Working Papers

Governance under the AfCFTA: Linkages between Implementation and Gains

Governance under the AfCFTA: Linkages between Implementation and Gains

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24 Aug 2020

Author(s): Gerhard Erasmus

There have been several studies about the extensive economic gains that will be generated by the AfCFTA, despite the fact that essential aspects (the extent and tempo of the tariff reductions, how strict or flexible the rules of origin will be and what conditions will govern trade in services) must still to be agreed. The outstanding negotiations are about complex technical matters and involve concessions among a large number of countries at very different levels of economic development. The early predictions about remarkable outcomes are based on assumptions that may fail to materialize.

This Working Paper discusses the AfCFTA as it is, not whether it has an optimal design. The reason is that the legal instruments adopted for the purpose of founding the AfCFTA reveal rather clearly what the sovereign Member States of African Union (AU) have been prepared to accept as the future rulebook for intra-African trade and integration. There are no supra-national institutions to enforce the rules and to monitor compliance. This is a member-driven arrangement.

It is important to form an early understanding of how things will unfold once the outstanding negotiations are concluded and trade under AfCFTA rules and preferences will commence. Private sector players have to prepare for the new dispensation, investors must weigh opportunities and decide about investment opportunities and destinations, while governments have to get their house in order. Specific questions then arise and need to be discussed: How will actual trade governance and regulatory oversight be undertaken and by whom? What remedies will be available when obligations are not respected or when Governments want to postpone or suspend compliance? How to deal with unfair trade practices? And what will happen to existing trade patterns, distribution networks, logistical services and markets in the RECs? How will private parties (the importers, exporters, freight forwarders and investors in the engine room) be affected and what new opportunities will arise with respect to trade in goods and services?


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