Critically examine the Legal and Institutional Framework of the newly

established African Continental Free trade Areas. Identify the constraints by

way of accomplishment of the purpose of the organization and chart the way
forward.

Answer

ABSTRACT

At the African Union’s (AU) 18th Ordinary Session in January 2012, the Head of State
and Head of Government of African Countries agreed to establish the African
Continental Free Trade Area (AfCTA). This free trade area is outlined in the African
Continental Free Trade Agreement among 54 of the 55 AU members currently.
The AfCFTA is the largest in the world in terms of participating countries since the
formation of World Trade Organistion, as it translates to a market potential for goods
and services for 1.3 billion people across 55 countries with a combined gross
domestic product (GDP) valued at US$3.4 trillion. It has the potential to lift 30
million people out of extreme poverty, but achieving its full potential will depend on
putting in place significant policy reforms and trade facilitation measures.
The United Nations Economic Commission for Africa (UNECA) estimates that by
2040 implementation of the AfCFTA will raise intra-African trade by 15 to 25
percent, or $50 billion to $70 billion. The International Monetary Fund (IMF)
similarly projects that, under the AfCFTA, Africa’s expanded and more efficient
goods and labor markets will significantly increase the continent’s overall ranking on
the Global Competitiveness Index. The AfCTA is aimed at creating a single
continental market for goods and services, with free movement of commerce and
investment. Although there is a great momentum behind the agreement, its successful
implementation is dependent on smart choices and thoughtful policy options, which
shall be addressed hereinforth.
The AfCFTA is the world’s largest free trade area bringing together the 55 countries
of the African Union (AU) and eight (8) Regional Economic Communities (RECs) to
create a single market for the continent. According to Agenda 2063, the African
Union's (AU) flagship project is the African Continental Free Trade Area (AfCFTA).
It provides a member-driven road map for achieving sustainable and inclusive
development on the continent. Its objective is to create an integrated market for the
trade in goods and services, as well as the free movement of people and capital.
It was established in 2018 by the African Continental Free Trade Agreement, which
has 43 parties and another 11 signatories, making it the largest free-trade area by
number of member states, after the World Trade Organization. The agreement aims to
create a single market for goods and services across the continent, facilitating the free
movement of people and investments.
The scope of AfCFTA is large. The agreement will reduce tariffs among member
countries and cover policy areas such as trade facilitation and services, as well as
regulatory measures such as sanitary standards and technical barriers to trade. Full
implementation of AfCFTA would reshape markets and economies across the region
and boost output in the services, manufacturing and natural resources sectors. The
main objective of the AfCFTA is to create a single market for goods and services,
facilitated by movement of persons, in order to deepen the economic integration of the
African continent. More specifically, the State Parties shall progressively eliminate
tariffs and non-tariff barriers, progressively liberalise trade in services, cooperate on
investment, intellectual property rights and competition policy, cooperate on all trade-
related areas, cooperate on customs matters and the implementation of trade
facilitation measures, establish a mechanism for the settlement of disputes concerning
their rights and obligations, and establish and maintain an institutional framework for
the implementation and administration of the AfCFTA.

Background of AfCFTA
In 1963, Organization of African Unity was founded by the independent states of
Africa. The OAU aimed to promote cooperation between African [Link] the
realisation of which, the organisation went through several changes, and also served
as an avenue for the creation of numerous regional cooperation organizations in the
different regions of Africa, such as the East African Community, or the Southern
African Development Coordination Conference, Economic Community of West
African States. Eventually the Organization of African Unity was succeeded by
the African Union (AU), and it had as one of its goals to accelerate the "economic
integration of the continent" and also to "coordinate and harmonize the policies
between the existing and future Regional Economic Communities for the gradual
attainment of the objectives of the Union.
In 2012, at the African Union (AU) 181 Session from 29-30 January in Addis Ababa,
Ethiopia, African Heads of State and Government recognized that 'the promotion of
intra-African trade is a fundamental factor for sustainable economic development,
employment generation and effective integration of Africa into the global economy'
and decided to establish the Continental Free Trade Area (CFTA) by 2017. This
deadline was, however, not met. The Summit also endorsed the Action Plan on
Boosting Intra-Africa Trade (BIAT) which identifies seven priority action clusters:
trade policy, trade facilitation, productive capacity, trade related infrastructure, trade
finance, trade information, and factor market integration.
African leaders held an Extraordinary Summit on the African Continental Free Trade
Area (AfCFTA) from 17-21 March 2018 in Kigali, Rwanda, during which the
Agreement establishing the AfCFTA was presented for signature. On that occasion,
44 out of the 55 AU member states signed the consolidated text of the AfCFTA
Agreement. To date, only Eritrea has yet to sign the consolidated text.
The Agreement entered into force on 30 May 2019 for the 24 countries that sought to
ratify the agreement. As at August 2023, 47 countries have both signed and deposited
their instruments of AfCFTA ratification with the African Union Commission (AUC).
The State Parties are the AU Member States that have ratified the AfCFTA
Agreement or have acceded to it, and for whom this Agreement is in force.
The operational phase of the AfCFTA was launched during the 12th Extraordinary
Session of the Assembly of the African Union in Niamey, Niger on 7 July 2019. The
AfCFTA will be governed by five operational instruments – the Rules of Origin, tariff
concessions, online mechanism for monitoring, reporting and elimination of non-tariff
barriers, the Pan-African Payments and Settlements System (PAPSS), and the African
Trade Observatory. The AfCFTA Secretariat will facilitate the efficient conduct of
business of the AfCFTA and is charged with various responsibility related to the
implementation of the AfCFTA, including the annual budget and work programme.
The AfCFTA Secretariat was officially handed over in Accra, Ghana on 17 August
2020. In addition to the AfCFTA Secretariat, the Agreement provides for an
institutional framework for the implementation, administration, facilitation,
monitoring and evaluation of the AfCFTA. It consists of the Assembly of Heads of
State and Government of the AU, Council of Ministers (CoM), Committee of Senior
Trade Officials, the AfCFTA Secretariat, and the Dispute Settlement Mechanism.
Various technical committees have also been established to assist with the
implementation of the Agreement and will comprise of designated representatives
from State Parties.
An Extraordinary Summit of the AU Assembly on the AfCFTA took place virtually
on 5 December 2020. The Assembly approved the start of trading under the AfCFTA
Agreement as 1 January 2021, although this did not materialise. On 7 October 2022,
the AfCFTA Secretariat launched the AfCFTA Guided Trade Initiative (GTI) in
Accra, marking the commencement of trade under the Agreement for eight (8)
participating countries: Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda,
Tanzania and Tunisia, representing the five regions of Africa. The GTI is a pilot
initiative to test the operational, institutional, legal and trade policy environment
under the AfCFTA.
The following milestones were set in the formulation of the framework, road map and
architecture for fast-tracking the establishment of the CFTA:
• Finalization of the East African Community (EAC), the Common Market for
Eastern and Southern Africa (COMESA) and the Southern African Development
Community (SADC) Tripartite FTA (TFTA) initiative by 2014;
• Completion of FTA(s) by Non-Tripartite Regional Economic Communities (RECs),
through parallel arrangement(s) similar to the EAC-COMESA-SADC Tripartite
Initiative or reflecting the preferences of their Member States, between 2012 and
2014;
• Consolidation of the Tripartite and other regional FTAs into a CFTA initiative
between 2015 and 2016; and
• With the option to review the target date according to progress made.

