African Continental Free Trade Area Research Articles

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.

The African Continental Free Trade Area Agreement: Aiding Intra-African trade towards deeper continental integration

The signing of the African Continental Free Trade Area Agreement (AfCFTA) reflected many years of hard work by the continent’s forefathers who include Kwame Nkrumah of Ghana, Julius Nyerere of Tanzania, Jomo Kenyatta of Kenya, Kenneth Kaunda of Zambia, Patrice Lumumba of Congo, Robert Mugabe of Zimbabwe and Frantz Fanon of Algeria, but to mention a few. The AfCFTA also depicts the novel work of the Organisation of African Unity (OAU), and later the African Union (AU), towards shaping a vision of continental integration, embedded in the vision of the African Economic Community (AEC), a by-product of the Abuja Treaty. Vision 2030 and the long-term continental vision of Agenda 2063: ‘The Africa We Want’ are also designed to contribute towards deeper and successful continental integration. However, by now the excitement over the AfCFTA signing has subsided. For each member state, the reality of being an AfCFTA party has started to sink in. Some member states have expressed concern and fear over problems such as opening their markets and accepting continental competition, allowing free movement of persons and trade across borders. Others find it too expensive to deal with the internal political fallout from their populace’s scepticism regarding the agreement’s effects on jobs (due to increased competition) and livelihoods. This article examines the AfCFTA to determine its impact and related advantages in respect of continental trade policies. It discusses the advantages of the AfCFTA and its potential challenges.

Towards Building Shared Prosperity in Sub-Saharan Africa: How Does the Effect of Economic Integration Compare to Social Equity Policies?

The debate on the need for Sub-Saharan African (SSA) countries to foster inclusive growth has intensified following the coming into force of the African Continental Free Trade Area (AfCFTA), and the emergence of the coronavirus pandemic. A conspicuous lacuna in the literature is a lack of rigorous empirical work(s) exploring: (1) the joint effect of economic integration and resource allocation, and (2) social equity policies on inclusive growth in SSA. Using data from the World Bank’s World Development Indicators and the Global Consumption and Income Project (1980–2019) for 43 SSA countries, I provide evidence robust to several econometric techniques the fixed-effect, random-effect, and the system generalized method of moments estimators to show that: (1) though economic integration induces inclusive growth, the effect is higher in the presence of greater financial deepening and productive government expenditure; (2) relative to economic integration, social equity policies are rather remarkable in enhancing inclusive growth. Policy recommendations are provided in line with the AfCFTA and the reversals of welfare gains due to the coronavirus pandemic.

The African Continental Free Trade Area (AfCFTA) and it’s applicability in the West African clime : Nigeria in focus.

The African Union’s (AU) Agenda 2063 dream to create a continental market with the free movement of persons, capital, goods and services became much more promising following the existence of the African continental free trade agreement areas (AfCFTA). This crucial step by the African community is furnished towards creating one African Market to reduce trade barriers, import quotas and tariffs, and increase the trade of goods and services on the continent. By now, the Agreement had already come into force following the 22nd ratification by the Saharawi Republic and Sierra Leone. Moreover, the progression of tthis agreement has been further encouraged by the ratification of Nigeria whose previous absence stood out and raised concerns on the relevance of the Agreement. On this wise, this paper explicates an overview of the AfCFTA agreement and further gives the implications of this agreement in the African clime with a rapt focus on the Federal Republic of Nigeria.

Resetting the Rules on Trade and Gender? A Comparative Assessment of Gender Approaches in Regional Trade Agreements in the Context of a Possible Gender Protocol Under the African Continental Free Trade Area

Resetting the Rules on Trade and Gender? A Comparative Assessment of Gender Approaches in Regional Trade Agreements in the Context of a Possible Gender Protocol Under the African Continental Free Trade Area

Integrating Africa by Competition and Market Policy

Africa has the African Continental Free Trade Area (AfCFTA). The agreement will lower tariffs and facilitate internal market trade on the Continent, and policy makers hope that it will help lift 30 million people out of poverty. A competition protocol is now in the process of negotiation and proposals have been made ranging from a full, detailed, technical competition law as in the West to a scaffolding of regional cooperation. For the competition element of AfCFTA, this article makes a bold suggestion. Africa needs a basic but deep competition protocol, concentrating on the priorities “at the top.” It needs to rid the continent of insidious trade-and-competition restraints at member state borders that prevent African integration, requiring a joinder of trade-and-competition violations. And it needs a voice at the top to take a stand for the Continent, for example against the mega-mergers that hurt Africa. Only with these three elements –clear basic rules, trade/competition restraint prohibitions, and voice at the top, can Africa hope to realize the promise of Africa.

