By Bola A. Akinterinwa
The Business Law Section of the Nigerian Bar Association, under the chairmanship of Barrister Olumide Akpata, held its 12th Annual Business Law Conference from Wednesday, 27th, to Friday, 29th June, 2018 at the Transcorp Hilton, Abuja, Nigeria. The theme of the Conference was “Bringing Down the Barriers: The Law as a Vehicle for Intra-Africa Trade. In this regard, the African Continental Free Trade Area (AfCFTA) agreement was adopted as a framework for analysis. The AfCFTA agreement is essentially on Trade in Goods; Trade in Services, Investment, Intellectual Property Rights; and Competition Policy (vide Article 7). The agreement is reviewable every five years.
What is particularly important about the AfCFTA is that it is endowed with an institutional secretariat which ‘shall be a functionally, autonomous, institutional body within the African Union system, with an independent legal personality.’ As noted in Paragraph 3 of Article 14 of the AfCFTA, ‘the Secretariat shall be autonomous of the African Union Commission and its departments with which it shall work closely,’ but the funds of the Secretariat shall come from the overall budget of the African Union (paragraph 4).
The first working session of the Conference, which was moderated by Barrister Soji Awogbade of the Energy and Resources Group, espied the subject. Ambassador Chiedu Osakwe, Director General of the Nigerian Office for Trade Negotiations (NOTN) and Nigeria’s Chief Trade Negotiator, gave the lead paper. The panelists were Dr. Stephen Karingi, the Director of Regional Integration and Trade Division of the United Nations Economic Commission for Africa (UNECA); Professor Pat Utomi of the Pan Atlantic University, Lagos; Ambassador Albert M. Muchanga, the African Union Commissioner for Trade and Industry; and Professor Bola A. Akinterinwa, the Director General of Bolytag Centre for International Diplomacy and Strategic Studies (BOCIDASS), in Yaba, Lagos.
Two additional points about the opening session that are also noteworthy are the attempts by the session to investigate how to bring down the barriers militating against enhanced intra-African natural resources trade, using law as the instrument, on the one hand, and Nigeria’s refusal to sign the agreement, on the other hand. Nigeria took an active part in all the negotiations leading to the finalisation of the AfCFTA agreement, but refused to sign the Agreement, reportedly because of the need for further consultations on the implications for Nigeria of signing the Agreement. The opening session addressed why it had been so.
In this regard, there is nothing wrong in seeking further consultations before finally signing the agreement. However, why were there no consultations before the scheduled time of signing? If there were, with who were the consultations held? When and where were they held? If there were consultations, it is still possible that, for unforeseen reasons, some critical questions might have been inadvertently omitted. If such omissions were later discovered, there is nothing wrong in seeking to re-address them before eventually signing the Agreement. It is for these considerations that we can commend President Muhammadu Buhari for having listening ears on this very critical agreement, largely aimed at enhancing trade cooperation in Africa.
But, without any jot of doubt, Nigeria is not the only country that has withheld its signature. Only 44 countries out of 54 African Union members signed the AfCFTA in Kigali, Rwanda at the March 17-21, 2018 AU Summit. Why have the other ten members (Benin, Botswana, Burundi, Eritrea, Guinea Bissau, Lesotho, Namibia; Nigeria; Sierra Leone; and South Africa, which only signed the Kigali Declaration in order ‘to follow constitutional and internal processes’, but not the actual agreement) not signed?
Going down the memory lane, Nigeria’s refusal to sign the Agreement is not in any way different from that of the French Plenipotentiary sent to Lagos to sign the Nigeria-EEC Agreement that would have enabled Nigeria to join the EEC as an associate member within the framework of Articles 131-136 of the March 1957 Rome Treaty Establishing the EEC.
