The African Continental Free Trade Area: a significant role for IP

December 2020

By: Marumo Nkomo, University of Cape Town; and Jabulani Mthombeni and Trod Lehong, AfriqInnov8 (Pty) Ltd., Pretoria, South Africa

The COVID-19 pandemic has wreaked havoc on economies across the globe. Although it experienced a peak in infections later than countries in the global North, Africa has not been spared the economic fallout of the pandemic. The World Bank’s June 2020 Global Economic Prospects, forecasts the deepest global recession in decades. The study predicts that global gross domestic product (GDP) will contract by at least 5.2 percent with a downside contraction of close to 8 percent in 2020.

In the aftermath of the COVID-19 pandemic, implementation of the African Continental Free Trade Area (AfCFTA) will serve as a stimulus package for African economies and will drive economic growth across the continent. (Photo: Serbek / iStock / Getty Images Plus)

GDP in Sub-Saharan Africa is expected to fall by 2.8 percent in 2020, with the continent’s largest economy, Nigeria, projected to shrink by 3.2 percent. Africa’s most industrialized economy, South Africa, is expected to contract by 7.1 percent.

Unlike the member countries of the Organisation for Economic Cooperation and Development (OECD), African economies may not have the fiscal resources to provide multi-billion dollar stimulus packages and furlough programs. This reality has prompted the Secretary-General of the African Continental Free Trade Area (AfCFTA), Mr. Wamkele Mene, to state that, “for Africa, the stimulus package is the actual AfCFTA, the implementation of this agreement. Increased intra-African trade is what will drive economic development post-COVID-19.”

The World Bank agrees. In a July 2020 study on the economic and distributional effects of the AfCFTA, it underlined the Agreement’s transformative potential, noting that its full implementation could result in lifting around 100 million people out of poverty. But how did the AfCFTA come about? What are its key elements and what role will intellectual property rights (IPRs) play in achieving its objectives?

The IPR Protocol can serve as a catalyst for technology transfer, technology diffusion and the economic transformation of Africa’s economy from one that is primary resource-based, to one that is driven by knowledge, information and ideas.

Historical background

Since the 1960s, when various African countries gained independence, the Organization of African Unity (OAU) and its successor institution, the African Union (AU), have sought to advance the ideal of Pan-Africanism and the interdependence and economic integration it encompasses.

Attaining African economic integration, however, has been inhibited by a variety of persistent challenges. These include small markets, insufficient industrialization, poor infrastructure and low levels of intra-African trade. For example, in 2019, intra-regional trade accounted for 17 percent of Africa’s exports compared to 59 percent in Asia and 69 percent in Europe.

To address these challenges, the OAU called for the establishment of an African Economic Community by 2028. To this end, African nations have placed regional economic communities at the center of the continent’s economic integration initiatives.

Despite these laudable intentions, progress in establishing the African Economic Community had stalled by the early 2000s. This was due, in large part, to a proliferation of regional economic communities with overlapping membership, which resulted in a “spaghetti bowl” of conflicting obligations.

The AfCFTA Agreement aims to eliminate barriers to intra-African trade. (Photo: Tom Fisk / Pexels)

In a drive to reinvigorate progress towards establishing the African Economic Community, the 18th AU Summit, which took place in Addis Ababa, Ethiopia, in January 2012, focused its discussions on boosting intra-African trade. The Summit endorsed the Action Plan on Boosting Intra-African Trade (the BIAT Action Plan), which introduced a road map to expeditiously establish the AfCFTA.

The following year, the AU celebrated the 50th Anniversary of the Charter of the OAU and launched its Agenda 2063, which outlined the AU’s development goals for the next 50 years. Significantly, the AfCFTA features prominently among the Agenda 2063 milestones, which call on AU member states to fast-track the establishment of the AfCFTA with a view to doubling intra-African trade.

AU members heeded Agenda 2063’s call. AfCFTA negotiations were launched in June 2015. Less than three years later, in March 2018, negotiations culminated in the conclusion of the Agreement Establishing the AfCFTA (the AfCFTA Agreement), which was signed by 44 of the AU’s 55 member states. Just over a year later, the Agreement entered into force.

Key elements of the AfCFTA

The AfCFTA Agreement aims to eliminate barriers to intra-African trade progressively by resolving the problem of overlapping membership of regional economic communities, thereby promoting trade liberalization and enabling structural transformation.

The Agreement has three layers: The first is the AfCFTA Agreement itself, which serves as a framework agreement. The second consists of Protocols on Trade in Goods, Trade in Services, Rules and Procedures on the Settlement of Disputes (Dispute Settlement), Investment, Competition Policy and Intellectual Property Rights (IPRs). And the third layer consists of Annexes, Guidelines and Schedules to the aforementioned Protocols.

