NIGERIA: DOMESTICATION OF THE AFRICAN CONTINENTAL FREE TRADE AREA (AFCFTA) AGREEMENT

By Mfon Ekong Usoro (Partner, Paul Usoro & Co, Lagos, Nigeria)

On the LawPavilion Blog, this paper is a 2-part publication (this is part 1), use the button at the bottom to continue reading. Don’t miss any part of it. Remember to leave your comments and thoughts in the Comment Section.

INTRODUCTION

The African Continental Free Trade Area Agreement (AfCFTA) is a multilateral trade agreement negotiated and agreed by member states of the African Union and facilitated by the African Union Commission. The main objective of the Agreement is to boost intra-African trade through the creation of a single continental market for goods and services and a single customs union to facilitate free movement of goods, funds and temporary entry of business visitors. 54 of the 55 African countries have signed the AfCFTA. Eritrea is yet to join the AfCFTA regime. 36 African countries have signed and ratified the Agreement. Trading under the AfCFTA commenced in January 2021 and several State parties have submitted their initial offers and requests.

There have been concerns and debates in Nigeria around the issue of
domestication of the AfCFTA. The process of domestication involves the enactment of the African Continental Free Trade Area Agreement as a domestic or national legislation by the National Assembly of Nigeria. Proponents of domestication of the AfCFTA Agreement argue that non-domestication will impede Nigeria’s ability to take benefit of or implement the AfCFTA. This argument is hinged on the Nigerian jurisprudence derived from the constitutional provision requiring international treaties to be enacted into law if it is to have the force of law in Nigeria. Section 12 of the Nigerian Constitution stipulates that:

“No treaty between the Federation and any other country shall have the force of law except to the extent to which such treaty has been enacted into law by the National Assembly.” (1)

1. Abacha v Fawehinmi (2000) 6 NWLR, Part 660, pp. 288.

The promulgation of international conventions into law by the National Assembly is accomplished in two distinct formats. The convention may be incorporated as a schedule to an act or by straightforward ratification and enforcement act that comprises solely of the reproduced international convention. An Act of the National Assembly converts the international treaty into an integral part of Nigeria’s municipal laws with direct application and enforceability by the courts in Nigeria. In explaining the status of international treaties in Nigeria, OGUNDARE, JSC in Abacha v Fawehinmi (2) held that

“An International treaty entered into by the Government of Nigeria does not become binding until enacted into law by the National Assembly. Before its enactment into law by the National Assembly, it has no such force of law as to make its provisions justiciable in our Courts”. (3)

3. Abacha v Fawehinmi (2000) 6 NWLR, Part 660, pp. 288.

A treaty has the force of law when it confers rights directly to natural persons or juridical persons. Through the process of domestication, the treaty becomes enforceable and justiciable in court enabling individuals or companies to invoke or defend rights derived from the incorporating legislation and indeed compel the Nigerian government to comply with the provisions of the treaty where there is a violation, or certain provisions are not implemented.

International conventions generally require legislative intervention to give effect to it and grant it the force of law in respective member States. Examples of international conventions promulgated into law by the National Assembly include the United Nations Convention on the Law of the Sea, International Convention for the Prevention of Pollution from Ships, 1973 and 1978 Protocol (Ratification and Enforcement) Act 2007, United Nations Convention on Carriage of Goods by Sea (Ratification and Enforcement) Act 2005, International Convention for the Safety of Life at Sea (Ratification and Enforcement) Act, 2004, and the Treaty to Establish
the African Union (Ratification and Enforcement) Act 2003, to cite a few.

Is it mandatory that the National Assembly should make a wholesale enactment of the AfCFTA Agreement which comprises both trade in goods and trade in services into our national laws for Nigeria to benefit or implement its obligations under the AfCFTA? Put differently, do we need an African Continental Free Trade Area Agreement (Ratification and Enforcement) Act? Is Nigeria prejudiced by not having such a legislation? The jury is still out.

