An Assessment of African Participation in the World Trade

Organization Dispute Settlement Mechanism and its Effects on

Development in African Countries

Thesis

By

Diana Mosadak Amin Ahmed Ghalib

Submitted in Partial fulfillment

Of the Requirements for the degree of

Degree Earned

In

International Economic Relations

State University of New York

Empire State College

2017

Reader: Max Hilaire, PhD.

2

Statutory Declaration / Čestné prohlášení

I, Diana Mosadak Amin Ahmed Ghalib, declare that the paper entitled:

An Assessment of African Participation in the World Trade Organization Dispute

Settlement Mechanism and its Effects on Development in African Countries

was written by myself independently, using the sources and information listed in the list

of references. I am aware that my work will be published in accordance with § 47b of

Act No. 111/1998 Coll., On Higher Education Institutions, as amended, and in

accordance with the valid publication guidelines for university graduate theses.

Prohlašuji, že jsem tuto práci vypracoval/a samostatně s použitím uvedené literatury a

zdrojů informací. Jsem vědom/a, že moje práce bude zveřejněna v souladu s § 47b

zákona č. 111/1998 Sb., o vysokých školách ve znění pozdějších předpisů, a v souladu s

platnou Směrnicí o zveřejňování vysokoškolských závěrečných prací.

In Prague, 08.12.2017 Diana Mosadak Amin Ahmed Ghalib

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Acknowledgments

First and for most, I would like to thank my family, especially my mother for their

continuous support throughout the whole duration of my studies. They have been there

for me all the way along through the ups and downs of my academic life providing me

with valuable advice and guidelines. Besides my family, I would like to thank my

friends for sharing my struggles and providing me with constant support, especially

during late night writing sessions. Secondly, I would like to thank Dr. Max Hilaire for

being my mentor throughout the thesis writing process. He has been a great help in

guiding me through my work since step one. His feedback, suggestions, and advice

have contributed greatly to my thesis. I would like to present my thanks to Dr. Shiela

Aird for helping me to get across my emotional breakdowns and complete my work

with at most dedication. Moreover, I would like to thank Professor Oscar Hidalgo for

his concerns and at times of confusion for his support. I would like to also thank

Professor Lenka Kinclova and Professor Jan Zahorik for as serving great sources of

inspiration to choose the following topic as my thesis work. Last but not least, I would

like to thank the Empire State College for providing me with the best years of my life

yet.

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Table of Content

Acknowledgments ............................................................................................................ 3

Abstract ............................................................................................................................. 5

Introduction ....................................................................................................................... 1

Research Methodology ..................................................................................................... 3

WTO’s Main Objective ................................................................................................... 5

WTO & Africa .................................................................................................................. 7

Overview of the Dispute Settlement ................................................................................. 9

African Participation ....................................................................................................... 11

The Degree of African Participations ............................................................................. 12

African Legal Assistance ................................................................................................ 14

Reasons for African Countries Lack of Participation ..................................................... 16

Why African Involvement is Important .......................................................................... 18 The Curious Case of Egypt ...................................................................................................... 18

Africa Caribbean and Pacific (ACP) -EU Relations ....................................................... 19 Case 1. WTO Banana Wars ................................................................................................. 20 Case 2. EC Sugar-Subsidies Dispute .................................................................................... 22 Case 3. Africa & TRIPS......................................................................................................... 24

Aid for Trade .................................................................................................................. 29

African Global Stance ..................................................................................................... 31

Africa’s Bargaining Power in International Trade .................................................... 34

Alternatives for Africa .................................................................................................... 36

Economic Partnership Agreements ................................................................................. 39 What is EPAs? ......................................................................................................................... 41 How Relevant are EPAs for the Developing Trading Regime? ................................................ 43

Conclusion ...................................................................................................................... 46

Reference List ................................................................................................................. 48

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Abstract

The following thesis assessed the degree of participation of the African countries in the

World Trade Organisation Dispute Settlement Mechanism and the effect of their

participation on the level of their development. The studies demonstrated the limited

degree of the African participation in the World Trade Organisation’s legal procedures

and negotiations. A thorough assessment has been examined selected cases of the

Banana Wars, European Communities Sugar Subsidies, and Nelson Mandela Vs. Big

Pharma to demonstrate the importance of the African participation in the system.

Furthermore, the researchers examined the position of the African countries in

international trade, their current contributions and possible alignments outside the

World Trade Organisation. Despite the low levels of participation that have concluded

from statistical analysis, the effects of the participation on African development are not

clear as there are various dimensions to the assessment of development. However, the

researcher attempted to suggest various steps to increase the relevance of African

countries in the global trade affairs through negotiating multilateral and regional

agreements.

1

Introduction

“It [is] that courage that Africa most desperately needs” Barack Obama mentions in his

memoir Dreams from My Father: A Story of Race and Inheritance upon reminiscing

(2004, p.141). This sentence summarizes the modern view of the African continent

globally regarding every aspect of its existence. A continent that needs courage, a

continent that is desperately in need. The rest of the world had spared no efforts to assist

the African countries; this is predominantly evident in international trade and its role in

assisting the process of African development. Therefore, this thesis will address the

African question from an international trade perspective.

There are 54 countries with a population of 1.216 billion people in the African

continent, yet this continent remains underrepresented on a global scale (United Nations

Economic Commission for Africa, 2017). The United Nations identifies 33 of African

countries as Least Developed Countries (LDCs). The outburst of poverty, economic

inefficiency, political and social instability led the African countries towards a slippery

slope road. Despite the African presence internationally in many governmental

organizations and regional unions, Africa has little contributed to the formation of

global politics and economics. It is distinctly evident in the World Trade Organisation

(WTO). Following the premises that trade is the lifeblood of growing economies,

African countries should top the line of the driven force in the organization to benefit

the most from trade negotiations and dispute settlement outcomes. However, the reality

reveals otherwise.