In practice, these deadlines have not been met. Progress towards the TFTA, seen as
one of the building blocks for the CFTA, has been slower than was expected. It was
launched at the Third Tripartite Summit on 10 June 2015 in Sharm El Sheikh, Egypt,
as a framework, with negotiations outstanding on rules of origin, trade remedies and
tariff offers. However, while Member States were given 12 months to conclude these
outstanding negotiations, the new deadline of June 2016 was not met. As a
consequence, the commencement of Phase lI negotiations covering trade ni services,
competition policy, intellectual property rights, and cross-border investment, was
delayed pending the conclusion of negotiations on Phase Iissues. At the seventh
Tripartite Sectoral Ministerial Committee (18 June 2018 in Cape Town) Ministers
took note of the progress on outstanding issues relating to tariff reduction negotiations
and rules of origin, agreed to proceed with Phase Il negotiations, and urged Member
States to ratify the TFTA by 2019.
This has implications for the AfCFTA negotiations as 26 of the 55 AU Member States
are Member/Partner States of the Tripartite. Given that the 26 Tripartite
Member/Partner States have had difficulty in reaching agreement on issues such as
tariff reduction and rules of origin, ti can be expected that those difficulties would be
magnified under the AfCFTA. However, the political impetus behind the AfCFTA
could help ot break logjams at the Tripartite level. nI practice, this is what has
influenced progress with the AfCFTA.

Ratification status
According to Article 23 of the AfCFTA Agreement, entry into force occurs 30 days
after the 22nd instrument of ratification is deposited with the Chairperson of the
African Union Commission (AUC) – the designated depositary for this purpose – an
essential step for the AfCFTA to enter into force. The Agreement entered into force
on 30 May 2019 for the 24 countries that had deposited their instruments of
ratification before this date. As at September 2023, 47 of the 54 signatories (85%)
have deposited their instruments of AfCFTA ratification with the AUC Chairperson.
The Agreement and its related Protocols (on Trade inGoods, Trade in Services, and
on Rules and Procedures on the Settlement of Disputes) will enter into force 30 days
after 2 Member States have ratified the Agreement. As at July 2018, six Member
States have ratified the AfCFTA, and as at January 2022, the African Continental Free
Trade Area (AfCFTA) had been ratified by 36 countries.

KEY FEATURES AND PURPOSE OF THE AGREEMENT

On 21 March 2018 the Establishment of the African Continental Free Trade Area
(AfCFTA) was signed in Kigali, Rwanda, by 44 Heads of State and Government of
the 55 AU Member States. The Agreement is a starting point for more detailed
negotiations on trade in goods and services and other trade-related issues such as
competition, investment and intellectual property rights. it comprises three
frameworks:
1. An overarching Establishment of the African Continental Free Trade Area;
2. A Protocol on Trade in Goods, comprising a framework of general obligations and
nine (incomplete) Annexes, as well as provision for national schedules of tariff
concessions yet to be negotiated; and
3. A protocol on Trade ni Services, also comprising a framework of general
obligations, with provision for Annexes (sectoral and cross-cutting) and national
schedules of specific commitments, also yet to be negotiated.

Article XXIV of the General Agreement on Tariffs and Trade (GATT) defines a
freetrade area as an agreement among a group of two or more customs territories in
which the duties and other restrictive regulations of commerce are eliminated on
substantially all the trade between the constituent territories in products originating in
such territories. Following the deposit of the instrument of ratification by Sierra
Leone and the Saharawi Republic on 29 April 2019, the Treaty came into effect on 30
May 2019. This is in line with Article 23 of the Agreement which stipulates that the
Agreement will enter into force 30 days after the deposit of the twenty second (22nd)
instrument of ratification. As at the commencement of the Treaty, 52 countries have
signed the agreement while 3 countries – Republic of Benin, Eritrea and Nigeria are
yet to sign.
Trade in goods - The Treaty provides that a State Party (a member state that has
ratified or acceded to the AfCFTA) shall accord to products imported from other State
Parties treatment no less favourable than that accorded to like domestic products of
national origin, after the imported products have been cleared by customs. State
Parties are to progressively eliminate import duties and charges. Special and
differential treatment is allowed for State Parties at different levels of economic
development. A State Party may however regulate export duties or charges having
equivalent effect on goods originating from its territory provided it is applicable to
goods exported to all destinations on a nondiscriminatory basis.
Trade in services - With respect to trade in services, Article 20 requires each State
Party to accord to services and service suppliers of any other State Party treatment no
less favourable than that accorded to its own like services and service suppliers. Also
a State Party shall not maintain or adopt limitations on the total value of service
transactions, or quotas on the total number of natural persons that may be employed
or measures which restrict or require specific types of legal entity. The Treaty
recognises the significant contribution of air transport services and, in particular, the
Single African Air Transport Market.
Review and withdrawal - A State Party may withdraw from the Agreement after 5
years from the date of entry into force and the withdrawal shall be effective 2 years
after receipt of notification or such later date as may be specified in the notification.
The Agreement is subject to review every 5 years. With respect to trade in services, a
State Party may modify or withdraw at any time after 3 years have elapsed from the
date on which that commitment entered into force.

The AfCFTA will contribute to establishing regional value chains in Africa, enabling
investment and job creation. The practical implementation of the AfCFTA has the
potential to foster industrialisation, job creation, and investment, thus enhancing the
competitiveness of Africa in the medium to long term. The free trade agreement is a
key step towards achieving the vision of an African Economic Community (AEC), set
out in the Abuja Treaty. The AEC was established by Article 3 of the Treaty with the
following objectives:
I) To promote economic, social and cultural development and the integration of
African economies in order to increase economic self-reliance and promote an
endogenous and self-sustained development;
II) To establish, on a continental scale, a framework for the development,
mobilization and utilization of the human and material resources of Africa in order to
achieve self-reliant development;
III) To promote cooperation in al fields of human endeavour in order to raise the
standard of living of African peoples, and maintain and enhance economic stability,
foster close and peaceful relations among Member States and contribute ot the
progress, development and the economic integration of the Continent; and
IV) To coordinate and harmonize policies among existing and future economic
communities in order to foster the gradual establishment of the Community.
Included in the ambitions was the objective of establishing, at the level of each
Regional Economic Community and within a period not exceeding 10 years, a FTA
by the gradual removal of tariff barriers and non-tariff barriers to intra-community
trade and the establishment of a Customs Union by means of adopting a common
external tariff.
More recently, in 2013 during the commemoration of the 50th anniversary of the
Organization of African Unity (OAU), African Heads of State and Government
launched Agenda 2063, which is described as a shared framework for inclusive
growth and sustainable development for Africa to be realized in the next fifty years. tI
is a continuation of the pan-African drive over centuries, for unity, self-determination,
freedom, progress and collective prosperity pursued under Pan-Africanism and
African Renaissance. It builds on and seeks to accelerate the implementation of past
and existing continental initiatives for growth and sustainable development.' Member
States emphasized a guiding vision 'to build an integrated, prosperous and peaceful
Africa, driven and managed by its own citizens and representing a dynamic force in
the international arena.

