Still on AfCFTA: The imperative of good faith fulfilment

by | May 14, 2018 1:26 am



With an unending fixation with the newly established African Continental Free Trade Area (AfCFTA), I want to continue, in this third consecutive article, my discussion on the subject. Two weeks ago, I praised the point man for the emerging intra-Africa free trade zone, Nigeria’s Chiedu Osakwe; last week, I analysed the agreement itself. My focus this week is on its implementation. The phrase “good faith fulfilment” is an international law concept. It is a variation of another international law principle pacta sunt servanda, Latin for “Agreements must be kept”; parties to a treaty must faithfully implement and comply with it. But legal principles aside, the AfCFTA’s success would depend on its implementation. As I tweeted amid the buzz and euphoria surrounding the launch of AfCFTA: “It’s all about implementation!”

Last week, Ghana and Kenya became the first African countries to ratify the agreement. Once 22 countries have submitted their instruments of ratification, the AfCFTA treaty would enter into force. Thereafter, the question is one of implementation. But what are the prospects that most African countries would faithfully implement and comply with the agreement? Going by precedents, the prospects are not promising. Well, let’s consider two sources of evidence: the WTO and Africa’s regional economic communities (RECs), such as ECOWAS.

As I noted last week, the texts of the AfCFTA instruments are almost entirely the same as those of the equivalent WTO agreements. Furthermore, there is a symbiotic relationship between AfCFTA and the RECs. Indeed, the agreement describes the RECs as “building blocks for the AfCFTA”. Given the similarities and/or relationships between AfCFTA and both the WTO and the RECs and considering that AfCFTA state parties are members of the WTO and belong to at least one REC, their behaviour with respect to the WTO and REC obligations must be indicative of their likely response to the AfCFTA obligations. Surely, if they are not substantially complying with their WTO commitments or meeting their REC obligations, it would be misguided to assume that they would faithfully fulfil their AfCFTA commitments. So, what does the evidence show?

Well, take the WTO first. The truth is that most African countries have made little efforts to implement their WTO commitments. Like most developing countries, African countries, bar South Africa, which negotiated as a developed country, were given a long transitional period of up to 10 years to implement the WTO agreement. Yet, several years after the end of the implementation period, most African countries did not meet the basic procedural obligations, such as notifications, let alone comply with the substantive commitments. For instance, successive WTO trade policy reviews of Nigeria consistently showed growing incidence of protectionism, with Nigeria failing to introduce any significant WTO-specific legislation. The AfCFTA instruments are suffused with WTO-type procedural and substantive obligations. Given their lack of enthusiasm, and poor record of compliance, with WTO law, one must wonder whether the attitude of most African countries to the WTO-styled AfCFTA would be different. The assumption must be that it won’t!

Then take the RECs, which, unlike the WTO, are home-grown and thus indigenous to Africa. Yet, the evidence is also of poor implementation. In a study, Jaime De Melo, emeritus professor at the University of Geneva, found that although African RECs have “ambitious objectives”, they have very poor records of implementation, resulting in shallow rather than deep integration. Trade costs, he pointed out, are high within African RECs relative to non-regional trade. He concluded: “Reducing intra-regional trade costs by tackling barriers to trade remains a challenge for successful integration across African RECs”. The truth is that the establishment of the RECs has not stopped intra-regional protectionism.  In a lecture at the London School of Economics in 2014, the then President of Ghana, John Mahama, lamented that Nigeria’s protectionism was undermining deeper integration within ECOWAS. Indeed, several of Nigeria’s regional partners have complained about its violation of the ECOWAS treaty, with its import prohibition policy. So, again, if the RECs have such poor implementation records, how is the AfCFTA going to be different?

Compliance scholars are divided on how best to secure state compliance with international obligations. The enforcement school regards compliance as a function of enforcement, namely that compliance can be induced through direct mechanisms, such as sanctions. But the managerial school takes a dim view of this approach. As the renowned international legal scholars Abram and Antonia Chayes put it, “sanctioning authority is rarely granted in treaty, rarely used when granted and likely to be ineffective when used”. Instead, the managerial school recommends ensuring compliance through “instruments of active management”, such as transparency, reporting, data collection, verification and monitoring, capacity building and technical assistance.

But the AfCFTA provisions are short on technical assistance and monitoring but long, very long, on dispute settlement mechanism. Of course, there are provisions on technical assistance, such as Article 28 of the Protocol on trade in goods; special and differential treatment (Article 30); and “implementation, monitoring and evaluation” (Article 31). However, these provisions are relatively weak compared with those on dispute settlement. For instance, unlike the WTO, which creates an elaborate trade policy review mechanism, the AfCFTA agreement leaves the decision about verification and monitoring to a political organ, the Council of Ministers. This is one area where AfCFTA is, arguably, WTO-minus!

By contrast, AfCFTA’s dispute settlement provisions are the same as those set out in the WTO’s Dispute Settlement Understanding (DSU), a system described by one scholar as “more far-reaching than any multilateral arrangement for resolution of disputes among states in history”. It would involve the establishment of dispute panels and an appellate body, as well as the authorisation of trade sanctions where a party fails to comply with the ruling of the dispute settlement body. While the Abuja Treaty establishing the African Economic Community provides that disputes would be settled by a putative African Court of Justice, the AfCFTA creates a WTO-style multi-layered dispute settlement system. Yet, it’s instructive to note that, in the nearly 25 years of the WTO, no African country has been a complainant in a WTO dispute. It would be ironic if African countries that are not challenging China, the EU and the US at the WTO, despite their anti-Africa trade policies, are dragging each other before the AfCFTA dispute panels and imposing trade sanctions against each other in a free trade zone that is expected to morph into one African market.

But, let’s face it, enforcement and sanctions will play no significant role in inducing compliance with the AfCFTA agreement. Rather, three factors would be central to the success or otherwise of AfCFTA. The first is national will, the second is state capacity and the third is regime type. Let’s briefly consider each in turn.

Surely, national political will, as influenced by policy objectives and priorities, would be critical to the implementation of the AfCFTA. Ghana and Kenya are pursuing outward-oriented policies, and so are enthusiastic about AfCFTA; Nigeria is inward-looking and wants to protect its import-competing industries, hence it’s lukewarm about the agreement. So, notwithstanding ratification, the domestic political economy will shape a country’s response to the AfCFTA obligations.

Then, state capacity and institutional quality. There is, as everyone knows, a huge institutional deficit in Africa that, even with the best intentions, creates significant implementation capability traps. There are huge weaknesses around government effectiveness, legislative efficiency and the administrative and technical capacities of the public sector, not to mention corruption. These are critical factors in the AfCFTA’s domestic   implementation process.

Then, finally, what I call domestic regime type. This refers to whether a country has a strong commitment to the rule of law and legality. A rule-of-law state is more likely to honour its international commitments than one that has a poor reputation on the rule of law and legality. In a rule-of-law state, public servants constantly act under the shadow of the law; they ask whether the policies they are introducing are consistent not only with domestic law but also with the country’s international obligations. But in African countries, like Nigeria, where domestic and international law considerations hardly feature in the policy-making process, international agreements, such as the AfCFTA treaty, will suffer neglect.

So, beyond the signing, ratification and entry into force of the AfCFTA treaty, the real challenge is its faithful implementation. Sadly, going by precedents, the prospects are not good! But miracles do happen!

 

   Olu Fasan

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