By
Chidimma Onyiaorah LL.M, MCIArb, MICIC
The AfCFTA SERIES
Part 1- Overview of the AfCFTA- Scope, Objectives and Principles.
INTRODUCTION
This will discuss, in detail, the dispute settlement mechanism (DSM) of the African Continental Free Trade Agreement (AfCFTA) Agreement as found in the Protocol on Rules and Procedures on the Settlement of Disputes. It will be necessary also to examine the purpose and scope of the Agreement, its guiding principles, and organic structure extensively. The aim will be to fundamentally demonstrate the efforts of the AfCFTA Agreement to solve Africa’s developmental needs with free-market principles. This context is necessary to understand the nature of the DSM that it has proposed and give indications around the effectiveness of same in achieving the Agreement’s objectives.
- Purpose and Scope of the AfCFTA Agreement
Every economic system in today’s world is characterized by a complex legal and institutional system including but not limited to international trade, commercial and corporate laws, territorial and admiral laws, financial laws, personal and estate laws, rules on dispute settlement (including conflict of laws), etc.[1] Historically, agreements between two or more states have usually had an important role to play in the international landscape of contemporary economic systems.[2] Such agreements, otherwise known as treaties, can function as regulatory instruments in different areas like international trade, shipping and aviation, monetary systems, boundaries, cyberspace, and investment, among others.[3] Fundamentally, the AfCFTA agreement was created to manage regional trade by providing regulations for goods and services in a single market, while facilitating mobilisation of persons and legal entities in Africa.[4]
While it may be possible to gain insights on the purpose of the Agreement from its preamble, as is the case with treaties, there are historical perspectives that give further understanding of intention of the architects of the AfCFTA Agreement.[5] Fitzmaurice, in his commentary on this debate of the purpose of treaties, asserts that the preamble can reflect independent rules of customary international and may therefore, be binding in character.[6] The question, which needs no answer will be to what end will a party seek to enforce the purpose of a treaty as deduced from the preamble of same?
A close examination of the preambles of the AfCFTA Agreement and its Protocols reveals that free mobility of persons, capital, goods, and services is a key driving factor of the collective market the member states intended to create.[7] To deepen economic integration, structure transformation in the economy at large scale, promote agriculture, achieve better levels of food security and industrialisation, a free market that allows flexibility and mobility is crucial.[8]
The Protocol on Trade in Goods and the Protocol on Trade in Services highlight that the AfCFTA Agreement was driven by a desire to create an environment conducive to private sector development that could boost intra-African trade.[9] The preamble of the Protocol on Trade in Services clearly states that it hopes to enhance competitiveness at the industry and enterprise levels by exploiting opportunities for economies of scale, continental market access, and efficient resource allocation.[10] The clear intention here was to achieve these ambitious objectives by establishing ‘clear, transparent, predictable and mutually-advantageous rules’ to govern trade, competition policy, investment, and intellectual property.[11] If the market will be liberal, then there has to be comprehensive trade rules that create economic efficiencies and improve social welfare. One way to do so will be the progressive elimination of trade barriers, either by boarder movement or import tariffs, to create more opportunities for member states.[12]
The Preamble of the AfCFTA Agreement also recognises the importance of international security, human rights, democracy, gender equality, and the rule of law to develop international trade and economic cooperation.[13] Although, not key trade issues, these important elements highlighted will also form crucial points in the implementation of the agreement.[14] The results only project positivity. One of such projections is an estimated increase in the volume of intra-African trade by 81 % by 2035, and increase in the volume of total African exports by 29 % are some of the projected results.[15]
As may already have been identified in the purpose, the scope of the AfCFTA Agreement as declared by Article 6 is covering trade in goods, trade in services, investment, intellectual property rights, and competition policy.
- Objectives of the AfCFTA Agreement
Following these, the AfCFTA Agreement provides for two categories of objectives. The general objectives include among others the creation of a liberalized market for goods and services facilitated by movement of persons, laying the foundation for the establishment of a Continental Customs Union (CCU) at a later stage, contribution to the movement of capital and natural persons and facilitating investments building on the initiatives and developments in state parties and RECs, enhancement of the competitiveness of the economies of State parties, and promotion of industrial development through diversification and regional value chain development, agricultural development and food security.[16]
The second category is specific objectives. These include progressive elimination of barriers to trade in goods, progressive liberalisation of trade in services, cooperation on investment, IP, competition policy and on all trade-related areas, customs matter and the implementation of trade facilitation measures.[17] These and other objectives demonstrate the broad ends that the AfCFTA Agreement seeks to accomplish. Of these objectives, industrial and agricultural development, food security, and diversification and regional value chain are at the heart of the Agreement as severally cited in the preamble and operative parts of the document.