Scope and Objectives of The AfCTA

The AfCTA aims to maximize Intra-African Trade. One of the flagship projects
identified under Agenda 2063 is the creation of the CFTA, which 'aims at
significantly accelerating growth of intra-African trade and use trade more effectively
as an engine of growth and sustainable development. It includes doubling of intra-
African trade by 2022, strengthen Africa's common voice and policy space in global
trade negotiations and establish the financial institutions within agreed upon
timeframes. Another policy document adopted by the AU in 2012 was the Action Plan
on Boosting Intra-African Trade. The Plan identified seven action clusters, namely
trade policy, trade facilitation, improving productive capacity, trade-related
infrastructure, trade finance, trade information, and factor market integration. On the
trade policy issue, Africa has faced a number of challenges including the absence of a
continental framework for facilitating intra-regional trade, high tariffs between AU
Member States, overlapping membership in RECs, and lack of diversity in its exports
base (AU, 2012). Implementation of the AfCFTA wil help address some of these
challenges, but as has been pointed out in recent research (e.g. Aner et al., 2015;
Maas, 2015), procedural obstacles associated with obtaining visas and work permits
add substantial costs to trade between nations.
Once implemented, the Agreement is expected to cut tariffs on 90% of goods traded
within the continent. This is expected to increase intra-African trade, which is
disappointingly low when comparedot intra-regional trade within other trade
configurations, such as the Association of South East Asian Nations or the European
Union (EU).
In 2016, for example, intra-African exports accounted for 18% of total exports,
compared to 59% and 69% respectively for intra-Asian and intra-European exports
(Sow, 2018). It has been observed that African countries trade more value-added
products amongst themselves, unlike their exports to the rest of the world which are
mainly commodities (Songwe, 2018). The AfCFTA has therefore the potential to
increase intra-African trade ni manufactured and other value-added products, which
can prepare African countries for entry to other emerging economies and developed
country markets.
The key objective of AfCFTA is to boost intra-African trade through progressive
elimination of tariffs and non-tariff barriers to trade in goods and liberalisation of
trade in services. The Agreement will also involve cooperation on investment,
intellectual property rights and competition policy. Progressively, a deeper integration
is expected in form of a single common market, and economic and monetary union, a
single African Central Bank and a single African Currency. In addition, there will be
free movement of people and rights of residence and establishment. Expected benefits
include scale, efficiency and significant welfare gains to the people, employment
expansion, and intra-African trade growth in the long-run. The highest positive impact
is expected in Agriculture and food as well as industrial goods. It is also expected that
the AfCFTA will help resolve the challenges of multiple and overlapping REC
memberships. Opportunities abound under the Treaty especially in terms of building
capacity and training for trade in services; improving the export capacity of both
formal and informal service suppliers, with particular attention to micro, small and
medium size; women and youth service suppliers.
While Nigeria may be relatively disadvantaged in the area of trade in goods due to its
poor infrastructure and high cost of production, the country can leverage on services
to accelerate economic and social development in some areas. The objective will be to
develop capacity to provide top-notch services, which can match the very best on the
continent and improve competitiveness for export of services outside the continent.
Taking steps to compete under the agreement will also improve local competitiveness
resulting in better quality and lower prices for the people. Protecting domestic
industries through tariffs on import of similar goods is effectively a tax on consumers
to pay for local inefficiency.
The Agreement sets out a number of general and specific objective stipulated in
Article 3 which are to:
• Create a single market for goods, services, facilitated by movement of persons ni
order to deepen the economic integration of the African continent and ni accordance
with the Pan African vision of an integrated, prosperous and peaceful Africa'
enshrined ni Agenda 2063;
• Create a liberalized market for goods and services through successive rounds of
negotiations;
• Contribute to the movement of capital and natural persons and facilitate investments
building on the initiatives and developments ni the State Parties and RECs;
• Lay the foundation for the establishment of a Continental Customs Union at a later
stage;
• Promote and sustainable and inclusive socioeconomic development, gender equality
and structural transformation of the State Parties;
• Enhance the competitiveness of the economies of State Parties within the continent
and the global market;
• Promote industrial development through diversification and regional value chain
development, agricultural development and food security; and
• Resolve the challenges of multiple and overlapping memberships and expedite the
regional and continental integration processes.
The specific objectives stipulated in Article 4 are necessary to realize these general
objectives. Some of these objectives include; Progressive elimination of tariffs and
non-tariff barriers to trade in goods;
• Progressive liberalization of trade ni services;
• Cooperation ni al trade-related areas including investment, intellectual property
rights and competition policy;
• Cooperation on customs matters and the implementation of trade facilitation
measures;
• Establishment of a mechanism for the settlement of disputes concerning the rights
and obligations of Members; and
• Establishment and maintenance of an institutional framework for the
implementation and administration of the AfCFTA.

Rules of Origin
The basic requirements for implementing an FTA are rules of origin (Protocol on
Trade in Goods Annex 2, Article 9) and a tariff phase-down schedule. Rules of origin
– the legal provisions that are used to determine the economic nationality of a product
in the context of international trade – should only be used to reduce trade deflection
while, at the same time, creating a conducive environment for trade in originating
goods to take place between FTA members.
Negotiations on tariffs and rules of origin under the AfCFTA are yet to be completed.
Agreed Rules of Origin currently cover 92.3% of tariff lines. Trade in goods, for
which Rules of Origin are finalised, can take place under the tabled tariff offers.
These offers must comply with the agreed modalities for tariff negotiations.
Negotiations on rules of origin have proved a sticking point: “While some countries
are arguing for stringent rules of origin to ensure that preference accrues only to
members and is not deflected to non-members, others – generally the least developed
countries with weaker productive capacities – advocate more flexible, pro-
developmental rules that allow them to source inputs from the cheapest and most
competitive locations,” explains Hippolyte Fofack in an article for the Journal of
African Trade.
As of 13 March 2023, negotiations on rules of origin were 88.3% complete, with
completion and implementation “expected soon”, according the the African Policy
Research Institute

