It has been a
long-term ambition of African countries to create a single market and foster
economic integration among African States as it is believed that this
liberalization of trade will improve the poor intra–African trade with
bountiful implications for all. The African Export – Import Bank[1] reported in 2019,
that intra-African trade stood at just 16% of Africa’s total trade, thereby
making it lowest intra – regional trade in the world. The Report further states
that there are cases where products could have been sourced completely from
other African countries but were procured from outside the continent, thereby
increasing cost and contributing to the unfavourable trade balance between
Africa and the world.
Hence, when on 1st of January 2021 Nigeria
and 53 other African States officially flagged the commencement of AfCFTA and
set it in motion as the world’s biggest trade bloc, in terms of participating
nations, that will speed up easy and efficient intra-continental trade, marked
by few restrictions and less complex checks of goods across national borders
and ports of entry, AfCFTA became the global game changer!
Under the
administration of the Agreement, the framework for its implementation is
provided for in Part III of the Agreement and it consists of the following: (a) the Assembly; (b)
the Council of Ministers; (c) the Committee of Senior Trade Officials; and (d)
the Secretariat. The Assembly,[2] as the highest decision-making organ of
the African Union, shall have the exclusive authority to adopt interpretations
of this Agreement on the recommendation of the Council of Ministers. The
decision to adopt an interpretation shall be taken by a consensus.
The decisions taken by the Council of
Ministers, while acting within its mandate, is provided to be binding on State
Parties, while decisions that have legal, structural or financial implications
will be binding on State Parties upon their adoption by the Assembly.[3] In our view, it is left to be seen how
this provision will be applied, as in effect, all decisions may be fraught with
legal implications, which, in that sense, may eventually require an adoption by
the Assembly.
Decisions of the AfCFTA institutions[4] on substantive issues are to be by a consensus,
while decisions on questions of procedure are to be taken by a simple majority
of State Parties eligible to vote.[5]
Waiver of
Obligations under the Agreement
In exceptional
circumstances, the Council of Ministers may waive an obligation imposed on a
State Party, upon such State Party’s request. Such decision to waive is
required to be by a consensus, and in the absence of same, by three-fourths of
the State Parties.[6]
We
are hopeful that the foregoing provision on waiver will not be misapplied or
abused, and that the considerations and procedural requirements for the grant
of a waiver, as provided by the Agreement will be adhered to.
Conflict and
Inconsistency with Regional Agreements
It is worthy of
note that this Agreement provides that in the event of any conflict or
inconsistency between it and any other regional agreement, the AfCFTA Agreement
will prevail over the other(s) to the extent of such specific inconsistency,
unless otherwise expressly provided by this Agreement.
Adoption/
Withdrawal/ Review/ Amendment
This Agreement is
to be adopted by the Assembly and will be open for signatures and ratification
by the member states, in accordance with their respective constitutional
procedures.[7]
The Agreement,
with its annexed protocols, have been provided to enter into force thirty (30)
days after the deposit of the twenty-second (22nd) instrument of
ratification with the Depositary (the Chairperson of the Commission).[8]
A State Party may
withdraw after
five (5) years from the date of entry into force. Any State Party seeking to withdraw from this Agreement may do so by giving written notification to other State Parties through the Depositary and such Withdrawal shall be effective two (2)
years after receipt of notification by the Depositary, or on such later date as
may be specified in the notification.
Also, the Agreement shall be subject to review
every five (5) years after its entry into force, by State Parties, to ensure
effectiveness, achieve deeper integration, and adapt to evolving regional and
international developments. Following this process of review, State Parties may make
recommendations for amendments.
The Agreement
provides for the submission of proposals for amendment of the Agreement by
State Parties, to be commenced by the submission of such proposal to the
Depositary, and the Depository’s circulation of same to State Parties; a
receipt of comments; consideration by committees; and an adoption by the
Assembly in respect of any recommended amendment to the Agreement.[9]
Protocols under
the Agreement (Phase 1)
To give effect to
the Agreement and set the objectives on a part to implementation, Protocols to
the Agreement have been enacted. The first phase of these Protocols include:
A. Protocol on Trade
in Goods
This Protocol is
aimed at creating a liberalised market for trade in goods within the trade area
through progressive elimination of tariffs and non–tariff barriers. It seeks to
enhance efficiency of Customs procedures and efficiency of trade facilitation and
transit.
One of the main
causes of the low volume of trade between African Countries is the high
tariffs. It is more expensive to trade between African Countries than to buy or
import from Europe. Thus, the Protocol seeks to ease the tariffs applicable to
trade in goods between State Parties. Overall, the Agreement seeks to remove
import duties on about 90% tariff lines.
Also, the Protocol
requires State Parties to accord Most – Favoured – Nation Treatment to one
another. State Parties are enjoined to accord to products imported from other
State Parties with treatment no less favourable than that accorded to like
domestic products of national origin. It also provides for a non-imposition of
quantitative restrictions on imports and exports from/to other State Parties,
unless as otherwise provided under it or relevant WTO agreements.[10]
Attendant to this
liberalization of traffic in goods may come the danger of an unhealthy surge of
import of products into a particular country. To curb this, the Protocol has
created a safety valve in the form of anti – dumping and countervailing
measures.
It is note-worthy
that despite the promotion of trade liberation, the Protocol provides that
State Parties may apply safeguard measures where there is a sudden surge of a
product imported into a State Party, under conditions which cause or threaten
to cause serious injury to domestic producers of similar or competing products
within its territory.[11]
While the
implementation of the foregoing provision is laced with conditions and
procedures and is aimed at preserving the growth and survival of domestic
producers and local content, this provision (along with the general exceptions
and rights of a State Party over trade within its territory, under Article 26
of this Protocol) stands the risk, of being exploited with negative
consequences, which may defeat the objectives of this Agreement.