AfCFTA - BEYOND THE FINE PRINT

The African Continental Free Trade Area (AfCFTA) Agreement presents a new dawn in international trade for and among African countries. While the agreement establishing it is in itself mighty a feat, mightier still its smooth implementation will prove to be. A few points that may smoothen its journey from agreement to reality are considered in this paper.

The Synergy between Governance and Economic Integration in Promoting Female Economic Inclusion in Sub-Saharan Africa

The debate on the need for Sub-Saharan African (SSA) countries to increase female participation in the economic sector has intensified the coming into force of the African Continental Free Trade Area (AfCFTA) and good governance. This study investigates the joint effects of governance (comprising of political, economic and institutional governance) and economic integration on female economic participation in sub-Saharan Africa (SSA). The study employs panel data of 42 countries in SSA spanning 1996-2020 for the analysis. The empirical strategy uses the dynamic System Generalized Method of Moments (SGMM) estimation technique. The findings reveal that the single effect of economic integration on female economic participation is necessary but not sufficient. Hence, complementing economic integration with good governance further enhances female economic participation in SSA. In general, the joint effect of economic integration and good governance should be a concern for policymakers to promote female economic inclusion.

The exhaustion of local judicial remedies in investor-state dispute settlement: a proposal for the African Continental Free Trade Agreement on Investment Protocol

ABSTRACT Over the past few years, the international Investor-State Dispute Settlement (ISDS) mechanisms have been confronted with an unprecedented level of scrutiny, and the system's legitimacy is being questioned by both developed and developing countries alike. This article presents a proposal for the adoption of the old customary international law rule of exhaustion of local remedies in the upcoming Investment Protocol of the African Contin en tal Free Trade Agreement (AfCFTA). It observes that the ISDS mechanism that will be developed under the AfCFTA framework is likely to be shaped by the legitimacy crisis in investment treaty arbitration and ongoing global debates about the reform of the ISDS mechanisms. In particular, the ISDS debate in the African region will continue to characterise and potentially derail the negotiations of the AfCFTA Protocol on Investment. The main contention is that adopting the exhaustion of local remedies under the AfCFTA Protocol on Investment before recourse is had to the ISDS is arguably the single reform with the greatest potential to foster a balanced investment dispute resolution mechanism and reduce political opposition to ISDS while still providing investors with access to ISDS when domestic remedies are inadequate. The article finally proposes a drafting suggestion for the adoption of the exhaustion of local remedies rule into the ISDS provision of the AfCFTA Protocol on Investment. Keywords: Exhaustion of local remedies; African Continental Free Trade Area; Investment Protocol; ISDS; African courts.

Is Regional Trade Integration a Growth and Convergence Engine in Africa?

The main objective of Regional Trade Agreements (RTAs) is to stimulate economic growth in participating countries through increased trade, economies of scale, knowledge and technology transfer. Using a panel data over the period 1979 to 2018, this paper examines the contribution of regional trade integration (RTI) to economic growth and income convergence in Africa and its major Regional Economic Communities (RECs). The results of the instrumental variable and panel fixed-effects estimation show that RTI promotes economic growth in Africa. However, it fosters income divergence, reflecting the distribution of the gains from regional integration in favor of the more developed economies of the continent. The results of this study show the importance to support the African Continental Free Trade Area (AfCFTA) project with policies aimed at reducing non-tariff barriers to trade and improving infrastructure in order to maximize the effects on growth in all participating countries.

Local production and international trade regulations: challenges and legal framework

This paper discusses local production and international trade regulations that is the legal framework and challenges encountered in ensuring compliance with such trade regulations. It contextualizes the meaning of local production and its benefits. This paper further discusses the key international trade regulations such as the World Trade Organisation (WTO) which was created out of the General Agreement on Tariffs and Trade (GATT). At regional level specifically Africa, this paper discusses the African Continental Free Trade Area Agreement (AfCFTA) whose main focus is to establish a free trade area. Furthermore, this paper discusses the challenges encountered in ensuring that local production by African countries is in compliance with the international and regional trade regulations.

