December 21, 2020
DISPUTE RESOLUTION UNDER THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) AGREEMENT
By Ruth Nwankwo (Associate)
Nigeria has ratified the African Continental Free Trade Area (AfCFTA) Agreement which will come into effect on 1st January 2021 following the approval of the Federal Executive Council. This is after more than a year Nigeria became a signatory to the Agreement on 7th July 2019. The reason for the cold feet shown by Nigeria towards the ratification of the Agreement is to ensure the protection of Nigerian Industries.1 There was much deliberations and consultations with trade and industry stakeholders on the threats the operation of the Agreement may present such as the rise in smuggling, import surge arising from trade liberalisation without corresponding growth in export of Nigerian products and the fear of Nigeria turning into a “dumping ground” for non-African goods.2
The AfCFTA Agreement portend a good omen for Africa because of its objectives which include the creation of a single market for goods and services, facilitation of investments, enhancing competitiveness of the economies of State Parties etc.3 The Agreement seeks a progressive elimination of tariffs and non-tariff barriers to trade in goods, liberalisation of trade in services, cooperation on investment, intellectual property rights, competition policy, trade-related areas, custom matters, establishment of a dispute settlement mechanism amongst others.4
An assessment conducted by the Economic Commission for Africa5 reports that AfCFTA will be a game changer for stimulating intra-African trade which is projected to increase by between 15% and 25% depending on liberalization efforts in 2040 compared to a situation with no AfCFTA in place The more ambitious the liberalisation of trade, the greater the expansion. This expansion will be most pronounced in industrial sectors thereby providing great opportunities to industrialize through trade.6
