AfCFTA Negotiations Continue Despite Coronavirus Snag, ECA's Stephen Karingi

24 September 2020

Addis Ababa — Member States are continuing negotiations on phase 1 issues of the African Continental Free Trade Area (AfCFTA) despite the ongoing novel coronavirus pandemic, says Economic Commission for Africa's Stephen Karingi.

Mr. Karingi, Director of the ECA's Regional Integration and Trade Division, says though timelines may have been revised for the commencement of trade with the global pandemic taking a toll on the advancement of the operational phase of the AfCFTA, the need for further analysis on the linkages and interplay between phase II issues was critical to support negotiations.

Mr. Karingi was speaking during a virtual Expert Group Meeting to review the draft publication; Towards a Common Investment Area in the African Continental Free Trade Area: Levelling the Playing Field for Intra-African Investment.

"The ECA has therefore started policy research on a common investment area, with a view to deepen the analysis we undertook in ARIA IX," he said.

"It is our aspiration that the envisaged research will contribute to elucidating and shaping the debate on how the AfCFTA may be instrumental to level the playing field for intra-African investment, through coherent rules that govern a common investment area and that exploit the positive synergies and linkages that may exist with competition, intellectual property and digitalization."

Mr. Karingi also spoke about the investment regulatory landscape in Africa which is littered by a proliferation of bilateral investment treaties (BITs). Currently, Africa has a total of 731 BITs of which 135 are intra-African.

These treaties have often added an additional regulatory layer, created an uneven playing field among different types of investors, undermining the policy space of host economies.

These need to be addressed, said Mr. Karingi.

"African countries' experience to counter this "spaghetti bowl" of investment treaties has taken several approaches, including taking the initiative of developing their own rules, and unilaterally, initiatives such as that of South Africa to terminate existing bilateral investment treaties and level the policy field by reforming its domestic legal and regulatory frameworks with its Protection of Investment Act enacted last year," noted the Director.

At a subregional level, the East African Community has developed a new draft Investment Policy that would streamline and harmonise the existing investment regimes and other regional economic communities have also made strides in this area, such as COMESA, with its common investment area, through the consolidation of existing regulation, notably through the recent series of binding protocols and non-binding model BITs formulated by some of the RECs for example ECOWAS, EAC, SADC, COMESA and AMU.

A multilateral approach spearheaded by the African Union, has been the Pan African Investment Code (PAIC) adopted in 2017 as a non-binding instrument, with a set of investment rules that are balanced, innovative and forward looking. The ECA supported this process with a view to rebalance the right and obligations of States and investors, whilst seeking to integrate sustainable development in investment law. The PAIC has set the stage and is likely to influence Africa-wide regulatory IIA reform, also in the context of the AfCFTA.

Mr. Karingi said all these efforts at the national, regional and plurilateral levels provide evidence of the conviction that intra-African investment could play a crucial role in increasing the actual levels of investment in Africa and contribute to improving its relative performance in terms of its global participation in FDI flows.

"It is therefore important to understand how the AfCFTA could also be instrumental to this objective," he said.

The Market Institutions Section of the RITD which organized the meeting seeks to build on previous research on linkages between BITs and Double Taxation Treaties (DTTs), as well as drivers of intra-African investment, to support the advancement of a continental approach on investment regulation in the AfCFTA. More recently, ARIA IX, which was launched last year, looked at the envisaged investment protocol of the AfCFTA as well as the other phase II issues, namely competition, and intellectual property, as well as e-commerce, as a phase III issue.

The AfCFTA will be the largest free trade area in the world, uniting 1.3 billion people in a $3.4 trillion economic bloc.

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