Africa in the World Trade Organization
Over the past year, TULIP Consulting has been working with the Firoz Lalji Institute at the London School of Economics, seeking to better understand African countries' participation at the WTO. The findings have been published by LSE Press in the chapter Africa in the World Trade Organization as part of the open access book "How Africa Trades", launched on May 15. The main findings are summarized in a blog post co-authored by TULIP Consulting's Director Colette van der Ven, and David Luke, published by the LSE Business Review, available here and also reproduced below.
[this blog is reproduced from LSE business review]
Why African countries struggle to exercise their agency in the World Trade Organization
"African countries suffer from severe capacity constraints in their engagement with the core functions of the World Trade Organization. To strengthen the link between the WTO and these countries’ development objectives, there is an urgent need to address deficits in the technical capacities of African missions in Geneva. Colette Van der Ven and David Luke share these and other insights from recent research on African agency in the WTO. The World Trade Organization (WTO) regulates international trade between its members. With over a quarter of the WTO‘s 164-country membership being African, it is important that the organisation works for and with Africa. Drawing upon recent research, we find that African agency at the WTO has had a mixed performance. While African members have achieved specific negotiating objectives in areas such as public health, they have failed to effectively leverage the system in other areas, including ongoing negotiations and dispute settlement. This suggests that more can be done to leverage the WTO to advance African members’ development objectives.
Participation in deliberative bodies
Except for key bodies that are of obvious strategic interest, such as the General Council, the Committee on Trade and Development (CTD), and the Trade-Related Intellectual Property Rights (TRIPS) Council, African participation in most other WTO deliberative bodies is less substantial. Participation in WTO committees is not always at the top of the list. This is a missed opportunity to engage in the strategic use of trade policy instruments to advance national commercial interests, including in areas of importance to African countries, such as sanitary, phytosanitary and other technical standards. This reflects both capacity constraints and the high cost of maintaining diplomatic missions in Geneva. Typically, African diplomatic missions are understaffed, with concurrent responsibility for covering deliberations at other international organisations in Geneva, necessitating prioritisation.
One area in which African countries are actively participating is accessions. Nine African countries are at various stages of acceding to the WTO: Algeria, Comoros, Equatorial Guinea, Ethiopia, Libya, São Tome & Principe, Somalia, South Sudan and Sudan. African countries remain interested in joining the WTO as it locks in important trade reforms that are helpful for ensuring predictability and lower trade costs, attracting investment and diversifying economies. However, the accession process is lengthy, cumbersome, and adversarial, often stretching the thin capacities of countries. For countries that account for small shares of world trade, the accession process could be improved and rendered more expedient. Perhaps if Sudan’s accession process had been nimbler and less onerous, the stakes would have been higher for the generals who are fighting over control of the gold commodity trade.
Participation in negotiations
Since the WTO’s establishment in 1995, it has failed to conclude a major round of negotiations. The Doha Round, launched in 2001, aimed at an ambitious programme of reform in agriculture and tariffs on industrial goods, and to provide developing countries with flexibilities and policy space. WTO members are divided over the merits of further pursuing the Round. Developed country members have effectively turned their back on it.
Meanwhile, several initiatives and negotiations have been launched with enthusiastic promotion by developed country members. These include joint statement initiatives (JSIs) on e-commerce, investment facilitation, services domestic regulation, and micro, small and medium-sized enterprises (MSMEs) in trade. Gender equality in trade, trade and environmental sustainability and plastics pollution have also featured as new areas of interest. Africa’s participation in these negotiations and discussions is characterised by either low levels of engagement and/or an overwhelming focus on re-emphasising the issues in the unfinished Doha Round.
However, more than half of the 44 African WTO members are participating in at least one joint statement initiative. Participation between the different JSIs is not equally spread, reflecting, in part, the distinct set of draft provisions set out in each of the initiatives. For example, the draft JSI on e-commerce includes market access provisions and other measures on cross-border data flows and data localisation requirements that will have implications on a country’s regulatory approaches to e-commerce and data governance. African members remain wary of making commitments in these areas. The JSIs on services domestic regulation and investment facilitation do not cover market access but envisage binding commitments. The JSIs on small and medium-sized enterprises, plastic pollution and trade and environmental sustainability reflect mostly best endeavour provisions focused on regulatory cooperation. Investment facilitation is the JSI with the highest level of African participation. This reflects not only African prioritisation of investment mobilisation but also the fact that the draft proposals do not cover controversial matters such as market access but focus on facilitating investment through rules on streamlining bureaucratic requirements and processes.
