Gerhard Erasmus, tralac Associate, comments on the growing interest in trade remedies as a tool to promote rules-based trade and integration in Africa

There seems to be a renewed interest in Trade Remedies (TRs) in African trade and integration arrangements. They are debated and modified in Regional Economic Communities (RECs) pursuing deeper integration, are discussed as part of the Continental Free Trade Area (CFTA) negotiations, and have just been adopted in the form of a special TR Annex for the Tripartite Free Trade Area (TFTA).[1] African trade specialists are also writing about them. What explains the interest in TRs and what is being discussed?

Trade remedies are trade policy tools that allow governments to take remedial action against imports which are causing injury to domestic industries. They are divided into anti-dumping (AD) action; countervailing duty measures; and safeguard action.[2] The fact that TRs figure prominently in the context of policies on industrialization and economic development, can be part of the reason why African Governments now seem to consider them as necessary for intra-African trade and integration.

In the context of the TFTA and CFTA negotiations the most problematic issue has been the inclusion of “flexible” TRs. The pro-flexibility argument holds that TRs involve onerous disciplines, sophisticated technical investigations, and compliance with detailed World Trade Organization (WTO) legal requirements. Flexibility is necessary, so the argument goes, to make it easier for most African states to implement TR rules.[3] The counter argument says the real issue is about domestic capacity. TRs are viewed as essential for preventing protectionism and the abuse of discretionary powers. TR rules (based on WTO disciplines) must, therefore, be complied with. TR measures should also be justiciable.

It has been argued that flexibilities (contingencies) in trade agreements are justified because they avoid rigidity in respect of compliance with obligations touching on sensitive national policy matters. The justification for their inclusion in trade agreements ultimately lies in the fact that their availability makes it easier for Member States (MS) to comply with the applicable rules.[4] Flexibility should, as a consequence, advance the formation of trade regimes in which rules are more likely to be respected.

Trade agreements often include other notions which may suggest flexibility, (such as asymmetrical obligations[5] and variable geometry[6]) but they need to be linked to specific outcomes and activities, such as longer implementation periods or lower membership fees. Ultimately all obligations must be complied with; even if they allow “flexibilities” for certain MS. The challenge is to agree on mutually acceptable formulations of the relevant provisions in legal texts.

These discussions suggest that African trade arrangements are paying more attention to trade governance issues. This will require that basic design issues such as the relationship between existing trade arrangements are also clarified. In ECOWAS, COMESA and the EAC the Member/Partner States have embarked on a path of deeper integration. They have adopted legal arrangements for customs unions (CUs), common markets, common external tariffs (CETs) and single customs territories. Their MS must have unified rules on AD and countervailing duties on goods imported from third countries. Thus, their legal instruments include provisions on closer institutional and legal cooperation. They are also focusing on preferential safeguards; regulating trade in goods amongst the parties only.

The TFTA and the CFTA follow a different route. They want to boost intra-African trade and do not aim at establishing CUs among the parties.[7] In a Free Trade Area (FTA) the MS retain national powers over their own trade and tariff policies. This will include policy space over the use of TRs. TR measures are not compulsory; Governments may adopt them. And it must be noted that the AD Agreement of the WTO does not regulate dumping, but anti-dumping measures.

How does the TFTA deal with the fact that many of its Members do have TR laws in place? The TFTA does not require that new laws must be adopted to reflect the TR regime negotiated as part of the TFTA. The modus vivendi suggested in the TFTA TR Guidelines is:

The Guidelines are to be applied in conjunction with the existing national legislation for conducting trade remedy investigations and reviews in the individual Tripartite Member/Partner States.

The Tripartite Member/Partner States recognize that most of the Tripartite Member/Partner States are WTO members who are bound by the provisions of the WTO Trade Remedy Agreements and may have national legislation, which is consistent with these Agreements. All Tripartite Member/Partner States recognize that these Tripartite Member/Partner States have the right to apply their national legislation.[8]

The TFTA does not require MS to domesticate the TR Annex nor the Guidelines. They must give effect to the TR provisions in the TFTA instruments.

The fact that TR measures are justiciable is of particular importance. Access to an independent forum protects the rights of MS as well as private parties. This aspect touches upon a vital feature of modern trade regimes. By ensuring that TR provisions are linked to an accessible dispute settlement regime, critical guarantees are provided. The fact that an independent forum will rule about the correctness of TR measures, increases the preparedness of MS to join legal regimes allowing for TRs.

Trade remedy regimes without judicial review is a contradiction. If judicial review is absent from the CFTA, unjustifiable protectionist measures may follow; or the suspicion may exist that such measures are ultra vires the applicable rules and procedures. Judicial remedies must be available through domestic tribunals (where private parties can bring their applications) as well as through inter-state dispute settlement mechanisms provided by the trade agreements in question. Disputes about the correct application of TR rules constitute the majority of WTO disputes; where the Members act on behalf of national firms (or on their own initiative) and invoke treaty obligations.

It is, of course, possible (and even preferable) that regional Tribunals/Courts established as part of REC regimes (or in the TFTA and the CFTA) can entertain applications (by Governments as well as private parties) to decide whether national trade remedy measures comply with the applicable rules. Such disputes have never been decided by any of the regional REC Courts/Tribunals. (There has been one case in COMESA where a tariff imposed by a MS has been declared invalid.[9] The ruling was complied with.) This matter (judicial review of trade remedy measures as well as dispute settlement generally) has wider implications. It touches upon the fact that African governments never litigate against each other about compliance with obligations in trade agreements.

Many states face practical and capacity constraints. Their needs with respect to the implementation of trade agreements are real and should not be ignored. The appeal for more TR flexibilities may, in fact, often flow from national capacity constraints. Well-targeted practical responses and technical assistance are required to solve these problems. Ideally such responses should be comprehensive in nature and build capacity in all trade disciplines involving compliance with technical requirements and standards. The ability to reap the potential benefits promised by rules-based trade regimes depends on the capacity to play by the rules and to comply with the applicable standards. African trade negotiations and existing institutions should generate more specific ideas on how to assist all MS to play by the rules.

Read more in the related tralac Trade Brief, available to download here.

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[1] A set of TR Guidelines was also added to the TFTA. See recent tralac Trade Brief at https://www.tralac.org/publications/article/11989-the-final-trade-remedy-arrangement-of-the-tripartite-fta.html

[2] Anti-dumping and countervailing measures are directed against unfair trade practices; safeguards are directed against the domestic effects of an upsurge in imports. Serious injury (or a threat thereof) to domestic industry must be demonstrated.

[3] Only Egypt and South Africa are active users of TRs.

[4] For a discussion of the theoretical arguments, see the 2009 World Trade Report of the WTO.

[5] The Cotonou Agreement, the RECs (see the EAC Treaty), EPAs and certain EU legal instruments are examples.

[6] COMESA has included a provision on variable geometry. The CFTA Negotiating Principles also mention variable geometry.

[7] If the CFTA eventually becomes a building block of the African Economic Community under the Abuja Treaty, will require additional negotiations and the clarification of specific technical questions.

[8] Guideline 4.

[9] Polytol Paints & Adhesives Manufacturers Co. Ltd (Applicant) versus The Republic of Mauritius (Respondent). Reference Number 1 of 2012.