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The creation of a legalized dispute settlement mechanism within the WTO

revolutionized the understanding of international economic relations where the law has

become the predominant power. The power of international law is greatly circulating

around trade as in no other area has the rule of law advanced as much. Therefore, the

ability to mobilize the legal sources in international trade constitutes those who will

prevail in the system.Therefore, despite the Dispute Settlement Mechanism being the

most effective compliance tool of the World Trade Organisation, it serves as well a

major inequalities instruments that guard the developed countries an advantage over the

developing countries by undermining the process of development by stepping them

from their bargaining powers. The structure of the thesis will explore the nature of the

dispute settlement mechanism of the WTO. A general introduction of the organization

followed by a brief explanation of its main bodies, decision-making processes and the

distribution of influence within its members. Furthermore, the researched topic will

focus on the process of case selection as well as describe both the functions of the panel

and the appellate body. To demonstrate the role of the Dispute Settlement Mechanism

(DSM) in the WTO and its contribution to the power stance of the organization

selective cases will be discussed in more depth. Additionally, the following work will

focus on the role of the developing countries within the DSM and how the hearings

influence the developing countries in an economic and geopolitical sense. A stress on

the lack of transparency and the narrow focus on merely economic and political issues

will be demonstrated in details. Furthermore, the work will focus on the development

programs that the WTO is offering the developing countries and their implications. Last

but not least, the last part of the thesis will attempt to propose alternatives for African

countries to increase their economic/political relevance in the international arena today.

3

Research Methodology

The following research has presented the WTO Dispute Settlement mechanism from the

African perspective due to the undermined presentation of Africa and the

oversimplification of the contributions of the entire continent. The researcher has

undertaken the liberty to conduct a thorough analysis of different sources and

documentation that would support the focus of this research. The researched spectrum

relied on a rigorous analysis of quantitative and qualitative data from primary and

secondary sources. Study cases have been primarily derived from legal cases brought to

the WTO Dispute Settlement Body and national courts specifically focusing on WTO

Banana Wars, the European Communities (EC)- Sugar Subsidies case, and Big Pharma

versus Nelson Mandela. A primary analysis of the legal text and the numbers of cases

indulged has been used as a quantitative method.

The analysis of the possible obstacles of African countries has been drawn from journal

articles, opinion papers, and reports on the development and Africa’s role in

international affairs. Significant statistical assumptions have been excogitated from

comparative analysis of the African countries contributions to the WTO to the amount

of aid they receive. The research attempts to highlight the institutional barriers that

African countries face through gathering the relative costs of the legal services

necessary to become participatory in the legal framework in the WTO. Additionally, the

research examines the incentive that African countries may have to participate in the

international trading system. The following information has been inferred from an

extensive literature review on different articles and books. The research starts by given

a historical overview followed by explaining the WTO legal tools and mechanisms.

Subsequently, African cases have been selected to highlight the importance of African

4

countries as the ⅔ of the WTO Members representation and yet lacking the stance to

majorly contribute to the involvement of international trade and development issues that

directly affect the continent. The research continues to explore the stance of African

countries in international affairs and their bargaining powers to conclude with proposed

alternatives from various academic sources.

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WTO’s Main Objective

The WTO (World Trade Organisation) has been established to follow up on the primary

goal of the GATT (General Agreement on Tariffs and Trade) to improve the global

welfare through facilitating international dialogue. The organization recognizes the

development differences between countries and addresses their needs and concerns. The

WTO pays a special attention to the development of the LDCs (Least Developed

Countries) and spares no efforts in to “secure a share in the growth in international

trade commensurate with the needs of their economic development” (World

Trade Organisation, 2009). The nature of the institution seeks to achieve

greater integration.

The WTO and other major international institutions are funded on the ideas of John

Rawls’ theory of justice. These institutions set up the frameworks and facilitate a

political culture that puts justice as its crown jewel in a global context. On this basis, a

strong system that supports the principle of trading justice and the principle of political

obligation that tackles the division between advanced and less advanced countries is the

core of WTO premises (Trejo-Mathys, 2013, p.461). The implication of the Rawlsian

theory appears in the operation of institutions like the International Monetary Fund and

the World Bank. In theory, like the WTO, the questions of mutual benefit thinking are

the center of the debate concerning foreign policy of liberal states (Trejo-Mathys, 2013,

p.467). The stress on liberal applications is guided by concern for the future. The

struggle of these international organization is to The stress on liberal applications is

guided by concern for the future. The struggle of these international organization is to

promote and create “communities of free human beings” (Macdonald, 2017,

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p.224). Therefore, it does not come as a surprise that the idea of comparative

advantage prevails in the international dialogue.

The idea behind the economist David Ricardo’s model that was developed in the

early nineteenth century is a simplified module two countries will save their

opportunity cost by specializing in the prevailing sectors of their economies and trade

with each other rather than produce all the products themselves (Pelli & Tschopp, 2017,

p.315-316). The module relies on differences in labour productivity. By trading,

countries mutually benefit. Comparative advantage theory also assumes that similar

countries trade similar goods. Both the Ricardian Model and Heckscher-Ohlin Model

explain trade between different countries, the differences occur in the technological

premises (World Trade Organization, 2012, p.7). Nonetheless, the WTO’s statistics

endorse that most trade occurs between similar countries as one-quarter of

world trade is an intra-industry trade, this is particularly true in the case of the

developed part of the world.

7

WTO & Africa

The WTO membership constitutes an inclusive sphere in consensually bringing trade

issues to the negotiation table and the ability to resolve these issues through the usage of

the dispute settlement mechanism. The WTO includes the regional groups which

involve 42 African member states which accounts for almost one-third of WTO total

members (Ancharaz, 2012). Despite the WTO statues of an economic forum, it failed to

recognize the contribution of African countries. Africa in general and Sub-Saharan

Africa, in particular, is neglected the right to globally integrate into the multilateral

trading system. The WTO proclaims that its work is “member-driven”. Therefore, the

participation of member states in its functions and bodies is essential to shape the global

trade rules that will subsequently affect all members under the principle of Most

Favoured Nation (MFN). The general tendency is to view the African countries as one

trading block which does not have a significant share in the global trade. Although it is

true that African share of global exports accounts only to 2.4%, with Sub-Saharan

Africa accounting for merely 1.7% (The World Bank Data, 2016). Global trade plays a

significant role in shaping African economies. In many Sub-Saharan countries, such as

Mozambique, import and export of goods and service represent 96% of its GDP where

exports represent only 26%. Similarly, in Rwanda, foreign trade accounts for 45% of

the GDP with an export proportion of 15% (The World Bank Data, 2016). Most African

countries, foreign trade represents 50% of GDP (Schmieg, 2016).

