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Harnessing Africa’s Free Trade Agenda – Institutional structure and broad objectives of the AfCFTA Agreement

13 July 2023
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Overview

  • This is the second part in a series of articles on the African Continental Free Trade Area (AfCFTA).
  • Grandiloquence is what comes to mind when yet another article is written about the virtues of the 54-nation AfCFTA agreement, a flagship programme of the African Union’s Agenda 2063.
  • However, as Richie Norton reminds us in his book, The Power of Starting Something Stupid, ‘Opportunities will come and go, but if you do nothing about them, so will you’.
  • This is the second part in a series of articles on the African Continental Free Trade Area (AfCFTA).
  • It outlines the overall institutional structure and broad objectives of the AfCFTA agreement and identifies opportunities for private economic actors to influence the trajectory of the implementation of the Agreement.

This is the second in a series of articles on the African Continental Free Trade Area (AfCFTA) agreement. The aim of the series is to unpack the agreement’s various protocols and related matters and highlight:

  • key opportunities and potential inhibitors for business to consider in undertaking a regional growth strategy;
  • the roles of legal advisors in navigating the AfCFTA institutions and member states in supporting a regional trade or investment strategy; and
  • avenues for the private sector to influence the trajectory of the implementation of the AfCFTA instruments.

Grandiloquence is what comes to mind when yet another article is written about the virtues of the 54-nation African Continental Free Trade Area (AfCFTA) agreement, a flagship programme of the African Union’s Agenda 2063.1

However, as Richie Norton reminds us in his book, The Power of Starting Something Stupid, ‘Opportunities will come and go, but if you do nothing about them, so will you’. Given that the AfCFTA is a major opportunity for the African continent as discussed by Derek Lötter and Wang’ombe Kariuki in Part 1 of this series (here), it is important to understand:

  • what the AfCFTA is;
  • its membership and institutional architecture;
  • its principles and applicability;
  • its objectives; and
  • suitability of the institutional architecture to achieve the stated objectives.

Key to the assessment of the AfCFTA realising its stated objectives will be the suitability of the institutional and legal architecture of the AfCFTA agreement and, in particular, the horizontal justiciability of rights under the agreement in municipal courts.

In this article, we discuss the overall institutional structure and broad objectives of the AfCFTA agreement and identify opportunities for private economic actors to influence the trajectory of the implementation of the agreement.

The free trade area

Article 3(a) of the AfCFTA agreement lists ‘create a single market for goods, services, facilitated by movement of persons…’ as a general objective. However, it is important to note that the AfCFTA agreement does not create a single African market. Rather, the AfCFTA agreement creates a free trade area (FTA), being an agreement among countries to reduce or eliminate trade barriers (such as tariffs, customs duties, and non-tariff barriers) on goods and services traded among them.2

This is fundamental to understanding the opportunities and limitations of trade under the AfCFTA agreement, in particular with reference to its membership and institutional architecture. At its core, the AfCFTA is an agreement between countries (State Parties, who are all AU Member States). As such, all rights or entitlements under the agreement, as well as all obligations under the agreement, accrue to the State Parties.

This also means that disputes under the agreement can only arise, and be resolved, as between the State Parties (i.e., private actors will rely on their governments to utilise the mechanisms and entitlements under AfCFTA). This is buttressed by Article 9 of the agreement, which sets out that the Assembly of Heads of State and Government of the AU, subject to those decisions carved out for the Council of Ministers3, has the exclusive authority to adopt interpretations of the agreement and decisions that have a legal, structural, or financial implication shall be binding on State Parties only once adopted by the Assembly.

Moreover, Article 5 of the AfCFTA agreement sets out 12 principles under which the AfCFTA will be governed, the most important of which are:

  • the AfCFTA is driven by Member States of the AU;
  • Regional Economic Communities (RECs) FTAs form the building blocks for the AfCFTA and the preservation of the acquis4;
  • most-favoured nation or national treatment;
  • reciprocity; and
  • consensus in decision-making.

Simply put, State Parties do not lose their trade sovereignty by acceding to the AfCFTA agreement and the REC trade regimes continue to exist, albeit now harmonised under the AfCFTA regime. As such, the experience of economic actors on trade under AfCFTA may vary significantly depending on the State Party or REC involved (for example, economic actors in East Africa where the East African Community is already highly harmonised may experience less friction than in Southern Africa, where the regional trade regime is less developed outside of the Southern African Customs Union or Common Monetary Area countries). 

AfCFTA fit for purpose?

Given the institutional shortcomings set out above, one may wonder whether AfCFTA is yet another opportunity lost for the continent. Taking such a view would be to lose sight of how FTAs operate: the AfCFTA agreement is the treaty that provides the institutional framework and overall entitlements of its members.

Sitting ‘below’ the treaty are the protocols, which in municipal law would be viewed as principal legislation (if the treaty is viewed as the basic law, the protocols are the enabling legislation). Finally, each protocol is operationalised by specific undertakings of State Parties in line with the principles set out in Article 5 of the agreement (as may be further expanded on, but not detracted by, the applicable protocol).

These undertakings are captured in schedules and appendices under each protocol. Once schedules and appendices are agreed between the State Parties, these do not become self-executing, given that they are trade agreements and in the ordinary course, public international law requires that trade agreements be signed by the Executive and passed by the legislative arm, before they become binding.

This is the case in terms of section 231(4) of South Africa’s Constitution, which provides that an international agreement becomes law in the Republic only once it is enacted into law by national legislation. For example, South Africa’s undertakings on tariffs under the Protocol on Trade in Goods will only become effective once the Minister of Finance tables these before Parliament and the South African Revenue Service updates and gazettes its Customs and Excise handbook.

This mechanism of domestication means that individuals and other economic actors have an opportunity to influence those aspects of AfCFTA that will have a direct and material impact on their businesses. However, the business community and traders need not wait for the process to get to its tail-end before getting involved to influence outcomes: there remain several protocols being negotiated (we deal with these in Part 9 of this series).

Private economic actors are invited to make submissions via their trade ministries in the negotiation processes. Moreover, those private actors who choose to be involved in this manner are also more likely to have their views canvassed by their country’s trade negotiators at critical milestones of the negotiations. As such, a proactive approach is encouraged in relation to both the outstanding protocols as well as the outstanding operationalisation of the protocols already in place.

  1. As of April 2023, 46 out of the 54 African Union (AU) Member States that have signed the AfCFTA agreement have deposited their instrument of ratification.
  2. A single market is a free trade area where trade borders have been removed and free movement of goods, services, and people is permitted.
  3. Ministers of State Parties responsible for trade.
  4. Meaning that which has been agreed at REC level is maintained, making the AfCFTA agreement an overlay rather than a replacement for the existing REC architecture.