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Coalition of the Developing: Can regional trade agreements on the African continent lead to development?

Mary Katherine Lederer was a 2018-2019 Young Scholar Awards Program recipient. She attended the University of Notre Dame and majored in economics and political science.

Still struggling to attain stable political regimes, sound economic institutions, and greater access to world markets, African policymakers have turned their attention to the regional free trade agreement (RTA) as a potential tool for development. In 2012, with renewed enthusiasm for achieving trade integration, the African Union set out to create the African Continental Free Trade Agreement (CFTA). An ambitious project to coordinate trade policy and economic standards across the continent, the CFTA and its lofty goals remain under scrutiny.

While African policymakers have recently shifted even more focus towards the CFTA as a mechanism for augmenting economic growth, they are not unfamiliar with the project of trying to improve regional free trade. In fact, across the globe, RTAs have proliferated in number over the past decades as states face weakened international institutions and repeated breakdowns in WTO negotiations. Noting these trends in RTA formation, the African continent has created and reformed a number of regional arrangements over the years with the hope of sparking independent growth, but to no avail.

Currently, eight RTAs span the African continent: the East African Community (EAC), the Economic Community of West African States (ECOWAS), and the Southern African Development Community (SADC)—to name a few. Unlike the well-fitting pieces of a jigsaw puzzle, these arrangements often overlap in membership and purpose. Policy coordination issues and collective action problems among member states have only hampered anticipated economic growth. Despite evidence of uneven economic gains and shaky implementation records within existing RTAs, African nations have indicated support for the recent continent-wide integration efforts.

Thus, the proposed CFTA raises a striking puzzle: although existing RTAs have experienced varying degrees of success, with most failing to adequately enforce standards for integration among member states, policymakers continue to push forward plans to coordinate trade among all African countries.

These policymakers involved in CFTA negotiations do not deny that challenges lie ahead. Nonetheless, they move forward with the belief that the CFTA presents an opportunity to address the astronomical trade costs, as well as the constraints on market access, infrastructure, and economies of scale that continue to plague commercial transactions within the continent.

Because it represents the realization of a long-awaited development strategy, the CFTA is often treated as just that: the means to achieving the next listed objective in a pre-determined development plan. As a result, reports do not often rigorously evaluate the feasibility of this ambitious agreement. A closer examination of the profiles of states that were first to ratify the CFTA sheds light on the mixed motives of countries looking to participate and provides further evidence that the idea of seamless continental integration is far from Africa’s current reality.

Primarily, historic experience within existing RTAs has motivated or deterred state ratification of the CFTA. More specifically, within RTAs that have experienced a relatively high degree of implementation success, the member states most willing to undertake the project of continental integration are the regional hegemons who benefit from the existing agreement and exhibit infrastructure improvements. These hegemons have been either positively or not adversely affected by their existing RTAs and expect the CFTA to yield similar results without requiring them to drastically alter their current behavior. Non-hegemons within a high-performing RTA remain economically disadvantaged and will not participate in order to avoid the administrative costs of instituting a larger agreement.

Within low-performing RTAs, the hegemon is more likely to take a protectionist stance due to its perception that RTAs threaten its domestic industries. On the other hand, in the same low-performing RTA, there exist non-hegemons who experience limited trade gains, possess poor infrastructure, yet indicate potential for growth. These countries will show more interest in participating because they have been held back by their current RTA membership and have little to lose by joining a broader arrangement. The types of countries most interested in expanding regional integration – the hegemons of high-performing RTAs and the non-hegemons of low-performing RTAs – sharply differ in their profiles and motivations, which will make coordination efforts even more difficult than anticipated by policymakers.

Although 24 of the total 52 signatories to the agreement have ratified and launched the CFTA into its enforcement stage, the process of bridging policy gaps, tariff regulations, and rules of origin among the disparate states involved will not be easy and will come at a high cost. Both hegemons and non-hegemons from the existing RTAs will undoubtedly continue to ratify the agreement in the months to come, but as seen over and over again in the creation of smaller RTAs across the continent, ratification of a trade agreement on paper is not the hard part, effective implementation on the ground is. In the case of the CFTA, the implementation challenges are steep if not insurmountable. The disparities between the states most eager to ratify poses a significant obstacle to proposed integration, and the implementation trajectory of the CFTA is even more tenuous than policymakers are willing to acknowledge.

Further, problems arising in the European Union and other RTAs around the world have revealed that fault lines exist in large regional arrangements, suggesting that it is time to craft more innovative solutions to Africa’s continuing trade challenges. While African development is an undeniably complex topic that requires consideration from multiple angles, African policymakers must rethink regionalism as an adequate strategy for strengthening African economies.