EXISTING MODELS ON APPROACH OF STATE PARTIES TO MULTILATERAL TRADE AGREEMENT

By the provision of Article 2 of the Vienna Convention on the Law of Treaties (4), 1969, and the Nigerian Treaties Act, the AfCFTA Agreement is correctly referred to as an international treaty. Treaties are defined in Section 3(3) of the Treaties Act as

“… instruments whereby an obligation under international law is undertaken between the Federation and any other country and includes “conventions”, “Act”, general acts”, “protocols”, “agreements” and “modi-vivendi”, whether they are bilateral or multi-lateral in nature”. (5)

5. Treaties (Making Procedure, etc) Act, Cap T20, LFN 2004

However, trade agreements appear to be in a separate category and are treated differently from typical international conventions with respect to the need for incorporation into municipal laws.

Proponents of the view that by virtue of Section 12 of the Constitution and the precedent set in the case of other international conventions that have the force of law in Nigeria, the AfCFTA Agreement should be enacted into law by the National Assembly and are quick to cite as examples international conventions that the National Assembly has domesticated. With respect, the argument fails to appreciate the difference between a trade agreement and the traditional international conventions. For a balanced view, a review of global models on the status of international trade agreements vis-à-vis domestication, compliance and implementation provides a useful guide. The closest model to the AfCFTA Agreement is the WTO Agreements – General Agreement on Tariffs and Trade
(GATT) and the General Agreement on Trade in Services (GATS). The AfCFTA is actually closely fashioned after the WTO Agreements in content and procedures. If a comparison needs to be made, the approach of member states of the WTO to the GATTS and GATS should serve as the best guide on whether the AfCFTA should be promulgated as national legislation by State parties. It will greatly help to identify the member states of the WTO if any that has incorporated the entirety of the WTO Agreements into their municipal laws thereby granting the GATT and GATS the force of law and enforceability in the courts of such countries. One would be hard put to point to any of the major trading nations that have domesticated the entirety of the WTO Agreements, that is, including the agreements on trade in goods and trade in services. There is a congruence of thoughts that the WTO Agreement does not and was not intended to have direct applicability or to be self-executing in the domestic affairs of member states of the WTO. Literature abounds in support of that conclusion and need not be canvassed in this paper.

The dynamics in trade agreements are different from the typical international convention where compliance is at the same level across board for every contracting State of the convention, the exception being only in cases of permitted reservations. Trade agreements on the other hand operate around mutual benefits and consequently accommodate inbuilt and acceptable avenues for infractions and violations and uneven levels of implementation. AfCFTA Agreement, like the WTO Agreements, permit State parties to derogate from trade commitments made through the mechanism of the Most Favoured Nation (MFN) exemptions, limitations to market access and national treatment etc. and has its negotiated and agreed mechanism for dealing with violations by State parties. The same is not the case with the implementation and enforcement of the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) and its Annexes or the Geneva Convention Relative to the Treatment of Prisoners of War 1949, or the Hague-Visby International Convention for the Unification of Certain Rules Relating to Bills of Lading (1924/1968), for example, which implementation are uniform to all contracting States.

A. Becoming a State Party
What actions are required of countries that are parties to multilateral trade
agreements to be entitled to full participation in the trade regime? The eligibility criteria for attaining the status of a State party and taking benefit of a multilateral trade regime is usually specified in the agreement. The AfCFTA Agreement, for example, in Art. 23 requires

“signature and ratification or accession by Member States …. in accordance with their national laws.”

Art. 1 of the AfCFTA defines a State Party as a member state that has ratified or acceded to the AfCFTA Agreement. To become a signatory, a member State signs the treaty when it is opened for signature at the venue of the diplomatic conference where the agreement was adopted and if subsequent to the adoption, signs at the depository which in the case of the AfCFTA, is the African Union Commission. Signing a treaty signifies the country’s commitment to take steps to conclude the process of becoming a State party. Obligation to refrain from actions that will derogate from or defeat the objectives of the treaty attaches upon signature (6).

