Promoting discourse on a 21st century CFTA: launching tralac’s CFTA Soapbox
Planning for the CFTA: Why a fresh Approach is necessary
African trade agreements are designed according to a standard recipe. They focus on market access for goods; within the context of promoting regional integration agendas along a linear path. The typical approach is to establish Free Trade Areas (FTAs) for trade in goods and to strive to grow into customs unions, common markets and even monetary unions at pre-determined dates; which normally remain elusive targets. Services and other trade related disciplines receive relatively little attention. These FTAs also allow the Member States a wide margin of discretion when it comes to complying with legal obligations. Disputes about the application or interpretation of the relevant legal instruments are absent.
We would like to argue that the negotiations to launch the Continental FTA merit a different methodology. Our first Soapbox contribution will explain why.
One should acknowledge the tariff liberalization successes achieved in African Regional Economic Communities (RECs). However, these arrangements show certain recurring shortcomings. What lessons can be learned and what new approaches are called for? The assumptions of the 1980s and 1990s might have been true then; they do not provide a sufficient basis for the challenges of the 21st century. When examining our traditional strategies we will also discover ways and means to consolidate and improve existing RECs.
We believe the initial requirement for effective trade arrangements is a proper rules-based foundation supported by sound domestic governance. This entails strong legal instruments, institutions to monitor compliance and resolve disputes about the applicable rules, as well as means to ensure harmonized domestic policies, standards and regulations. The Member States should all pull in the same direction. And they should do so with the aim to foster and promote what they have agreed to. Private traders and firms should be able to count on accurate information, certainty about the rules, and the availability of remedies when necessary.
The fear that compliance with the applicable rules (which have been mutually agreed and ratified) means the loss of sovereignty is not convincing. Legal certainty is essential for predictability and for reaping the benefits of trade liberalization. Should there be a need to deal with the consequences of an upsurge in imported goods or unfair trade practices, safeguard measures, trade remedies or competition law are the answer. These are rules-based responses and they are superior to unilateral discretionary measures. Allowing independent courts or tribunals to apply the law objectively when parties differ about its correct interpretation, will foster better relations. Adjudication will preclude the acrimony of retaliation.
The second set of requirements is about content and scope. Services, investment, trade facilitation and those related disciplines essential for coping with 21st century challenges should be included in our trade deals. Such arrangements will, if respected, also integrate our economies more effectively into the global economy. We will trade amongst ourselves and with the rest of the world under the same rules and governance practices.
When debating the reasons for launching the CFTA and what it should achieve, we will also revisit the assumptions underpinning existing RECs. How could they be improved and consolidated in order to become better platforms for advancing developmental goals, competitiveness and industrialization? We will recognise that our domestic and regional agendas must work in tandem; to ensure harmonization of standards, to adopt converging policies and to implement regulatory reforms which will allow services to unlock value chain potential and support trade in goods. We should approach trade in services in an Africa-specific manner: the GATS formula of the early 1990s (when very little information about the nature of services trade existed), is no longer applicable. Regulatory reforms hold the key to many of our immediate services challenges.
We may discover that the ambitious CFTA agenda to integrate the economies of 54 states sets the hurdle too high; at least initially. We might have to ponder more realistic options such as variable geometry; while accounting for the political and technical complications. We will have to find answers for the special needs of LDCs and how to manage weak (but sovereign) states.