Article by Amadou Barry Ismael Traoré of Thiam & Associes – Guinea Conakry
In order to implement the largest free trade area with 1.2 billion consumers and approximately US $2.5 trillion GDP, the AfCFTA was recently ratified by 54 out of 55 countries (excluding Eritrea). One of its purpose is to eliminate tariffs on nearly 90% products and set up a continental free trade area for goods, people and services.
To achieve these goals, the AfCFTA will rely on different instruments currently being used by many free trade areas. Such instruments include: the rules of origin principles, intra-African investments and competition policies. Some of these instruments are currently in force in certain regional free trade areas across the continent, also known as Regional Economic Communities (RECs). With eight (8) official RECs, many African countries have already experienced free trade areas. The West Africa REC, the Economic Community of West African States (ECOWAS) is seen as one of the most dynamic.
Therefore, the overlapping between AfCFTA and ECOWAS, as well as the survival of the West African free trade area are issues raised by the upcoming implementation of the AfCFTA.
The AfCFTA, a harmonisation tool: According to the Treaty on the Agreement Establishing the African Continental Free Trade Area, the AfCFTA’s main purpose remains the establishment of a common and harmonised market. This goal is further detailed in the Treaty which refers to the “single market” and “continental customs union” principles.
Likewise, pursuant to some of its provisions, the Treaty shall, subject to certain conditions, prevail over any other regional free trade agreements in the event of inconsistencies between the latter and the Treaty. Such a view could, for instance, apply to the rules of origin calculation methods.
The AfCFTA’s harmonisation purpose is also reflected in the Protocol on Rules and Procedures for the Settlement of Disputes which created a Dispute Settlement Body (“DSB”). According to this Protocol, any dispute between AfCFTA member States should first be submitted to the consultation procedure before any recourse to the DSB.
Despite its harmonisation purpose, the AfCFTA intends to ensure its successful implementation in the shadow of the RECs. This is clearly expressed in the Treaty which states that the AfCFTA will learn from the RECs best practices to implement common set of rules.
Survival of ECOWAS: With approximately US$600 billion GDP and a significant migration flow, the ECOWAS stands as one of the most dynamic RECs. In 2016, the ECOWAS region posted approximately US$11 billion in trade value. These facts explain the key role played by ECOWAS in the AfCFTA negotiations.
In this context, the functioning of the AfCFTA vis-à-vis ECOWAS and other existing RECs is a key point raised by the Treaty. For instance, the Treaty states that free movement of people and capital will be reached through the RECs existing principles. In addition, some provisions of the Treaty temper its predominance over the RECs. Thus, it is agreed that RECs that have reached higher levels of integration than the Treaty may maintain those levels of integration over the Treaty. While aiming a harmonised set of rules, the AfCFTA intends to keep in force the ECOWAS and the other RECs. Therefore, one may reasonably conclude that the ECOWAS companies who are currently taking advantage of the Trade Liberalisation Scheme (ETLS)[1] will continue to use it in the coming years.
The same conclusion would also apply to the Common External Tariff currently in force in the ECOWAS for imported goods.
This two-way approach of harmonisation and survival of the RECs can be viable for a transitional period, which seems to be the spirit of the AfCFTA. Indeed, the trade area will be implemented in different phases over a certain period. Nevertheless, the substitution of the ECOWAS by the AfCFTA and its institutions is likely to become a contentious issue to settle in the future. For instance, when the North American Free Trade Agreement (NAFTA) was signed in 1992 (and came into force on January 1st, 1994), it automatically superseded the pre-existing agreement between Canada and the United States, the Canada-United States Free Trade Agreement (FTA) which was in force between 1987 and 1994.
[1] The ETLS is the instrument created under Section 3 of the revised ECOWAS Treaty. It aims at clarifying the definition of originating products in determining the rules of origin for eligible products to preferential tariffs.
Amadou Barry is Counsel at Thiam & Associes Law Firm. He is admitted to the Bar of Quebec and assists clients on wide range of business law files (from project finance transactions to corporate law)
Ismael Traoré is legal trainee at Thiam & Associes Law firm. He assists clients on general business law files.
