Tanzania-Malawi-SA trade fight: AfCFTA dispute system's test or breaking point?

A recent trade dispute involving Tanzania, Malawi, and South Africa has ignited debate about the crucial need for a strong dispute resolution system to underpin the success of the African Continental Free Trade Area (AfCFTA). An analysis in the Business Daily highlights that this these kind of disputes serve as a stark reminder of the potential for trade disagreements  among African States to derail the ambitious AfCFTA project. However, questions linger over whether African nations will actually utilize the formal mechanisms designed to settle such disputes, given their historical preference for other means.

The trade tensions, which saw Tanzania banning agricultural imports from Malawi and South Africa in retaliation for earlier restrictions, and Malawi facing a cutoff of Tanzanian fertilizer, were widely reported last week. Fortunately, the dispute was resolved swiftly through diplomatic channels on April 26th.

The AfCFTA, a landmark pact aiming to create a single market for goods and services across the continent, theoretically provides a framework for resolving such conflicts. Once a country ratifies the agreement, it legally commits to the Protocol on Rules and Procedures on the Settlement of Disputes. This protocol establishes a mandatory system for handling disagreements over how the AfCFTA is interpreted and applied, largely mirroring the dispute settlement process of the World Trade Organization (WTO).

Under this system, trade disputes between African nations are addressed by a two-level structure of quasi-judicial bodies. First, specialized panels review the case. If a party is not satisfied with the panel's decision, they can appeal to a higher appellate body for a final ruling. By accepting the AfCFTA, State Parties essentially agree to the jurisdiction of this mechanism, with the inherent right to initiate proceedings if they believe another State has breached the obligations set by the agreement.

However, historical trends suggest a different reality on the ground. African nations traditionally resolve trade frictions through direct dialogue, cooperation, and diplomatic solutions, as the recent Tanzania-Malawi-South Africa spat vividly illustrates. As highlighted by an article published on the TRALAC blog on 10 February 2022, African countries never defer trade disputes to formal judicial or quasi-judicial bodies. This pattern extends beyond Regional Economic Communities, as African nations show minimal engagement in the WTO's dispute settlement system despite their significant membership. Specifically, the latest WTO Dispute Settlement case book reveals only one instance of an African member state, specifically Tunisia, initiating a dispute against another African member state, Morocco, within the WTO framework.

This historical reluctance raises concerns about whether the AfCFTA's dispute settlement mechanism will be actively used.

Furthermore, a significant challenge lies in the enforcement of decisions adopted by the AfCFTA's panels and the appellate body. Unlike national legal systems, the AfCFTA does not have a built-in mechanism for direct enforcement against a State Party that refuses to comply with such decisions. Ultimately, their implementation will rely on the willingness and good faith of the involved States. Without this commitment, the legally binding decisions risk becoming mere recommendations.

In conclusion, despite the establishment of a legally binding and compulsory dispute settlement framework within the AfCFTA, the historical preference of African states for negotiation and diplomacy in resolving trade disputes, coupled with the absence of a solid supranational enforcement mechanism, represents a potential impediment to the effective operationalization of the AfCFTA's dispute settlement system. The success of this mechanism will depend not solely by its intrinsic robustness, as suggested by the Business Daily article, but more critically by the commitment of State Parties to uphold and implement the adjudications rendered by its quasi-judicial bodies.

The AfCFTA's rules-based dispute resolution system may take time to build credibility. However, the Protocol on Dispute Resolution also strongly encourages amicable solutions in the initial phase of the procedure. These alternative approaches may prove more readily adopted by African States than the formal dispute settlement mechanism itself. Historically, African traditional societies viewed these less formal, consent-based methods as more effective for harmonious conflict resolution and preserving social peace, earning because of this reason a greater public trust than formal legal systems. This perspective remains largely unchanged across Africa today.