Introduction
Many of us assume, or at least certainly believe, that if the African Continental Free Trade Area is successfully executed, it will create huge economic development opportunities for the African continent. In international economic and trade relations since 1945, most free trade agreements have been led by the liberal international order dominated by the United States of America. Considered alongside great projects in the history of international trade, the implementation of AfCFTA has far-reaching implications for Africa. Many experts indicate that Africa faces enormous challenges in many arenas and that AfCFTA may be beneficial to the African continent if it successfully marshals all African economies toward a common mission. And it is no secret that the United States has contributed to the implementation of most free trade agreements in the history of humanity. In 1993, the United States played a leading role in creating the EU Single Market, which is at the heart of the European integration process. The EU Single Market ensures the free movement of goods, services, capital, and persons in a single EU internal market. By eliminating bureaucratic, technical, and legal bottlenecks, the European Union also ensures its European Union businesses do business freely. In 2016, President Barack Obama signed the Trans-Pacific Partnership before failing to ratify it in 2017 with less support from the US Congress.
The question everybody in the international trade relations area is asking is whether the AfCFTA is a project of the liberal international order, reshaping its future in the 21st century. In other words, is the African Continental Free Trade Area a product of the US-Led International liberal order?
AfCFTA and Its Purpose
The African Continental Free Trade Area is a project of the African Union. It is a flagship project of the African Union Agenda 2063 and is the world’s largest free trade area bringing together the 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs) to create a single market for the continent. The purpose is to build an open free trade zone, accelerate the free movement of people, products, and services in Africa, and position Africa as the most vibrant trade partner in the world economy. The overall mandate of the AfCFTA is to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion. If successfully implemented, the African Continental Free Trade Area will represent a considerable economic weight in the global economy and trade market.
International Liberalism’s Role in Advancing Free Trade Agreements
International liberalism helps us understand the way the international trade and free trade market systems work, as well as how multinational corporations engage with countries. It promotes international economic cooperation and free market on the international political and economic stages. With the support of central governments, trade associations, and multilateral institutions, free trade agreements remain an essential economic development tool for private companies whose power grows day by day. The international liberal order promotes an open global market and distributes great power of influence to companies.
Since 1945, the United States of America has been the major driver of the world’s free trade agreements. Market openness characterizes nations’ strategic priorities and the types of corporations that will facilitate their trade relations. An open international market system is one in which most countries possess political and economic freedom of action. Openness favors sustained interstate trade cooperation, beneficial commerce, and the free flow of information across borders to the extent possible. It also calls for transparent governance within international trade institutions. For the United States, advancing free trade agreements means reducing barriers to U.S. exports, protecting U.S. interests competing abroad, and changing the rule of competition in a way that benefits American multinational companies.
Is The AfCFTA a Tool of the US-Led International Liberal Order?
Several factors indicate that the African Continental Free Trade Area is becoming a project of the liberal international economic and trade order. First, AfCFTA possesses all the features of all other free trade agreements. In 2022, The United and Kenya officially launched the Strategic Trade and Investment Partnership (STIP) in Washington, D.C. from September 16-27, 2024. As a leading partner in the successful implementation of the African Continental Free Trade Area like Kenya, America wants to position itself at the heart of the game. By partnering with Kenya, America will likely increase investment, promote sustainable and inclusive economic growth, support African regional economic integration, and become an active partner in the project delivery.
Opening African economies to the global trade market is essential in helping many countries develop competitive advantages in the production and commercialization of products. The openness of AfCFTA will require that African countries and partners build new rules and institutions. A market openness strategy with the African Continental Free Trade Area represents a clear path for economic development and departure from the rules of liberal internationalism that have governed international relations since the end of the Cold War –especially, its objective to open trade routes and forge new commercial markets.