In scrutinizing the legal framework of the free trade agreement, The legal backbone of
the AfCFTA is the agreement itself, thus, the agreement aims to create a single market
for goods and services across the continent, facilitating the free movement of people
and investments and in itself provides the legal basis for its enforcement.
The AfCFTA Agreement is supplemented by various protocols and annexes
addressing specific issues such as rules of origin, tariff concessions, trade facilitation,
and dispute settlement mechanisms. These documents are crucial for the effective
implementation and operation of the AfCFTA. Member states are required to align
their national legislation with the provisions of the AfCFTA Agreement. This ensures
consistency and coherence in legal frameworks across participating countries, which
is essential for the smooth functioning of the free trade area.
The African Union Commission (AUC) serves as the implementing body of the
AfCFTA. It is responsible for overseeing the implementation of the agreement,
coordinating activities among member states, and resolving disputes that may arise.
African Continental Free Trade Area Secretariat established in Ghana, is also an
institutional framework of AfCFTA and serves as the administrative hub for the
AfCFTA. It is responsible for day-to-day operations, including coordinating
negotiations, facilitating communication among member states, and providing
technical assistance. The Council of Ministers, composed of trade ministers from
member states, provides strategic direction and policy guidance for the AfCFTA. It
oversees the implementation of the agreement and makes decisions on key issues
affecting trade within the free trade area. Various committees and working groups are
established under the AfCFTA to address specific areas such as trade in goods, trade
in services, investment, intellectual property rights, and competition policy. These
bodies play a vital role in formulating policies, resolving disputes, and promoting
cooperation among member states.
The AfCFTA builds upon a broader legal and institutional framework established
through the 1991 Abuja Treaty Establishing the African Economic Community
(Abuja Treaty) and 2000 Constitutive Act of the AU, which created the legal basis for
a pan-African trade agreement as called for under the 1980 Lagos Plan of Action.
The AfCFTA is also a flagship element of the AU Agenda 2063 and aligns with the
Sustainable Development Goals (SDGs), both of which have a focus on food security
and agricultural development. Sustainable development and the SDGs are referenced
in several places in the AfCFTA text, including in the agreement’s General
Objectives and in the preamble and specific objectives of the Protocol on Trade in
Services, creating a link between the AfCFTA and the SDGs that could provide
foundation for future focus on agriculture and food security.
Although earlier efforts to establish a continental trade area had not materialized, the
AfCFTA gained momentum relatively quickly following a 2012 decision among AU
Heads of State, and the agreement was signed in March 2018 and entered into force in
May 2019. Part III of the Agreement Establishing the AfCFTA outlines the
AfCFTA’s institutional structure, which is integrated within the broader institutional
structure of the AU, yet it is important to emphasize that the AfCFTA is a consensus-
based model driven by AU Member States that are or will become State Parties to the
AfCFTA.
According to AfCFTA Part III Article 9, the AfCFTA’s institutional framework for
“implementation, administration, facilitation, monitoring, and evaluation” consists of
four entities:
(1) the AU Assembly
(2) the Council of Ministers
(3) the Committee of Senior Trade Officials
(4) the AfCFTA Secretariat, which was established in August 2020 in Accra, Ghana.
The AU Assembly provides high-level guidance and oversight, in line with the
Action Plan for Boosting Intra-African Trade, and has the “exclusive authority” to
interpret the AfCFTA text as recommended by the Council of Ministers.
The Council of Ministers, which is comprised of relevant trade ministers and
authorities from the AU Member States, is responsible for implementation of the
AfCFTA and supervision of relevant AfCFTA committees and working groups, as
well as adoption of decisions that are binding upon AfCFTA State Parties that may
result in the need for changes to domestic law or regulation in order to fulfill
obligations under the AfCFTA Agreement (this latter dimension is particularly
important, as domestic law will ultimately determine how aspects of the AfCFTA are
operationalized or implemented). The Committee of Senior Trade Officials, which,
like the Council of Ministers, must also meet at least twice a year, consists of
Permanent or Principal Secretaries of the AfCFTA State Parties who establish
committees, working groups, programmes, and action plans, as well as direct the
AfCFTA Secretariat, all acting in accordance with the decisions of the Council of
Ministers. The African Regional Economic Communities (REC) also participate in
the Committee of Senior Trade Officials in an advisory capacity.
The RECs are integral to the AfCFTA in structure and substance. The AfCFTA
provides that the “RECs’ Free Trade Areas [will serve] as building blocks for the
AfCFTA”. While the AU recognizes eight official Regional Economic Communities,
several have the most well-developed trade and agricultural rules, namely, Common
Market for Eastern and Southern Africa (COMESA), Southern African Development
Community (SADC), East African Community (EAC), Economic Community of
West African States (ECOWAS).
Within this group of four, some are Customs Unions instead of Free Trade Areas, and
several have pursued deeper integration through other instruments, such as the
Tripartite Free Trade Area (TFTA) among COMESA, the EAC, and
SADC. Among and across these RECs, however,their legal systems and
implementation differs especially with respect to agricultural rules.
Reconciling the differing levels of integration among the RECs will have implications
for alignment of rules and commitments as the AfCFTA forward. The AfCFTA
recognizes among its objectives the need to “resolve the challenges of multiple and
overlapping memberships and expedite the regional and continental integration
processes.” Because the AfCFTA is such a new legal instrument, it is unclear how the
integration of REC and AfCFTA rules will function in practice. Yet, the AfCFTA text
is clear that the acquis principle will apply and provides that the AfCFTA shall take
precedence in case of a conflict or inconsistency with the regional rules established
under the RECs and that, among the RECs, “higher levels of regional integration”
shall prevail.
Due to the overlapping rules established under the RECs, including those that relate
to agriculture, this will present a considerable but important task. In some areas, such
as Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT), the
AfCFTA’s provisions could make the AfCFTA the binding instrument in the case of
any conflicts in regional rules. In other areas, like agricultural inputs, where the
AfCFTA does not yet contain provisions, it will be important to understand which
RECs provide a higher level of regional integration, although interpretation of this
term will also present challenges.
The AfCFTA is importantly built upon the foundation of the RECs, which have
already taken significant steps to align, harmonize, and streamline trade rules for
agricultural development and food security, as discussed in greater detail below.
Substantively, the AfCFTA contains relatively standard provisions related to
agricultural trade, such as provisions on sanitary and phytosanitary (SPS) measures,
technical barriers to trade (TBT), and trade facilitation, along with general provisions
on goods and services, but the AfCFTA text contains some important references to
agricultural development and food security that could provide the foundation for later
work. The AfCFTA structure also incorporates various committees and working
groups. A Committee on Trade in Goods has been established, as has a Committee on
Trade in Services.
The Committee on Trade in Goods has a number of sub-committees, as set forth in the
Annexes:
(a) Sanitary and Phytosanitary Sub-Committee;
(b) Technical Barriers to Trade Sub-Committee;
(c) Non-Tariff Barriers Sub-Committee;
(d) Trade Facilitation, Customs Cooperation and Transit Sub-Committee;
(e) ROO Sub-Committee; and
(f) Trade Remedies Sub-Committee.
There is also a Non-Tariff Barriers Coordinating Unit under the NTB Sub-Committee.
All of these will be relevant to agricultural development and trade.

Implementation of AfCFTA
The AfCFTA is set to be implemented in phases, and some of the future phases still
under negotiation.
Phase I covers trade in goods and trade in services. Negotiations led to the ratification
of legal instruments (the AfCFTA agreement itself and protocols on trade in service
and goods and settlement of disputes) that came into force on 30 May 2019,
permitting the launch of trading. However, negotiations continue on many details.
Phase II covers intellectual property rights, investment and competition policy.
Phase III covers E-Commerce. These negotiations are due to begin when phase 2 is
complete.
At the 2018 Kigali summit, areas of agreement were found on trade protocols, dispute
settlement procedures, customs cooperation, trade facilitation, and rules of origin.
There was also agreement to reduce tariffs on 90% of all goods. Each nation is
permitted to exclude 3% of goods from this agreement. This was part of Phase I of the
agreement, which covers goods and services liberalization. Some Phase I issues that
remain to be negotiated include the schedule of tariff concessions and other specific
commitments.
The 12th Extraordinary Session of the African Union on AfCFTA was called to
launch the new agreement into its operational phase, which was hosted in Niamey on
7 July 2019. At its launch, five operational instruments that will govern the AfCFTA
were activated: "the rules of origin; the online negotiating forum; the monitoring and
elimination of non-tariff barriers; a digital payment system; and the African Trade
Observatory."
Phase II and III negotiations are expected to be initiated by all AU member countries
and held in successive rounds. In February 2020, the AU Assembly of Heads of State
and Government decided that Phase III would begin immediately following the
conclusion of Phase II negotiations, which were initially scheduled to conclude in
December 2020. However, this deadline was delayed due to the COVID-19 pandemic
in Africa, and a new date (December 31, 2021) was set as the deadline for the
conclusion of Phase II and III negotiations. The AfCFTA officially but largely
symbolically launched on January 1, 2021.
Implementation of the AfCFTA requires individual state parties to align their
domestic legislation with their obligations under the Agreement. This would require
extensive review towards, repealing, amending or supplementing existing legislation,
enacting new legislation or negotiating industry specific concessions. The whole
process is technical and requires a coordinated effort from the government, sector
regulators and the organized private sector. There is therefore a need for capacity
building to upskill all the relevant stakeholders to play their respective roles
effectively. Many institutions have recognized this skill gap and are currently funding
capacity building projects to enhance the implementation of the AfCFTA, thus
creating opportunities for professionals.
Increased intra-Africa trade will significantly increase the demand for different means
of transportation which will in turn attract investment in building supporting
infrastructure. The maritime industry will be the biggest beneficiary with many
opportunities becoming available.
The AfCFTA is an ambitious project and already bears the distinction of being one of
the fastest free trade agreements to be concluded within a short timeframe. The
teething challenges highlighted above are opportunities for research and experiential
learning in developing best practices in the negotiation and implementation of Free
Trade Agreements. Many of the RECs in Africa have been underwhelming in
achieving the level of regional integration and economic development that underpin
their existence. Negotiations phase of implementing the AfCFTA therefore represents
a renewed opportunity for the RECs to act on their regional integration goals and
actually implement liberalization policies.
AFCFTA implementation may face a number of difficulties. Despite their significant
differences in size, degrees of economic growth, and economic diversification, and
despite the difficulty of guaranteeing widespread benefits for all member states, the
agreement will imply harmonizing Africa's heterogeneous economies.
The AfCFTA is the continental free trade agreement with the highest levels of income
inequality. Many nations, particularly the 32 least developed nations, struggle to
diversify their economies, create new jobs, and expand their industrial sectors.
Conflicts, inadequate infrastructure, and slow technological adoption will pose threats
to the agreement's implementation in some nations. Segments of the population have
also spoken of a generalized fear of losing identity and control.

