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Dispute Settlement under the African Continental Free Trade Area Agreement: A Preliminary Assessment

Document Cited authorities 1 Cited in Related
Vincent
Pages138-158
Published date01 November 2020
DOI10.3366/ajicl.2020.0335
Date01 November 2020
INTRODUCTION

The African Continental Free Trade Area Agreement (AfCFTA) is the latest effort by African states to restructure the international economic order from below. The AfCFTA aims to create a large single African market for goods, services and movement of persons.1 The AfCFTA Phase I negotiations comprise three key agreements: the Protocol on Trade in Goods; the Protocol on Trade in Services; and the Protocol on Dispute Settlement.2 While the Protocol on Trade in Goods includes provisions relating to the elimination of duties and quantitative restrictions on imports, rules of origin, trade facilitation and transit, trade remedies, protections for infant industries and general exceptions among others,3 the Protocol on Trade in Services provides for transparency in service regulations, progressive liberalisation of service sectors and mutual recognition of standards, licensing and certification of service suppliers among African states.4 The formal commitments enshrined in the AfCFTA will build on the modest gains recorded in the context of formal and informal intra-African trade.5 To the extent that an integrated African economy would strengthen the competitiveness of the local industries, enhance the realisation of economies of scale for domestic producers, boost industrialisation, enhance better allocation of resources and attract foreign direct investments, the AfCFTA has the potential to restructure both international and intra-African economic relations.6 However, viewed against the background of struggles by African states to maximise the economic integration aspirations of the existing regional economic communities, the AfCFTA is an ambitious agreement.

An important feature of the AfCFTA is the Protocol on Dispute Settlement which provides the rules and procedures for the settlement of disputes within the AfCFTA. Unlike the majority of the African regional economic community courts that are modelled after the Court of Justice of the European Union, the AfCFTA Dispute Settlement Mechanism (AfCFTA-DSM) is modelled after the World Trade Organisation Dispute Settlement Understanding.7 This is not the first time that an African trade dispute mechanism has borrowed its architecture from the WTO model.8 The Tripartite Free Trade Area Agreement between three regional economic communities in Africa – the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community – preceded the AfCFTA. The DSM of the Tripartite Free Trade Area Agreement is also based on the WTO model. While there is nothing inherently wrong in the transplantation of dispute systems such as the WTO model, the challenge is that previous similar transplants have failed in practice. The success of these transplants depends on the extent of their adaptation to the socio-political contexts of the destination. In Africa, whether the dispute settlement mechanism was designed to mimic the European Union or the WTO, in practice African states have approached the functionality of the highly legalised and formal trade dispute system with strong discontent and apathy. In relation to the Economic Community of West African States (ECOWAS), the Southern African Development Community (SADC) and the East African Community (EAC), the discontent has manifested in one form of backlash or another with varying success.9 While the conundrum – of the value of the formal dispute settlement mechanism in economic integration in Africa – that has arisen from the discontent remains, the shift towards a more rules-based dispute mechanism under the AfCFTA exacerbates this regime complex.

In the ensuing sections of this article, I examine the challenges of operationalising the AfCFTA's DSM. I situate the AfCFTA-DSM in the context of discontent with similar WTO-styled DSM in African regional economic communities and international arbitration at the national level. I argue that, on the one hand, while there is every reason to be sceptical about the effectiveness of the AfCFTA-DSM for the settlement of trade and investment disputes, on the other hand there are reasons to be cautiously optimistic about the potential of the AfCFTA-DSM to influence the substantive aspiration of a single African market in ways that the existing African international courts and trade dispute settlement regimes have not. To do this, I suggest that African leaders and the negotiators should draw on lessons from the experiences of existing regional economic courts to inform an AfCFTA-DSM that is autochthonous in its norms. Finally, I draw attention to the critical role of the private sector and business for the success of the DSM, as well as geopolitical challenges and power dynamics in the African continent as a relevant factor that must be borne in mind in operationalising the AfCFTA and its DSM.

