This note provides an update on the African Continental Free Trade Agreement (AfCFTA) and reflects on the interest it has sparked on the European Union (EU) side, specifically in a ‘Continent to Continent’ agreement – a matter that has recently been raised by the new President of the European Commission, as well as her predecessor.

Political support for African trade and economic integration under the AfCFTA is at levels which we have not seen for at least two decades. Nevertheless, it remains questionable whether a partnership will be concluded within the institutional framework created under the AfCFTA and what the nature and scope of such a relationship would be.

The AfCFTA does not establish a supra-national continental legal entity capable of concluding binding obligations on behalf of its Members. The AfCFTA is a typical member-driven trade arrangement and the issue of sovereignty still remains a key focus. The implication is that effective implementation of agreements, and consequences for non-compliance remain key challenges. Thus, governance issues may be the weak link in the present thinking about an intercontinental partnership.

Although it has been said that the AfCFTA State Parties are pooling their sovereignty, there is no reference to such a notion in the text of the AfCFTA Agreement. It contains standard obligations to liberalize trade amongst the State Parties as agreed and it excludes sensitive goods.

Institutionally, the AfCFTA is a compromise between a modern Free Trade Agreement (FTA) for trade in goods and services, and an ambitious African Union (AU) flagship project. In an FTA the State Parties may conclude new trade deals and retain national policy space over their trade relations. They are free to develop and implement tariff related policies and measures, in accordance with national choices. Although a continental customs union, where State Parties would articulate a common policy over trade in good and negotiate and conclude trade in goods agreements, en bloc, is envisaged, it will not be achieved in the near future. It should also be noted that the AfCFTA Agreement expressly provides for the continuation of the Regional Economic Communities (RECs). This means that overlapping membership of regional integration arrangements will continue.

The institutional structure is as follows:

• The Assembly of the AU is the highest decision-making organ of the AfCFTA and will, on the basis of consensus, provide oversight and strategic guidance. It consists of all AU Members and meets at pre-determined occasions. However, it will not formulate or execute AfCFTA policies.

• The Council of Ministers consists of Trade Ministers of the State Parties and will formally be responsible for the implementation and enforcement of the AfCFTA Agreement. However, it is a high-level political platform where Ministers representing the State Parties, will meet from time to time.

• The Committee of Senior Trade Officials consists of the Permanent or Principal Secretaries of State Parties and may turn out to be responsible for most of the measures implementing Council decisions. It will also direct the AfCFTA Secretariat to undertake assignments, promote harmonisation of appropriate policies, consider reports and can take appropriate actions and establish committees.8

• The Secretariat will be a unique institution but is not endowed with inherent powers or a mandate to secure compliance with obligations accepted by the State Parties. The Secretariat will provide administrative support and work together with several ad hoc technical committees and the Regional Economic Communities.

One of the important features of the AfCFTA is that it is based on a Framework Agreement. This means it will be implemented and be expanded over time as determined by the State Parties. Tariff phase-down commitments, rules of origin and services commitments are still being negotiated. Only when all tariff schedules, the rules of origin and services commitments are known, will it be possible to assess the extent and pace of trade liberalization under the AfCFTA regime.

The AfCFTA is a very important step for African integration, and it does hold potential benefits for global trade partners including the EU. The most important benefits for both Africa and its partners may well come from the non-tariff agenda. Improvements in customs and border management and broader trade facilitation will have a non-discriminatory effect – improving the trade environment and lowering the cost of doing business, irrespective of the trade partner. These are areas where cooperation with the EU and other partners can contribute to promote efficiency, transparency and accountability.

Trudi Hartzenberg

director Trade Law Center, University of Stellenbosch

January 2020