Covid-19 and export restrictions: The limits of international trade law and lessons for the AfCFTA
The Economic Commission for Africa (ECA) today released a Policy Brief which provides a preliminary analysis, from an African perspective, of the limits of international trade law in times of crisis such as now and offers powerful policy recommendations for African policy makers to consider.
Following a brief analysis of the law of international trade as it applies to the movement of Covid-19-essential goods, the study concludes that, in times of real emergency such as now, the role of law in assuring access to essential medical supplies on the international market is highly diminished. The impact has been severe especially on those countries that lack sufficient local manufacturing capacity.
In a global economic model in which Africa exports predominantly primary commodities and imports mainly finished products, the crisis has left Africa facing a double whammy: (i) the economic lockdown in much of the world has sent the price of commodities to record lows, thereby causing significant and dramatic declines in much-needed foreign exchange revenues for most resource-dependent African countries; and (ii) when advanced countries with production and supply capacity impose restrictions on the export of essential medical supplies, the inevitable outcome has been a sudden drop in supplies, a jump in prices, and an equally dramatic escalation in import bills for African countries at a time when their already meagre resources are overstretched.
Considering the structural nature of the challenge, there is little that can be done in the short term. As a consequence, much of Africa is once again forced to rely heavily on the charity of others. This is unsustainable. Four major lessons emerge from the analysis.
Industrialisation: first comes the industrialisation imperative. If the economic case for industrialisation and related diversification in Africa has been compelling for too long, Covid-19 now makes it a matter of survival for the Continent and its citizens.
Research and Development: then comes the need for an infrastructure of knowledge made up of skilled manpower to maintain a degree of research and development capacity. Africa can succeed in its industrialisation and diversification drive only if it is underpinned by robust R&D strategy and knowledge base.
Effective multilateralism: not only does industrialisation take time, even an industrialised Africa with a diversified economic base will need to put trade with the rest of the world at the centre of its strategy for supply security in all sectors, enabling African manufacturers to be part of well-functioning regional and global value chains. As such, Africa needs to continue to advocate for effective multilateralism in trade that ensures the rules of the game are tightened and applied by its members in good faith, in the collective interest, and with a sense of solidarity.
Revisiting the AfCFTA Agreement: finally, learning from the deficiencies of the global trading system exposed by Covid-19, and considering that Covid-19 struck while Africa was preparing to launch the operational phase of the AfCFTA, Africa should use this window of opportunity to revisit the provisions of the AfCFTA Agreement and craft additional rules to guarantee the freest possible flow of trade in essential products at times of difficulty such as this.
Commenting on the Policy Brief, David Luke, Coordinator of ECA's African Trade policy Centre, said: it is clear that trade law cannot guarantee open markets in times of crisis such as the current global pandemic. There is scope for the AfCFTA Secretariat and the Committees on Trade in Goods and Trade in Services, when up and running, to revisit this issue and find creative solutions.