The Africa continental Free Trade Area (AcFTA) was launched on 1 January 2021. Here is a brief background to the AcFTA.
AcFTA within General Agreement on Trade and Tariffs
The formation of Free Trade Areas (FTAs) falls within the wide framework of the General Agreement on Tariffs and Trade (GATT)[1]. In particular, Article 24 of the GATT provides for the formation of FTAs and Customs Unions. Article 24(4) of the GATT provides that the purpose of a Customs Union or a FTA is to increase trade between the constituent territories and not to raise barriers to trade with other members of the World Trade Organisation (‘WTO’). This is important to note as regards the purpose of a FTA as was decided in the case of Turkey Textiles[2].
Additionally, Article 24 (8)(b) of the GATT defines a FTA to mean ‘a group of two or more customs territories in which the duties and other restrictive regulations of commerce (with some exemptions[3]) are eliminated on substantially all the trade between the constituent territories in products originating in such territories’.
Essentially, the AcFTA should meet this criteria set under Article 24(8)(b) to constitute a proper FTA under the GATT. Meeting the criteria is necessary so as not to fall foul of the WTO principles of Most Favoured Nation (‘MFN’) and National Treatment Principle (‘NTP’).
Africa Continent Free Trade Area Agreement (AcFTA) framework
The AcFTA Agreement seeks to inter alia eliminate tariff and non-tariff barriers to trade in goods and to liberalise trade in services within Africa[4]. Both of these are set as specific objectives of the AcFTA to be achieved progressively[5].
If successfully implemented, it will mean that there will be a substantial increase in trade in both goods and services within Africa. That said, it is important to mention that multiple challenges attend to the implementation of the AcFTA including, cultural and political constraints like Xenophobia tendencies, as low or lack of production of finished goods among African countries to beneficially trade, poor infrastructure like roads and technology among others. The already existing RECs which would be seeking to meet the same objective as the AcFTA present an interesting topic on their own.
Of note, the AcFTA Agreement caters to some potential issues in achieving successful implementation of the FTA through the principles set out under Article 5 and mentions RECs.
Regional Economic communities (RECs) as building blocks
Article 5(b) of the AcFTA Agreement states that Regional Economic communities (‘RECs’) within Africa are building blocks for the AcFTA. This is very important for a number of reasons. First, there already exists eight (8) ReCs within Africa[6] with multiple overlapping memberships of African countries in the different Africa Recs.
The levels of integration within the 8 RECs differ. Some RECs are at the stage of Customs Union while others have progressed to the Common Market. Thus, the issue of commitment to the AcFTA vis-à-vis the RECs will be key to the success of the AcFTA.
Similar to the WTO case there is a question as to whether the RECs in Africa would be rivals or friends to the AcFTA. Within the WTO has been debate on whether RECs are rivals to the WTO[7]. Some view RECs as rivals to the WTO system while others think that the two can be complementary. The jury is out on the issue. Nonetheless, the WTO notes that as at 30 June 2016 all its contracting members were members of a REC[8]. Additionally, the WTO notes that there is an increase in the plurilateral agreements under negotiation[9]. Overall, it would seem that WTO contracting states are looking to their regions to have some form of trading arrangement.
The plulilateral agreements also open up a debate of their own. This is due to the wide reaching impact that they would have on trade. One could thus see why some think that these factors may pose a risk to the WTO system. Of note, the core principle of WTO is non-discrimination among its contracting parties.
Conclusion
This article gave a brief background to the Africa Continental Free Trade Area. Look out for the next articles that will explore Africa Continental Free Trade Area at some length.
Please also look through our training course on AcFTA. The course speaks on all you need to know about the AcFTA.
[1] Article 24 of the GATT, 1947.
[2] Organisation WT, DS34: Turkey — Restrictions on Imports of Textile and Clothing Products (2010) https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds34_e.htm, World Trade Organisation
[3] Where necessary, the restrictions permitted under Articles XI, XII, XIII, XIV, XV and XX may apply to a FTA or a Customs Union.
[4] Article 4 of the Africa Continental Free Trade Area Agreement (AcFTA).
[5] Ibid.
[6] the Arab Maghreb Union (UMA); the Common Market for Eastern and Southern Africa (COMESA); the Community of Sahel-Saharan States (CEN-SAD); the East African Community (EAC); the Economic Community of Central African States (ECCAS); the Economic Community of West African States (ECOWAS); the Intergovernmental Authority on Development (IGAD) and the Southern African Development Community (SADC);
[7] Organisation WT, Regional trade agreements (2020) https://www.wto.org/english/tratop_e/region_e/region_e.htm, World Trade Organisation,
[8] Organisation WT, Regionalism: friends or rivals? https://www.wto.org/english/thewto_e/whatis_e/tif_e/bey1_e.htm, World Trade Organisation
[9] Ibid