Meanwhile, the African countries heavily depend on exporting raw materials their

import meanly is finished products. Therefore, their participation in multilateral trade

negotiations is essential to develop their domestic economies. WTO member self-

proclaim the statues of their economies with general references to the county’s status in

8

the United Nations (UN) and The Organisation for Economic Co-operation and

Development

The Organisation for Economic Co-operation and Development (OECD) (Apecu &

Joan, 2013, p. 12). WTO in 2001 has attempted to concede to open the table for

development negotiations that will be named the Doha Development Agenda (Doha

Round) as it took place in Qatar. The negotiations were scheduled to end in 2005.

Although developed countries, the USA and the EU specifically, have pushed for

concessions to decrease tariff cuts at the beginning, they have changed their stance

swiftly after China started to export more than they imported to developed nations

(Meyn, 2008, p.2). This changed of stance harmed the developing nations, especially

African countries.

9

Overview of the Dispute Settlement

Since its inception in 1947, the General Agreement on Tariffs and Trade has provided a

legal platform for disputing countries to bring forward their issues for an international

resolution (Grimmett, 2009, p.1). The process of dispute settlement under the GATT

was little detailed; however, it brought the opportunity to invoke GATT dispute

settlement articles if a member state had violated general trade rules. It was the first step

to an unprecedented system of international dispute resolution. Although under the

GATT, the dispute settlement mechanism had its problems. The procedure lacked

deadlines, the process was slow due to the consensual decision-making nature of the

mechanism allowing member states to block the establishment of a dispute panel and

the adoption of reports (Johannesson & Mavroidis, 2017, p.15-23). Moreover, even

though a dispute panel would be established, it was very hard to implement the

decisions and make the violating member adhere to it. As a result of all these

insufficiencies, in the GATT Uruguay Round of Multilateral Trade Negotiations (which

took place between 1986 and 1994), a more comprehensive system was developed

(Udombana, 1988, p.1162). On 15 April 1994, the international community took a step

further in signing the Marrakesh Agreement to establish the World Trade Organization

(WTO). The WTO manifested clear procedures and integrated system of dispute

settlement which came as a result of incorporating the Understanding on Rules and

Procedures Governing the Settlement of Disputes (DSU) treaty (Grimmett, 2009, p. 2).

The Uruguay Round had also harbored the previous GATT agreement under its

umbrella. It also adopted new agreements such as the Agreement on Agriculture, the

Agreement on the Application of Sanitary and Phytosanitary Measures, the Agreement

on Antidumping, and the Agreement on Subsidies and Countervailing Measures

(Udombana, 1988, p.1165). Overall, currently, the WTO oversees around 60

10

international agreements that mostly concern agriculture, domestic support, subsidies,

intellectual property, and market access.

The dispute settlement process foremost consists of the WTO Dispute Settlement Body

(DSB) which consists of all WTO members’ representatives. It is the highest body that

oversees the proceeding of the disputes within the WTO with the rule of consensus.The

difference between the consensus exercised in the DSB contrary to the GATT dispute

settlement is that to reject of a case will be determined by the agreement of all

representatives; otherwise, the case stands. The disputes occurring under the DSU are

member driven. Upon a member’s request, the DSB will establish panels and adopt

appellate reports (Grimmett, 2009, p.10). In case the WTO ruling will not be

implemented. The prevailing party will impose retaliatory measures. The DSU also sets

deadlines and monitors the implementation of rulings. Moreover, it provides the

members with the opportunity to appeal their cases to Appellate Body which consists of

seven members, three of which serve on a case. Mutual consoled agreement lies in the

core of WTO dispute resolutions as stated in Article 3.7 of the DSU, the preferred

outcome of a dispute is “a solution mutually acceptable to the parties and consistent

with the covered agreements” (World Trade Organization, 1994). Therefore, retaliation

is the last resort of the process.

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African Participation

The WTO has gone a long way of improvements in comparison to the GATT; however,

the African countries have criticized the high legal costs of WTO dispute participation,

they have been impeded from fully benefiting from the DSU to enforce their rights

under the organization. A cursory glance of all the WTO cases initiated since 1995

reveal that the biggest beneficiaries of the system are advanced developing countries

such as Argentina, Brazil, Chile, India and Thailand which has been involved either as a

complainant or defendant (Johannesson & Mavroidis, 2017, p.12). Moreover, some of

these countries have been directly involved in the establishment of the Advisory Centre

on WTO Law to represent them in WTO proceedings. Meanwhile, African participation

has been limited only to third parties participants and a limited number of cases brought

against Egypt and South Africa (Johannesson & Mavroidis, 2017, p.11).

12

The Degree of African Participations

Since 1995 till 2010, 62% of the developing countries have been complainants in WTO

dispute settlement and in 56.1% of the disputes as respondents signifying an increased

usage of the WTO dispute settlement system (Kerckhoven & Crombez, 2015, p.3).

However, African Members have been avoiding this trend and rarely been registered as

participants. The African participation in WTO dispute settlement has been notably low

as the figures below show.

Table 1. African Members’ participation in WTO dispute settlement

· Benin, Cameroon, Chad, Cote d'Ivoire, Egypt, Ghana, Kenya, Madagascar, Malawi,

Mauritius, Nigeria, Senegal, South Africa, Swaziland, Tanzania, and, Zimbabwe

Complainant participation 0

Respondent participation 7 (Egypt & South Africa)

Third Party participation 41 (16 African Members)*

Panellist participation 42 (Egypt, Mauritius, Morocco & South Africa)

Appellate Body Member Egypt & South Africa

Source: Joan Apecu- African participation at the WTO, Legal and Institutional Aspects

1995 to 2010, thesis no 10, the Graduate Institute.

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According to a study conducted by Joan Apecu from the Graduate Institute Geneva,

indicates key findings indicate through regression analysis that there is no strong

positive correlation between a country’s trade share and third party participation (2013).