Several factors explain the general lack of engagement in most of the JSIs that address so-called ‘new issues’, including concerns that new rules will further restrict countries’ policy space; the perception that the new initiatives favour the interests of the developed economies at the expense of developing and least developed countries; the envisioned inclusion of a most favoured nation (MFN) provision in some JSIs, which would enable ‘free riding’ on the benefits without having to make concessions; and questions about the appropriateness of discussing non-trade topics such as the environment at the WTO. In addition, on grounds of both principle and procedural rectitude, most African members are reluctant to engage fully in the JSIs and other new issues until the core subjects of the Doha Round are addressed.
Even so, African members registered some consequential results at the Twelfth WTO Ministerial Conference that took place in June 2022. For example, led by South Africa, a waiver to the TRIPS Agreement was adopted to override patents and produce vaccines to combat the COVID-19 pandemic. A multilateral agreement on fishery subsidies, one of the major outcomes of the ministerial conference, also includes some gains for African members. These outcomes demonstrate that negotiating breakthroughs, technical solutions and results that are development-friendly are possible even in a systemically biased and polarised WTO.
Participation in dispute settlement
The WTO is grappling with an ongoing disputes settlement crisis. The absence of a functioning Appellate Body allows for panel reports to be appealed ‘into the void’, thereby leaving disputes unresolved. While some members have set up an alternative arbitration arrangement, the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), this will be at best a partial solution given that membership is optional and contributes to the risk of a splintered WTO.
The Africa Group has emphasised that any dispute settlement reform should seek to enhance the participation of African countries in the dispute settlement system. The latter concern refers to low levels of African participation in the WTO’s dispute settlement system due to expense involved in litigation, technical and capacity constraints at the African diplomatic missions in Geneva and at home in the capitals, fear of retaliation by donor countries in some situations, insufficient economic heft to incentivise compliance of trading partner, and the reality that most African countries mainly trade under preferential schemes.
Until 2022, Tunisia was the only African country ever to have filed a dispute as a complainant. This concerned a case against Morocco on anti-dumping measures on school exercise books. In July 2022, South Africa filed a complaint against EU phytosanitary requirements on its fruit exports. On the respondent side, only three African countries (Egypt, Morocco and South Africa) have been sued, being subject to a total of 13 disputes. Unsurprisingly, the three African countries that have been subject to disputes are among the largest economies on the continent.
With respect to third-party participation, African countries account for less than 5 per cent of participation as third parties. The African countries concerned had a direct commercial or strategic interest in the cases, which included sugar and cotton subsidies, bananas, tobacco advertisement laws, trade remedies, and trade and environmental issues in relation to extraterritoriality.
Another indicator of African participation in the WTO dispute settlement concerns the appointment of African panellists as adjudicators of disputes. African panellists’ participation is low and concentrated in a handful of countries.
The main conclusion from this examination of African agency at the WTO is that overall performance is mixed. Low levels of participation in the core functions of the WTO suggest that African members are not sufficiently linking development priorities to their rights and obligations under the WTO framework. It also reflects systemic biases against small economies, such as in dispute settlement, and severe capacity constraints. Procedural rectitude and ideological positioning have further limited African countries’ engagement in the joint statement initiatives that address ‘new issues’ to update the WTO rulebook in a changing global economy.
Here, ideology trumped pragmatism. A pragmatist approach would have implied relying on empirical evidence and analysis for guidance on how JSI proposals might impact development concerns—and formulating negotiation priorities and strategies accordingly. At the same time, where major interests are perceived to be at stake, African agency has been exerted in pursuing them in the deliberative bodies and negotiations – including through coalitions such as the Africa Group and the Least Developed Country (LDC) Group – and in dispute settlement.
To strengthen the link between the WTO and African countries’ development objectives, there is an urgent need to address deficits in the technical capacities of African missions in Geneva. Here, the African Union, which maintains a representative office that monitors deliberations at the Geneva-based international organisations, could play a key role. It should strengthen its establishment to pool expertise and provide technical services to the African Group, including in drafting proposals and preparing responses to proposals from interlocutors.
Some African ambassadors who were interviewed identified the dearth of drafting skills as a priority to be remedied and the need to surmount over-reliance on a few Geneva-based development-friendly think tanks. These capacity constraints can be addressed, including by enhancing the role of the African Union in Geneva by giving it observer status at the WTO, as well as by investing in African think tanks focused on assessing the implications of relevant WTO initiatives and negotiations for African countries’ development objectives. Doing so would also equip African countries to better align their positions in the WTO to their offensive interests. For more on Africa and trade, please see: