Examining Trade Disputes in the AfCFTA Agreement: The Need to Engage with the Private Sector in Nigeria

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With the AfCFTA agreement providing the opportunity for effective collaboration to increase the incomes of millions of Africans, there is a huge expectation of economic development for African countries. According to the World Bank, the AfCFTA agreement creates the world’s largest free trade area by connecting 1.3 billion people in 55 countries with a combined GDP estimated at $ 3.4 trillion. Therefore, effective measures must be put in place to limit trade disputes that could hamper its progress. This was the heart of the discussions at the recent AfCFTA roundtable organized in collaboration with the Nigerian Institute of Chartered Arbitrators (NICA) and the Nigerian Chambers of Commerce Dispute Resolution Center (NCCDRC) on the theme ” AFCFTA and Non-State Parties: Implications for Trade and Dispute Resolution ”. The webinar brought together business leaders, academics, government officials, trade and legal experts to discuss and deliberate on the litigation issues in the implementation of the agreement in Nigeria.

Participants identified a challenge that could lead to disputes in the implementation of the AfCFTA agreement in Nigeria, namely that economic activities on the AfCFTA are mainly carried out by private individuals and not by the state. Many of these private individuals are owners of small and medium-sized enterprises (SMEs). However, the agreement gives power to the state, so individuals are harmed because the state will have to act on their behalf. Thus, they believe that there should be more structure on investment negotiations so that private entities can also participate effectively and have their rights protected.

According to figures provided during the webinar by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), there are over six million SMEs in Nigeria and half of them do not yet understand the implementation. of the AfCFTA. Due to the large size of its economy and population, Nigeria continues to attract investment in its private sector. Nigerian SMEs are essential to the deal as they employ a large portion of the country’s workforce, which has the potential to boost local production and development capacity. Therefore, SMEs should be better educated to ensure that they are part of the AfCFTA negotiations and implementation process.

Hogan Lovells’ arbitration partner Nathan Searle provided an overview of the matter, stressing the importance of effectively resolving disputes between member states and non-state parties. Commenting further on private sector participation in AfCFTA, he said

The AfCFTA deal offers real opportunity and huge prospects for growth in Africa through investment. Chambers of commerce and trade bodies have an important role to play in engaging with government on behalf of small and medium enterprises to advocate with government on the economic impact of any remaining trade barriers to market access. so that these can be resolved. within the framework of the AfCFTA. Such engagement from industry bodies can encourage government to trigger state-to-state dispute resolution to resolve these issues. As we move towards the second phase of the implementation of the agreement, discussions are underway regarding the preparation of an investment protocol for the regulation of trade in goods and services that is consistent with this mechanism. ”

Part IV of the AfCFTA Agreement establishes a dispute settlement body in which representatives of all state parties monitor and evaluate the functions of the Dispute Settlement Mechanism (DSM). The mechanism ensures that disputes between member states are resolved with an efficient, rules-based and transparent approach.

In order to benefit from the Free Trade Agreement, it is important to have a mechanism to enforce the rules. It is hoped that the pre-existence of the mechanism will mean that parties who fear others are breaking the rules will know that there is a way to resolve these disputes. This is why in the first phase of the agreement, there is a protocol in the dispute settlement rules. This will ensure that parties to the AfCFTA deal view the process as fair for all. ” Searle added

Although there is no direct access for private actors to the state-to-state dispute settlement mechanism, the private sector can play a key role through the governments of member states to ensure the effective application of the obligations of other Member States, such as market access.

Participants suggested that while this approach may reduce some problems, the challenge is that trade in goods and services as well as other economic activities in FTAs ​​like the AfCFTA are not carried out by states. Resolving disputes only between States Parties could be costly and time consuming, and may not be viable for businesses and businesses that thrive on speed. There was consensus that there should be a more in-depth examination of the role and importance of the private sector and the balance to be struck, especially since Phase 2 documents such as the investment protocol are currently under negotiation.

The AfCFTA Roundtable was designed to educate, galvanize and engage Africans and investors to participate and actualize the vision of the AfCFTA agreement. Hogan Lovells is committed to understanding, operating, investing and respecting Africa. With close relationships with law firms in 50 African countries, the global law firm continues to lead and be part of discussions that advance the actualization of the AfCFTA agreement in key sectors of the African Union. Africa.


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