Guided Trade Initiative (GTI)

In considering the operational instruments of the AfCFTA, during the launch of the
operational phase of the AfCFTA in Niamey in July 2019, five of such operational
instruments were unveiled:
I) The Rules of Origin : A regime governing the conditions under which a product or
service can be traded duty free across the region;
II) The Tariff concessions : It has been agreed that there should be 90% tariff
liberalisation and the deadline is 1st July 2020. Over a 10 year period with a 5 year
transition, there will be an additional 7 % for "sensitive products" that must be
liberalized;
III) The online mechanism on monitoring, reporting and elimination of non-tariff
barriers , NTBs: NTBs are a great hindrance to intra-African trade whether physical,
like poor infrastructure, or administrative like the behaviour of customs officials.
These are to be monitored with a view to ensuring they are eliminated.
IV) The Pan-African payment and settlement system : To facilitate payments on time
and in full, by ensuring that payments are made in local currency and at the end of the
year there'll be net settlements in foreign exchange. With the certainty of payments,
there will be confidence in the system.
V) The African Trade Observatory : A trade information portal to address hindrances
to trade in Africa due to lack of information about opportunities, trade statistics as
well as information about exporters and importers in countries. The trade observatory
will have all this information and other relevant data which will be provided by AU
member states.
While preferential trade under the AfCFTA can only truly begin once negotiations on
issues such as tariff concessions and rules of origins are finalised, a ‘pilot phase’ of
the AfCFTA was launched in October 2022 in the form of the Guided Trade Initiative
(GTI). The primary aim of the GTI is to test the operational, institutional, legal and
trade policy environment under the AfCFTA. Given the slow progress of negotiations
the launching of the allowed a degree of free trade between countries that have met
minimum requirements for trade under the AfCFTA. Eight countries (Cameroon,
Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia) are taking part,
representing the different regions of Africa. According to the Secretariat, its aims are
to:
 enable a degree of meaningful trade to commence between the participating
countries
 test the operational, institutional, legal and trade policy environment under the
AfCFTA
 send an important positive message to the African economic operators.

In September, as a prelude to the launch, Kenya and Rwanda exported their first
goods to Ghana under the AfCFTA, with the former exporting Exide batteries and the
latter premium coffee.
The Secretariat says it hopes that the Initiative “will serve as a gateway to encourage
continued trade under the AfCFTA, resulting in a multiplier effect and increased
opportunities for SMEs, Youth and Women in trade and ultimately establishing
sustainable and inclusive economic development”.
Schedules of Tariffs Concessions in October 2021 which provided a legal basis for
the AfCFTA State Parties that had submitted their tariff schedules in accordance with
the agreed tariff modalities to trade preferentially amongst themselves. The GTI takes
practical steps towards the facilitation of trade under the AfCFTA through direct
engagement with key stakeholders both in the public and private sectors of State
Parties.
The AfCFTA Guided Trade Initiative will serve as a gateway to encourage continued
trade under the AfCFTA. The ultimate objective is to ensure that AfCFTA is truly
operational and the gains from the initiative are improved implementation in order to
achieve increased inter-regional and intra-Africa trade that would yield economic
development for the betterment of the continent at large.
Eight (8) State Parties representing the five regions of the continent are currently
participating in the initiative. In accordance with the 2023 AU Theme of the year
“Acceleration of Implementation of the AfCFTA”, the scope of the GTI has been
expanded in both product and country coverage across the five African regions and
Islands States, with a total of thirty-one (31) State Parties having expressed interest in
joining the initiative.
As at January 2024, 12 State Parties have finalised their legal modalities to enable
trade under the GTI to commence, including South Africa, the first member of the
Southern African Customs Union (SACU) to do so.
A number of products for trade under the Initiative in 2023 were identified covering
thousands of tariff lines, including meat and meat products, poultry and poultry
products, beverages, textiles and clothing, processed food products, powdered milk,
mineral and chemical fertilizers, honey, nut butters, fruit jams, tea, coffee, and milling
(flour and maize meal).
The next phase of the GTI will be to include trade in services in the priority sectors
(Business, Communication, Financial, Transport, and Tourism Services) in order to
fast-track the implementation of commitments in the adopted schedules of specific
commitments and facilitate the start of trading in services under the AfCFTA Regime.