Following the declaration on July 20, 1963 of EEC’s preparedness to consider the admission of Associate Members and Nigeria’s indication of interest in associate membership on September 10, 1963 of the EEC, preliminary negotiations with the EEC took place from 21 to 29 November 1963. Nigeria’s official application for membership was made on January 6, 1964. In a nutshell, the French Negotiators, including Messieurs Valéry Giscard d’Estaing, Edgard Pisani and French Ambassador to Brussels showed readiness to negotiate with Nigeria. They took active part in all the negotiations but all to no avail.
In other words, on July 16, 1966, the agreement with Nigeria was validly concluded but to Lagos, the French delegation only came to exercise France’s right of veto not to sign, and thus making a big nonsense of the Agreement, as well as the whole efforts hitherto put into it. Adoption of decisions was then by the rule of consensus. France was the only country that refused to sign the association agreement. The five others (Germany, Italy, Belgium, Netherlands and Luxembourg).
But unlike the French example which sought to prevent Nigeria’s membership of the then EEC, Nigeria is not on record to be seeking to kill the AfCFTA Agreement, far from it. However, how do we explain the last minute decision of Nigeria not to sign the AfCFTA accord? African leaders, right from the time of the OAU, have always followed the footsteps of the Europeans in their journey from EEC of Six through the European Community of Nine (with Britain and Denmark joining in 1973 and Greece joining in 1981) and later European Union of 27.
When the Europeans changed the designation of their ‘Secretariat’ to a ‘Commission’, Africa followed suit. When that of the ‘Executive Secretary’ was also changed to ‘President’, Africa did the same. In fact, a cursory look at the 1991 Abuja Treaty Establishing the African Economic Community lends indisputable credence to this observation.
The question therefore, with the current developments in Brexit politics, and since one major reason for French hostility against Nigeria’s associate membership of the EEC was essentially because of Nigeria’s place within the context of Franco-British relations, is Nigeria sending a signal of withdrawal à la Britannica or Donald Trump pending the time the AfCFTA will be made to conform with the national interest? Is the NOTN truly responsible for the non-consultation with the stake holders, especially with the MAN which had alleged that there had not been prior consultations with the private sector stakeholders? In other words, to what extent is Nigeria’s reasons for not signing the Agreement tenable? Will Nigeria eventually sign the agreement or not?
Dynamics of Further Consultations
It is quite arguable that PMB has not signed the agreement because Ambassador Osakwe had not performed well or that he had not consulted with all the stakeholders. The truth of the matter is that Nigeria’s Chief Trade Negotiator, Ambassador Osakwe, was given a very clear mandate as Nigeria’s plenipotentiary.
First, he is to ensure the competitiveness of the Nigerian economy by focusing on presentation of Nigeria as an attractive investment destination. This means that provisions that are likely to present the goodness of the environmental conditionings of the Nigerian economy or that would not be inimical to it should be provided for in the agreement during the negotiations.
Second, Ambassador Osakwe is required to expand market access for Nigeria’s export of goods and service through integrated market manufacturing structures linking Nigerian exporters of goods and services to regional and global value chains. The implication of this is that, other countries must not be allowed to create barriers, not to mention making them discriminatory and detrimental, to Nigeria’s national interest.
Third, Ambassador Osakwe is specifically mandated to eliminate barriers to trade against Nigerian businessmen, as well as to ‘stop the discriminatory and hostile treatment against Nigerian business persons (natural and corporate persons) in a number of African countries,’ to borrow Ambassador Osakwe’s words.
Fourth, and perhaps more importantly, Ambassador Osakwe is to ‘ensure that the trade agreement resulting from the AfCFTA negotiations must neither be used, misused nor create loopholes to trans-ship and dump goods in the Nigerian economy (and) to enhance Nigerian economy, thereby undermining Nigerian industry for goods and service providers.’
And fifth, he is to take advantage of the geo-political use of the AfCFTA negotiations to enhance Nigeria’s economic and trade policy leadership in the conduct and management of the global economy on the continent.