To become a State party, the AfCFTA requires member States to take a second step after signature. Art. 23 identifies the two steps: signature plus ratification or signature plus accession. Upon ratification or accession, a member State is required to deposit the instrument of ratification or instrument of accession with the African Union Commission (AUC) being the repository. Accession and ratification are often used interchangeably but there is a subtle difference between the two terminologies. Accession occurs when:

“a state accepts the offer or the opportunity to become a party to a treaty already negotiated and signed by other states. It has the same legal effect as ratification. Accession usually occurs after the treaty has entered into force.” – United Nations Glossary of Terms Relating to Treaty Actions (7)

7. United Nations Glossary of Terms relation the Treaty Actions.
https://treaties.un.org/pages/overview.aspxpath=overview/glossary/page1_en.xml#accession accessed on 27 May 2021;

Art. 24 of the AfCFTA stipulates 22 ratifications by member States for the
Agreement to enter into force. Whereas the AfCFTA entered into force on 30 May 2019 after attaining the minimum threshold of 22 ratifications from member states of the African Union, Nigeria signed the Agreement on 7 July 2019 after the AFCFTA had entered into force. Nigeria’s Instrument of Ratification was deposited on 5 December 2020 at the AUC, so technically, Nigeria acceded to the AfCFTA Agreement. The process for “ratification” or “accession” usually performed by a competent authority varies from country to country. In Nigeria, the procedure for obtaining “approval” or “ratification” or “accession” is performed by the executive arm of government while the procedure for applicability or enforceability of the
the agreement is through the promulgation of an Act by the National Assembly incorporating the agreement or specified aspects of the agreement into our domestic laws.

The deposit of its instrument of ratification as provided in the AfCFTA Agreement completed the eligibility criteria to attain the status of a State party and having complied with the requirement stipulated by the AfCFTA to become a full member, Nigeria became a State party in December 2020. A State party is entitled to take benefit of and participate fully in the trading system under AfCFTA through the submission of its schedule of tariff concessions in the case of trade in goods and schedule of specific commitments in the case of trade in services and participation in the negotiations facilitated by the AfCFTA secretariat. The concerns of persons
who fear that “Nigeria will be left behind” appears to be unfounded because having fulfilled the eligibility criteria for a State party, Nigeria is indeed participating fully in the ongoing negotiations. Nigeria’s schedule of commitments forms part of the initial combined offers submitted by ECOWAS as permitted by the AfCFTA. AfCFTA requires State parties to make commitments to liberalize markets in specified sectors. The commitments are published in schedules that list the sectors opened, the extent of market access granted and the terms, limitations, and conditions to the market access. The scheduled commitments guarantee access to the country’s market in the listed sectors, and they spell out any limitations on market access and national treatment. The point here is that a wholesale domestication of AfCFTA in the manner the National Assembly domesticates international conventions generally is not required for Nigeria to participate in or benefit from the AfCFTA trading system.

Nigeria is a member state of the WTO, it scheduled its commitment on tariff
concessions and commitments on services sectors designated for liberalization together with limitations on market access or national treatment on specified sectors as did other members of the WTO. Nigeria having met the membership requirement of the WTO is bound by the obligations imposed by the WTO Agreement on contracting States. Like several other trading nations of the WTO regime, the National Assembly has not domesticated the WTO Agreements and Nigeria’s interest has not been jeopardized howsoever by the non-domestication through an omnibus “ratification and enforcement” legislation for the WTO Agreements.

B. Multilateral/Bilateral Trade Agreements as “Executive Agreements”

The response to the question regarding the legal status of the AfCFTA is simply that the AfCFTA is a validly entered agreement by Nigeria. It creates rights and obligations for Nigeria as it does for other State parties irrespective of the fact that it has not become national or domestic law. This paper posits that the act of signature and deposit of the instrument of ratification by the competent authority, in this case, the President of the Federal Republic of Nigeria representing the executive arm of government completes the steps required to clothe the AfCFTA Agreement as a valid and subsisting agreement that is binding on Nigeria.

Trade policies and agreement whether multilateral or bilateral fall under the category of “executive agreements”. Trade agreements rest on the President’s express and inherent constitutional powers in the “foreign affairs” arena. S.148 of the 1999 Constitution expressly vests in the President the right of

“determining the general direction of domestic and foreign policies of the Government of the Federation.” Trade policies expressed in agreements with other countries is “foreign trade policy”. Under the constitutional powers to negotiate and execute international trade agreements with foreign countries, Nigeria has negotiated and signed several trade agreements with several countries, both multilateral and bilateral agreements. That the AfCFTA is multilateral, on its own, does not make it require an Act of the National Assembly any more than the several bilateral agreements in existence did not require enactments by the National Assembly for them to be binding and operational.