In section II, I provide a brief overview of the substantive provisions of the AfCFTA. In section III, I analyse the steps in an AfCFTA dispute as enshrined in the Protocol on Rules and Procedures on the Settlement of Dispute. The AfCFTA-DSM is a transplantation of the WTO dispute settlement system. Despite the poor record of formal trade disputes by African states, I argue that consultation – the informal process for settling disputes amicably – offers the AfCFTA member states the most realistic chance of engaging with the AfCFTA-DSM. In section IV, I deepen the analysis of the AfCFTA-DSM by situating it in the broader context of discontent with a similar WTO-styled dispute settlement system at the regional level in Africa and the broader growing apathy with international arbitration by African states at the national level. To contextualise the analysis, I draw on the Southern African Development Community (SADC) and the Tripartite Free Trade Area Agreement (TFTA). In the concluding section, I briefly examine four factors that are critical to the success of the AfCFTA-DSM, particularly in the implementation phase.

 THE AFRICAN CONTINENTAL FREE TRADE AREA – AN OVERVIEW

Visions of solidarity and brotherhood have historically underpinned African international economic law since the late 1950s when independence began. In the 1980s, this solidarity of African states was centred and coalesced around a vision of collective self-reliance as enshrined in the Lagos Plan of Action. In the face of scepticism and failure narratives of the multiple and overlapping regional economic communities in Africa, Afro-optimism has remained at the core of the creation and revision of regional trade agreements. Despite a momentary lapse in optimist accounts, there is a renaissance of Pan-Africanist discourse in the African international trade and investment law landscape.

Embedded in Pan-Africanist and economic development centred aspirations, the AfCFTA is the latest vehicle through which African States aim to galvanise and deepen economic integration, industrialisation, food security, African-oriented international investment law and intellectual property regimes. A fully operational AfCFTA will pitch Africa's new economic order as a competitor, supposedly on equal footing, against other established multilateral trading regimes controlled by a few dominant economic powers. The question is whether there are measures in the AfCFTA to preserve its objectives vis-à-vis the interests of the dominant economic powers?

On 9 March 2018, the African Union (AU) Ministers of Trade approved the Declaration launching the Agreement establishing the AfCFTA, the AfCFTA Agreement, the Protocol on Trade in Goods and associated annexes, the Protocol on Trade in Services and its annexes as well as the Protocol on Rules and Procedures on the Settlement of Disputes.10 The AfCFTA has a general and a specific set of objectives that are mutually reinforcing. The general objectives of the AfCFTA, inter alia, are the creation of a single market for goods, services and movement of persons and investments among African countries; the creation of a liberalised market for goods and services based on successive rounds of negotiations; the laying of the foundations for the establishment of a Continental Customs Union and enhancement of the competitiveness of the economies of African states with both the continent and the global market.11 The agreement aspires towards a better coordination of African trade regimes and the elimination of challenges associated with multiple and overlapping trade agreements across the continent.12 Although the AfCFTA is progressive in enshrining provisions that aim to address the perennial problem of multiple and overlapping trade agreements, the practicality or modus operandi for achieving the objective remains obscured in light of the historical trajectories and heterogeneity of the different regions in Africa. The objectives of the agreement also include socio-economic development, gender equality, structural transformation of the state parties13 as well as healthcare.14

To realise the general objectives, the AfCFTA provides for the following specific measures: the state parties are to progressively ‘eliminate tariffs and non-tariff barriers to trade in goods’ and ‘liberalise trade in services’; to cooperate ‘on investment, intellectual property rights and competition policy in all trade-related areas’ and ‘on customs matters and the implementation of trade facilitation measures’; to establish ‘a mechanism for the settlement of disputes concerning their rights and obligations; and to ‘maintain an institutional framework for the implementation and administration of the AfCFTA’.15 Article 5 provides that the AfCFTA shall be governed by principles such as variable geometry;16 consensus in decision-making; flexibility, special and differential treatment; the adoption of regional economic community free trade areas as building blocs; the preservation of the acquis; as well as best practices in the RECs;and state parties and international conventions binding the...

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