African Continental Free Trade Area Research Articles

Dispute Settlement: African Continental Free Trade Area (AFCFTA)

Article 20 AfCFTA establishes a Dispute Settlement Mechanism, the Protocol on Rules and Procedures on the Settlement of Disputes (‘the AfCFTA DSM Protocol’; ‘Protocol’) and a Dispute Settlement Body (‘DSB’) for resolving disputes between State Parties. The AfCFTA dispute settlement mechanism is a central element of the AfCFTA as it provides security and predictability to the regional trading system (Art 4 AfCFTA-DSM Protocol). The AfCFTA dispute settlement mechanism will ‘preserve the rights and obligations of State Parties under the Agreement and clarify the existing provisions of the Agreement in accordance with customary rules of interpretation of public international law’ (Art 4(1) AfCFTA-DSM Protocol). Accordingly, the AfCFTA dispute settlement mechanism has the potential to enhance the integrity and efficiency of the whole AfCFTA trading system. This entry focuses on the AfCFTA dispute settlement mechanism. In the ensuing sections, this submission reflects on that mechanism from a historical, procedural, comparative, and critical perspective. Where necessary, it highlights areas of improvement that may better position the dispute settlement mechanism to facilitate the objectives of the AfCFTA.

African Continental Free-Trade Area: Key Challenges

Abstract On March 21, 2018, the African Continental Free Trade Agreement was signed in Kigali, Rwanda by an overwhelming majority of African states. This Agreement, which was designed to create a free-trade area across the African continent, came into force on May 30, 2019, following its ratification by twenty-two African states as provided for in the agreement. The resultant free-trade area is intended to integrate African markets, stimulate industrialization, and engender the economic transformation of the continent through the promotion of free movement of persons, capital, goods, and services across the continent. This article discusses the key challenges facing the new free-trade zone and the prospects of the trade zone for African industrialization and economic development in the twenty-first century.

Murky trade waters: Regional tariff commitments and non-tariff measures in Africa

In several African regions, economic integration has successfully reduced tariff protection by freezing the opportunity to raise applied tariffs against fellow integration partners above those promised. In this paper, we examine whether the regional tariff commitments on the continent have come at the expense of adverse side-effects on the prevalence of other – non-tariff – trade barriers. More specifically, regional tariff commitments have not only created large tariff overhangs – the difference between Most Favoured Nation (MFN) bound tariffs and effectively applied tariffs – for African WTO members, but they also sharply reduced their tariff policy space within Africa, thus leaving regulatory policies such as sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT) as one of the few legitimate options to level the playing field with market competitors. Comparing the effects of applied tariff overhangs towards all vis-a-vis African trading partners on SPS and TBT notifications of 35 African WTO members between 2001 and 2017, we find no overall relationship between tariff overhangs and import regulation in our preferred model setting. By contrast, larger tariff overhangs specific to intra-African trade relations have a significant share in increasing the probability of SPS measures and TBT. Our findings have important implications for future Pan-African integration under the recently launched African Continental Free Trade Area (AfCFTA) in that success of fostering continental economic integration not exclusively depends on the realization of tariff liberalization, but similarly on a mindful coordination with non-tariff provisions.

Implementing the African Continental Free Trade Area (AfCFTA): The Effects of Trade Procedures on Trade Flows

In January 2018, the 10th African Union (AU) Summit of African Heads of States and Governments was held in Kigali. At this occasion, 44 countries had signed the African Continental Free Trade Area (AfCFTA) agreement. In this study, it is pointed out that the implementation of AfCFTA cannot be done without harmonized trade procedures. Using a gravity model of 49 African countries over the 2010-2015 periods, the study estimates the impact of inefficient trade procedures on intra-African trade. The results show that trade procedures such as the number of documents required to import goods and Border compliance negatively affect intra-African trade. This suggests the need of harmonization and rationalization of trade procedures to boost intra-African trade.