The analysis has shown that the low levels of participation had a negative effect on

other areas of the WTO functions. This negative effect manifests through lowering the

overall effectiveness of the dispute settlement system by not invoking third party rights.

Apecu's study shows that to develop a thorough understanding of the dispute

settlement system requires an effective use of it. Additionally, a coherent participation

in the system is an indispensable part of a better understanding of the rules-based

multilateral trading system. It provides deeper technical, jurisprudence-based insights

into the balanced base of rights and obligations; into a system based on the rule of law.

Meanwhile, South Africa that participated twice in a WTO dispute as a complainant has

contributed 0.547% of the total fund (Apecu, 2014).

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African Legal Assistance

The WTO and DSU system recognize that not all the countries are on an equal footing.

WTO provides assistance to the developing countries in order to participate more

effectively in the trading system through providing legal support. The Advisory Center

on WTO Law (ACWL), was established in 2001, is an organ that assists the developing

countries in their activities in regards to their dispute settlements mainly at much lower

rates than those of private law firms. ACWL also applies a cost ceiling. In order for a

Member to qualify for these services, they must pay single contribution calculated on

the basis of their share of world trade (Advisory Centre on World Trade Organization

Law, 2017). The services are hourly billed at a rate which varies depending on the

Member's category. The DSU also ensured that the developing countries get a say in the

system through implementing explicit provisions on how the DSU is to be applied to

developing countries in contrast to developed countries. For example, the DSU requires

all Members to consider the particular problems and interests of the developing

countries during consultations. Moreover, Article 8 requires that when a dispute is

between a developing country Member and a developed country Member “the panel

shall, if the developing country Member so requests include at least one panelist

from a developing country Member” (World Trade Organization, 1994). Article 21

also stresses that when implementing the recommendations and rulings of the

panel particular attention should be paid to the interests of the developing

countries.

According to Mr. Nelson Ndirangu, it was specifically created to provide legal services

to LDCs and DCs at a nominal cost. However, these attempts by the WTO are still

viewed insufficient by various scholars (Samuel, 2014, p.71). Amin Alavi argues the

15

ACWL is lacking the capability to address all the LDCs and DCs concerns due to

inadequate financing. He also criticized the advisory fees; however minimal they are, as

they deter LCDs from using DSB. Samuel Ochieng Rambo suggested in his study that

the creation of an African Union (AU) Advisory Center on WTO level will encourage

the participation of African countries in the DSB (2014). The African Group a failed

attempt that consisted of four African countries came together to attempt to create the

African Group, these countries are Nigeria, Egypt, Morocco, and Senegal (Van der

Borght, 2014, p.791). However, this group did not achieve an official legal recognition

and remained merely a coordinating body. This group was meant to act as a coordinator

in a scenario where If two developing Member is seeking assistance, the assistance is

provided on a first come first serve basis. However, with the creation of an AU advisory

center, African countries’ issues will be addressed more coherently. The body

shall serve both LDCs and DCs without asking for any fees under the premises what

is minimal to one country might be a considerable fee for another. The creation of the

AU Advisory Center will tackle the problems experienced by African countries in the

shade of dispute resolution under the DSB (Samuel, 2014, p.44). However, this group

did not achieve an official legal recognition and remained merely a coordinating body.

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Reasons for African Countries Lack of Participation

There are several explanations why the African countries have not been making use of

the WTO dispute settlement system to claim their legitimate rights and expectations.

First of all, the share of the African countries in the WTO is estimated around 2%

(WTO, 2016, p.33). Most of the African countries export few commodities and focus

mostly on removing export contrast of their commodities which sho0uld allow them to

diversify their exports. Despite the African countries attempt to negotiate their tariff

barriers, their exports are often subjected to non-tariff barriers such as sanitary and

phytosanitary measures, technical regulations and standards and overly stringent rules

of origin (Schmieg, 2016, p.6). Therefore, these restrictions prevent the African

countries from becoming less volatile to foster growth and international trading power.

Most importantly, African countries have far fewer incentives to pursue a case

considering that most African exports receive preferential treatment in the major market

of the EC communities and the US.

These preferences are non-reciprocal; therefore, the majority of African countries that

depend on these partnerships hesitant to indulge in lawsuits that may revoke these

trading benefits. Therefore, a greater participation of African countries in the Dispute

Settlement by submitting detailed proposals to the Special Session of the Dispute

Settlement Body would facilitate greater access to the system as well as greater

knowledge acquisition (Nnamdi & Iheakaram, 2015, p.14). The example of China has

shown that the system could be used adventurously if a developing country participates

as a third party in the dispute. Since China joined the WTO in 2001, it has participated

in almost every case as a third party to become acquainted with the rules and procedures

(Kessie & Kofi, 2006, p.8)

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However, the low participation of the African countries remains primarily explained by

“special and differential exemption orientation” (Apecu & Joan, 2013). It is evident

primarily in the Doha negotiations, the exemption-seeking orientation has been the

focus of several African countries in their negotiation agendas. However, this only

hindered the African countries from fully integrating into the system. Although it fair to

note that Members contributions to the WTO fund do not always correlate to the size of

their GDP speaking in relative terms. For example, Brazil that used the WTO dispute

settlement system numerously and has participated in the trade talks and negotiation

with a contribution of 1.281% (World Trade Organization, 2015). Meanwhile, South

Africa that participated twice in a WTO dispute as a complainant has contributed

0.547% of the total fund. The trade shares of the countries also did not correspond to

this occurrence. Although African countries might gain aid contributions to their

developing sectors, it is very disputed if this helps their economies.

Regardless of the trade share or the size of the GDP suggests that the competitiveness

level of a Member correlates with the level of engagement in the WTO talks. The

example of Morocco, Tunisia, and Mauritius strongly suggested that the variable of

economic/trade competitiveness had provided an explanation of the key performance

indicators in regular work and negotiations (WEF, 2016). Also, studies conducted by

the WTO on the effects of trade on eliminating poverty suggest that African countries,

such as the Democratic Republic of Congo, the Central African Republic, Somalia, and

Sudan with fragile democratic systems with unstable rule of law and weak governance

are inactive and ineffective in the multilateral negotiations and dispute questions

(Manji, 2007, p.15).

