In this interview, Professor James Gathii, Professor of Law and Wing-Tat Lee Chair in International Law at Loyola University Chicago School of Law, discusses the African Continental Free Trade Area, (AfCFTA), and more. Professor Gathii is a founding editor of AfronomicsLaw, a blog that focuses on the international economic law landscape as it relates to Africa. He also sits on the board of editors of journals such as the American Journal of International Law, the Journal of African law and the Journal of International Trade Law and Policy. Professor Gathii is an elected member of the International Academy of International Law. He is widely published and speaks extensively on his areas of research interests, including Public International Law, Third World Approaches to International Law, African Constitutionalism and Human Rights.
Flora IP (FI): You have written ground-breaking pieces about regional trade in Africa, can you share your thoughts on the African Continental Free Trade Area (AfCFTA) currently in Phase II of its negotiations?
Professor James Gathii (JG): First of all, I think it is an exciting initiative. I like the fact that it emphasises improving intra-African trade as its primary objective. The improvement of intra-African trade has been on the agenda of the African continent for many decades, but it has never come to fruition.
As a scholar and as an African myself, I share the commitment that the African Union has to promote more intra-African trade.
Africa imports food worth between 60 and 70 billion dollars a year. I consider that to be a real tragedy because less than 3 per cent of that money stays in Africa; most of it goes outside the continent. You can imagine if all those resources, or even a portion of them, stayed within Africa. That would be of tremendous benefit to Africa. Take another example, Africa imports things like toothpicks, when we have plenty of forests in Africa. Our trade policies do not prioritise what African cannot produce or make.
I share the African Union’s commitment because I believe that there could be much more intra-African trade. I fully recognise that some of the ideas about free trade being adopted are likely to be detrimental to certain segments of the population and are likely to benefit the interests of those countries that are most trade competitive. In addition, there is a risk the primary beneficiaries of this trade agreement may not be African firms. I am sensitive to that as well. That is why the free trade agreement must be pursued in conjunction with heavy investment in infrastructure as well as ensuring producers and farmers have access to the capital and inputs they need. These and other prerequisites for making free trade work are already embodied in the African Union’s Boosting Intra-African Trade Initiative (BIAT). The contrasting view of free trade is embodied in the legacy of neoliberalism of the 1980s and 1990s that I don’t think the African Union wants to borrow from or follow. With those reservations, I believe that more intra-African trade is essential. I also believe the African Union recognises this.
It is not just about removing barriers but investing in the sectors where we have a comparative advantage, especially in Agriculture. For example, establishing regional value chains that would benefit African firms and removing the barriers that exist between African countries.
FI: How do you think the AfCFTA will impact on the food and agricultural sectors in Africa?
JG: Many African countries are net food importing countries and the food that they import ends up being brought in from outside Africa. If we had better intra-regional trade, we would be eating healthier food, because African countries have a comparative advantage in terms of agriculture. For example, imported powder milk from Europe several years ago replaced locally produced fresh milk in West Africa. I acknowledge storage of fresh milk is a challenge in several West African countries. Yet, I see no reason why West African farmers should not be the ones whose powder milk is available for sale in West Africa. Second, African countries stand to save foreign exchange by producing or growing things currently being imported. This foreign exchange would, in turn, enable African countries to undertake other activities including funding public education, an essential investment for Africa’s large youth population.
The kind of developmental regionalism that ought to be embodied in the AfCFTA would prioritise scaling up some of the agro-manufacturing firms that can take over the manufacturing, especially of intermediate products like rubber and other commodities that African countries produce and export.
Some of the current problems stem from the governments’ failure to invest adequately in agriculture. As you know, there is the Comprehensive African Agriculture Development Programme (CAADP) where African governments committed to allocating at least 10 per cent of their budgets to support the agricultural sector. Very few African governments do that. Very many African governments, by contrast, are investing much more in industrialisation than agriculture. If you pause for a minute, you will see how that turns the terms of trade against agriculture because many African governments want food to be cheap – they don’t want their citizens in African cities to have expensive food. They are subsidising the city workers’ but punishing the farmers who cannot make enough profits.
Another reason African farmers suffer is, after major harvests, governments sell extra produce such as maize to other countries on the continent at very low prices. When there is a shortage, maize is imported from overseas. This is a tremendous boom for import lobbies and a major disadvantage for farmers. Government resources are used to buy the maize at highly subsidised prices which means that eventually when farmers harvest, they have to compete with imported maize. African farmers cannot compete favourably because the government has subsidised the maize from Mexico at exceptionally low prices.
The case for free trade is a strong one. While acknowledging that the limits of free trade are many, I think that if the AfCFTA is carefully designed using the type of ideas I have discussed, there is a likelihood its objectives could be met.
Unfortunately, I am not sure that the AfCFTA, particularly its Protocol on Trade in Goods, has been designed consistently with what I would argue is in the interest of benefitting African farmers and eventually promoting agro-processing as well as regional value chains. If you look at the Protocol on Trade in Goods and accompanying modalities, you would see that efforts have been made, but even then I would argue that much more could have been done.
FI: You raised a few issues that I will like to follow up. You have said there are limitations to the current framework and it has not been designed in a way that would best benefit Africa. First, what are the limitations of the existing agreements? Second, what changes would you suggest?
JG: One of the threats African producers and farmers face is that more experienced producers from other parts of the world who have command of the global value chains, especially in agriculture, are likely to be the ones that would sweep the African continent once the AfCFTA is put in place.
