Band 6, Heft 2 - Special Issue (2013): Integrating Africa Into The World Economy Through International Economic Law

This is an introduction to a special issue of the Law and Development Review comprising papers presented at the Second Conference of the African International Economic Law Network at the Mandela Institute of the University of Witwatersrand in South Africa in March, 2013.

With regional economic integration (REI) as a major strategy for development, the African continent hosts a plethora of regional economic communities of varying ambition longevity and success. While in the 1970s, political-economic ideas built mainly on the “developmental state” informed the design of most of these agreements, the change in economic thought in the 1980s which ushered in the “neoliberal turn” has since influenced the design of most REI schemes in Africa, including the New Partnership for African Development. However, among other factors, inadequate transport infrastructure linking regions poses a major impediment to regional trade and development in Africa. The more so as most African governments are not able to meet up with the financial burden, pace and managerial capability for the efficient provision and management of regional transport infrastructure. The article explores the dilemma associated with the adoption of Public–Private Partnerships (“PPP”) as a mechanism for the provision of regional transport infrastructure in Africa. While sourcing infrastructure provision through the PPP mechanism has significant advantages, it is however also embedded with a complex financial, contractual and legal process. First, it explores the theoretical assumptions which inform PPP based on ideologies within law and development debates. It argues that theoretically, PPPs are reflective of the neoliberal policy set. Against the trajectory of governance in Africa, it critically foregrounds insights that are derivable from an application of Path Dependency theory to the institutional change which comes with the planned adoption of PPP at the regional level. These insights are essential considerations for policy experts to bear in mind both while designing the regional institutional framework for PPP and during the implementation stage. Secondly, although most of the past initiatives for the provision of regional infrastructure have fallen short of their flamboyant development policy goals, the article argues that the recently initiated Programme for Infrastructure Development in Africa (“PIDA”) provides a new hope for the future of infrastructure development in the continent. The article contends that PIDA offers a legitimate platform which with the requisite support of the regional economic initiatives can generate the enabling environment for the implementation of successful regional PPP infrastructure projects.

The WHO estimates that traditional medicine(s) (TM) are used in every country around the world in some capacity and that in much of the developing world 70–95% of the population relies on these TM for primary care. It is estimated that at least 25% of all modern medicines are derived, either directly or indirectly, from medicinal plants and that in the case of certain classes of pharmaceuticals, this percentage may be as high as 60%. Some sources claim that that nearly a quarter of all pharmaceutical products worldwide are derived from plant sources. There is a global increase in interest in the use of TM and with it the global expenditure on TM. In 2005, for instance, the global market for traditional medicines was estimated at US$ 60 billion, reached US$ 83 billion in 2008 and is expected to reach US$ 114 billion by 2015. Africa prides itself as one of the most important pools for this globally important resource. Experience has, however, shown that both at national and at international levels, the continent has not yet been able to benefit from the international trade of TM. The regulation of TM is yet to become comprehensive at international and national levels. Yet, traditional medicinal knowledge has hitherto attracted only a fragmented regulatory attention by international organizations such as the WTO which focus on the various interests that TM represents. Although the harmonized regulation of the environmental, health, intellectual property, trade, cultural heritage, human rights, development and other interests on TM can be a complicated assignment, this article will attempt to show how the rules of international economic law, in tandem with other relevant international instruments, can bring benefit to the African continent by setting rules for sustainable exploitation of TM.

Most African countries are WTO Members, and yet to date none has been a complainant in dispute settlement proceedings. One possible reason is that the WTO enforcement regime is not well suited to smaller complainants whose imports from a larger defendant represent only a small share of that defendant’s total exports. Because retaliation rights must be “equivalent” to damage caused, retaliation may not be sufficient to induce the defendant to comply with its obligations. As a result, there may be a chilling effect on smaller countries commencing trade disputes. This article analyses current proposals within the context of the WTO DSU Review that address this problem. It also compares the WTO enforcement regime to general international law on the proportionality of countermeasures and suggests ways to soften the “equivalence” requirement.