“Executive agreements” like the AfCFTA Agreement fits into the classification of treaties contemplated in the Treaties (Making Procedure, etc) Act, Cap T20, LFN 2004. Section 3 of the Treaties Act identify three categories of treaties and stipulates the category that promulgation into law is mandatory and those that require only ratification. The section requires “Law-making treaties” referring to treaties intended to have direct applicability or constitutes alteration of existing laws or impacts on the legislative powers of the National Assembly to be enacted into law. The AfCFTA Agreement is not such an agreement. Subsection 3(2) stipulates ratification for the remaining categories of international agreements
except for agreements on mutual exchange of cultural and educational facilities where ratification is optional.

The practice in the United States of America regarding the authority of the executive arm of government to enter into binding international treaties making is quite informative. A study published in a briefing paper by the European Parliamentary Research Service confirmed that

“In the United States, the term “international agreement’ pools two major types of agreements: international treaties and executive agreements.” (8)

8. Micaela Del Monte and Elena Lazarou, How Congress and President Shape US Foreign Policy, European Parliamentary Research Service, March 2017, p.3. https://www.europarl.europa.eu/RegData/etudes/BRIE/2017/599381/EPRS_BRI(2017)599381_EN.pdf accessed 26.05.21

The Congress (legislature) and the President (executive) have the legal authority to make binding treaties. The Executive can negotiate, conclude and sign international trade agreements. However, such agreement can have the force of law in the United States only when it is ratified by the Congress and the promulgation of a domestic law to enforce and implement the agreement. Ratification of an international treaty by two-third majority in the Senate makes the treaty part of the US domestic laws.

The executive in the United States is empowered to enter into binding international trade agreements through the use of “executive agreements” without the two-third congressional approval required for traditional treaties. Scholars assert that

“the most common use of these type of agreements is in international trade” (9).

9. Ibid. para. 9 International Agreements without Senate Approval, https://www.law.cornell.edu/constitution-conan/article-2/section2/clause-2/international-agreements-without-senate-approval

Pragmatism seems to be a very important consideration in the decision on whether to have a treaty executive agreement where the legislature is not involved or with limited involvement requiring information and consultation with the Congress or to go through the congressional process of passing a domestic legislation. Approval by the Senate could be signalled by a resolution where an implementing legislation is not required. An informed decision is made by the executive who has the sole authority to initiate and negotiate international trade agreements after due consideration is given to the following criteria:

• the commitments and risks involved into the agreement;
• possible effects on state law;
• past practice in similar cases;
• necessity to enact law to give effect to the agreement;
• Congress preferences;
• proposed duration, and the degree of urgency required to conclude” (10)

10. Ibid. para. 10/11

Even though executive agreements enter into force when signed by the president, the executive derives its authority to bind the country from a statutory grant of that power by Congress or from the president’s inherent powers on foreign affairs. U.S. legislation like the Trade Act of 1974 and the Omnibus Trade and Competitiveness Act 1988 and subsequent extensions authorizes the President to negotiate and enter into multilateral trade agreements within specified periods. Where there is notification and consultation with Congress on the proposed international agreement and approval of the Senate by way of a resolution (not ratification) is obtained the agreement is referred to as congressional-executive agreement and has a binding effect. The North American Free Trade Agreement (NAFTA) and the WTO General Agreement on Tariffs and Trade (GATT), other free trade agreements are examples of congressional-executive agreements. There are a limited number of executive agreements negotiated, concluded and proclaimed solely by the president relying on its express and inherent constitutional powers without any form of congressional involvements.

In the next part, we look extensively at compliance issues and analyse how desirable it is for the AfCFTA to be backed by law in Nigeria.

MORE REFERENCES/CITATION

• (2) Abacha v Fawehinmi (2000) 6 NWLR, Part 660, p. 288.
• (4) “treaty means an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation”.
• (6) Article 18, Vienna Convention on the Law of Treaties, 1969

* This paper was initially published by Paul Usoro & Co.