One of the most important safeguards that the AfCFTA should prioritise is ensuring that the benefits of the AfCFTA would first and foremost be for African producers.
I say that because the next phase of the AfCFTA negotiations is going to be focusing on investment and a lot of the ideas being pursued are ideas that are likely to make it possible for non-African producers to take advantage of the opportunities of an opened AfCFTA.
There is a clause in the Agreement establishing the AfCFTA that suggests that the benefits opened up by the AfCFTA should not necessarily be available to non-African producers. But so far, what we know is that the institutional mechanism that has been proposed by the AfCFTA is a separate secretariat from the one in the African Union’s trade and industry department. It would take a very long time to establish a secretariat for the AfCFTA. Would it have the capacity to monitor the implementation of the AfCFTA at the level of detail that I am describing? We know agrochemical companies are so well prepared and positioned to pounce on the African market. We also know that there have been mega-mergers in the agricultural industry. Do we have the wherewithal in Africa to withstand these types of competition?
The second reason is that we have weak national competition regimes that are unlikely to control the threats that I see. My misgivings are not because I don’t like free trade, my misgivings are that we are opening up in a way that does not prepare us adequately to have the institutional and legal tools to ward off the competition that is going to be spurred by the new regimes of free trade.
I hope that a lot of resources are going to be poured into strengthening the regional institutional framework at the continental level, meaning the secretariat, so that it can help the national strategies that will be put in place to prevent these threats from becoming a reality. I also hope the African government are going to be doing all the other things they have committed to do under other parts of the African Union’s Agenda 2063, and under the Action Plan for BIAT, which calls on African governments to invest in not only infrastructure but also the resources expended in agriculture. The BIAT agenda overlaps with the CAADP. Those are the types of commitments that should come alongside the AfCFTA. Without those prerequisites, African producers will play second fiddle to foreigners, like the farmers in Holland that produce the powdered milk consumed in West Africa.
The bottom line is that there is a mismatch between the ambition to liberalise on the one hand and the institutional capacity to address the consequences of opening up the markets on the other.
Let me give you another dramatic example. Many African countries, perhaps except South Africa, allow importation of second-hand clothes. The only other country that has prohibited the importation of second-hand clothes is Rwanda. Textiles and related industries are our comparative advantage in Africa. It would take a lot of political courage to ban second-hand imports of clothes, which is urgently needed to develop the textile industry on the continent that unfortunately fell apart about two decades ago with the liberalisation of the economies and neoliberal economic restructuring. Research shows that indigenously owned textile industries are most likely to create the local capacity and to create jobs that take people out of poverty and unemployment.
It takes a lot of both political courage and vision to solve these problems. I don’t think that a trade treaty would necessarily do that without the commitments of African governments to make changes to their domestic economic structures. Governments could be under external pressure from other bilateral/regional treaties and agreements (in this instance – the African Growth and Opportunity Act- AGOA, which provides access to the American markets). This example illustrates what would make a difference if the governments were committed to the vision that should be at the forefront of negotiating the AfCFTA.
The AfCFTA adopts the principle of variable geometry, meaning that the commitments countries make will be matched by their ability to execute them. It is not a free trade agreement that seeks to flatten the continent on day one in terms of liberalisation. Rather, the liberalisation commitments are going to be graduated depending on the level of commitment that each country is ready to take up. Overall, the sensitivity to the context, particularly in terms of the differences in the ability of the countries to not only commit but to be able to execute the commitment has been driving the negotiations. After all, these countries are negotiating on their [own] behalf, unlike the deals with the United States (US) or European Union (EU) where external players drive the process. I think the fact that this is an African driven process has made it such that the interests of Africa are put at the forefront. This is what makes it challenging to complete all the schedules.
No trade agreement is likely to take effect unless there is visionary leadership. When the EU was first proposed, visionary leaders foresaw what is currently going on today. The EU went through phases like the ones the AfCFTA will go through. There was a crisis called the ‘Empty Chair’ crises when delegations from the then European Economic Community (EEC) refused to show up in Brussels because they thought that the way the EEC was evolving was against their national interests. There were so many ways in which the EEC accommodated countries that wanted to abandon the experiment. Some assume that the EU became what it became effortlessly, which is not true.
There will be struggles. The struggles are likely to be even more prominent in the African context. We are so many countries, and there are so many ways to divide and rule the continent because of all the existing divisions. Ideologically, some countries are opposed to each other in terms of politics; some countries are in complete turmoil. These are not the problems that the EU necessarily encountered, but remember, the EU was formed after massive destructions caused by the second world war, enormous human suffering and millions of lost lives.
While there are no perfect analogies, African countries face the same types, if not worse challenges by coming together for purposes of trade. Some of the recent work that has been done around regional integration in developing countries suggests that maybe there might be some areas in which there might be success. Perhaps, we need to figure out areas in which there might be success on the continental level. For example, in the Andean context, some of the work done by Laurence Helfer shows that they were successful in integrating on Intellectual Property (IP) issues and even resisting the global rules on IP. There might be areas in which the AfCFTA might be successful on the onset than in other areas.
I am an optimist about this. I don’t think I am making the neoliberal case for the AfCFTA. I do believe there is potential. I acknowledge that there are insuperable problems and I am not trying to write them off.
For more on the AfCFTA, see here. See Part II of Professor Gathii’s interview here.
Photo Credit: School of Law, Loyola University Chicago.