To date, African states have been called before 62 tribunals of the International Centre for the Settlement of Investment Disputes (ICSID); 26 cases are pending. Recently, foreign investors have invoked Bilateral Investment Treaty provisions to challenge legislation aimed at addressing historical inequalities in the distribution of natural resources in Southern Africa ( Funnekotter, Piero Foresti, Border Timbers ). This tension between the right to property as international investment law’s origin and other rights protected by national regulation raises the question of applicable law in investor-state arbitration. The principle of “systemic integration” expressed in the Vienna Convention on the Law of Treaties requires arbitrators to have regard for the disputing parties’ other relevant obligations under international law, including human rights. Such considerations are often paramount to the determination of whether expropriations are arbitrary, discriminatory, or pursued in good faith for a public purpose. In practice, however, decisions by ICSID tribunals are far from consistent in this respect. Attempts to address this through submissions made by non-disputing parties acting as amicus curiae have produced mixed results ( Biwater, Border Timbers ). As questions remain concerning the harmonisation of these parallel regimes, an environment of legal uncertainty is emerging which impacts negatively on local populations and investors, both current and potential. This paper argues that since the admission of the EU Commission as amicus curiae in AES v. Hungary , the door has opened for regional organisations like the Southern African Development Community to participate actively in ICSID arbitrations. This may provide an enhanced opportunity to counteract the effects of a legal regime that promotes economic and political subordination to investors and investor-states, by introducing into investment law a perspective that reflects the particular circumstances of post-colonial economies.

This article inquires into the Organisation pour l’harmonisation du droit des affaires en Afrique (OHADA)’s claims to innovation for its law reform processes and into its ambition to become a precedent for pursuing legal integration among countries elsewhere in Africa and in the world. It seeks to assess whether the OHADA regime effectively contributes to, or has the potential to contribute to, socio-economic development in member states. In making this assessment, the article revisits assumptions about the part that international and Western inspired law should play in development, institutional renovation and law reform in OHADA countries. The article argues that a shift of paradigms should occur in OHADA and international economic law from the foreign investor credo towards a more nuanced empirically informed approach to law making. Legal, policy and economic experts should concentrate more efforts on the needs, practices and realities of businesses in OHADA states, particularly local enterprises the majority of which are micro, small and medium (MSM) and are regulated by both formal and unofficial rules. Focusing on facilitating the operation of local businesses as well as on poverty reduction rather than on making regional economic integration, the dominant goal of business law reform in the OHADA can lead to commercial rules and strategies more successful at fostering sustainable development in member parties. Bearing this in mind, the article analyses some of the innovations ascribed to the OHADA regime with a view to investigating whether they actually contribute usefully to the operation of businesses and more generally to socio-economic development in member states. The attributes examined concern both the form and the substance of the new law. Part A looks at the alleged increased physical accessibility and logical ordering of member states’ business law rules. In order to better appreciate the impact of this claimed novelty, Part B focuses on the OHADA Acts themselves and analyses three of their fundamental characteristics, namely their supranational, transplanted and viral-like nature, the latter two qualifiers being used metaphorically. The article shows that while OHADA-promoted rules and concepts are innovative in a number of respects, their supranational, transplanted and viral qualities have either little, none or adverse effects on the operation of local MSM businesses in the OHADA region. Some commentators contend that the adverse effects and poor effectiveness of laws can be linked to a system’s legal origins. In particular, law and economics scholars and other academics have asserted that common law is a superior normative framework to civil law for law reform aimed at promoting economic development and the “rule of law”. Part C considers this claim and argues that the debate is beside the point since it presupposes a hermetic conception of legal traditions, conceives development as being primarily dependent on foreign investment and does not rest on solid empirical data from OHADA states.