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Why African Involvement is Important

Director-General Pascal Lamy, during his visit to Melbourne, Australia, on the 26th of

November in 2012 for the Richard Snape Lecture Series, said that: “The rising weight

of influence of emerging economies has shifted the balance of power. This clearly

implies a number of transitions to which we have not yet adjusted as classic Westphalia

concepts of sovereignty are being challenged by the realities of interdependence. Some

may consider this a problem, it is perhaps better to think of it as an opportunity to look

at the real shaping factors of trade” (“WTO News: Speeches — DG Pascal Lamy,

2012).

The Curious Case of Egypt

Despite the weak African stance and the seemingly absent voice, one of the countries

that negotiate on the behalf of the continent besides South Africa with a strong position

is Egypt.

Egypt’s position has been very consistent with the vision of Africa in changing the

DSU. Together with the African group and other countries such as India, Cuba,

Dominican Republic, Honduras, Jamaica, and Malaysia, Egypt have submitted proposal

to overcome the hinders facing the developing countries, the documents called for the

implementation of the special and differential treatment provisions (Dialogue on WTO

Dispute Settlement, 2007, p.7) Egypt has requested an extension of the consultation

period. The country proposed a compensation for the winning party if they are

developing and the compensation includes litigation costs. Moreover, Egypt had

numerously called for guidelines of the usage of the DSU and invoking the principle of

collective trade retaliation against a non-complying member (Shahin, 2006, p. 12). Last

19

but not least, Egypt calls for increasing the technical assistance from the WTO

Secretariat and deregulating the principle of substantial interest to participate in a WTO

dispute as a third party in order to gain experience for developing countries.

Egypt does not support the reduction of the time frame for the dispute settlement

procedures, as it perceives as a risk of unequal system installment where again the

developing countries will be affected by their limited technical and financial capacity.

The premises of time reduction shall work only when the proper training and support is

given to the LCDs to fully integrate into the system. Moreover, the Egyptian stance

stands clear in the vision of the proposal for permanent panelists as it perceived as a

harming change for the interests of the developing countries with their limited

capacities. However, Egypt supports fully the proposed amendment to insert the word

“arbitrator” to the bodies that are listed in article 18/1 of the DSU (Panel and

Appellate Body), who are not allowed to communicate with parties(Dialogue on WTO

Dispute Settlement, 2007, p.37; Shahin, 2006, p.14). Therefore, opposed the common

premises, Africa has some key players on the side of its negotiation table. However,

these efforts may not be enough until all or at least the majority of African countries to

come together to pursue their collective efforts in trade negotiations.

Africa Caribbean and Pacific (ACP) -EU Relations

“The Common Market is a European scheme designed to attach African countries to

European imperialism, to prevent the African countries from pursuing an independent

neutral policy, to prevent the establishment of mutually beneficial economic ties among

20

these countries, and to keep the African countries in a position of suppliers or raw

materials for imperialist powers.”

- Joint communiqué by President Nkrumah of Ghana and

President Brezhnev of the Soviet Union, July 24, 1961

Although the Banana disagreement has involved only the US and the EU as disputing

parties, the at most effect it has produced on the ACP countries. The economy of the

developing countries usually is dependent on a single product in an environment of a

remorseless market and small population. The ACP countries, together with the

remaining Economic Free Trade Agreement (EFTA) states, have a tight history of

multilateral agreements such as the the Lomé Conventions and then the Cotonou

Agreement that allows ACP countries to enjoy an entry into the single market and sell

their products in accordance with artificial price-setting (Nnamdi & Iheakaram, 2015,

p.1851). Moreover, the ACP countries through its relations had an access to the

European Development Fund.

Case 1. WTO Banana Wars

The Banana War was one of the longest lasting disputes in the history of the WTO. The

conflict triggered in 1991 when Costa Rica expressed its concerns for the creation of the

European Single Market and its potential impact to the principle of the most favored

nation (Mulvena,2001, p. 113). In total there were eight disputes and five claims over

the course of eighteen years that were finally put to rest in December 2009. An

agreement was reached for progressive lowering of the specific import tariff on MFN

bananas from 176€/ ton to 114€/ ton by 2017 (Flentø & Ponte, 2017, p. 78).

21

The main disputed issue revolved around EU’s trade practices of granting its former

colonies in Africa, the Caribbean, and the Pacific region (ACP) more favorable trade

conditions as they allowed a free-tariff regime of bananas import from these countries.

Before the EU’s imposition of the banana regime in 1993, non-EU export companies

controlled 95% of the European banana market (Flentø & Ponte, 2017, p.81). However,

the share of the American-owned companies such as Chiquita and Dole have fallen by

50% after the introduction of the regime. Considering the enormous consumption of

bananas in the European market that account for 40% of the total world banana exports,

the US government influenced by the massive lobbying effort of Chiquita Brands

International files a lawsuit against the EU (Mulvena, 2001, p.123).

The banana issue has developed to be a serious potential threat to the stability of the

WTO structure. A single fruit has polarized the international trading superpowers.

Banana is the world’s most favorite fruit and the fourth most exported staple food. It is

an industry worth $8 billion a year. Bananas are also a key income source for at least 15

the Caribbean and Latin American countries. The EU has implemented the mechanism

of preferential treatment to the ACP countries already back in 1976 when the first Lomé

Convention has come to force. It was designed to provide a new system of cooperation

between the European Economic Community and its former colonies (Mulvena, 2001,

p.145). It established a free-duty mechanism for importing agricultural and mineral

goods from the ACP countries as well as contributed aid and investment for these

countries.

In 1995, the US petitioned to the WTO to investigate the fourth Lomé

Convention on whether it violated international trade rules. The WTO Dispute

22

Settlement Body ruled in favor of the US in 1996 ending the cross-subsidies system that

had benefited the ACP countries. However, the US insisted that all preferential

agreements should be removed. Consequently, the WTO Dispute Settlement Body

established another panel to discuss the issue and concluded that agreements between

the EU and ACP were incompatible with WTO regulations.

