Rafia Akram and Thabelo Muleya
The Phase II Protocols have been assented to by the African Union (AU) Summit in Addis Ababa, Ethiopia, on 19-20 February 2023 and will now undergo a national ratification process. Unlike the Phase I Protocols, such as the ones on Goods and Services, the tangible benefits and opportunities may seem less evident.
The Phase II Protocols on Investment, Intellectual Property Rights, and Competition Policy move beyond the focus on tariffs on goods and services. These so-called ‘beyond the border’ measures require the creation of regulatory systems at both regional and national levels. Member States are called upon to put in place relevant processes and institutions to facilitate the objectives of the AfCFTA. The Protocols harmonise norms, and create rules and procedures to which Member States must comply based on various policy flexibilities that accommodate national development objectives. The relationships between the various RECs and the AfCFTA and instruments are also clarified to ensure that no duplication exists.
The Protocol on Investment is relatively low impact, with several best endeavour cooperation clauses on issues like investment promotion and facilitation, and the introduction of the standard language to ensure foreign investors receive equal treatment to local investors. Most clauses include substantial limitations that allow states to avoid these restrictions in cases where it is important to national development or to help designated groups, among other conditions.[1] This places a duty on states to facilitate investment but to allow for the differentiated development levels and needs in African states.
The core substantive portions of the Protocol on Investment exist in four areas. First, expropriation[2] is allowed under terms considered in line with international standards. Second, the transfers of funds creates a more robust protection for investors. Third, the Protocol allows only for a State-to-State dispute settlement system,[4] which may impact the parity between African and non-African investors. This inequality is further compounded by the final important provision that sets out an automatic ending of current African bilateral investment treaties.[5]
In complete contrast to Investment, the Competition Protocol is extremely ambitious. The Protocol effectively establishes a continental Competition Authority, with similar powers to regional or domestic authority that adjudicates over mergers, combatting anti-competitive practices and setting out prohibited business practices.[6] This would be a substantially empowered institution, with the capacity to issue large fines and penalties as well as legally restrict mergers, even when the domestic authority approves them.[7]
The establishment of such an institution creates a dilemma, as Article 12 stipulates that state parties who do not have a competition law or enforcement shall enact the Protocol upon entry, and those state parties that do must endeavour to harmonise their laws to the Protocol.[8] In addition, Article 20 of the Protocol sets out that the competition authorities of RECs will maintain their jurisdictions as building blocks for an integrated competition regime.[9] This may be intended to create a transitional process, to ensure there is time to harmonise the competition laws and enforcement.
In fact, it will be interesting to see what regulations the Council of Ministers for the authority set out for this Protocol.[10] The negotiations for such regulation should focus on proposing not only a prescriptive but an integrative approach to rules and their interpretation, allowing for recognition of the legal developments in national and regional decision-making bodies.
To the best of available knowledge, the Intellectual Property Rights (IPR) Protocol appears to be relatively low ambition.[11] It reaffirms largely pre-existing commitments to safeguard patents, marks, copyrights, and other forms of Intellectual Property (IP); but offers few restrictions on the ways in which this is achieved.
The specifics of IPR implementation are largely left to national authorities, and while the agreement may offer another lever to pressure some states to enforce IPR, it seems likely that enforcement will remain as strong as national capabilities.[12]
The Protocol does, however, make provisions for geographic indicators, which may be important for some African export products. Traditional knowledge and Traditional Cultural Expression are accepted as IP. These are currently being proposed at the World Intellectual Property Organisation as IP that warrants protection by African states.[13]
The Protocol also makes provision for flexibility in patents for pharmaceutical patents that are in conflict with human well-being, such as empowering states to produce products under compulsory licenses via the WTO’s TRIPS agreement.[14] The provisions on pharmaceuticals seem entirely in line with global standards and norms and seem very reasonable given the significant healthcare needs of many countries on the continent.[15]
The IPR Protocol is less interventionist. In light of overlapping membership to the two continental organisations, the African Regional Intellectual Property Organization (ARIPO) and the Organisation Africaine de la Propriété Intellectuelle (OAPI), and the divergent approaches across various IPR regimes, member states are permitted to consider how best to achieve policy coherence within this context.[16] The process of developing the AfCFTA IPR Protocol can also be used to develop mechanisms to facilitate better coordination at multilateral negotiations for all.[17] There are also other institutions, such as the Pan-African Intellectual Property Office, as well as policies outlined in the COMESA IP policy framework and the East African Community’s Regional Intellectual Property Policy, which create a network of IPR rules and policies that must be compatible with the AfCFTA.
