European Union

Jonathan Bashi Rudahindwa’s monograph on regionalism in Africa is a timely addition to the literature on the topic. His focus is primarily on the creation of the African Economic Community (AEC). Created by treaty in 1991 the AEC lays down a path for Africa to follow towards the creation of an African common market. This is to be done in stages culminating in an economic and monetary union.  The AEC thus seems to be a critical landmark in the evolution towards African economic unification.

The book traces the evolution of regionalism and regional integration on the continent, from the Organization of African Unity through to the African Union but, unlike earlier treatises on regionalism, Bashi Rudahindwa rightly places emphasis on the role of the legal framework. He draws comparisons with other regional economic integration projects: the North American Free Trade Agreement (NAFTA), the Common Market of the Southern Cone (MERCOSUR), the Association of South East Asian Nations (ASEAN), and the European Union (EU), to argue for greater emphasis in the AU on capacity building, and the need to utilize law to support regulatory and institutional frameworks to facilitate trade and industrialization, and interventionist measures aimed at promoting structural transformation.

Rudahindwa’s contribution lies in his articulation of the need for institutions and legal frameworks to reflect these multiple objectives of African RECs. In this regard, he ably demonstrates how the specific objectives of NAFTA, ASEAN, MERCOSUR and the EU have informed the nature of the institutions that manage their respective organisations and their legal frameworks, including how they address issues such as the relationship between the laws of the organisations and their member states, the bindingness of agreed commitments and laws, and dispute settlement.

In this blog post I will consider policy initiatives for tackling the issue of illicit flow of funds out of African countries and the implications of these activities on investment and trade in the context of the AfCFTA. Combating Illicit Financial Flows has been a difficult task for African countries and, the best approach to tackle this endemic problem may be to develop and implement comprehensive mechanisms that will encourage the disclosure of these illegal activities in a timely manner. Such disclosure can best be realized by the adoption of a regional whistleblower protection directive.

The necessity to change the measurement strategy of the AGOA and ACP-EU trade agreements presents a challenge not only to African countries but also to the US and the European Union to establish a common understanding on the need to widen the scope of the measure. All the partners involved require a comprehensive measurement strategy to quantify the real impact of AGOA and ACP-EU on people’s lives.

It has become increasingly clear with the unfolding of the EPA events that the failure of the Community to achieve basic set out objectives lies deeper than the merits of the projects embarked on. As it has not proved efficient to hold each Partner State to their commitments to the Community at all times, it is necessary to address the systemic weaknesses that allow unconstructive concerns to permeate well-intended goals.

Reforming domestic law is critical to ensuring countries capture the benefits of their natural resources wealth. In addition, it is increasingly being recognized in investment treaty reform processes as well as in investor-state dispute settlement proceedings that investor compliance with domestic law is a prerequisite to entertaining investor claims against states.

It is clear that over the past decade, there is perhaps no other African country that has made such large concessions to the United States as Morocco has. By first adjusting its intellectual property laws, and now allowing the importation of American poultry despite concerns for its domestic market, Morocco's has affirmed its loyalty to its trade partner. By contrast, countries such as South Africa, which refused the U.S.'s intellectual property law requirements and implemented anti-dumping tariffs against American poultry, are moving in the opposite direction of liberalized free trade with the United States particularly with regard to poultry.

The AfCFTA will continue to face a number of risks that threaten to impede continental integration in favour of fragmentation. Of interest to this post are bilateral trade agreements between African countries, individually or in smaller groups, on the one hand, and non-African countries or regions, on the other.

African countries should consider alternatives to the arm’s length principle. A viable alternative to the arm’s length principle: the unitary taxation (formulary apportionment) approach should be considered. This approach looks in detail at the economic activities resulting into the profits of MNCs for tax purposes. Under this approach, tax authorities in Africa will justifiably impose corporate income taxes on “actual” profits of MNCs accruing form economic activities carried out in their jurisdictions, thereby eliminating the opportunities for base erosion and profit shifting in Africa.