On the basis of the foregoing mandate, two important points are noteworthy. The first is that Ambassador Osakwe was not only Nigeria’s plenipotentiary at the AfCFTA, but was also the Chairperson of the AfCFTA negotiating team. Secondly, competent sources have it that the Government of Nigeria consented to his appointment as Head of the AfCFTA negotiating team.
In this regard, all the five instructions given to Ambassador Osakwe could only be carried out during negotiating meetings. In such meetings, the extent to which the chairman of the meeting can override the policy stand of other sovereign Member States of the African Union is, at best, very limited. The best anyone in the shoes of Ambassador Osakwe could do was to ensure that Nigeria’s national interests were not considered as a peculiar or particular national interests, but to give them a general and multilateral character in such a way that they are regarded as common interests, and therefore made a win-win interest for all.
Additionally, Nigeria’s instructions could only be achieved at the external negotiating level. As such, they constitute the external dimension of Nigeria’s foreign policy calculation. Put differently, the instructions did not provide for responsibilities at the domestic setting. And whereas, the domestic setting was and still remains the problem. It is precisely because of the allegations of non-consultation with the domestic stakeholders that PMB requested for more time to consult with them before signing the agreement. In other words, what are the concerns of the private sector stakeholders? Are the concerns not accommodated in the agreement? Can the private stakeholders rightly claim not to know that negotiations for the making of an AfCFTA were on course to have warranted their own request to be carried along? Why is it that the private sector stakeholders not prepared for the signing of the agreement at the domestic level? Many questions but few answers!
In the thinking of opponents of the Breton Woods institutions in Nigeria, their officials are generally sponsored to ensure that policies of the International Monetary Fund and the World Bank are prescribed as the only workable solutions to economic problems in the developing countries. An example was the imposition of the policy of Structural Adjustment Programmes (SAP), which underscored democratisation, staff lay-off, trade liberalisation, privatisation, budgetary cut in important strategic areas of health and education that are critical to nation building and national survival.
As a result, people coming from international financial institutions or organisations are often suspected of having interests not likely to promote the national interest when they are recruited into the public service of Nigeria. In this specific case, Ambassador Osakwe was formerly an international functionary with the World Trade Organisation. He resigned his appointment to join the Nigerian public service. As Head of the NOTN, in whose interest is he mostly disposed: Nigerian or the AU or even that of the UN institutions?
The second important point is on the conflict between the situational reality of the current government’s consultations with the various geo-political zones in the country and the Manufacturers Association of Nigeria’s claim that the reports being given to the general public by the NOTN on it do not reflect even the reality of the consultations. It is not only argued that the AfCFTA agreement is characterised by many ambiguities, but also that Ambassador Osakwe has only succeeded in preaching the gospel of advantages of the AfCFTA but consciously keeping silent about the disadvantages for Nigeria, and particularly in terms of Nigeria’s many economic problems, which the Nigerian manufacturers of goods and services do not want overlooked. The challenge in this case is how to reconcile the potential advantages with the disadvantages or likely perceived negative impact. The main truth about Nigeria’s economy is its non-competitiveness which must first be addressed before signing the agreement.
Many other reasons can explain the need for further consultations before signing. For instance, there is the issue of Article 15(1), Article 15(5) and Article 16(1) of the AfCFTA agreement. As provided in Article 15, paragraph 1, ‘decisions of the AfCFTA institutions on substantive issues shall be taken by consensus.’ Article 15(5) says ‘abstention by a state party eligible to vote shall not prevent the adoption of decisions.’ It is important to note some basic differences between the two articles. In Article 15(1), AfCFTA institutions are referred to. The required consensus is at their level.
In the context of Article 15 (5), by saying in the event there is no consensus, it first means no decision could be validly taken. The other point here is that the Article insists on eligibility to vote and the possibility of abstaining from voting. The problem here is that there is no precision on the level to which abstention applies. The article refers to a state party, but we all know that in multilateral diplomacy, there are three levels of representation and decision-taking: Permanent Representatives, Council of Ministers, and the proper Summit of Heads of State and Government.
