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The current global trend towards multilateralism and the harmonisation of investment rules in agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) 2018, the European Union-Canada Comprehensive Economic and Trade Agreement (CETA) 2017 and Pan-African Investment Code (PAIC) 2016 present an excellent opportunity to reshape future global investment policy.
This new multilateralism in investment governance promises to recalibrate and harmonise international investment rules. For Africa, the PAIC and its respective Regional Economic Communities (RECs) represents the most tangible manifestation of an integrated policy on investment on the continent.
This is also evident in a number of regional and African Union (AU) led initiatives including the African Continental Free Trade Area (AfCFTA) Treaty signed by 44 African leaders at the 10th extraordinary African Union Summit on 21 March 2018, in Kigali, to create the world’s largest single market.
The preamble of the AfCFTA Draft Agreement provides as a general statement that the Member States are conscious “of the need to establish clear, transparent, predictable and mutually-advantageous rules to govern Trade in Goods and Services, Competition Policy, Investment and Intellectual Property among State Parties, by resolving multiple and overlapping trade regimes to achieve policy coherence, including in our relations with external partners.” Besides the AfCFTA, the Kigali Declaration Agreement was signed by 47 Member States, while 30 Countries signed the Protocol on Free Movement of Persons and the African Passport to ease mobility of people across the continent.
The goal of the AfCFTA is fourfold. Firstly, it aims to create a single continental market for goods and services, with free movement of business persons and investments, and thus paving the way for accelerating the establishment of the Continental Customs Union and the African customs union.
The AfCFTA commits governments to remove tariffs on 90 per cent of goods produced within the continent and phase out the levy in the future. It envisions a continental market of 1.2 billion people, with a combined Gross Domestic Product (GDP) of more than $3.4 trillion.
The AfCFTA is expected to boost the level of intra-Africa trade from the current 14 per cent to over 52 per cent by 2022.
Secondly to expand intra-African trade through better harmonisation and coordination of trade liberalisation and facilitation regimes and instruments across RECs and across Africa in general.
The establishment of the AFCFTA and the implementation of the Action Plan on Boosting Intra-African Trade (BIAT) provide a comprehensive framework to pursue a developmental regionalism strategy.
Thirdly, to resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes. Multiple and overlapping memberships are costly and cumbersome to implement.
By belonging to several of them simultaneously compliance requirements are duplicated and different sets of rules have to be met with regard to the same product when exported to separate destinations.
However, the RECs will not be terminated. Article 21 states that “State Parties that are members of other regional economic communities, regional trading arrangements and custom unions, which have attained among themselves higher levels of regional integration than under this agreement, shall maintain such higher levels among themselves.”
Last but not least, to enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.
These goals and objectives are echoed by the Chairman of the AU, Rwandan President Paul Kagame, who said, “The promise of free trade and free movement is prosperity for all Africans because we are prioritising the production of value-added goods and services that are made in Africa.”
The potential for sustainable development is echoed by UNECA’s African Trade Policy Centre (ATPC) and the African Union Commission (AUC): “AfCFTA is an opportunity for development in Africa. But it must be wielded by private enterprise. Through doing so, businesses can benefit from the great opportunities that the continent has to offer, and contribute to its sustainable growth and development.” Thus, the AFCFTA places Africa in a unique position to make a contribution to international investment law reform on the negotiation of multilateral treaties but also to grow national economies.
The AfCFTA Agreement and the protocols have now been submitted for ratification by state parties in accordance with their domestic laws. African countries not party to the AfCFTA Agreement, such as Nigeria and South Africa, will have to accede to the Agreement. The AfCFTA will be accompanied by its own institutions including the Assembly of Heads of State and Government, the Council of African Ministers responsible for Trade, the Committee of Senior Trade Officials, the Secretariat and a Dispute Settlement Mechanism. This is necessary in order to allow the institution to function in a transparent and rules-based manner. Overall, it hoped that the AfCFTA will promote investment for inclusive growth and sustainable development in light of crises over food security and the environment across Africa.
Moses Oruaze Dickson
Dickson is the Managing Solicitor, TRIAX Solicitors.