Although the US has won the case. The effect of the Banana Wars on the ACP

countries had hit their trading bargaining powers and left a wave of economic

devastation. The most positive aspect of the Lomé Convention was the System of

Stabilization of Export Earnings (Stabex) (Flentø & Ponte, 2017, p.82). The convention

has benefited 18 mostly list developed countries through the system of protection

against export losses resulting from adverse economic conditions compensation for

losses suffered as a result of adverse conditions or natural disasters. Despite the

fluctuation of the exchange rate, the system of price indexation guaranteed a fair share

of competitive power against the ACP producers and benefited the ACP exporters

(Mulvena,2001, p.134). The fixed price system allowed the developing countries to

remain in the market. However, the seizure of Lomé Convention had left the ACP

countries in a disadvantaged situation and lowered their income by driving them out of

the market as they did not stand a chance against the big US-led corporations.

Case 2. EC Sugar-Subsidies Dispute

In September 2002, Australia, Brazil, and Thailand firstly have requested a consultation

with the European Communities (EC) in regards to export sugar subsidies (WTO,

2005). Australia condemned the EC export under the WTO rules as it is prohibited to

23

provide subsidies for agricultural products unless maintained with limits in each

member’s commitment schedule. The annual EC limits cap €499.1 million and 1.2735

million tonnes (WTO-Panel Reports, 2004, p.3). However, the EC had subsidized its

sugar sector in a manner that will not identify as subsidized. On average, the EC exports

over 5 million tonnes of sugar annually and at the same time, it spends more than €1

billion on sugar subsidies (WTO-Panel Reports, 2004, p.6). Additionally, the EC

exceeded its export limits by 1.6 million tonnes which have been identified to be the

national equivalent of their import under preferential arrangements with certain

African–Caribbean–Pacific countries (ACP Countries) and India (WTO, 2005).

Moreover, it also exports an addition quantity (C Sugar) that are entitled to EC

domestic price nor this quantity is supported by direct exports subsidies, it is rather

indirectly subsidized by the profits made from sugar sales on the domestic markets.

After the ineffectiveness of the consolidations. Australia alongside with Brazil and

Thailand brought a complainant to the WTO DSB claiming that EC provided export

subsidies in excess of reduction commitment levels that violated the most favored

nation treatment. The claims stated the fail of the EC to apply the required WTO limits

to its subsidized exports of the ACP/India equivalent sugar and the C sugar (Ngo &

Paper, 2005, p.9). Seven African countries have participated in the dispute as third

parties including Côte d'Ivoire, Kenya, Madagascar, Malawi, Mauritius, Swaziland, and

Tanzania, mainly sugar-exporting countries.

African producers have enjoyed tariff-free access to European market since 1970s under

various preferential trade agreements. They have received price guarantee for their

products which were above the world price (Rydén, 2013, p.6). Therefore, African

countries have supported EC’s respondents to preserve their preferential access to the

24

European markets accompanied with higher prices than the world’s average under a

limited quantity of exports under the Sugar Protocol. However, guaranteed prices

system has been invoked in 2009 with the introduction of EU Sugar Policy Reforms.

The EU quotas and price references were removed. However, the EU has substituted

EC’s Action Plan for ACP countries which combines a mixture of international and

regional sugar trading conditions that will help their sugar sectors to survive EU’s sugar

market liberalization through trade and aid measures (Ngo & Paper, 2005, p.15).

Especially that Mauritius i is a high-cost producer with limited access to alternative

markets. Over 90% of its sugar is imported to the EU followed by Mozambique and

Swaziland (Ngo & Paper, 2005, p. 16). The EC sugar subsidies have signified the

importance of African participation in even though as third parties have opened the door

for a dialogue and ensured the adoption of safeguard measures to safe their sugar sector

in the long run.

Case 3. Africa & TRIPS

Pharmaceutical development at often times is undermined in developing countries

where prices are dumped down; however, due to the basic standards of protection that

are installed by the TRIPS (the Agreement on Trade-Related Aspects of Intellectual

Property Rights), international regulations elevate the prices of pharmaceutical products

(Mshomba, 2011). Although Intellectual Property agreements offer safeguards to

remedy patent abuse in the medical sector. It is often time criticized for creating high

barriers in developing countries to access medicine. The Fourth WTO Ministerial

Conference has adopted the Declaration on TRIPS and Public Health that gives

governments the sovereign right to administer public health sector in accordance with

25

their vision (WTO, 2017). It allowed countries to adjust on TRIPS and bring public

health in front of the intellectual property. Critics argue that the Doha round failed in

resolving the issue of production and export of generic medicines to countries that do

not have the possibility to develop that knowledge (Ancharaz, 2012).

African pharmaceutical market accounts for one of the fastest growing markets in the

world. A study conducted by McKinsey estimates that African markets will be worth

between $40 billion and $60 billion by 2020 with a compound annual growth of a 9.8%

estimate between 2010 and 2020 (Holt, Lahrichi, & Santos, 2015, p.2). Despite the

attractiveness of pharmaceutical market in Africa, the access of newly developed

medicine is too costly for the vast majority of people in the continent. Worldwide

statistics show that three-quarters of the global population lacks the access to the most

basic drugs that are vital for survival (World Health Organization, 2010, p.37).

Moreover, the development of drugs that tackle specific regional diseases for Africa is

at a very low point. According to the World Health Organisation (WHO), the drugs

developed between 1975 and 1997 which account to 1223 new drugs only 13 drugs

(around 1%) are products developed to treat diseases that abound in developing

countries (2010).

Despite TRIPS setting out minimum protection standards of intellectual property rights,

including trademarks, copyrights, and patents; TRIPS actually sets drugs prices upward

and makes them unaffordable for public access. This is evident in the Big Pharma

versus Nelson Mandela of 1998 case. In the early, 1990s, In the early 1990s, South

Africa became the country with “the highest absolute number of people living with

HIV/AIDS” (Mohan, 2003, p.2013) The South African government tried to utilize the

26

imports of pharmaceutical products from other markets for lower prices which resulted

in a feverish reaction from 40 multinational manufacturers and the United States that

brought a lawsuit to South African court challenging the South African Medical and

Related Substances Control Act (MRSCA) in 1997 (Fisher III & Rigamonti, 2005, p.6).