Whereas developed countries were the main players in the GATT dispute settlement mechanism, the era of the WTO saw a sharp increase in the developing countries’ participation in trade disputes. Thus, developing countries are active complainants and defendants in the WTO dispute settlement processes. Nevertheless, African states are still marginalised, and this situation has attracted attention of many scholars. As a result, scholars in the field have come up with many reasons to explain why African states do not appear as either complainants or respondents. The reasons for Africa’s non-participation have been argued to include cost of WTO litigation relative to the gains, low trade volumes, legal knowledge and non-integration of African countries in the WTO system. This article seeks to contribute to the existing literature on Africa’s non-participation in the WTO dispute settlement. The goal in this article is to confirm or dispel assumptions that African states have interests that they need to safeguard through dispute settlement but are inhibited from doing so because of the reasons mentioned above. Unlike other studies, the determination on Africa’s non-participation in the WTO dispute settlement will be approached from African states’ participation in intra-Africa RTA dispute settlement mechanisms. While there are six intra-Africa RTAs notified to the WTO, this work focuses on only two – East African Community and Southern Africa Development Community.

The growth of international trade in recent years has highlighted the importance of customs authorities as the gateway to the global market. However, border delays and inefficiencies resulting from cumbersome documentation requirements have disrupted the flow of goods and acted as a non-tariff barrier to international trade in many African countries. Additionally, these same deficiencies have interrupted the inward flow of vertical Foreign Direct Investment (FDI). When searching for suitable locations to establish manufacturing plants, foreign investors place emphasis on a number of factors such as the cost of exporting, expediency of importing time sensitive production inputs and distance to target markets. Customs efficiency plays a major role in positively influencing these factors and hence forms a crucial part of any investment decision. This article examines the negative impact of inefficient border procedures on vertical FDI inflows to Africa. The article recommends the implementation of single window systems as an investment facilitation tool.

International investments in developing countries are fraught with varied influences, competing interests and contestations about their contribution to development. This article examines the main vehicle of foreign investment – international investment law (IIAs) – to ascertain its role as a development tool particularly for developing African states. It uses theories and legal analysis of capitalism and development, to argue that IIAs represent forms of capital, capitalisation and growth processes as development – “capitalist growth development investment” (DFDI). It argues that FDI literature erroneously propagate the construction and framing of investment capital and promote the intangible assets of transnational corporations as the most important factor in FDI’s growth propensity for developing host states. It shows how this flaw roots IIAs, especially BITs in capitalism, capitalisation of assets and entitlement rights as the factors of growth needing substantive protection, but neglects the relational effect of growth development as a contribution of foreign investments to the developing host states. This contrasts with the broader development orientation of African economic cooperation and preferential trade and investment agreements, creating thereby the potential for conflicts between various investment regimes on the concept of development. The article calls for a new rationality in defining investment capital, which encourages the application of the economic concept of “asset” or “capital” to LDCs natural resources that may form the subject of investments. This will facilitate their “transnationalisation” and “capitalisation” and invariably enhance and protect their growth potential, including through IIAs. It also entails suggestions on how developing host states can protect the broader development contribution of IIAs.

Services liberalisation has gradually become very important for growth in developed and less-developed countries alike and can, as such, be seen as development prospects for sub-Saharan Africa where numerous economic integration attempts are stories of repeated failures. Despite the abundant literature on PTAs, however, little attention has been given to Central Africa Economic and Monetary Community (CEMAC) as a trade bloc. This is an attempt to address that dearth. At a time when “boosting intra-African trade” is gaining currency on the continent, this article tests the compatibility of the potential CEMAC economic integration agreement (EIA) against the background of the existing framework and argues that Central Africa countries would be in a better position to integrate their economies after widening the borders of their individually tiny markets. Analysing the legal discipline behind services Preferential Trade Agreements (PTAs) under the General Agreement on Trade in Services (GATS) and how CEMAC’s agreement fits into this legal landscape, this article further advocates that this sub-group of countries should go beyond the Enabling Clause self-contentment and embark on a deeper (and comprehensive) integration.