- Principles of the AfCFTA Agreement
These noble objectives can be achieved within a framework of principles as provided by the Agreement. A crucial part of the Agreement is the State members.[18] This means that State actors will be the focus of the operation of the Agreement. Historically, economic integrations followed a trade arrangement pattern and not such progressive strategy like the provisions of the AfCFTA.[19] More recently, the approach to regional integration has focused on development strategies with frameworks that create political will towards resolving regional challenges in different areas.[20]
Article 5 ( c) of the Agreement provides a vital principle of the AfCFTA. Onyejekwe and Ekhator discuss in detail the principle of variable geometry.[21] Gathii explains that this principle means that policies can be adopted to give member states, particularly the poorest the following: (i) policy flexibility and autonomy for member states to self-pace with the commitments and integration objectives, (ii) mechanisms to minimize distributional losses by creating opportunities such as compensation for losses arising from implementation of regionwide liberalization commitments and policies, and (iii) preferences in industrial allocation among members.[22] While there are arguments that this granular and gradualist approach is what Africa certainly needs to grow together,[23] there is also criticism of the disparity in the growth process
that this approach can create in the short term.[24] Of course, political will towards success will be necessary for the implementation of this principle.[25]
Another principle of the AfCFTA Agreement is that the RECs Free Trade Areas will be building blocs for it. And so, it is refreshing that the constitutive treaties of some RECs also aspire towards economic development and improved living standards and can have foundations on which the AfCFTA Agreement can improve. The Revised ECOWAS Treaty aims to promote cooperation and integration in West Africa in order to raise the living standards of its peoples, maintain and enhance economic stability, foster relations-among members, and contribute to the progress and development of the continent as a whole.[26] The ECCAS Treaty aims at integrating the economies of its members to increase economic self-reliance and promote endogenous and self-sustained development.[27] The SADC Treaty aims to promote self-sustaining development based on collective self-reliance and interdependence of its members.[28]
The obvious conclusion is that these regional treaties have a similar message of integration, however, Leshoele argues that there is a missing crucial integration in the area of political unification in the form of a central government that needs to be addressed for this to be a reality.[29] For Udombana, the major problem with these RECs is the overlapping membership and mandate. This creates conflicts and leads to manpower and resource duplication, which the continent may not be able to afford.[30] While the RECs may be building blocks, they may also be stumbling blocks if these issues are disregarded.
Other principles of the AfCFTA Agreement include flexibility and special and differential treatment, transparency and disclosure of information, preservation of the acquis, reciprocity, and national treatment.[31]
[1] Byung-Yeon Kim, ‘The Studies of Economic Systems and Institutions: Some Views on Future Directions’ (2012) 7 The Journal of Comparative Economic Studies pp 11-21
[2] Vienna Convention on the Law of Treaties, art. 19(a), May 22, 1969, 1155 U.N.T.S. 331, 8 I.L.M. 679
[3] James Crawford, Brownlie’s Principles of Public International Law (8th ed. 2012) 367; Malgosia Fitzmaurice, The Practical Working of the Law of Treaties,INTERNATIONAL LAW 173 (Malcolm D. Evans ed., 2003).