In many cases, there are rules of procedure for meetings and decision-taking at the three levels. Consequently, if there is no consensus, it simply means no decision could be validly taken, and if paragraph 5 of the same Article provides that an abstention by any Member State does not mean decisions could not prevent the adoption of decisions, it means that the notion of consensus applies only to those voting. Abstention is not part of the definienda of consensus.
The issue of lack of consensus is again raised in Article 16 (1). It says that ‘in exceptional circumstances, the Council of Ministers may waive an obligation imposed on a State Party to the Agreement or its Protocols and/or associated annexes, provided that any such decision shall be taken by three fourths of the States Parties, in the absence of consensus.’
In this regard, does it mean that such decision on waiver will not need the ratification by the Assembly of Heads of State and Government? If there is no need for reference to the principals, does it mean that there are two different levels of application of consensus: Assembly and Council? The non-clairvoyance in the foregoing articles may also explain Government’s interest in wanting to make haste slowly in signing process of the AfCFTA agreement.
Additionally, Articles 26 and 28 cannot but require much caution before signing. According to Article 26, ‘no reservations may be made to this Agreement.’ This simply means that a Member State is still allowed to formulate any reservation at any time to the Agreement, because the expression ‘no reservations may be made’ is not the same thing as ‘no reservations ‘shall be made.’ Before the entry into force of the Agreement, Nigeria signs the accord, and thereafter, another Member State formulates a reservation that is inimical to Nigeria’s national interest, will the process of readjustment not be cumbersome? For Nigeria, taking a cautious step to allow for further consultations before signing the Agreement seems more sagacious than signing and then later coming back to formulate reservations that can even frustrate the implementation efficiency of the Agreement.
In Article 28, it is stipulated that ‘After five years from the date of entry into force in respect of a State Party, a State Party may withdraw from this Agreement by giving written notification to State Parties through the Depositary.’ Put differently, a State Party to the AfCFTA cannot withdraw from it until, at least, seven (7) years after the entry into force of the Agreement. This is because paragraph 2 of Article 28 says ‘withdrawal shall be effective two (2) years after receipt of notification by the Depositary, or on such later date as may be specified in the notification.’ In this regard, prevention, by way of further consulting with those that are most likely to be affected, is better than seeking to cure.
There is also the argument of the supranational character of AfCFTA vis-a-vis other trade agreements within the framework of regional organisation or Nigeria. First, Nigeria does not belong to the Monist School of thought but the Dualist School in international law. Any international treaty contracted by Nigeria in international relations must be first ratified and then domesticated before it can be enforced in the country. Consequently, since there is a stiff opposition, at the domestic level, to the signing of the agreement by the major economic stakeholders, Government cannot be quick to sign the Agreement and then return to face mounting opposition that will not enable constitutional domestication of the agreement. The main grouse of the opposition elements, the Manufacturers Association of Nigeria in the main, is that they were not carried along during the processes of negotiation of the agreement.
Article 20 on Conflict and Inconsistency with Regional Agreements, provides in paragraph 1 that ‘in the event of any inconsistency between this Agreement and any regional agreement, this Agreement shall prevail to the extent of the specific inconsistency, except as otherwise provided in this Agreement.’ Paragraph 2, however says that ‘notwithstanding the provisions of Paragraph 1 of this Article, State Parties that are members of other regional economic communities, regional trading arrangements and customs unions, which have attained among themselves higher levels of regional integration than under this Agreement, shall maintain such higher levels among themselves.’
In this regard, there is no disputing the fact that the ECOWAS is a leader in its efforts at regional integration in Africa. This means that the ECOWAS cannot but be a first priority for Nigeria by virtue of her commitments and ECOWAS’ rules of subsidiarity, and more so that Nigeria is playing host to the secretariat of the regional organisation.