IMPACT OF AFRICAN FREE TRADE POLICY (AGREEMENT) ON THE SOCIO-ECONOMIC DEVELOPMENT OF NIGERIA

The signing of the agreement that established the African Continental Free Trade Area (AfCFTA) in the year 2019 is believed to be an African-based growth strategy that is self-reliant and is expected to be the world’s largest free trade area after the World Trade Organization (WTO). The agreement is an attestation to the fact that African countries cannot continue to rely solely on the global trading system and global economy of the world economic powers, probably because they are increasingly becoming unpredictable. However, there is an assumption that the aggregate consumer and business spending on the continent could rise if AfCFTA is implemented successfully. This assumption therefore calls for a research like this to evaluate the likely economic impacts of the free trade agreement on different African countries particularly Nigeria which is the giant of Africa and the focus of this study. To achieve the objectives of the study, descriptive statistical approach was utilized to examine how the AfCFTA could contribute particularly on poverty reduction and Nigeria has been struggling for many decades to reduce poverty. These variables were considered: household income, illiteracy level, unemployment level and access to health care. The results of the analyses revealed that the AfCFTA could be slightly beneficial to Nigeria as it would improve the efficiency of the factors of production and product markets thereby enhancing household income generation, reducing the level of illiteracy, unemployment and increasing access to good health, efficient resource allocation and improved industry competitiveness which was expected to help Nigeria record significant reduction in poverty level and increase in economic development. In the light of these findings, the study recommends that government should then design proactive strategies that would reap the full benefits of AfCFTA such as engaging the private sector in identifying receptive and risk surrounding their sectors and paying more attention to the development of the service sector etc. The study has potential limitations such as unavailability of recent data. To tackle this limitation, the study adopted the 2019 survey data on pillars of measuring human development index by World Bank to address the quality of the findings, and research question.
 
 JEL: F10, H13, O10
 
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Not all that glitters is gold: Political stability and trade in Sub-Saharan Africa

This study examines linkages between political stability and trade openness dynamics in a panel of 44 countries in SSA from 1996 to 2016. The empirical evidence is based on the generalized method of moments. From the findings, the negative relationship between political stability and merchandise trade is not significant while the negative relationship between political stability and trade openness (exports plus imports) is significant. Hence, the findings do not validate the tested hypothesis that political stability/no violence increases trade in the sub-region. The perspective that some forms of political stability can slow down and prevent international trade is consistent with Oslon in Rise and Decline of Nations (RADON) and recent contributions to the economic development literature which have shown that not all forms of political stability are development friendly because much depends on the extent to which stability translates into, inter alia, good governance. The principal policy implication is that standards of political governance need to be boosted in order to improve the anticipated effects of political stability on trade, especially in the light of the ambitious African Continental Free Trade Area (AfCFTA). Other policy implications are discussed.

Africanisation of international investment law for sustainable development: challenges

PurposeThe purpose of this study is to critically examine the move to Africanise international investment law (IIL) aimed at promoting sustainable development on the continent.Design/methodology/approachThe study analyses the move by African countries to “Africanise” IIL by incorporating specific and innovative provisions and features in their international investment agreements (IIAs) for the benefit of African economies. This is evidenced by provisions in African regional investment instruments such as the 2007 Common Market of Eastern and Southern Africa Investment Agreement and the 2008 Economic Community of West African States Supplementary Act on Investments produced by the different African regional economic communities (RECs), new-generation IIAs such as the 2016 Nigeria-Morocco IIA and the China-Tanzania IIA and the African Union’s Pan-African Investment Code 2016. The common features of these instruments include linking the objective of investment promotion and protection to sustainable development; excluding portfolio investments; including provisions on investor-obligations; and reserving wide scope of regulatory space for host-states, including the ability to take emergency measures without incurring liability to investors. Some of these provisions are rare in IIAs.FindingsThe study finds that, while the efforts are commendable, there are real challenges. Firstly, there are inconsistencies in the regimes existing on the continent due to differences in the contents of the international investment instruments promulgated by the different RECs, and also differences in the content of IIAs signed by some member-states of the RECs with countries external to the RECs. Secondly, there are governance gaps and a lack of enforcement in practice, which would undermine the effectiveness of the laws being forged. Thirdly, the Africanised IIL alone would not attract investment if other important determinants, such as critical infrastructure, remain lacking. Fourthly, there is under-representation of Africa in the arbitral institutions that develop and enrich the laws, which, if it continues, would undermine the effectiveness of the Africanisation provisions being included in IIAs.Research limitations/implicationsWhile the research discusses both law and policy, more is discussed of the law, owing to space limitation.Practical implicationsIt is anticipated that this research will impact the content of the investment protocol under the African continental free trade area and beyond and will prompt review of existing and future IIAs by member states of the various RECs to align them for consistency. It is also hoped that this research will impact the review of various investment instruments of the RECs with the aim of harmonising them. It is further hoped that this research would contribute to addressing the challenges that militate against the achievement of the goals of Africanising ILL for sustainable development.Originality/valueThe study is original. It has not been published previously and the authors have found no existing publication that addresses the issues covered in this study.