The Impact of COVID-19 on Trade in Africa: African Continental Free Trade Area (AfCFTA) as a Catalyst for Growth

The Impact of COVID-19 on Trade in Africa: African Continental Free Trade Area (AfCFTA) as a Catalyst for Growth

Opportunities, Constraints and Critical Supports for Achieving Sustainable Local Pharmaceutical Manufacturing in Africa: With a Focus on the Role of Finance, Final Report

The Open Society Foundations Public Health Program commissioned an interdisciplinary team to examine the extent to which gaps in financing are an obstacle to more robust local production of pharmaceutical products (including diagnostics, vaccines and treatments (DVT)) and personal protective equipment (PPE) with focus on Africa. The Report is posted here. The Executive Summary and an Addenda compilation (which includes 3 supplemental research reports) are posted along with the Report at the website of Nova Worldwide Consulting.The overall findings of the study are that gaps in financing pose a constraint on the localization of pharmaceutical production in Africa. The gaps are not mainly due to a lack of financial capital in global financial markets that might be deployed for this purpose. The main problems are associated with the market environment in the sense that sustainable business operations require adequate demand, and market demand for pharmaceutical products in Africa is limited by various factors. In addition, comparatively weak infrastructure (recognizing variation among countries) makes it difficult to compete with large efficient foreign suppliers that are bolstered by foreign government support. Potential investors appear to perceive relatively high risks associated with investing in pharmaceutical manufacturing in Africa.Transforming political engagement:The COVID-19 pandemic may serve as adequate impetus to transform local production of pharmaceuticals into a governmental priority. Government commitment at a high level is required to engage the financial levers that will support localization of production.Sustainable business models:Particularly outside the vaccine sector, successfully operating a pharmaceutical manufacturing facility means addressing a market with sufficient demand to generate revenue and profits. Alternatively, or as a supplement, governments may provide direct subsidies, guaranteed offtake agreements, tax credits, local production pricing premiums, and other measures to substitute for market demand. These forms of support are commonly used for “infant industries”, and there should be plans to withdraw such support once a business has achieved sustainability.The social impact investor market:African governments should consider a program to encourage sovereign wealth funds and other financial asset managers to invest in local production on the African continent as a way to accomplish important social goals. To facilitate this objective, there should be some type of backstop or guarantee of the social impact investments within reasonable parameters. The African Development Bank may be helpful in establishing mechanisms for this purpose.Opportunities for advocacy:There is substantial room for advocacy by civil society to move Africa toward greater self-sufficiency in the production of pharmaceutical products. At the high level of political commitment, government authorities should be persuaded to prioritize local production of pharmaceuticals as a matter of public health security, engaging the financial levers to support such a commitment. At the level of industrial policy, the African Union should be encouraged to engage in concrete planning for regional pharmaceutical production hubs, and associated infrastructure and centers of technical expertise. Whether in conjunction with that, or separately, procurement authorities should be encouraged to form regional pooled procurement mechanisms to aggregate demand, allow for more effective bargaining with suppliers, and support regional hub manufacturers.Support for effective implementation of the African Continental Free Trade Area in terms of reducing barriers to intra-Africa trade in pharmaceutical products would improve the market situation. Similarly, continuing support for efforts to integrate the African regional regulatory structure for pharmaceutical products would accelerate access to medicines. Establishment of a library of available drug master files for reference by manufacturers would significantly lower barriers to manufacturer market entry.Foundations should be encouraged to develop a transparent platform which could provide information to African manufacturers with respect to opportunities for financing and expertise for pursuing their objectives.

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.

Towards Efforts to Enhance Tax Revenue Mobilisation in Africa: Exploring Synergies between Industrialisation and ICTs

Motivated by the momentous rise in ICT diffusion, the implementation of the African Continental Free Trade Area agreement, and the expected rebound of foreign direct investment inflow to Africa from 2022, this study examines the joint effects of industrialisation and ICT diffusion on resource mobilisation in Africa. To this end, we use data on 42 African countries for the period 1996 – 2020 for the analysis. First, we provide evidence robust to several specifications from the dynamic system GMM to show that although unconditionally both industrialisation and ICT diffusion enhance (i) goods and services tax (GST), and (ii) profits, corporate and income tax (PCIT) mobilisation efforts in Africa, the effects of the former are rather remarkable in the presence of the latter. Particularly, the results show that, while ICTs amplify the effect of industrialisation on GST, only ICT usage and ICT skills matter for PCIT. Second, the study unveils ICT thresholds for complementary policies. Accordingly, industrialisation and ICTs are necessary and sufficient conditions for tax revenue mobilisation only below some ICT thresholds. Above these ICT thresholds, complementary policies are needed to maintain the overall positive incidence on tax revenue mobilisation. Policy recommendations are provided in the end.