If we recall the mandate given to the Chief Trade Negotiator, Ambassador Osakwe, the extent to which he has not complied with the mandate is very limited. However, it is important to note that the operational area for the implementation of the mandate is foreign while the need to carry the stakeholders who are complaining about the agreement falls within the framework of domestic politics. The manufacturers of goods and services in Nigeria are not ready for the agreement. They are not ready for competition yet: there is power outage, inadequate power generation and even power distribution all of which make the costs of industrial production very prohibitive.
True, no one is disputing the more advantages such trade agreement has, especially in terms of removal of trade barriers and enhancement of trade cooperation and continental integration. For instance, the UNCTAD has predicted that reduction of intra-African tariffs has the potential of generating more than $3.6 billion in welfare gains to Africa. UNECA says intra-Africa trade is also likely to increase by 52% by 2022.
In the same vein, the Trade Law Centre (TRALAC) has not only revealed that intra-African trade is only between 10 and 12% compared to 40% in North America and 60% in Western Europe, but has also explained that it is easier to trade with the rest of the world than to trade with fellow African countries, simply because tariffs faced by African countries exporting to Africa were higher, compared to exporting to the rest of the world. This should not be so and this explains the rationale for AfCFTA agreement which is aimed at removing trade tariffs and non-tariff barriers, as well as promoting cooperation between customs authorities, free movement of people and underscoring mutual recognition of standards, certifications and licensing in Africa.
With the foregoing advantages, what really has Nigeria to export in exchange for what is to be received, especially in light of the fact that virtually all markets in Africa are flooded with Euro-American products all of which are more competitive than those of Nigeria? The answer is none. It is from this perspective that there is no way Nigeria would not end up becoming a dumping ground for all manners of international products, thanks to the likelihood of application of the Most Favoured Nation Clause, regardless of the provisions on safeguard in Article 19 on Continental Preferences in the agreement.
As provided in paragraph 1 of the Article, ‘following the entry into force of this Agreement, State Parties shall accord each other preferences, on a reciprocal basis, that are not less favourable than those given to third parties when implementing this agreement.’ Additionally, paragraph 2 stipulates that ‘a state Party shall afford opportunity to other State Parties to negotiate preferences granted to third parties prior into force of this Agreement and such preferences shall be on a reciprocal basis…’
Beyond Further Consultations
Government’s decision to embark on further consultations before deciding whether or not to sign the Agreement is a welcome development. The delay in signing the AfCFTA does not in any way prevent the entry into force of the Agreement. However it only creates discomfort for those extra-African countries seeking to target Nigeria as the final destination of their exports in the same way the European Union cannot be happy with Nigeria’s non-preparedness to sign the EU-ECOWAS Economic Partnership Agreement.
If the AfCFTA agreement enters into force without Nigeria, since only 22 instruments of ratification are required for it to enter into force, Nigeria cannot but lose the status of an original member. In the event Nigeria does not sign the AfCFTA, will the purpose of redefining the concept of UN definition of a ‘region’ and ‘sub-region’ by the OAU Council of Ministers as contained in Article 1(d)and 1(e) of the 1991 Treaty Establishing the African Economic Community not be defeated? How will this also affect relationships with other ECOWAS Member States, especially Benin Republic who prefers to wait until Nigeria has passed its budget before it adopts its own?
Whatever is the case, the Nigerian Bar Association is interested in the removal of barriers to enhancement of trade in Africa. One way of doing this is for the lawyers to first show special interest in trade negotiations, and become specialists on the subject as their counterparts have done in other countries. Secondly, it must be specially borne in mind that the existence of barriers to trade development is not simply because most African States are primary producers, but because they have always shown lackadaisical attitude to the development of Africa. They hardly pay their assessed dues on time. In fact, European development partners account for more than 70% of the funding of African Union’s development projects. Intra-Africa trade cannot develop without political will which is lacking. The direction of African trade is more towards Europe. If this is to be reversed, the business mentality must also change. This is why Nigeria’s policy of going slowly about the matter should not be blamed on the altar of politics of selfishess.