Ratification of the CISG: A Way Forward to Ensure Success of the African Continental Free Trade Area (AfCFTA)

The African Continental Free Trade Area (AfCFTA) established in March 2018 has recently commenced trading under the free trade area on the 1 st January 2021. Except for Eritrea, all the remaining 54 member states of the Africa union signed up to the agreement. Ever since the WTO creation, the Africa Continental Free Trade Area is considered the largest in the world in terms of the number of contracting states. Several authors have indicated that the establishment of this agreement is a success to Africa. However, the researcher believes that the uniformity of laws concerning the international sale of goods has become crucial for the smooth operations of African Trade. The UN Convention on Contracts for the International Sale of Goods (CISG) is a breakthrough effort by the United Nations Commission on International Trade Law (UNCITRAL) to unify the laws pertaining to contracts for the international sale of goods.This study argues that, for a smooth operation of the AfCFTA, there is a need for all African countries to sign and ratify the CISG which is also known as the Vienna Convention. The proposed appeal holds benefits for the continent and it is easy and judicious to implement. Keywords: AfCFTA, CISG, Africa DOI: 10.7176/JLPG/107-01 Publication date: March 31 st 2021

A social network analysis of the structure and evolution of intra‐African trade

AbstractWe used social network analysis to examine the country attributes and patterns of intra‐African trade between 2002 and 2017. The results showed that, generally, trade networks in Africa have become denser, and have the characteristics of the core‐periphery structure and small world phenomenon. Trade imbalances are widely found among African countries with the evidence that structure holes exist in intra‐African trade networks highlighted by the motif detectors. Using Quadratic Assignment Procedure, we found that countries that possess closer economic, geographic and cultural distance, but longer institutional distance, are more likely to form trade networks. However, many countries and the regional economic communities on the continent, have not adequately manifested these favourable characteristics for enhancing intra‐African trade. The implications are proposed that countries should develop their strategies, expedite structural adjustment, and foster competitive industries to cope with the external competition and seize opportunities of regional integration brought by the African Continental Free Trade Area (AfCFTA) agreement. It is also critical to efficiently address the overlapping problems of regional economic communities and intensify their coordination with AfCFTA.

Africa’s Development and Post Covid-19 Emerging Opportunities: Towards a Political Economic Model for Strengthening Intra Africa Trade and National/Regional Competitiveness in Response to Global Supply Chain Disruption

In view of the general observation that emerging opportunities exist for developing economies in the aftermath of the COVID-19 global pandemic, despite its many health, safety, economic, social and environmental realities, this paper examines how Africa could translate the challenges of the crisis into positive development opportunities from three interrelated salient angles: first is how to consolidate on innovation for local production and reinforce intra-African trade; the second is strengthening innovation for more resilient policies that address youth employment and skills development for regional and global competitiveness; and third, refocusing the digital and green economies, including the strengths of artificial intelligence, big data, e-commerce and the continuity of related environmental objectives. Using the “systems approach”, it proposes three quaternal models, advocating for policy coherence as optimal for development deliverables. This is not only beneficial for helping Africa out of the crisis, but could also meet some novel and future-oriented objectives of capacity building for managing complexities as purported in current global and regional development Agendas 2030 and 2063, as well as the African Continental Free Trade Area (AfCFTA) proposals.

The African Principles on the Law Applicable to International Commercial Contracts – a first drafting experiment

Abstract This article contains the first draft of the envisaged African Principles on the Law Applicable to International Commercial Contracts. The drafting of various sets of African Principles of Commercial Private International Law is a project of the Research Centre for Private International Law at the University of Johannesburg. The future sets of principles, in the form of model laws, could be used by national legislators on the continent and African economic integration organisations, particularly the African Union, in, respectively, domestic legislation and regional or supranational laws of a soft or binding nature. The existence of a reliable transnational legal infrastructure in respect of international commercial law, including commercial private international law, is a prerequisite for investor confidence, inclusive economic growth, sustainable development, and the ultimate alleviation of poverty on the African continent. The proposed sets of African Principles may contribute to sustainable growth on a long-term basis. The regulation of private international law of contract is essential in the further development of the African Continental Free Trade Area, which was established in 2018. Academics and other interested parties are invited to provide comments on the draft below before the end of June 2021.

