Trade Defence Instruments in Africa: Possible Scenarios for Implementation under the TFTA
| Published date | 01 May 2018 |
| DOI | 10.3366/ajicl.2018.0226 |
| Pages | 157-180 |
| Date | 01 May 2018 |
| Author |
The signing of the Tripartite Free Trade Area (TFTA) Agreement in Sharm El Sheikh, Egypt, in 2015 represented a milestone towards achieving the African Economic Community (AEC). When fully implemented, the TFTA will create a market of 626 million customers and an aggregate GDP of USD 1.2 trillion. In 2014, the total merchandise exports by TFTA members reached USD 145 billion (1 per cent of global exports) and merchandise imports of USD 211 billion (1.5 per cent of global imports).
The TFTA adopted an innovative and improved approach to African integration that sought to learn from previous African experiences. The Preamble of the Agreement indicates that it was built on three pillars: market access, industrial development and trade facilitation. The strong focus on non-market access issues can potentially expedite the implementation of African integration. Nevertheless, the outcome of phase I of the negotiations was less than the planned objectives. The negotiations started with a very ambitious text that included progressive provisions but ended up with a consensus-based text. These negotiations could have brought many important added values to African trade defence instruments (TDIs) systems, one of which is the harmonisation of the different rules on TDIs, including anti-dumping, countervailing and safeguard action, in the three blocs that constitute the TFTA – the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC). Of the 26 potential TFTA Members,
At present only three Tripartite Members have national legislations in the three TDIs: Egypt, South Africa and Zambia, while some other countries, including Kenya, Mauritius and Namibia, have some TDI legislation. Only Egypt and South Africa – on behalf of the Southern African Customs Union (SACU) – have fully fledged investigating institutions,
The initial TDI proposal presented in December 2010 included a number of very ambitious objectives, which faced strong challenges, practical realities and diverse points of views from Members, eventually leading to a deadlock on the issue. This article focuses on the unresolved issue of the TFTA TDI legal framework, with the objective of identifying possible scenarios for African policy-makers in phase II of the negotiations.
The short-term objective of the tripartite area is to reach the FTA level which implies a high level of trade liberalisation. Article XXIV of GATT requires that Members of an FTA remove the duties and other restrictive measures on substantially all intra-trade. The determination of what constitute ‘substantially all trade’ is challenging and the WTO Dispute Settlement Understanding (DSU) has addressed this vagueness several times; however, this issue is usually subject to debate in the WTO committee on Regional Trade Agreements (CRTA). Nevertheless, it could be assumed that the WTO law is in favour of a high degree of sector coverage as implied in paragraph (8)(a)(i) of GATT which was further confirmed in the
Following this introduction, this article is divided into three main sections. Section II compares the initial draft of the TFTA with the agreed outcome in June 2015, with the objective of contrasting the initial ambitious objective with the realistic consensus among Member States. Section III discusses the application of TDIs in other regional groups while Section IV proposes possible solutions for the TFTA.
The TFTA proposes to establish a free trade area (FTA) between the 26 countries that form part of the three regional economic communities (RECs). This would include removing customs duties between member states.
One of the major questions is whether TFTA members should have the right to use TDIs against other Member States or whether TDIs should only be applied to non-Members, especially as the TFTA progresses over time to become a customs union. Another important question, regardless of the answer to the first question, is how to achieve this.
TDIs could be maintained in the TFTA. TDIs do not fall under ‘other restrictive measures’ in Article XXIV of the GATT. The current practice of major FTAs confirms that Members could maintain the application of TDIs as they are not categorised as prohibited measures by Article XXIV. If TDIs are to be removed, this could put a limitation on FTA Members in applying legitimate trade tools that may be required in the early stages of trade liberalisation. Up to now, there was no decision from the WTO DSU that rendered the application of TDIs on intra-FTA trade as non-legitimate.
TDI negotiations were one of the contentious issues in the negotiations process. It proved that there were many different approaches and conceptions toward TDIs, often related to differences in the level of development, the application of TDIs at the national level and the understanding of the importance of TDIs to regional integration.
Several of the smaller Members were in favour of simple and favourable TDI rules since they have neither national laws on TDIs nor technical capacities or investigating authorities. On the other hand, the more advanced economies such as Egypt and South Africa were supportive of an advanced TDI system.
As a compromise, at the end of stage I Members adopted a simplified set of TDI rules on a transitional basis and decided to postpone negotiations on whether to develop detailed rules to the second stage of negotiations.
Comparing the original proposal against the final outcome provides the a number of stark contrasts, ranging from the establishment of a regional authority versus maintaining national authorities; detailing investigation procedures versus only including generalities; removing or maintaining the use of TDIs between TFTA members; the use of trade restrictive practices other than TDIs, especially to protect infant industries; and what role public interest should play in investigations. We now consider each of these issues.
The initial proposal was very progressive in the sense that it sought to overcome the national limitations of Members. One of its most important features was that it provided for the establishment of a Sub-Committee on Trade Remedies (CTR) that was supposed to act as a quasi-regional investigating authority.
The establishment of this authority would have been an unusual positive step in the context of regional integration. It could have been more conducive to African integration objectives in the long run, as it could have provided an effective framework for the protection of the largely infant African industries and consequently support intra-African trade. It is understood that this ambitious objective requires a deep level of integration that does not exist at this stage and may have faced challenges regarding the national sovereignty of Members. It is submitted that this goal had to do with the long-term objective of the tripartite area which is to establish a customs union. In the short run this would have raised some confusion regarding the level of integration and the applicability of TDIs to Members and non-Members.
This step did not materialise and the final text leaves the investigation powers in the hands of national authorities where they exist, thus failing to remedy the present situation where most African countries do not have effective national bodies. The TFTA, however, acknowledges the importance of dealing with TDIs from a regional perspective as it requires Members to cooperate in TDI investigations in connection with imports from other Members or from a third country.
Where Members do not have national authorities, the Sub-Committee could undertake the investigation on the Member's behalf. At the signing of the TFTA, no Sub-Committee was established. The creation of a TDI...
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