Implementation of the AfCFTA has significant potential to serve as a catalyst for Africa’s post-pandemic recovery.

The Protocols on Trade in Goods, Trade in Services, and Dispute Settlement entered into force concurrently with the AfCFTA Agreement. These instruments are the outcomes of Phase I of the AfCFTA negotiations.

Phase II negotiations will deal with Protocols on Investment, IPRs, and Competition Policy. It was initially hoped that Phase II negotiations would be completed by January 2021, but due to the COVID-19 pandemic, this timeline has been delayed.

The inclusion of investment, IPRs and competition policy in the AfCFTA architecture is apt as poorly calibrated IPR and investment regimes and anti-competitive practices can undermine the benefits of trade liberalization.

The IPR Protocol

As observed by the proposal of Geneva-based representatives of African countries (“the African Group”) for the establishment of a Development Agenda for the World Intellectual Property Organization (WIPO):

“IP is just one mechanism among many for bringing about development. It should be used to support and enhance the legitimate economic aspirations of all developing countries, including Least Developed Countries (LDCs), especially in the development of their productive forces, comprising of both human and natural resources. IP should, therefore, be complimentary and not detrimental to individual national efforts at development, by becoming a veritable tool for economic growth.”

Since Africa is made up exclusively of developing and least developed countries, the IPR Protocol offers AU members an opportunity to develop an IP framework that addresses the specific developmental needs and interests of Africa.

There has been a long-standing divergence of perspective between developing countries and various member countries of the OECD at the World Trade Organization (WTO) on biodiversity, traditional knowledge and patenting of life forms, the so-called “triplets”. This is one example of multilateral IP negotiations that have not been able to address the concerns of African countries.

A 2020 World Bank study highlights the AfCFTA’s transformative potential, noting that it could result in lifting around 100 million people out of poverty. (Photo: RZAF_Images / Alamy Stock Photo)

During negotiations within the WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) and other similar platforms, the African Group has consistently advocated for recognition of the central importance of the interplay between IP on the one hand, and traditional knowledge, indigenous cultural expressions and genetic resources on the other hand. Regrettably, however, this view is not shared by some OECD countries. As a result, international negotiations within the IGC have been unable, as yet, to yield agreement on an international instrument for the protection of relevant subject matter from misappropriation, despite consistently diligent work from the WIPO secretariat in trying to facilitate a positive outcome.

The AfCFTA’s IPR Protocol affords AU member states the opportunity to prioritize areas of comparative advantage for African countries in an international IP instrument. Furthermore, it can be used to promote IP rules and standards that are calibrated to the continent’s level of industrialization and in line with the AfCFTA’s objectives.

The COVID-19 pandemic is highlighting the importance of technology in the global economy, including within the economies of Africa. In these circumstances, IP is set to assume greater importance. The IPR Protocol can serve as a catalyst for technology transfer, technology diffusion and the economic transformation of Africa’s economy from one that is primary resource-based, to one that is driven by knowledge, information and ideas.

This is occurring in a context where a consensus is emerging among economists that a “one size fits all” approach to IP policy is not effective or appropriate. As stated by Rob Davies, the former Trade Minister of South Africa, when he opened WIPO’s inaugural conference on IP and Development in 2016: “Countries have taken different paths in pursuing economic development and they have used IP protection in different ways and at different times to support their development effort.”

Finally, various attempts have been made to deal with IP issues that have regional and sub-regional dimensions in Africa. These include the proposed Pan-African Intellectual Property Office, the African Regional Intellectual Property Organization (ARIPO), the African Intellectual Property Organization (Organisation Africaine de la Propriété (OAPI)), the East African Community Regional Intellectual Property Policy on the Utilization of Public Health-Related WTO-TRIPS Flexibilities and the Approximation of National Intellectual Property Legislation and the IP Policy of the Common Market for Eastern and Southern Africa (COMESA).

Some of these continental arrangements have divergent approaches and overlapping memberships. The AfCFTA IPR Protocol affords AU member states the opportunity to reflect on how best to achieve policy coherence within and among these initiatives. This process can also be used to develop mechanisms to facilitate better coordination at multilateral fora.

Implementation of the AfCFTA has significant potential to serve as a catalyst for Africa’s post-pandemic recovery. The AfCFTA is an important vehicle for realizing the Pan-African vision of regional economic integration and structural transformation of Africa’s economy. The IPR Protocol can help AU member states ensure that IP policy is applied in a manner that is supportive of Africa’s developmental goals.

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