[4] Songwe V. ‘Africa’s bold move towards integration: The Continental Free Trade Agreement, Foresight Africa: Top Priorities for the Continent’ (Africa Growth Initiative, Brookings Institution 2018) p. 19 – 20 cited in Udombana, N. J. ‘A Step Closer: Economic Integration and the African Continental Free Trade Area’ (2020) 31 Duke J. Comp. & Int’l L., 1. Available online at https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1568
[5] Gerald Fitzmaurice, ‘The Law and Procedure of the International Court of Justice’ (1957) 33 BRIT. Y.B. INT’L L. 229
[6] Malgosia Fitzmaurice, ‘The Practical Working of the Law of Treaties’ in International Law (2003) (Malcolm D. Evans ed.) 173
[7] AfCFTA Agreement (n. 17) Preamble
[8] Udombana, N. J. ‘A Step Closer: Economic Integration and the African Continental Free Trade Area’ (2020) 31 Duke J. Comp. & Int’l L., 1. Available online at https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1568; See also International Trade Centre, A Business Guide to the African Continental Free Trade Area Agreement, (Geneva, September 2018)
[9] See UNCTAD Policy Brief No 67, The African Continental Free Trade Area: The Day After the Kigali Summit Online available at https://unctad.org/system/files/official-document/presspb2018d4_en.pdf [accessed 23/8/2021] ; AfCFTA Agreement, Protocol on Trade in Goods, Mar. 21, 2018, 58 I.L.M. 1028, 1043
[10] AfCFTA Agreement, Protocol on Trade in Services, Mar. 21, 2018, 58 I.L.M. 1028, 1053
[11] Same as n. 99
[12] AfCFTA Agreement (n 15) Preamble
[13] AfCFTA Agreement (n. 17) Preamble
[14] P. Apiko, S. Woolfrey and B. Byiers, ‘The Promise of the African Continental Free Trade Area (AfCFTA)’ Discussion Paper No. 287, (December 2020) ECDPM, available online https://ecdpm.org/wp-content/uploads/Promise-African-Continental-Free-Trade-Area-AfCFTA-ECDPM-Discussion-Paper-287-December-2020.pdf accessed 23/8/2021
[15] Jackwell Feris, ‘Investment Protection for Trade-Related Infrastructure to Realise the AfCFTA’s Full Potential’ (CDH Dispute Resolution Alert, 9 February 2021) available at https://www.cliffedekkerhofmeyr.com/en/news/publications/2021/Dispute/Dispute-Resolution-Alert-9-February-2021-Investment-Protection-for-trade-related-infrastructure-to-realise-the-AfCFTAs-full-potential-.html accessed 12/8/2021
[16] AfCFTA Agreement (n 15) Article 3 (a – f)
[17] AfCFTA Agreement (n 15) Article 4 (a – f)
[18] AfCFTA Agreement (n 15) Article 5 (a)
[19] J.T. Gathii, African Regional Trade Agreements as Legal Regimes, (CUP Cambridge 2011).
[20] Akhaine S.O. ‘The Political Economy of Claude Ake’ In: Oloruntoba S., Falola T. (eds) The Palgrave Handbook of African Political Economy (Palgrave Handbooks in IPE. Palgrave Macmillan, 2020)
[21] Onyejekwe, C., & Ekhator, E. ‘AfCFTA and lex mercatoria: Reconceptualising International Trade Law in Africa’ (n. 40)
[22] James Gathii, ‘African Regional Trade Agreements as Flexible Legal Regimes’ (2009) 35 North Carolina Journal of International Law and Commercial Regulation, 60
[23] Katrin Kuhlmann and Akinyi Agutu, ‘The African Continental Free Trade Area: Toward a New Legal Model for Trade and Development’ (2020) 51 (4) Georgetown Journal of International Law 1
[24] Babatunde Fabgbayibo, ‘The African Continental Free Trade Area (AFCFTA) and the Imperative of Democratic Legitimacy: An Analysis’ in Nigerian Yearbook of International Law 2018/2019 (Springer Int. Publ. 2021)
[25] Olu Fasan, ‘AfCFTA: Africa is moving too slowly towards a Single Market’. (LSE Blog 11 February 2019) available at < https://blogs.lse.ac.uk/africaatlse/2019/02/11/afcfta-africa-is-moving-too-slowly-towards-a-single-market/> accessed 30/7/2021
[26] Revised Treaty of the Economic Community of West African States, art. 3(1), July 24, 1993, 2373 U.N.T.S. 233 (entered into force Aug. 23, 1995) Preamble
[27] UNCTAD, Economic Development in Africa Report 2019, ‘Made in Africa – Rules of Origin for Enhanced Intra-African Trade’ available online https://unctad.org/system/files/official-document/edar2019_en_ch1.pdf accessed 23/8/2021 Treaty Establishing the Economic Community of Central African States, art. 4(1)(a), adopted Oct. 18, 1983, 23 I.L.M. 945, Preamble
[28] Treaty of the Southern African Development Community, Aug. 17, 1992, 32 I.L.M. 116, Preamble
[29] Leshoele, M. ‘AfCFTA and Regional Integration in Africa: Is African Union Government a Dream Deferred or Denied?’ (2020) Journal of Contemporary African Studies, 1-15.
[30] Udombana, N. J. ‘A Step Closer: Economic Integration and the African Continental Free Trade Area’ (2020) 31 Duke J. Comp. & Int’l L., 1.
[31] AfCFTA Agreement (n. 17) Article 5 (d – h)