Tariff offers
The AfCFTA will see the progressive liberalisation of 97% of intra-Africa tariffs on
trade in goods (non-sensitive products, Category A), 7% of which are categorised as
covering ‘sensitive products’ (Category B). These will be liberalised over a longer
timeframe. The remaining 3% of tariffs may be excluded from liberalisation for
reasons relating to food security, national security, fiscal revenue, livelihood, and
industrialisation (Category C). Non-Least Developed Countries will liberalise tariffs
on non-sensitive goods over a period of 5 years and LDCs over 10 years.
As at August 2023, 43 tariff offers on trade in goods have been submitted by
individual State Parties (Egypt, Mauritius, and São Tomé and Príncipe) and
collectively as part of Customs Unions – CEMAC, EAC, ECOWAS and SACU, 29 of
which had been technically verified.
Tariff liberalization under the AfCFTA takes place in line with the AfCFTA Tariff
Modalities. Each country or customs union (ECOWAS, CEMAC, SACU, EAC)
designates a schedule of tariff concessions which includes: At least 90% of products
are non-sensitive (category A) and the base rate, which is the most-favoured nation
(MFN) tariff applied as of May 2019, is dismantled within 5 years (for LDCs 10
years); 7% of products are sensitive (category B) and the base rate is dismantled
within 10 years with a flexibility of a transitional period of 5 years (for LDCs 13
years); no more than 3% of products are Exclusion List (category C) and no tariff
reduction is applied. Excluded products in addition shall not exceed 10% of total
import value from other State Parties. This clause is known as "double qualification
and anti-concentration” clause. The recommended time range for assessment of
import value is 2015-2017, or 2014-2016.
Countries and customs union groups are independent in selecting Sensitive and
Exclusion Lists while being guided by the following criteria: food security, national
security, fiscal revenue, livelihood and industrialization. As part of tariff negotiations,
countries can feedback on each other's tariff offers on a counter-proposal basis trying
to improve the ambition of the Lists, while remaining in compliance with the
technical modalities. Due to a large number of pairs of negotiating countries involved
and a massive amount of data required, an AfCFTA Online Tariff Negotiation
Tool was developed and launched in June 2020.
The Thirteenth Extraordinary Session of the African Union Assembly of Heads of
State and Government held in Johannesburg in December 2020, decided that the start
of trade under the African Continental Free Trade Area (AfCFTA) shall officially
commence on 1 January 2021 on the basis of legally implementable and reciprocal
schedules of tariffs concessions.
The 7th Meeting of the AfCFTA Council of Ministers responsible for Trade, on 10th
October 2021, adopted the Ministerial Directive on the Application of Provisional
Schedules of Tariffs Concessions. This Ministerial Directive provided a legal basis for
the countries that had submitted their tariff schedules in accordance with the agreed
modalities to trade preferentially amongst themselves.
The Provisional Schedules of Tariffs Concessions can be accessed and searched at the
product code level at the AfCFTA e-Tariff Book . Please note that between 30 and 40
countries have submitted their provisional tariff offers, and some have not yet
designated their Sensitive and Exclusion lists.
DISPUTE RESOLUTION UNDER THE AFCFTA
African Governments do not settle their disputes about compliance with obligations in
intra-African trade and economic integration agreements through adjudication. Article
20 of the AfCFTA agreement establishes a Dispute Settlement Mechanism (DSM) to
determine disputes arising between State Parties. It further provides that the DSM
shall be administered in accordance with the Disputes Protocol. The DSM was
operationalised during the inaugural meeting of the Dispute Settlement Body (DSB)
in April 2021 and is only accessible to State Parties. The agreement reserves all
provisions on dispute resolution administration and procedure for the Protocol on
Rules and Procedures on the Settlement of Disputes (“Disputes Protocol”); one of the
protocols issued under the agreement. The Disputes Protocol establishes a Dispute
Settlement Body (DSB) composed of representatives of State Parties, and sets out the
framework for the resolution of disputes under the agreement and its other Protocols
on Trade in Goods and Trade in Servicesiv. The Disputes Protocol broadly provides
for four (4) methods of dispute resolution:
(a) Amicable Settlement through Consultation: As a mandatory first step, the Disputes
Protocol required parties to, upon declaration of a dispute, attempt amicable
settlement of same through consultation. This process is to be activated by a Request
for Consultation made by the Complaining Party to the Contravening Party. The
Complaining Party is mandated to notify the DSB of this request. State Parties are to
ensure good faith participation in process.
These consultations are confidential and are without prejudice to the rights of either
party in further proceedings. The Contravening Party is expected to reply the request
within 10 days of receipt and enter into consultation within 30 days. Unless agreed by
the disputing parties, consultations will terminate within 60 days of receipt of the
request for consultation, after which, the Complaining Party may refer the matter to
the DSB and request the establishment of a Panel. It is important to note that the
Protocols allow for sufficiently interested Third-Party States to join in the
consultations and that the timelines are abridged where the dispute between parties
involves perishable goods.
(b) Amicable Settlement through Good Offices, Mediation and Conciliation: Article 8
of the Disputes Protocol allows disputing parties to, at any time, voluntarily institute
good offices, conciliation and mediation processes. The Protocols provide that these
processes may be terminated at any time at the instance of any party to the dispute.
Where either of these processes are initiated after a request for consultations is
received, the Complaining Party is mandated to allow a period of 60 days from the
receipt before seeking redress at the DSB. However, should both parties agree that
this process has failed to settle their dispute, they may refer to the DSB before the 60-
day period elapses. Either of these processes may be facilitated by the Head of the
Secretariat and if the disputing parties agree, these processes may continue while the
DSB process proceeds. The DSB must, however, be notified of either of the
foregoing. (c) Dispute Settlement Body: The settlement of disputes the Dispute
Resolution Body may involve at least two bodies; the Panel and the Appellate Body.
The process involves the delegation of adjudicatory powers to an independent panel
of three (3) persons set up by the Body, or where parties are dissatisfied with the
Panel’s findings, to a further panel of 3 persons selected out of a pool of 7 persons
who form the Appellate Body. These bodies are constituted once a dispute arises for
consideration at their respective levels. It must be noted that both bodies are mandated
to, in executing their functions, interpret the agreement in accordance with the
customary rules of interpretation of public international law, including the Vienna
Convention on the Law of Treaties, 1969. These processes can, however, only be
activated where parties have failed to settle the dispute during consultations. The
following paragraphs will consider the DSB and its role in resolving disputes under
the Agreement through its subordinate bodies.
(c) Arbitration: The protocols provide that, as an alternative to resolution by the DSB,
the disputing parties may opt for arbitration in accordance with any agreements in that
regard and procedure thereunder. These agreements to arbitrate must, however, be
brought to the notice of the DSB. Any decision rendered by the arbitrator/arbitral
tribunal shall be binding on the parties and shall be notified to the DSB for
enforcement. These awards shall be enforced in accordance with the provisions of the
Protocol.
The Dispute Protocol makes provision for other Dispute resolution organs, such as;
Panel: The Panel established by the DSB considers submissions of the respective
parties to the dispute and makes its findings. These findings are in relation to the
rights and obligations of the disputing parties under the agreement and are to be
submitted in a report to the parties and to the DSB for adoption. The findings shall
include find - ings of facts, applicability of the relevant provisions, the basic rationale
behind any findings and the recommendations it makes. It must be noted, however
that, prior to the issuance of this report, the Panel is, expected to consult “widely and
regularly” with the parties to afford them an adequate opportunity to develop a
mutually satisfactory solution.
It is after the parties have failed to agree on a settlement before the Panel that a report
may be issued. Where a settlement is reached, the report shall include only a summary
of the case and the agreed settlement terms. The report, in any event, will be presented
to the DSB for adoption. The deliberations of the Panel shall be confidential;
however, each party may publish its own positions to the public. Opinions expressed
by individual panelists must remain anonymous in all cases.
Appellate Body: Decisions by the Appellate Body are final and will be adopted by
the DSB after which such decision may be enforced in accordance with the Protocol.
Appeals to the AB are limited to issues of law alone and legal interpretations covered
by the Panel Report. The Appellate Body will be composed of seven people, three of
whom shall serve on any one case. The Appellate Body may uphold, modify or
reverse the legal findings and conclusions of the Panel.
In regards to how a dispute is instituted, A Complaining Party must first attempt to
resolve the dispute amicably. This can be done either through what the Disputes
Protocol terms ‘good offices, conciliation, or mediation’. In addition, State Parties
may request the Head of Secretariat, headquartered in Accra, Ghana, to facilitate the
specific process. These deliberations are confidential and without prejudice.
If there is no resolution within 60 days, the Complaining Party must notify
the DSB by requesting for the composition of a Panel. The composition of
the Panel will be dependent on the number of disputing State Parties. Where there are
two disputing State Parties, the Panel shall comprise three members. Where there are
more than two disputing State Parties, the Panel shall comprise five members.
ENFORCEMENT OF SETTLEMENTS
The Disputes Protocol provides for enforcement of decisions of the DSB and an
arbitral tribunal by compensation and the suspension of concessions or other
obligations. The Protocol, however, notes these to be temporary measures available
where the decisions of the DSB or arbitral tribunal are not implemented timeously.
The Protocol provides that compliance with the decisions are mandatory and that such
recommendations must be fully implemented. The use of either of these temporary
enforcement mechanisms must however be consistent with the spirit of the agreement.
The avoidance of formal dispute settlement should be seen against the background of
the fact that most African countries are members of the World Trade Organization
(WTO), where compulsory dispute settlement is part of its single undertaking. Courts
with jurisdiction over trade issues have also been established in the African Regional
Economic Communities (RECs) that have accepted trade liberalisation and economic
integration obligations. Private parties have standing before these Courts and can file
applications against the relevant Governments. (The exception is the Southern African
Development Community (SADC). The SADC Summit abolished the SADC Tribunal
in 2010, after it had ruled against Zimbabwe for confiscating private land without
compensation. The SADC Member States took a unanimous decision to do so. They
drafted a new Protocol on dispute settlement but excluded private parties from
bringing applications.