PARTICIPATION OF AGRIBUSINESS SECTOR SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA); CHALLENGES AND PROSPECTS

This article examines how Small and Medium Scale Enterprises in the Agribusiness sector of the African economy can effectively participate in the African Continental Free Trade Area (AfCFTA) in relation to the various challenges facing Agribusiness SMEs, the prospects of Agribusiness SMEs under the AfCFTA, and the necessary governmental policies that can facilitate the participation of Agribusiness SMEs in intra-Africa trade through the AfCFTA. This article suggests that without adequate government policies put in place to address the challenges of SMEs in the Agribusiness sector in intra-Africa trade, many Agribusiness SMEs will be unable to participate and compete effectively under the AfCFTA which may lead to continuous stunted growth of this sector, thus preventing the impact of the AfCFTA from being felt in this sector and the AfCFTA not reaching its full potential.

The ‘Flexibility’ Standard in the African Union and Its Ramification for the Implementation of the African Continental Free Trade Area (AfCFTA) Agreement

African Union’s (AU’s) integration history indicates that the continental body is plagued by flexibility hindering its goal of continental unity. This article investigates the utility of ‘flexibility’ standard in the adoption, ratification, and the implementation of AU treaties. Through an empirical analysis of the seventy treaties currently in force at the AU, thirty-four treaties have been able to secure the minimum level of ratification. Results show that a treaty that lacks the required number of signatories and ratifications creates a big challenge for the continental body. On the other hand, treaty ratification is not a guarantee for successful implementation. Historically, differing views on AU’s role, goals and effect on regional stability has forced a gravitational pull on the essence of the body. Yet, AU continues to facilitate regional free trade agreements and customs union. One of these is the recent African Continental Free Trade Area (AfCFTA) Agreement. This article argues that achieving flexibility under AfCFTA is illusionary, hence AU should strive towards attaining a clear roadmap for flexibility milieu in the implementation of AfCFTA. We argue that, for AfCFTA to be effective, all AU Member States must ratify the agreement, thereby ensuring the harmonization of regional trade agreements, and elimination of tariff and non-tariff barriers. The article concludes that the AU must utilize the principle of variable geometry to have a differentiated level and speed of integration, still achieving the same objective of a unified continent towards maximum intra-trade realization. flexibility, African Union, AfCFTA, variable geometry, regional integration, trade barriers, and trade liberalization

Addressing the Missing Link for Sustainable African Continental Free Trade: Lessons from Ghana’s Manufacturing Industry

Expected benefits from the African Continental Free Trade Area (AfCFTA) hang on the production of sufficient real output within the region. Real investment will secure sufficient capital stock to drive sustained economic growth from AfCFTA. This can however be curtailed by high adjustment costs for investment, characteristic of Africa. The study examined how local manufacturing firms could increase their contribution to the African economy. As a starting point, it assessed the investment behavior of domestically incorporated manufacturing companies listed on the Ghana Stock Exchange (GSE), Ghana being the AfCFTA secretariat. Panel data was analyzed to estimate adjustment costs subject to the environmental consequences of manufacturing and trade, for Africa’s capital stock. The study found a positive and highly significant relationship between the value of capital and investment at the 5% significance level. It also found a 77% erosion of initial manufacturing sector capital stock due to environmental damage. The evidence of pollution haven and race to the bottom phenomena were strongly demonstrated. The net benefit of AfCFTA, based on current arrangements was found to be negative. The findings have offsetting effects on both the rate and magnitude of private local investment in Ghana’s manufacturing sector, with consequences for human welfare and AfCFTA. The study recommends a halt of all plans to start AfCFTA trading till a fully functional environmental policy has been put in place, to avert a further deterioration of the African environment and welfare of its people.

Le mécanisme de règlement des différends de la ZLECAf: un choix adéquat pour l’intégration économique en Afrique?

