Is it possible to have better governance in Africa’s Regional Economic Communities (RECs)?
Regional integration in Africa is necessary because our nations cannot prosper in isolation. The challenges posed by small domestic markets, limited economies of scale and the marginal position of Africa in global trade call for coordinated and effective responses from Regional Economic Community (REC) Members. That is why numerous regional agreements have been concluded; to provide legal frameworks to steer national administrations towards joint and firm action.
On paper we believe in the benefits of regional integration but frequently fail to implement what we have agreed to. Domestic policies and laws diverge, while institutions are weak. The result is low levels of compliance and fragmented outcomes. This comes at a cost.
Why do we often fail in regional endeavours and what can be done to improve matters? More specifically, how can the implementation of regional legal instruments be enhanced?
Be honest about design flaws in legal instruments and fix them
REC legal instruments do not provide for effective regional action. Their implementation is ‘decentralized’ and allows Members wide discretion on how and when to comply with their obligations.
Ambitious regional integration plans also result in overlapping membership, with multiple and often conflicting commitments. This causes confusion and duplication; undermining the effective implementation of obligations. It becomes costly for traders to comply and to reap the benefits of trade liberalization and regional integration.
These challenges have to be addressed if regional integration initiatives are to effectively deliver expected outcomes. An incrementalist approach will allow for identifying and correcting priority concerns. The South African Development Community (SADC) recently adopted new measures to deal with non-tariff barriers (NTBs) and to implement modalities required by Articled 3 of the Trade Protocol. They need transparent and certain implementation arrangements.
Build technical capacity jointly and around priority areas
It is necessary to consolidate existing free trade areas (FTAs) before the next stage of integration is launched. A Customs Union will not answer existing problems in FTAs; administering a common external tariff will compound matters.
The consolidation of exiting regional arrangements requires effective domestic governance. Many Governments lack the technical means, national institutions, commitment and domestic regulatory capacity to implement obligations, to develop and harmonize policies, and to meet regional standards.
Remedial action will need careful designs and does not come in a one size fits all format. In the context of SADC’s Finance and Investment Protocol the required action will require home-grown technical assistance in respect of legislation and institutions which address local and regional fiscal and monetary needs. Another such area is customs cooperation. The new WTO Trade Facilitation agreement offers opportunities to develop specific action plans and also to leverage donor support. Joint programmes launched around particular corridors stand more realistic chances to improve governance and harmonization between States.
The role of regional bodies such as secretariats and their technical institutions should also be put on the agenda for making regional integration work. They can provide technical frameworks and could channel follow-up action to priority areas. This will not violate the policy space of Members; it will advance implementation or regional norms.
There are success stories. Tanzania and Namibia comply with EU standards for fish, beef and table grapes. The necessary laboratories and abattoirs have been built through joint efforts.
Allow dispute settlement
African states do not litigate against each other over trade and regional issues. Suing another government (even over a mere technicality) is considered a sign of disrespect for another sovereign state. It is not clear why this should be so. Part of the explanation might be that this is unfamiliar territory; once litigation about trade technicalities becomes accepted practice the antipathy should disappear. African governments are prepared to litigate over international border disputes; which is a much more sensitive matter.
Effective dispute settlement brings certainty and predictability. It also takes questions regarding compliance out of the domain of political discretion. REC Members apparently want to retain the freedom to take unilateral action. FTAs (which are governed by multilateral rules) do not function like this; Members do not have a blank cheque as to when and how to honour commitments.
Rules-based FTAs allow for exceptions under certain conditions. The normal procedure is to use safeguards or trade remedies to deal with emergencies. Trade remedies give rise to the majority of disputes in the WTO. In the RECs the same need exists. Suitable arrangements result in rules-based responses to emergencies; not unilateral action.
Disputes about technical standards, trade facilitation, and customs issues fall in the same category. Some have already given rise to disputes in domestic courts. The administration of customs and non-tariff measures are routine matters and universally applied as part of the normal implementation of trade agreements.
African Governments accept that legal certainty should govern trade and have agreed to dispute settlement as part of their WTO membership. It is no different for trade in the RECs. Uncoordinated national responses will cause fragmentation and will prevent the development of precedents and the predictability brought by community law.
Allow the private sector dispute settlement space. Governments should assist nationals to resolve disputes involving unlawful actions by other Member States; as is the standard practice in e.g. the WTO. Annex VI to the SADC Protocol on Trade provides a poignant example of what can be possible. It provides for a panel procedure (as is found in the WTO) which could bring about a specialized and accessible dispute settlement procedure and a corpus of law for local needs. The Tribunal can serve as the appellate body for panel reports.
Relationships between the Members stand to benefit if dispute settlement would be accepted as ‘normal’. A sound legal foundation and better trade governance should, for example, resolve the tension around the functioning of Article 3 of the SADC Protocol on Trade. This provision provides for ‘derogations’ when Members States argue that they cannot comply with their obligations on the implementation of tariffs on goods traded among them, or with the duty not to impose non-tariff barriers. New modalities and procedures for granting derogations have been adopted and will need consistent interpretation once activated. Up till now the use of derogations has generated inconsistencies and unilaterally imposed national measures.
Without the ability to settle trade disputes the SADC FTA lacks a vital dimension. Article 32 of the Protocol on Trade in fact states: “The rules and procedures of Annex VI shall apply to the settlement of disputes between Member States concerning their rights and obligations under this Protocol.”
There seems to be confusion as to what sovereignty entails. The conclusion of international agreements is an act of sovereignty; ratified agreements which have entered into force have to be respected. Sovereignty does not permit State Parties to escape their obligations by subsequently invoking national laws or policies. If that were possible international law could never be effective. Then it serves no purpose to conclude agreements.
Inter-governmental litigation is also frowned upon by African leaders. It need not be so. By respecting the decisions of independent judicial organs or technical appeal bodies, sensitivities about sovereignty will actually be accommodated. The absence of objective rulings about agreed norms may in fact tempt Members to take retaliatory measures. That will have far more serious repercussions for sovereign relationships and integration.
Then advance to the next level
The African paradigm of regional integration focuses mainly on trade in goods; little attention is paid to services and other behind-the-border issues (investment, competition, standards, regulatory reforms, harmonization etc.). The result is that regional integration agendas are too limited in scope. They do not provide the frameworks necessary to grow and compete under 21st century conditions. These are outstanding challenges which merit the urgent attention of political leaders and officials.
African regional integration requires an honest re-assessment. We believe the aspects mentioned here belong on the agenda of the political leadership for meeting present challenges.
Reprinted with the permission of tralac, where this piece first appeared.
Gerard Erasmus is a founder and associate at tralac (Trade Law Centre NPC) and Professor Emeritus at the University of Stellenbosch in South Africa.
Tag: Customs and Trade Facilitation, Dispute Settlement, Functioning of the WTO, Multilateral, Regional Integration, Regional Trade Agreements, Standards, Tariffs