCFTA State Parties and the US, and the facilitation of opportunities aimed at promoting inclusive sustainable growth.

The Participants will explore opportunities for closer partnerships between African and U.S. companies in sectors such as infrastructure, digital trade, agro-processing, pharmaceuticals, medical devices, automobiles, transportation systems, and logistics services. They may invite representatives of departments, institutions, think tanks, industrial organizations, enterprises, and financial institutions to participate in their discussions. The Participants intend to meet annually to discuss the implementation of this MOU.

Technical Working Groups will be established and will meet at least quarterly. These Technical Working Groups will comprise experts from the AfCFTA Secretariat, the Office of the United States Trade Representative, other U.S. Government agencies, and other stakeholders as identified and decided by the Participants. The Participants intend to develop an action plan to be included as an addendum to this MOU that will set forth how the Participants intend to cooperate in the areas identified by them.

Nothing in this MOU is intended to give rise to international legal rights or obligations for either Participant. The Office of the AfCFTA Secretary-General and the Office of the United States Trade Representative are the contact points for this MOU. The Participants intend to resolve any issue regarding the interpretation or implementation of this MOU through consultations. This MOU may be modified by a written decision of both Participants. Any modification would become operative on the date of signature.

This MOU becomes operative upon signature by both Participants and is expected to remain operative for a period of 3 years. (It was signed in Washington, DC, on 14 December 2022 by respectively H.E. Wamkele Mene, Secretary General of the AfCFTA Secretariat, and Ambassador Katherine Tai of the United States.) Participants may review and decide to continue their cooperation at regular intervals. Either Participant may discontinue this MOU at any time. A Participant that intends to discontinue this MOU should endeavour to provide at least 60 days written notice to the other Participant of its intent to do so.

The MoU among the United States of America, the Democratic Republic of the Congo, and the Republic of Zambia Concerning Support for the Development of a Value Chain in the Electric Vehicle Battery Sector has a different objective, namely the development of “an integrated value chain for the production of electric vehicle (EV) batteries in the DRC and Zambia, ranging from raw material extraction, to processing, manufacturing, and assembly”.

This MoU is carefully worded. The US intends to support DRC and Zambia in their development of a value chain for EV batteries in their own countries. It will promote awareness of the DRC and Zambia Electric Vehicle Battery initiative within the U.S. private and investment sector. This could include commercial development, as well as exploring technical assistance opportunities to facilitate potential U.S. private sector participation in such projects.

This MoU is not intended to be legally binding and is not an obligation of funds. All activities pursued under this Memorandum of Understanding are subject to the availability of funds.

[1] The South African Standards Act for example provides for an MoU between the South African Bureau of standards and the Competition Commission. Standards Act: Memorandum of Understanding between South African Bureau of Standards and Competition Commission | South African Government (www.gov.za)

[2] For a discussion of MoU’s in private matters, see Memorandum of Understanding: Binding and enforceable or not? - RFS Administrators (Pty) Ltd (rfsolutions.co.za)

[3] Memorandum of Understanding - Wikipedia

[4] Memorandum of understanding - Wikipedia

[5] President of RSA v Hugo Case CCT 11/96.

[6] DIRCO, Practical Guide and Procedures for the Conclusion of Agreements.

[7] This will be indicated by the text of the agreement in question.

[8] DIRCO, Practical Guide and Procedures for the Conclusion of Agreements.

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