The Act was passed shortly after the adoption of TRIPS, the South African Health

Minister overrode drug patents and authorized compulsory licensing and parallel

importation to reduce the prices of HIV/AIDS antiretroviral drugs.

The WTO recognized the need for reducing the rate for the pharmaceutical drugs

attainment, especially after the outbreak of deaths from chronic diseases, the expanded

rate of chronic ailments and boosted demand for cancer and diabetes drugs (Meyn,

2008, p.3). Consequently, the WTO has faced a dilemma in reinforcing regulations

under TRIPS and protecting public health sector in the developing countries.

Pharmaceutical companies were lobbying for their patent rights to be enforced by all

WTO members. The pharma wars resulted in a 2001 WTO declaration that grants the

developing countries an access to obtain pharmaceutical drugs (Meyn, 2008, p.23).

However, the WTO attempted to maintain a balance between the social welfare

protection and Intellectual Property; it emphasizes that the greater good of the social

welfare can compensate certain degrees of bypassing patent rights, as stated in article 30

of TRIPS only when:

“Members may provide limited exceptions to the exclusive rights conferred by a patent,

provided that such exceptions do not unreasonably conflict with a normal exploitation

of the patent and do not unreasonably prejudice the legitimate interests of the patent

owner, taking account of the legitimate interests of third parties.”

27

Compulsory licensing became the loophole for developing countries, it allowed

utilizing the subject of a patent without the patent holder's permission (Unitalen, 2015).

However, if only the subject of the patent is produced domestically which is a big

hindrance because many African countries do not have the manufacturing capacity to

produce the drugs locally. Nevertheless, the South African dispute has revolutionized

TRIPS by providing even a stronger patent protection by setting up a dispute settlement

process where developing countries can bring claims against other countries for patent

violations and upon the case none-resolution, sanctions will be imposed subsequently.

TRIPS also allowed the concept of “parallel importation” for developing countries

which constituted a grey zone in international trade (WTO, 1995). This practice is not

explicitly condemned or prohibited in the agreement, in the TRIPS it is stated that:

“goods are sold into a parallel market at a much cheaper price than they could have

been sold through the patent owner.” (Mohan, 2003, p.2012); accordingly, developing

countries to obtain pharmaceutical drugs at a cheaper price. However, the biggest

success in the Doha Round in 2003 was the proposed solution for the developing

countries to acquire drugs without the compulsory licensing. A provision of the Doha

Declaration recognized that if some developing countries have “insufficient or no

manufacturing capacities in the pharmaceutical sector” to make “effective use of

compulsory licensing under the TRIPS Agreement” (Key, 2003, p.46)Therefore, taking

a significant step forward to tackle pressing African issues by African nations.

Despite the WTO recognition and providing the venue for developing countries to

receive drugs at lower prices under a more relaxed patent law, countries were utilizing

28

the parallel import licensing and importing its products such as India to South Africa

had to become fully compliant to the TRIPS Agreement. Most importantly, none of the

countries that utilized the licenses were falling under the category of Least Developed

Countries. In the case of India, in 2005 to become compliant to the Agreement, resulted

in a seizure of all generic drugs export and shut down the alternative markets for

developing countries to receive the drugs at reduced prices (Ancharaz, 2012, p.

34). Therefore, making the WTO’s attempt exercise its share of criticism.

29

Aid for Trade

The Doha Round is the biggest manifestation of the WTO towards taking a step forward

to put on the table the developing countries interests. Africa, with 31 of its 54 countries

classified as LDCs, is a critical player in the negotiations considering that the majority

of the countries in the continent have a major development deficit. However, statistics

show that sub-Saharan Africa (excluding South Africa) is estimated to have reached a

considerable loss ranging from USD 197 billion in the Carnegie model to USD 400

billion in the World Bank model (2016).

A big emphasis is out on the role of Aid for Trade (AfT) and its effectiveness in

increasing the trade capacity of LCDs. The biggest example of this premises is often

citing the North-South Corridor, which links the port cities of Dar Es Salaam and

Durban across eight countries. It has spurred intra-regional trade and facilitating

exports(Meyn, 2008).

The comparative dependency on exports of the African countries is reflected in the

share of GDP where foreign trade is more than twice the share accounted for exports.

Two-thirds of Sub-Saharan Africa’s imports are finished products. Meanwhile, it

exports remains dominated by raw materials; almost two‐ thirds compromise fuels, ores

and metals, and another 15% agricultural products. However, in terms of active

participation, African countries have relatively higher participation in the Doha Round

(ITU, 2016, p.18). They have approached the negotiations as a policy engagement to

reflect and ratify trade-related imbalances from the Uruguay talks. Therefore, the "first

real generation of African trade negotiators" on the African level (the Doha Group) that

participated on a multilateral level. The Group has included Benin, Burkina Faso, Chad,

Cote d'Ivoire, Egypt, Gabon, Ghana, Kenya, Lesotho, Mali, Mauritius, Morocco,

30

Namibia, Nigeria, Senegal, Tanzania, Tunisia, Zambia, and Zimbabwe (Apecu & Joan,

2013). However, the level of participation has been higher in specific areas related to

TRIPS, public health, and cotton. Moreover, a higher level of participation has been

facilitated through the provided support from non-WTO multilateral institutions, civil

societies as well as pro-bono support from international law firms. Nonetheless, beyond

this support, the level of the African participation remains relatively low. The analysis

suggests that the maintenance of a comparable level of participation to the developing

countries, African countries still lack a fundamental understanding of the technical

balance of rights and obligations and the direction of accumulating jurisprudence of the

rules-based system.

31

African Global Stance

Regional and multilateral agreements became the milestones of global economic

governance. The role of African countries had received a special attention in terms of

analyzing the weakness of the continent and its vigorous participation in the trade

negotiations. There has been two opposing viewing on African stance in the global

conduct. The first view suggests that Africa is not making sufficient effort to participate

in international trade (Meyn, 2008). The opposing view advocates that African

countries merit a spotlight on their significant progress to liberalize their trade.

