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Does the AfCFTA contain adequate mechanisms to ensure trade cooperation and predictability in the event of crisis or emergencies?

The Economic Commission for Africa (ECA) released on 14 May 2020 a Policy Brief which provides a preliminary analysis, from an African perspective, of the limits of international trade law in times of crisis, offering policy recommendations for African policy makers to consider. 

Following a brief analysis of the law of international trade as it applies to the movement of Covid-19-essential goods, the brief concludes that, in times of real emergency, the role of law in assuring access to essential medical supplies on the international market is highly diminished. An example is the export ban of protective equipment and life-saving medical supplies (such as face masks and respirators) which was recently adopted by Germany also towards the other EU countries. A measure that clearly contradicts the principle of free movement of goods within the EU, one of the main pillars of the EU single market, as highlighted in Article 3(3)(g) and Article 4 of the EC Treaty.

The brief observes that these restrictions can negatively impact especially those African countries where the pharmaceutical sector is not developed or lacking sufficient local manufacturing capacity in life-saving medical items and Personal Protective Equipment (P.P.E.). 

In sub-Saharan Africa (SSA), Medic East Africa calculates that the overall pharmaceutical market size is worth US$ 20 billion annually, with the production of life-saving medicines concentrated in very few countries: 50 per cent in South Africa and an additional 40 per cent in Nigeria, Ghana, Kenya and Uganda combined. In the East African Community, Kenya has the largest pharmaceutical market (USD 740 million), followed by Uganda (USD 450 million), Tanzania (USD 400 million), Rwanda (USD 100 million) and Burundi (USD 75 million). 

A drop in supplies of pharmaceutical items and in particular of life-saving medical items, can therefore cause a jump in their prices on the import markets, which in turn would mean an escalation in their import bills at a time when their already meagre resources are overstretched.

According to the International Trade Center (ITC) Global Map of COVID-19 Temporary Trade Measures, to date in Africa, 14 countries have imposed export restrictions on Covid-19 medical supplies (ex. mandatory licensing or permit requirements for the export of face masks and hand sanitiser, like in the case of Botswana, for instance). Africa needs to explore legal and policy tools to avoid this situation to perpetuate, as it can negatively affect those countries lacking a sufficient manufacturing capacity in life-saving medical equipment. 

In particular, the ECA notes that the AfCFTA does not contain any rule intended to protect those kind of countries during emergency situations, suggesting a revision or integration of this Agreement with additional provisions to address this issue. 

Is this the case? In reality, a review of Bilateral and Regional Trade Agreement (RTA) texts recently made by the United Nations ESCAP Secretariat to verify if they provide any guidance on what partners should do to ensure minimal disruption to trade and supply chains in such crises shows that, although all RTAs include clauses in order to permit exception to the agreements in time of emergencies, for the most part they do not feature specific provisions that could help deal with trade disruption in emergency or crisis situations, especially for those countries that lack sufficient local manufacturing capacity in life-saving medical items and pharmaceutical products. Hence, all the trade agreements currently in force – not only the AfCFTA – should be amended or complemented with additional provisions to promote more trade cooperation and predictability in the event of pandemics, health crisis or other emergencies caused by natural disasters. 

The ECA policy brief concludes with a recommendation to revisit the AfCFTA legal framework and craft additional provisions to cater for such contingencies. It can be however observed that without an appropriate enforcement mechanism, these changes would have a little meaning. Accordingly, the introduction of an infraction procedure should be considered by the AU against those countries that fail to implement the above provisions, with the possibility to impose them financial penalties. To this end, it would be advisable to introduce a procedure similar to the one used in the EU, described at Article 259 of the Treaty on the Functioning of the European Union, where the Commission can identify possible infringements of EU law on the basis of its own investigations or following complaints from citizens, businesses or other stakeholders.

The ECA document also reminds that Africa largely imports finished products, while its exports primary consist of commodities (including agricultural products, oil and hard minerals), whose prices reached record lows, due to the COVID-19 crisis and the economic lockdown in much of the world, with a significant drop in foreign exchange revenues for most African countries.

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