Working Papers

How will AfCFTA State Parties manage Trade Relationships with Third Parties?

How will AfCFTA State Parties manage Trade Relationships with Third Parties?

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24 Aug 2020

Author(s): Gerhard Erasmus

The African Continental Free Trade Area (AfCFTA) is anchored in legal instruments regulating the functioning of this ambitious arrangement. As the AfCFTA deal presently stands, trade in goods and trade in selected services areas will be liberalized. Trade under AfCFTA preferences will presumably start in 2021, once the outstanding negotiations on tariff reductions, rules of origin and the conditions applicable to trade in the five priority services areas are completed.

Since a Free Trade Area (FTA) is an integration arrangement in which the Member States retain policy space over their tariff and trade policies, the AfCFTA State Parties will remain responsible for their own choices and decisions about trade with third parties. They are not precluded from concluding external trade agreements. Neither does the AfCFTA Agreement provide for supra-national institutions or bodies with powers to speak on behalf of the collective when it comes to such trade agreements. Those AfCFTA State Parties that are members of Regional Economic Community (REC) FTAs will have to consider additional legal requirements; the relevant provisions in the respective REC instruments. And sometimes these States belong to more than one REC at the same time. Overlapping REC membership is ubiquitous.

This Working Paper discusses claims that the AfCFTA will be able to speak with one voice when the State Parties conclude trade agreements with third parties, and that AfCFTA State Parties would discredit the spirit of the AfCFTA when concluding their own external trade agreements. Kenya’s decision in early 2020 to start trade negotiations with the United States (US) has caused a stir in some circles. The relevant implications of the USKenya initiative will be examined. The question to be answered is whether the AfCFTA regulates, in some form or manner, the freedom of the State Parties to conclude trade agreements with Third Parties, and if so, under what conditions. When a particular AfCFTA State Party decides to conclude an external trade agreement, the more pertinent question might be whether such an initiative would be compatible with the rules of the REC or RECs of which it is a party.


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