Throughout the three Protocols, exceptions are created for developmental needs. The IPR Protocol, for example, provides exceptions for purposes of education, including distance/online learning and for research and collaborations.[18] There is also a specific reference to the Marrakesh Treaty,[19] highlighting an understanding of the constraints faced by students and researchers across the continent.
The AfCFTA negotiations for Phase II Protocols have also been extended to include both Digital Trade as well as Women and Youth. Steady progress has been made on both fronts. The Digital Trade zero draft has been shared with states, and the Inaugural AfCFTA Women and Youth in Trade Conference took place in September 2022.[20]
The Protocol on Women and Youth is a particularly important step to ensuring that these demographics can effectively participate in the AfCFTA. In the SMME sector, women are the majority due to a patriarchal culture that restricts their access to financial resources, leading to greater gender inequality[21]. Similarly, young people, who constitute the majority of the population, face significant barriers to accessing formal employment opportunities, which compels them to pursue entrepreneurship in the SMME sector[22]. By addressing these issues, the Protocol seeks to empower women and youth to become active participants in the AfCFTA, thereby promoting economic growth and reducing inequality across the continent.
[1] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
[2] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
However, to be truly inclusive women and youth should be the target of protection of the rules still to be negotiated on the E-commerce Protocol in addition to the Protocol on Women and Youth. Further women and youth should be prioritised in the policies and the implementation processes of the Protocols already in place.[23]
[1] Article 6 read with 7 and 8 and chapter 4 which set out the sustainable development-related rules.
[2] Article 19.
[3] Article 22.
[4] Article 44.
[5] Article 49.
[6] Part II Anti-Competitive Business practices and conduct read with Part IV institutional arrangements.
[7] Article 17.
[8] Article 12(3) and Article 12(4), the proviso in Article 12(7) is that state particles must ensure the adherence to the principles of transparency, independence, and procedural fairness.
[9] Article 20(1).
[10] Article 13.
[11] Can African trade integration be a game changer? M E Pangestu Feb 02, 2023 (Available at https://blogs.worldbank.org/voices/can-african-trade-integration-be-game-changer accessed 10 March 2023)
[12] Article 26
[13]WO/GA/55/11 ORIGINAL: ENGLISH DATE: JULY 20, 2022 (accessed 10 March 2023 at https://www.wipo.int/edocs/mdocs/govbody/en/wo_ga_55/wo_ga_55_11.pdf)
[14] The TRIPS Waiver Compromise Draft: A promising or compromising text? Thabelo Muleya | Apr 1, 2022 (Available at: https://tutwaconsulting.com/the-trips-waiver-compromise-draft-a-promising-or-compromising-text/ accessed 10 March 2023).
[15] Article 21.
[16] Nkomo, M., Mthombeni, J., and Lehong, T. (2020). The African Continental Free Trade Area: a significant role for IP. World Intellectual Property Organization (WIPO) Magazine. December 2020. (Available at: https://www.wipo.int/wipo_magazine/en/2020/04/article_0005.html accessed 9 March 2023).
[17] Ibid.
[18] Article 8(3), ((3), 10(3), 11(3),11(4),11(5), 12(3), 13(3),14(3), 15(2) an d16(2).
[19] The Marrakesh VIP Treaty (formally the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired or Otherwise Print Disabled 27 June 2013.
[20] https://au-afcfta.org/2022/09/day-1-afcfta-conference-on-women-and-youth-in-trade/
[21] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
[22] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
[23] National Experts meet to discuss the AfCFTA Protocol on Women and Youth | Economic Community of West African States (ECOWAS) 02 March 2023 Abuja, Nigeria, 16 February 2023.