Benefits of AfCFTA
An expected benefit of AfCFTA is its prioritization of Intra-African Trade. Two
provisions aim to ensure that intra-African trade is prioritized, relative to external (to
the continent) trading partners and could have important implications for the sourcing
of value-added goods and key inputs into production.
The provisions in Part V(Article 18) of the overarching Agreement, which deal with
'continental preferences', provide that following the entry into force of this
Agreement, State Parties shall, when implementing this Agreement, accord each
other, on a reciprocal basis, preferences that are no less favourable than those given to
Third Parties.' Article 18 continues that 'a State Party shall afford opportunity to other
State Parties to negotiate preferences granted to Third Parties prior to entry into force
of this Agreement and such preferences shall be on a reciprocal basis. In the case
where a State Party is interested in the preferences in this paragraph, the State Party
shall afford opportunity to other State Parties to negotiate on a reciprocal basis, taking
into account levels of development of State Parties'.
Similarly, Article 4 in the Protocol on Trade in Goods, which deals with the MFN
principle, provides that 'Nothing in this Protocol shall prevent a State Party from
concluding or maintaining preferential trade arrangements with Third Parties,
provided that such trade arrangements do not impede or frustrate the objectives of this
Protocol, and that any advantage, concession or privilege granted to a Third Party
under such arrangements is extended ot other State Parties on a reciprocal basis.'
Another factor is the improvement of regional and continental trade integration. As
noted above, one of the objectives of the AfCFTA is to 'resolve the challenges of
multiple and overlapping memberships and expedite the regional and continental
integration processes' (Article 3), while the principles of the AfCFTA include 'RECs'
Free Trade Areas as building blocs of the AfCFTA' and 'best practices in the RECs, in
the State Parties and International Conventions binding the African Union' (Article 5).
The eight RECs recognized by the AU are the Arab Maghreb Union (AMU), the
Community of Sahel-Saharan States (CEN-SAD), the Common Market for Eastern
and Southern Africa (COMESA), 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).
Acknowledgement that the RECs are building blocs towards establishment of the
AfCFTA is also provided in the Final Act of Lagos (1980), the Treaty Establishing
the African Economic Community (Abuja, 1991) and the Constitutive Act of the
African Union (Lomé, 2000). Indeed, the Final Act of Lagos and the Abuja Treaty
recognise the strengthening of the RECs and deeper integration at the REC level as a
necessary step towards the integration of the continent, while the treaties and
agreements establishing the RECs reiterate the fact that these bodies are immediate
step towards the creation of the African Economic Community.
With the adoption of the AfCFTA, RECs are re-examining their progress on regional
integration in line with the Final Act of Lagos and the Abuja Treaty. For example, ti
was reported that the South African Cabinet approved the Establishment of the TFTA
in May 2018. At the time of writing this report, only Egypt, Kenya and Uganda have
ratified the TFTA, and South Africa's ratification is expected to set the pace for other
countries in the three Tripartite RECs to do the same.
Binding obligations between countries at the REC level wil therefore remain but wil
be expanded to other RECs and countries under the AfCFTA. The experience of
RECs in negotiating tariff preferences; identification, monitoring and elimination of
non-tariff barriers; the EAC's deep integration through the Single Customs Territory
and Common Market; COMESA's Digital FTA, electronic trade facilitation
instruments and research and innovation programmes; EAC and COMESA's
Simplified Trade Regime; and ECOWAS' leadership on free movement of persons
can all be scaled up to the continental level as the focus shifts from negotiation ot
implementation of the AfCFTA (Mangeni, 2018).
Alignment with WTO agreements
The AfCFTA Agreement is consistent with WTO Agreements. It has been designed in
such a way that it does not operate counter to the spirit of the WTO (supporting a
rules-based system for free trade). The AfCFTA is not therefore expected to diminish
any existing WTO obligations and commitments for WTO Members in Africa but
may actually extend such obligations and commitments within the AfCFTA to states
who are not WTO Members. For example, the areas of negotiation within the
AfCFTA include goods and services in Phase I(similar to the WTO), and intellectual
property rights, investment and competition policy in Phase (similar to the WTO)
using WTO-consistent principles including dispute settlement mechanisms.
Forty-four out of the 55 AU Member States are members of the WTO. Those that are
not WTO Members include Algeria, Comoros, Equatorial Guinea, Eritrea, Ethiopia,
Libya, Sahrawi Arab Democratic Republic, Sao Tome Principle, Somalia, South
Sudan and Sudan. With the exception of Eritrea and Sahrawi Arab Democratic
Republic, the ascension processes are in progress. Virtually all AU Member States are
therefore WTO members, who have to a large extent, aligned their trade policies to
those of the WTO.
The AfCFTA Agreement refers to the Marrakesh Establishment of the WTO (1994)
and the GATT 1994. Preferential integration through a regional trade arrangement
(RTA) such as the AfCFTA contradicts the most favoured nation (MFN) and national
treatment principles ni the WTO. While the MFN principle requires al WTO members
to treat one another equally or no less favourably than they treat other trading partners
that may or may not be WTO Members, the national treatment principle requires
members not to give domestic goods preferential treatment over foreign goods.
The GATT, however, recognizes that RTAs act as mechanisms for facilitating trade
between the constituent territories and provides for an exception to the MFN principle
(Article XXIV), so long as the conditions in that
article are met, notably the requirement that an economic integration agreement such
as an RTA should cover 'substantially all trade'. Article V of GATT similarly allows
regional trade agreements (RTAs) ot extend preferential treatment in relation to trade
ni services, so long as the conditions of 'substantial sectoral coverage' and 'the absence
or elimination of substantially all discrimination' are met. In addition, RTAs are also
recognized in the WTO under what is known as the 'enabling clause', more formally
known as the 1979 Decision on Differential and More Favourable Treatment,
Reciprocity and Fuller Participation of Developing Countries. WTO members are
also required to notify the WTO of the RTAs that they have entered into, and such
membership is usually reflected in the periodic trade policy reviews carried out in
WTO Member countries.
Institutional arrangements of the Agreement mirror the WTO arrangements. Part III of
the overarching Agreement sets out the institutional arrangements, and decision-
making powers and procedures that will govern the implementation of the AfCFTA.
While this is not directly relevant to the conduct of trade and investment on a daily
basis, it is important to appreciate that these arrangements will be invoked ni the event
of disputes, and will also, over time, work on broadening the scope of the agreement
and potentially deepening its coverage.
In addition, the cross-cutting transparency provisions (Part IV) will contribute to the
information available to business about the status of the Agreement, its
implementation by Member States, and progress towards meeting liberalization
objectives. Given the opaque operating environment in which some trade across the
continent is conducted, this could prove to be highly valuable assuming ti is
implemented diligently by all Member States.
Part VI introduces the Protocol on the Rules and Procedures on the Settlement of
Disputes. The Dispute Settlement institutions and processes closely mirror those of
the WTO. The Agreement establishes a Dispute Settlement Body comprising
representatives of Member States, which will take decision.

Accomplishments of the AfCFTA

The AfCFTA is one of the most innovative, dynamic, and advanced trade agreements
on harnessing the power of women and youth. The willingness to give special
momentum to free trade is evidence of a strong commitment by African leaders who
now need robust operational instruments to be deployed professionally to realise the
expected transformation of people's lives in our lifetime.
Major progress has been made in the AfCFTA Secretariat’s trade facilitation mandate;
key projects and tools supporting adjustment costs, trade monitoring, cross-border
payments and other topics have been launched. Progress is also being made at the
continental level in negotiating the accompanying AfCFTA protocols. Under Trade in
Goods, the Rules of Origin negotiations are currently at 88.3%, and they are expected
be completed soon, allowing full implementation. To benefit from the AfCFTA,
countries are working on regional and national levels to share information on the
AfCFTA with their private sectors but also to ensure the readiness of soft and hard
trade infrastructure.
The launch of the Guided Trade Initiative has helped test the AfCFTA provisions and
instruments but should not downplay the need to start implementing the full AfCFTA.
Major challenges include clashes between national and continental aspirations that are
already evident in the slow negotiations and that will need to be mitigated when the
agreement is implemented.
The Secretariat is playing a strong trade facilitation role while encouraging national
ownership. The African Continental Free Trade Area (AfCFTA) agreement is one of
the biggest continent-wide projects aimed at economic integration and African
industrialisation through increased intra-African trade. The agreement’s Secretariat
has launched an interim trading arrangement to test the agreement’s provisions while
negotiations are ongoing. National, regional and continental institutions are also
preparing for the AfCFTA by putting the necessary infrastructure and processes in
place. Progress has been made on all fronts, and the agreement continues to enjoy
significant political will. This paper presents an assessment of trade readiness on three
levels:
Continental: Negotiations under the different protocols are at various stages of
completion, albeit behind schedule. The Guided Trade Initiative is a key development
on the continental level and injects some energy into the implementation process. The
Secretariat has advanced significantly in its trade facilitation mandate. It has set up
various tools, mechanisms and resources to support the implementation process.
Collaboration is increasing between the Secretariat and other continental entities such
as the African Development Bank and the African Export Import Bank.
Regional: As “building blocks” of the AfCFTA, the regional economic communities
(RECs) recognised by the African Union have been playing a part in AfCFTA
negotiations by supporting and coordinating the tariff offers submitted by member
countries. They help fill capacity gaps for state parties with lower expertise and are
also participating in harmonizing preferential trade provisions across the RECs under
the AfCFTA. They will also support the identification and settling of disputes.
National: Implementation plans have either been finalised or are almost finished.
Most state parties are actively preparing their private sector to leverage the AfCFTA
for larger markets. Designated Competent Authorities have largely been appointed,
and structural reorganisations are happening within governments in response to the
AfCFTA.