In order to ensure the peaceful resolution of disputes arising from the implementation of its norms, the African Continental Free Trade Area (AfCFTA) has adopted a dispute settlement mechanism that is almost identical to that of the World Trade Organization (WTO), although the two organizations have distinctly different objectives. While the ultimate objective of the AfCFTA is the progressive achievement of economic integration in Africa, the WTO aims to remove as many barriers to international trade relations as possible. This study attempts to demonstrate that the WTO model of dispute settlement adopted by the AfCFTA would not be appropriate to propel African economic integration, especially since not only is it characterized by a great deal of flexibility that allows member states to seek politically negotiated solutions, but above all, it does not take into account, either directly or indirectly, the individual, who is supposed to be the ultimate beneficiary of any process of economic integration of the African continent. Consequently, the present contribution advocates, on the one hand, the attribution of the competence to settle disputes related to AfCFTA’s Law to the future African Court of Justice and Human and Peoples’ Rights (ACJHPR) and, on the other hand, the incorporation of the preliminary referral into the AfCFTA’s Law that could be exercised by the national judge.

The African Continental Free Trade Area and the trade facilitation agreement: some regional macroeconomic impacts

This contribution analyses the potential impacts of the African Continental Free Trade Area (AfCFTA) and the positive role played by the Trade Facilitation Agreement (TFA) to augment its impact. We provide empirical evidence that expected trade flows and real GDP growth from the AfCFTA are relatively significant but are amplified by the TFA. In addition, the impacts on trade and economic growth are stronger when the TFA is extended to trade flows with non-African regions. More interestingly, all African regions experience an increase in exports of industrial and intermediate goods, which constitutes a catalyst for industrialisation and structural economic transformation.

Overcoming the Challenges in Documentary Procedures and Transparency in the Implementation of Effective Rules of Origin for the African Continental Free Trade Area

The United Nations Conference on Trade and Development (‘UNCTAD’) recently published a report on Economic Development in Africa. The purpose of this article is to consider the part of the report titled ‘Made in Africa: Rules of Origin for Enhanced intra-African Trade’, one of the main findings and make policy recommendations thereof. Preferential rules of origin are applied to goods by members of a contractual or autonomous trade regime in order to determine whether or not they qualify for preferential treatment and therefore beyond the scope of application of the general MFN principle. The ultimate test of effectiveness of rules of origin, therefore, depends on the so-called preference margin. The preference margin is the difference between the applicable most favoured nation tariff and the preferential tariff and the costs of compliance with the rules of origin that apply in terms of the specific free trade or preferential trade agreement area. However, Africa faces unique challenges in this regard. These are geographical, political and technological in nature. This article aims to contribute to the discussion of how, through creative and innovative use of rules of origin, Africa may begin to overcome these challenges to the implementation of the African Continental Free Trade Area (AfCFTA). Rules of Origin, AfCFTA, Africa, Development, Regional Value Chains

The African Continental Free Trade Area Agreement Vis-a-Vis Its Data Protection Concerns

The African Continental Free Trade Area(AfCFTA) Agreement (the Agreement) is an ambitious move at integrating the African continent, improving its domestic economy, and a signaling light of Africa's potential in world trade. It is a laudable step by the African Union to meet its AGENDA 2063. Flowing from this, protocols to the Agreement aim to ensure the elimination of possible bottlenecks, and by this, ease of trade is promoted in Africa. Despite this noble and commendable intention, the Agreement fails to establish a robust data governance regime, especially to protect personal data in the exchange of goods and services in the emerging African digital economy. This paper seeks to appraise the Agreement in the light of the data protection debate and other incidental issues.

African continental free trade area: Is there a trade potential for Côte d’Ivoire?

Many studies present the African Continental Free Trade Area (AfCFTA) as one of Africa’s most new trade issues. Previous assessments show that this AfCFTA will catalyze Intra African trade. The cum...

US-China Geoeconomic Tensions: Implications for the African Continental Free Trade Area

Passage of the African Continental Free Trade Area (CFTA) occurs at a time of rising tensions between the United States and China. Africa's growth and development prospects depend on a functioning and stable multilateral trading system, but recourse to economic nationalism and protectionism is increasingly undermining the open global economy and, indeed, the liberal international order on which free and fair trade depends. This article examines the implications of US-China tensions for the CFTA while assessing the opportunity for closer engagement between African countries and an axis of emerging powers led by China in an enhanced Global South strategy.