Berkeley Legal | HARNESSING THE FULL ECONOMIC BENEFITS OF THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) AGREEMENT THROUGH A PROPER DISPUTE RESOLUTION MECHANISM
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14 Feb HARNESSING THE FULL ECONOMIC BENEFITS OF THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) AGREEMENT THROUGH A PROPER DISPUTE RESOLUTION MECHANISM

 

The African Continental Free Trade Area (AfCFTA) was conceived with the aim of fostering the economic integration of Africa. The idea of the AfCFTA was birthed in 1980 when the then Organization of African Unity (OAU) now referred to as African Union (AU) drew a road map for the economic prosperity of the African Continent using “The Lagos Plan of Action for the Economic Development of Africa, 1980-2002.”

Fast forward to 21st March 2018, the 10th Extraordinary Session of the AU Assembly which was held in Kigali, Rwanda adopted the Agreement establishing the African Continental Free Trade Area (AfCFTA) and opened the same for signing by African countries wherein 44 African Countries signed. Thereafter, 10 more countries signed except Eritrea thereby bringing the total membership to 54 countries. Largely, AfCFTA seeks to create a single market for goods and services facilitated by the movement of persons across the continent, facilitate the movement of capital, and natural persons and investments building as well as lay the foundation for the establishment of a Continental Customs Union. AfCFTA offers Africa the opportunity to confront major trade/economic problems such as market fragmentation, the smallness of national economies, over-reliance on the export of primary commodities, lack of export specialization, and high level of regulatory and tariff barriers, etc.

However, just like every Agreement, there is always room for the resolution of conflicts that may arise. In the wisdom of the draftsmen of the AfCFTA Agreement (“the Agreement”), Article 20 established the Dispute Settlement Mechanism to regulate dispute resolution in line with the Protocol on Rules and Procedures on the Settlement of Disputes. This snippet seeks to proffer ideas and ways the Dispute Settlement Mechanism of the AfCFTA could be harnessed to achieve the aims and objectives of the Agreement for the economic prosperity of the Continent.

The Dispute Settlement Mechanism of the AfCFTA is modeled after that of the World Trade Organization (WTO) Dispute Settlement Understanding (DSU). The dispute resolution process under the Agreement begins with consultation and mediation among member states (aggrieved parties). Generally, parties are encouraged to settle disputes amicably. However, where parties are unable to reach an amicable settlement of their dispute, AfCFTA agreement provides as follows:

  1. An independent panel is set up to hear the dispute.
  2. The panel submits a private draft report to the parties after which the panel may revise the report in line with each parties’ inputs before submission to the Dispute Settlement Body (DSB).
  3. The report is then considered by the DSB and adopted as the final report barring any appeal to the report.
  4. Where there is an appeal by any party, such appeal goes to the Appellate Body (AB) which is only required to decide on issues of law discussed in the report and make a pronouncement within 60 days.

 

While the efforts of the draftsmen of the Agreement to provide a platform for the settlement of disputes under the Agreement is quite commendable, however same are largely ineffective due to the following reasons:

  1. There is no penalty under the AfCFTA for any failure by a Member State to submit to the Dispute Settlement Body established under the Agreement where a complaint has been activated by a fellow member state.
  2. There are no rules stipulating the guidelines for the resolution of disputes in the event of failure by a member state to submit to the dispute settlement mechanism of the agreement.
  3. The time frame of five months and one and a half months (in cases of emergency) stipulated for the resolution of disputes is lengthy. The Agreement is for commercial purposes and just like every commercial venture, time is of the essence. This, therefore, poses a threat to the achievement of the aims and objectives of the Agreement.
  4. The remedies of withdrawal of concession and/or compensation provided for under the Agreement are insufficient. These remedies do not protect certain rights such as intellectual property rights, (patents, trade secrets, and industrial designs). These rights are individual rights that inure to the benefit of individuals as opposed to a state and are therefore difficult to enforce under the Agreement.

 

The AfCFTA Agreement Dispute Resolution Mechanism only governs disputes among member states and is silent on cross-border disputes among private citizens. This, therefore, implies that Private International Law will continue to apply where there are cross-border disputes among private citizens. Private International Law has territorial limitations, therefore, the extent to which Private International Law will support the aims and objectives of the AfCFTA is yet to be ascertained.  The category of Private International Law to apply in a particular dispute between private citizens shall be determined on a case-by-case basis and Berkeley Legal is available to provide legal advice on same.

In conclusion, the effectiveness of the dispute settlement mechanism is essential for rules-based multilateral trade to provide certainty and predictability to commercial transactions in the AfCFTA. Therefore, to achieve the full economic benefits of the AfCFTA, a proper and robust dispute settlement mechanism should be provided to cover disputes among member states on one hand and disputes among private citizens on the other hand.

Caveat:

The information provided in this snippet is for general informational purposes only and does not constitute legal advice. If you require specific legal advice on any of the matters covered in this snippet, please contact info@berkeleylp.com