Second, the African Union heavily relies on foreign donors to fund its budget. The African Union is funded in most parts by international partners such as the United States and the European Union. These entities indirectly benefit from acting as advisors both at the African Union and in the implementation of the African Continental Free Trade Area. With receiving funding from outsiders, the African Union and AfCFTA Secretariat are bound to obligations and principles from these institutions, creating a loss of sovereignty and an absolute authority delegation over the total implementation of the agreement.
Third, until now, AfCFTA has not adopted provisions that protect local businesses and African economies. A kind of protectionism under AfCFTA protocols. The vast openness will favor most foreign multinational corporations. Without a sense of protectionism, this huge enterprise will not last in its effort to advance Africa’s inter-trade relations. A protectionist trade policy will allow African governments to promote domestic producers, and thereby boost the domestic production of goods and services by imposing tariffs or otherwise limiting foreign goods and services in the marketplace. A great objective of trade protectionism under the African Continental Free Trade Area will be to protect nations’ crucial economic interests including key industries, commodities, and employment of workers. The African Continental Free Trade Area, however, must encourage a higher level of national consumption of goods and a more efficient use of resources, whether natural, human, or economic. Besides short-term cyclical factors arising from a potential gain to a more protectionist set of actions, there are likely to be longer-term effects on the African economies too. Although trade openness supports growth in productivity and hence the long-run potential output of competing economies, implementing protection measures helps avoid illegal competition, especially from international big market players.
Competition from trade and the benefits offered by larger markets can encourage a more efficient allocation of labor and capital across sectors and across firms. This improved allocation supports innovation and hence productivity. This is why the EU Single Market is at the heart of the European integration process.
Moving Forward with AfCFTA
A growing body of evidence demonstrates that market openness with the African Continental Free Trade Area is occurring, and the pace of economic transformation will intensify overtime. Its long-term consequences will likely be severe, positively and negatively. Many experts suggest that the agreement should put in place a kind of protectionism in products of significant export interest for African countries.
The provisions in the new free trade agreements should not benefit more liberal multinational corporations than local companies, creating a balanced trade environment. Objectively, the African Continental Free Trade Area should not be unbalanced against the interests of African countries.
To distinguished liberal scholars, multinational corporations will represent the vanguard of the liberal international order in terms of trade and international cooperation. Multinational corporations are the embodiment par excellence of the liberal ideal of an open global economy. It is therefore imperative that African nations put their interests first before anything else. In the liberal international order, the leading state always leads international market openness, also known as free trade agreements.
Conclusion
The AfCFTA started off on a promising note for African economies. The African Continental Free Trade Area will certainly play a significant role in shaping the African economy in the global economic architecture. To succeed in this enterprise, leaders must be transparent in regard to the economic theory behind the project to better prepare future generations to play their part. Principles such as transparency, accountability, and openness must be non-negotiable under the AfCFTA leadership, creating a huge amount of hope, optimism, and a common vision for the good of the continent.
African countries have a special responsibility to catalyze action for improving the provision of the African Continental Free Trade agreements. These nations have the responsibility to move first towards goals for the good of African citizens, putting forward initiatives for enhancing cooperation and committing resources for their effective realization. And when this happens, a strong economic leadership emerges, not as an imposition from the West, but as a collective product and result of the African continent. With this type of leadership, countries can stimulate change and use their position to persuade others to participate in common endeavors to advance continental economic cooperation.
A critical trade agreement of this kind among all 55 African nations most likely would have a powerful catalytic effect on their economies. When successfully executed, developed economies, reluctant until now, to respect Africa as an economic powerhouse would have to reconsider their positions. But the African Continental Free Trade Agreements’ provisions must never exceed the mandate received from the African Union and countries they represent. It will be up to the highest levels of individual and collective political leadership to do what it takes to realize the AfCFTA agenda.
Author The Author
By Jean Narcisse Djaha, PhD is the Founding President and Chairman of the African Council on Foreign Relations. He is guided by Romans 8:30” And those he predestined, he also called; those he called, he also justified; those he justified, he also glorified”.
