Business

What makes the AfCFTA unique trade agreements

Sitshengisiwe Ndlovu

Trade

“Wow, beautiful and thank you. Kindly share  our national  strategy, and contact people if available  so that we see how the locals and the Diaspora can play part in this  to build  a trade intelligence network.” This is a response on social media to last week’s article published in The Herald  “Key Sectors in the Success of the AfCFTA”.

The comments reflect  levels of enthusiasm around  the AfCFTA. This  cheerful anticipation is legitimate as the agreement is set to unlock a  US$3 trillion market through accelerated industrialisation.

In  addition, a recent  study found in the  Forthcoming  51 Geo. J. Int’l L. 4 (2020)   indicate that  AfCFTA is set to impact  trade  and development  law  profoundly, nevertheless,  overhauling  the rules of Africa  and the rest of the world.

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It is worthwhile to explore  the  unique  features of the AfCFTA, and examine  why it has been classified as not only a  deep but also a progressive agreement.

The   AfCFTA has relatively taken a record time to conclude in comparison with other agreements negotiation of  trade agreements is an arduous task that demands a lot of time and specialised skills.

In another study found  in  the “Journal  Economic  Perceptive” economists agree that   trade agreements  synonymous with  any free trade  arrangement have  winners and losers. The inherent risk of ending up as losers should be balanced with the temptation or easy protectionist route.

It is this hindsight that demands astute negotiators who will be careful not to steep their countries into problems.

The AfCFTA  has been negotiated during a time when the  world is increasingly becoming protectionist as evidenced by Brexit, the  problems within the WTO and US-China  trade wars.

The AfCFTA unique  design  allows  flexibility and acknowledges variable geometry  in  the sense  that state parties  have  the freedom to  adapt to the AfCFTA  as guided by the domestic regulations prevailing in each country .

Furthermore,  the acquis principle  adopted by  the AfCFTA recognises  and acknowledges  the different levels of the RECs while at the same time managing the spaghetti bowl effect.

The five-year-periodic review of the AfCFTA allows the state parties to contribute to the monitoring and evaluation of   the  gains  or  losses that  are inherent with any trade  agreement.

It  does not  mean though, that state parties have to wait for  five years to bring their concerns to the  Secretariat — Annexe  9 on Trade Remedies  provides for the intervention. The efficacy  of the institutes  to uphold  these provisions remain to be tested.

The design of the AFCFTA allows for the opportunity to add more instruments to the agreement.

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This has already taken place as seen by  the addition of the Protocol on Women and Youth  announced last December at the AU 13th Extraordinary Session on the AfCFTA. Initially gender inclusivity was covered in the preamble and implicitly covered in Article 3(e).

However, preambles are not binding hence the development of the Protocol of Women and Youth. This reflects the AfCFTA as a developmental agreement that seeks to propel  inclusive socioeconomic growth, gender equality, food security, in line with SDGs and  Agenda 2063.

Objective criticism of the AfCFTA  borders  on trade governess  issues  within the AfCFTA. Trade Law Centre  has observed that  it may be difficult  to  unanimously concede to governess issues  as a trading bloc because of the diverse   complex challenges  that   state parties  are experiencing.

State parties have been slow in validating the AfCFTA National Strategies. As  of August 2020 only eight countries had validated their AfCFTA National Strategies and Zimbabwe is part of the 8 countries.

On the other hand  41 countries  have offered  to submit their tariff offers, which is a positive development by any standards. However, this mixed picture may denote that some state parties are still dealing with housekeeping issues to enable  mitigation  against the onset of competition in the AfCFTA.

The overlapping element of  the  FTA has  also been a bone of contention.

Critiques have alleged that the AfCFTA may easily become yet another FTA, however, this has been rebuffed  as state parties have agreed that the provisions of the AfCFTA  will prevail in a situation where there is conflict with the provisions  within   any REC .

Notwithstanding the challenges the AfCFTA may face, it remains a  deep  progressive agreement which is set to augment   Africa’s overlooked  business revolution — a term coined in the “McKinsey Africa Report”.

The “McKinsey  Report”  cites  five core competencies  to be developed by African enterprises; identifying the right portfolio of countries and cities, innovation of business models,  resilience, unleashing local talent, and doing well by doing good.

The enthusiasm around the AfCFTA is high and it is this tide that state parties must harness as support of the AfCFTA and in turn deliver on the promised mandate.

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Sitshengisiwe Ndlovu president of OWITZIMBABWE: MBA/UNCTAD: Trade and Gender Linkages/ IAC Dip/Cert: Trade in Services and SDGs: Robert Schuman Center of Advanced Studies/IDEPCert: Making the African Continental Free Trade Agreement Work. She writes in her personal capacity. For more on trade matters visit her Blog on website: owitzimbabwe.org

HERALD