B. Protocol on Trade
in Services
This Protocol
functions to support the objectives of the AfCFTA to create a single
liberalized market for trade in services. Using the World Trade Organization
services sectoral classification, there are twelve (12) types of services.[12] They include;
Business Services; Communication Services; Construction and Related Engineering
Services; Distribution Services; Education Services; Environmental Services;
Financial Services; Health Related and Social Services; Tourism and Travel
Related Services; Recreational, Cultural and Sporting Services; Transport
Services; as well as a miscellaneous classification for other services not
included elsewhere.
Also, these
Services could be further classified based on their mode of delivery. To this
end, there will be four (4) categories of services, namely, (a) the supply of
service from
the territory of one State Party into the territory of any other State Party (Cross Border
Trade) example consulting services, media etc. (b) the supply of service in the territory of one State Party to the
service consumer of any other State Party. This one
involves the movement of the consumer into the foreign territory. Examples are
tourists (both for pleasure and medical reasons), students etc. (c) the supply
of service by a supplier from one State Party, through commercial presence in the
territory of any other State Party. Examples here include Banks, Hotel
Chains, Supermarket chains etc. (d) the supply of service by a service supplier of one State Party,
through the presence of natural persons of a State Party in the territory of
any other State Party. This classification mostly covers
workers or natural persons who will perform the services in the earlier
classification.
Despite
the examples highlighted above, it is instructive that the applicable services
envisaged under the Protocol are so wide that the only restriction is on service
provided under the authority of government and for obvious reasons like air
traffic rights. However, the Protocol still allows individual State Parties to
regulate and introduce new regulations on services and service suppliers within
its territory.
This
protocol also provides for the mutual recognition of education, experience
obtained, licensing or certifications of services granted in another State
Party, for licensing, certification or authorisation of Service Suppliers. It
further requires a State to ensure that all measures of a general application,
affecting trade in services, are applied in a reasonable, transparent and fair
manner, in sectors where specific commitments are undertaken.
The
foregoing clearly suggests that the liberalisation of trade in services is not
whole, but is subject to a State Party’s consent, authorisation, certification,
rules and regulations and the likes, as may be applicable in respect of such
service or service provider. Thus, it will be interesting to see how this plays
out, particularly with respect to services of a professional nature, such as
medical services and legal services, which are generally regulated
domestically, and which ordinarily provide for restrictions on admission for
practice within the territory of such State Party.
C. Protocol on Rules
and Procedures on the Settlement of Disputes
This
Protocol provides a system for the administration of a Dispute Settlement Mechanism
and applies to disputes arising between State Parties concerning their rights
and obligations under the provisions of the Agreement.[13].
Through Article 5 of the Protocol, the Dispute Settlement Body (DSB) is created
with the mandate to administer the provisions of the Protocol and settle
whatever disputes may arise.
The DSB
is to be composed of representatives of the State Parties. However, the number
of such representatives per State Party seems unclear. The decision(s) of a
Panel in respect of a dispute are appealable to a body called the ‘Appellate Body’
(AB), both established by the DSB. [14]
Further, the Protocol provides a mitigator in self – help where aggrieved
parties are allowed to temporarily suspend concessions granted to defaulting
State Parties in the event where decisions of the DSB or AB are not followed.
The
Parties to a dispute may agree to submit same to arbitration, and the Parties
are also permitted to voluntarily undertake good offices, conciliation or
mediation as alternative dispute resolution methods for the settlement of their
disputes.
Where
the Parties are unable to reach an amicable settlement, the DSB will establish
a panel to adjudicate on the dispute, upon written request by the Complaining
Party, and any such appeal to the Appellate Body is required to be on issues of
law covered in the Panel’s report and legal interpretations developed by the
Panel.[15]
The threshold for
Nigerian Businesses exporting to other African Party States
Nigerian exporters or agents aspiring to move products to
countries under the Agreement must obtain permits, licenses, certificates and
other relevant documentation from appropriate government agencies. Beside
regulatory approvals from regulators like NAFDAC, SON, NEPC, etc., exporters
and agents must confirm that their exports fall within the permitted range of
goods permitted by the Agreement. Nigeria has the largest economy and population in
Africa. Its sheer market size allows Nigerians businesses especially in the
manufacturing sector to leverage and increase capacity. However, to achieve
this, the government needs to increase
its efforts at strengthening domestic value chains and developing an efficient
land border system for exports.
[1] https://www.afreximbank.com/research-and-knowledge/publications/African
Accessed on 20/1/2021
[2] The Assembly of Heads of State and Government of the African Union
[3] Article 11 (5)
[4] The Assembly, Council of Ministers or Committee of Senior Trade
Officials
[5] Article 14
[6] Article 15
[7] Article 22
[8] Article 23
[9] Article 29
[10] Article 9 of the Protocol on Trade in Goods (“PTIG”),
[11] Article 19 PTIG
[12] World Trade
Organization Agreement on Trade in Services of 1994
[13] Article 5 (supra)
[14] Article 5 and Article 20 Protocol on Rules and Procedures for the
Settlement of Disputes
[15] Article 21 (5)
Share on twitter
Share
Share on linkedin
Share
For further information on the foregoing (none of which should be construed to be an actual
legal advice), please contact:
afcftadesk@ao2law.com
![\"\"](\"https://ao2law.com/wp-content/uploads/2019/09/AXR_9935-copy-150x150.jpg\")
Amaka Ukuta
Associate
