Analysis

The AfCFTA, as presently negotiated, fails to address the potential tax avoidance likely to arise from the proposed single market. The tax-related non-tariff barriers mentioned in the AfCFTA are limited to subsidies and tax benefits granted by governments to countries. In the absence of any express provision on the allocation of taxable income among countries in the AfCFTA, it may be argued that the AfCFTA has adopted the global tax system, which treats companies in a group as separate from each other.

This low level of priority accorded to the social impact of the AfCTA contradicts the core values and aspirations of the African Union (AU). Most notably Article 3 (g) and 4 (c), (I), (m), and (n) of the AU Constitutive Act which all envisage an African Union that is democratic, inclusive, open to the participation of stakeholders, and sensitive to social concerns in the pursuit of economic development. However, going by what transpired prior to Kigali, it appears that priority was not accorded to these concerns mentioned above. More importantly, the recent hiccups experienced at the Kigali Summit are evidence that dialoguing with a broad range of stakeholders about the impact of trade on social structures is vital to the attainment of legitimate and effective economic agreements in Africa.

The provisions regarding the movement of people as services suppliers in the AfCFTA are a welcome development in the agenda of boosting intra-African trade in services. The next phases of trade in services are currently under negotiations at the end of which State Parties are expected to take specific commitments in sectors and modes of supply. It is only upon completion of that phase that the breadth and depth of service liberalization in the AfCFTA will be appreciated and possibly quantified.

Intellectual Property (IP) is one of the three items currently under negotiation in Phase II of the African Continental Free Trade Area (AfCFTA). The AfCFTA negotiations include IP because of the continued relevance of the innovative and creative sectors to trade in goods and services across the globe. With a focus on Pharmaceutical Patents, Plant Variety Protection (PVP), Geographical Indications (GIs) and Traditional Knowledge, this post suggests that the primary purpose of the Protocol on IP in the AfCFTA should be to promote socio-economic development on the continent.

The AfCFTA has a broad objective of creating “a single continental market for goods and services, with free movement of business persons and investments” and a potential to significantly impact international trade relations simultaneously at the continental and global levels. Yet, situated in the context of a challenging and protracted history of non-implementation of regional trade agreements, and a complex international and regional trade wars with divisive implications in contemporary multilateral trading system, there are reasons to be modest about the impact of the AfCFTA.

In this essay, I argue that the AfCFTA needs to rethink its relationship with the continental emancipatory movements. Its focus on economic integration without social-emancipatory movements undermines its central aim of creating “the Africa we want.” Its top-down approach fails to capture labor movements in Africa. Additionally, by creating yet another integration organization in Africa despite the existence of several regional and continental integration projects it cashes organizational costs that could have been spent in creating a labor-friendly integration project.

Regional integration requires not only the elimination of tariff and non-tariff barriers, but also the removal of impediments that cause the physical movement of goods across borders to be slow and costly. These impediments may arise due to defects in policies, laws or procedures. Thus, trade should not only be liberalised, but it also needs to be facilitated. The World Trade Organization (WTO) defines trade facilitation as “the simplification, modernization and harmonization of export and import processes.” Six of the Southern African Development Community (SADC) countries are land-locked (Botswana, Lesotho, Malawi, Swaziland, Zambia and Zimbabwe). Therefore, inefficiency and high costs in cross-border trade have detrimental impacts on their ability to participate in global, as well as in regional trade. SADC states are parties to several agreements that aim at facilitating trade. However, the implementation of obligations remains a chronic challenge.

The centralisation of democratic practise in the implementation of AfCFTA will require serious commitment on the part of national and regional officials involved in negotiating the process. A key first step in this respect is the express inclusion of respect for democratic values in the Agreement.

The signing of the consolidated text of the African Continental Free Trade Agreement (AfCFTA) in March 2018 by 47 African Union member States was a significant milestone. It was the first time since the Abuja Treaty of 1994 that a continental trade agreement had been negotiated. This symposium critically appraises the agenda of the AfCFTA. It kicks off with a post that boldly makes the case why this agreement promises to redress the comparatively low levels of intra-regional trade as well as the dearth of high value exports from Africa.

Welcome to Afronomicslaw.org, a blog on the international economic law landscape as it relates to Africa. A major goal of this blog is to complement current analysis of international economic law issues as they relate to Africa in the blogosphere. We believe that this blog is particularly timely because there are significant international economic law developments taking place in Africa that invite more contemporaneous reflection and discussion.