Are African Trade Arrangements rediscovering trade remedies?

THERE seems to be a renewed interest in trade remedies in African trade and integration arrangements. They are debated and modified in Regional Economic Communities pursuing deeper integration, are discussed as part of the Continental Free Trade Area (CFTA) negotiations, and have just been adopted in the form of a special trade remedies Annex for the Tripartite Free Trade Area (TFTA).

African trade specialists are also writing about them. What explains the interest in trade remedies and what is being discussed?

Trade remedies are trade policy tools that allow governments to take remedial action against imports which are causing injury to domestic industries. They are divided into anti-dumping (action; countervailing duty measures; and safeguard action).

The fact that trade remedies feature prominently in the context of policies on industrialisation and economic development, can be part of the reason why African governments now seem to consider them as necessary for intra-African trade and integration.

In the context of the TFTA and CFTA negotiations the most problematic issue has been the inclusion of “flexible” trade remedies. The pro-flexibility argument holds that trade remedies involve onerous disciplines, sophisticated technical investigations, and compliance with detailed World Trade Organisation (WTO) legal requirements.

Flexibility is necessary, so the argument goes, to make it easier for most African states to implement trade remedies.

The counter argument says the real issue is about domestic capacity. Trade remedies are viewed as essential for preventing protectionism and the abuse of discretionary powers.

Trade remedies rules (based on WTO disciplines) must, therefore, be complied with. The measures should also be justiciable.

It has been argued that flexibilities (contingencies) in trade agreements are justified because they avoid rigidity in respect of compliance with obligations touching on sensitive national policy matters.

The justification for their inclusion in trade agreements ultimately lies in the fact that their availability makes it easier for member states to comply with the applicable rules. Flexibility should, as a consequence, advance the formation of trade regimes in which rules are more likely to be respected.

Trade agreements often include other notions which may suggest flexibility, (such as asymmetrical obligations and variable geometry) but they need to be linked to specific outcomes and activities, such as longer implementation periods or lower membership fees.

Ultimately all obligations must be complied with, even if they allow flexibilities. The challenge is to agree on mutually acceptable formulations of the relevant provisions in legal texts. These discussions suggest that African trade arrangements are paying more attention to trade governance issues. This will require that basic design issues such as the relationship between existing trade arrangements are also clarified. In Ecowas, Comesa and the EAC the member/partner states have embarked on a path of deeper integration.

They have adopted legal arrangements for customs unions, common markets, common external tariffs and single customs territories. Their member states must have unified rules on anti-dumping and countervailing duties on goods imported from third countries. Thus, their legal instruments include provisions on closer institutional and legal co-operation. They are also focusing on preferential safeguards; regulating trade in goods among the parties only.

The TFTA and the CFTA follow a different route. They want to boost intra-African trade and do not aim at establishing customs unions among the parties. In a Free Trade Area, the member states retain national powers over their own trade and tariff policies. This will include policy space over the use of trade remedies. Trade remedies measures are not compulsory; governments may adopt them. And it must be noted that the anti-dumping agreement of the WTO does not regulate dumping, but antidumping measures.

How does the TFTA deal with the fact that many of its members do have trade remedies laws in place?

The TFTA does not require that new laws must be adopted to reflect the trade remedies negotiated as part of the TFTA.

The fact that trade remedies measures are justiciable is of particular importance. Access to an independent forum protects the rights of member states as well as private parties. This aspect touches upon a vital feature of modern trade regimes. By ensuring that trade remedies provisions are linked to an accessible dispute settlement regime, critical guarantees are provided. The fact that an independent forum will rule about the correctness of trade remedies measures, increases the preparedness of member states to join legal regimes.

Trade remedy regimes without judicial review is a contradiction. If judicial review is absent from the CFTA, unjustifiable protectionist measures may follow; or the suspicion may exist that such measures are ultra vires the applicable rules and procedures. Judicial remedies must be available through domestic tribunals (where private parties can bring their applications) as well as through interstate dispute settlement mechanisms provided by the trade agreements in question.

Many states face practical and capacity constraints. Their needs with respect to the implementation of trade agreements are real and should not be ignored. The appeal for more trade remedies may, in fact, often flow from national capacity constraints.

Well-targeted practical responses and technical assistance are required to solve these problems.

Ideally such responses should be comprehensive in nature and build capacity in all trade disciplines involving compliance with technical requirements and standards. The ability to reap the potential benefits promised by rules-based trade regimes depends on the capacity to play by the rules and to comply with the applicable standards. African trade negotiations and existing institutions should generate more specific ideas on how to assist all member states to play by the rules.

Erasmus is an associate with the Trade Law Centre, is a capacity-building organisation developing trade-related capacity in East and Southern Africa.