CHALLENGES TO THE ACTUALISATION OF THE AfCFTA

Although slowly increasing, intra-Africa trade remains low. In 2017, less than 20% of
Africa’s total exports and imports went to and from the rest of the [Link]
explanations have been offered to explain this state of affairs, including; the
dependence of African economies on commodity production and exports, lack of
diversification resulting in a mismatch between supply and demand, tariffs and non-
tariff barriers, inefficient transport infrastructure, poor trade logistics and high
security risks.
The common thread running through all these explanations is that the cost of trading
in Africa is unattractive and prohibitive whether it is as a result of non-tariff barriers,
trade bottlenecks created by infrastructural, policy and procedural constraints,
complex clearance procedures, cumbersome documentation requirements or
unpredictable trade policies. It is pertinent to note that challenges are not unexpected
in the implementation of any trade agreement, and this holds truer for as ambitious an
Agreement as the AfCFTA treaty is. What is of interest, are the unique challenges
which have significantly impacted implementation of the Agreement from a practical
perspective. The provision of the Treaty will potentially affect current company rules
regarding minimum capital, directorship and shareholding in many African countries.
It will also have effect on capital control exchange regulation and local content rules.
There is the need to harmonise existing rules such as the rules of origin which differ
between various RECs on the continent. This ranges from 60% of local content of
total raw materials used for wholly produced goods originating from the ECOWAS
region to 40% material content rule in COMESA to a more complex product specific
low import and high value added requirements in SADC. In the same manner plastics
are not allowed in some African countries so this has to be considered in the
packaging of goods destined for export to other countries. Some stakeholders have
raised concerns about the risk of transhipment and dumping of goods which may hurt
domestic businesses especially infant industries. However, the AfCFTA Treaty
already has provisions to address these concerns. Some other challenges include;
Political Arrangements
A related challenge in this sense is that the steps and efforts required for the proper
implementation of the AfCFTA depends on the impetus and commitment of each
Country which is often influenced greatly by political considerations. While it is not
unexpected that Countries will pursue only actions that align with their political goals,
it is hoped that they will not sacrifice the economic development and integration of
the continent on the altar of their selfish political interests.
This challenge is prevalent in the implementation of other Regional Trade
Agreements and is a complex hurdle to clear. This is because the loss of tariff revenue
in the short term, capital commitment to building infrastructure and capacity building
required for the implementation of the AfCFTA can significantly impact government
revenue and is therefore not an easy political decision to make.
Measures required to eliminate non-tariff barriers also require political will which
some nations lack and this represents a significant challenge to the implementation of
the AfCFTA.
Existing Regional Economic Communities
The AfCFTA declares the RECs as the building blocs of the trade area and makes
special provisions for goods and services produced in these special economic zones.
However, the reality is that these RECs are not all smoothly operating with the same
rules and mechanisms and there is a need to align and harmonise the obligations,
commitments, processes and procedure, standards, etc under these RECs with the
AfCFTA to ensure a single coherent and harmonised market.
The harmonisation process takes time, effort and resources and has proved to be
challenging to the implementation of the AfCFTA thus far. It is pertinent to note that
the AfCFTA treaty legislates for phenomenon. For example, RECs would be
permitted to maintain their integration arrangements where such arrangements specify
commitments higher than those of the AfCFTA. This provision is laudable but
insufficient in practice to address the convoluted situations that may arise where state
parties are subject to different commitments under the AfCFTA and their national and
regional commitments.
In any case, one of the general objectives of the agreement is to “resolve the
challenges of multiple and overlapping memberships and expedite the regional and
continental integration processes,” but the absence of a specific protocol on relations
between the AfCFTA and existing RECs creates some uncertainty. Additionally,
some economic alliances/agreements such as the Indian Ocean Commission, Southern
African Customs Union, and Mano River Unions are not specifically countenanced by
the AfCFTA and their status with respect to the AfCFTA treaty remains uncertain.
Trade related Innovation
Another challenge that must be addressed in the implementation of the AfCFTA is
what has come across as a lack of imagination and innovation in developing Africa-
first solutions from our attempts to implement the Agreement so far. For example,
frontier technology like cryptocurrency and blockchain are missing in current
conversations to innovate AfCFTA specific solutions to challenges such as cross-
border payment issues, ridiculous transaction costs in the traditional banking system,
complexity and slow pace of paper trade, etc .
Other areas that would benefit from innovation include, intellectual property rights
protection, competition and rules of origin.

Solutions to the challenges of AfCFTA

The real issues are not with the AfCFTA treaty but potentially its implementation.
The African Continental Free Trade Area (AfCFTA) is a significant initiative aimed
at fostering economic integration and boosting intra-African trade. However, like any
ambitious endeavor, it faces challenges that need to be addressed for its successful
[Link] best way to solve the problems is to get involved and work with
other countries in shaping the Free Trade Area to ensure a win-win outcome for all
parties. Here are some potential solutions to some of the problems associated with
AfCFTA:
Infrastructure Development: Many African countries suffer from inadequate
infrastructure, including transportation networks, energy supply, and digital
infrastructure. Improving infrastructure will reduce trade costs, enhance connectivity,
and facilitate the movement of goods and services across borders. Investment in
infrastructure projects through public-private partnerships and international
cooperation can help address this challenge.
Review and harmonise trade policies: A review of existing trade policies to identify
areas of improvement and harmonise macro-policies. Also harmonise elements of
national laws, upgrade of legal institutions handling potential disputes, competition
policy and consumer protection legislation. For instance, the current rule of origin is
heavy on materials and low on intangible value added and customs clearance
procedures are too cumbersome.

Addressing non-tariff barriers: Address non-tariff barriers to trade including policies

relating to industrial, agriculture, fiscal, banking, investment competition, ICT and
telecommunication, transport, standards, labour markets, and government
procurement.

Customs and Border Procedures: Lengthy customs procedures, bureaucratic red tape,
and inefficient border management systems hinder trade facilitation. Implementing
streamlined customs procedures, harmonizing documentation requirements, and
investing in modern border infrastructure can help expedite the movement of goods
across borders, reducing delays and transaction costs.

Trade Facilitation and Simplification of Trade Rules: Simplifying trade rules and
regulations, reducing non-tariff barriers, and harmonizing standards and regulations
across countries will facilitate trade under AfCFTA. Establishing a single window
system for trade documentation, enhancing transparency, and capacity building for
customs officials can further facilitate trade and compliance.

Promoting Inclusive Growth and Social Development: AfCFTA should prioritize

inclusive growth and social development to ensure that the benefits of trade
liberalization are equitably distributed across society. Implementing policies to
support vulnerable groups, such as women and youth entrepreneurs, promoting job
creation, and investing in social infrastructure, including healthcare and education,
can help reduce inequality and poverty.

Monitoring and Evaluation Mechanisms: Establishing robust monitoring and

evaluation mechanisms is crucial for assessing the impact of AfCFTA and identifying
areas for improvement. Regularly collecting data on trade flows, conducting impact
assessments, and soliciting feedback from stakeholders can help policymakers make
informed decisions and adjust strategies as needed.

Regional Integration and Cooperation: Strengthening regional integration efforts and

fostering cooperation among African countries are essential for the success of
AfCFTA. Regional economic communities (RECs) should align their trade policies
and coordinate efforts to ensure coherence and synergy with AfCFTA objectives.

Engage key stakeholders and build consensus: National consultation is critical in

gathering the views of interested non-States actors such as the organised private
sector, civil society, workers and academia. Consultation with key stakeholder should
include trade associations, chambers of commerce and industry, professional
associations, legislature and the academia.

By addressing these challenges through concerted efforts from governments, regional

organizations, the private sector, and civil society, AfCFTA can unlock the immense
potential for economic growth, job creation, and poverty reduction across the African
continent.