Africa today has been undermined to be represented in a single digit of less than

2% in international trade. The diverse economies of the continent has been smashed to

represent a single statistics. The premises that African countries do not participate in

international trade is derived mostly from a quantitative approach. Such representation

is underrepresenting the profound progress made by African countries. African

countries consist of 43 member of the WTO out of 162; they represent over a quarter of

this organisation.

They have abided to the WTO liberalization policies regardless of whether it was a

requirement, especially the LDCs (Shaffer, 2009, p.23) . Despite being an good student

of the WTO, African countries have been missing the opportunities created by the trade

liberalization. Because of the restricted nature of its exported products of basic

commodities and raw materials, it is left at the bottom of the value chain.

They have almost all widely liberalised and bound their tariffs, even though for many of

them – specifically least developed countries (LDCs) – it is not a requirement (Samuel,

32

2014, p.30). All the African countries and their regional economic communities are

participating, simultaneously, in a series of multilateral, regional and bilateral

negotiations that welcome international commerce. It is therefore impossible to deny the

fact that Africa is widening its availability to the international market. In addition, due

to the rushed liberalisation policies that African countries have experienced in the past,

their efforts to diversify its economy and industrializing its agricultural sectors have met

with an influx of foreign competition into the local and global markets alike. Therefore,

despite the common misconception, the African continent has been very active in

attempting to engage in international trade; however, the results have not carried the

anticipated success. At the ministerial conference in Bali, Indonesia in 2013, African

countries failed to promote their agendas and push for their needs (2013).

Africa’s focal focus is its own competitiveness in the various WTO schemes. Despite

the progress fall in tariffs, the key challenges remain in the intra-African trade were

tariffs between neighbouring countries are higher than continental tariffs. Consequently,

regional development and integration is hindered by these obstacles. There are 16

landlocked countries on the continent and to conduct an average customs transaction for

any of these countries, it would involve 20 to 30 steps, 40 documents, 200 data elements

and re-keying of 60 per cent to 70 per cent of all data at least once (Kanyimbo &

Manduna, 2013). As a result the trading costs are higher for landlocked African

countries are higher by more than 6% in comparison to other developing

countries. Additionally, African countries being a single commodity producers have a

bigger bulk of their GDP percentage coming from tariffs unlike developed countries.

33

However, trade facilitation have also resulted in positive externalities that pushed for

reforms and investments need to be viewed as regional public goods. The greatest

examples of such externalities is often cited to be the Kazungula Bridge and the

Chirundu One-Stop Border Post. Although the Kazungula Bridge connects Zambia and

Botswana; most traffic is in transit to the Democratic Republic of Congo thereby

spreading the benefits to a broad region (Impact & Summary, 2011, p.7). Therefore,

trade facilitation is crucial source in intra-African trade increase of an estimate up to

10%.

The African continent has been unanimous in calling for improvement of customs and

other border procedures and transit regimes. This call has been especially evident

during the oint AfDB-WTO trade facilitation symposium held in November 2012 in

Nairobi, Kenya (Kanyimbo & Manduna, 2013). African countries were serious in

adopting a more modern approach to he ports of entry and along transit corridors. They

have adopted the guidelines of the Revised Kyoto Convention (RKC) of the World

Customs Organization to implement these changes. As a result, the clearance time has

been reduced in the case of Chirundu One-Stop Border Post, the initiative have allowed

the clearance time of the commercial trucks between Zambia and Zimbabwe to be

reduced from taking five hours to two hours at the borders (Ismail, 2005, p.20). These

changes have raised the government revenue through improved collection of import

duties based on enhanced efficiency in border management.

34

Africa’s Bargaining Power in International Trade

The Doha Round aimed to correct the imperfections and hiccups of the trade

negotiations in the Uruguay Round negotiations (1986-1993). The Doha Rounds were

precisely a sign of hope for the developing countries as the negotiations were

committed to contract a compromise between the North and South at the core of their

economic transactions. The Round was expected to emphasize the role of development

to decrease the inequality between the hemispheres in trade talks. In Doha, all the

African countries contributed to building the dream of an open, transparent, fair, non-

discriminatory, regulated trade and financial system (Kanyimbo & Manduna, 2013).

However, these dreams were shattered by the powers of financial lobbies. This outcome

is only highlighted through the deliberate decision of African countries try to push for

an equal cotton policies through the Cotton Initiative.

In 2003, the General Council and the agriculture negotiations by Benin, Burkina Faso,

Chad, and Mali have raised the Cotton Initiative (WTO). The proposal has aimed to

tackle the damage of cotton subsidies in richer countries which harms the

competitiveness of poorer countries in this particular sector. The four countries have

called for the elimination of subsidies and requested a compensation to be paid to them

to cover economic losses caused by the subsidies. However, according to the Cotton

Initiative report, the outcome of this initiative have merely resulted in addressing the

issue an “ambitiously, expeditiously and specifically” manner within the agriculture

negotiations.

35

The WTO slowly but surely has shifted its interests from the developing

countries towards emerging countries leaving them to rely on creating regional,

plurilateral and mega-regional trade agreements to bypass this system. The WTO

current status quo might not be efficient to address the African countries concern

towards the protection of their own sectors against foreign subsidies without submitting

legal complaints which prove to be costly and excessively complicated. Consequently,

the majority of African countries started to seek an alternative to the WTO in a more

regional focus and bilateral treaties to enforce legally binding standards rather than

implement general universal values.

These very same developed countries, exasperated by the impasse the WTO has

reached, are the ones creating regional, plurilateral and mega-regional trade agreements

to bypass this system and establish new rules that they will later attempt to enforce as

universal principles (International Centre for Trade and Sustainable Development,

2015). They only give the WTO the bare minimum needed to keep it alive and to

continue to benefit from the advantages granted by the current status quo, in particular

when it comes to keeping the possibility of “protecting” themselves or of “subsidizing”

without having to submit to any legally binding obligations towards developing

countries.

36

Alternatives for Africa

Since the African decolonization, Africa countries have proclaimed their independence

one after another. However, the dependency of African countries on its former colonies

has only expanded to include an interdependence with the rest of the developed world.

African countries receive foreign assistance through receiving financial aid. The

assistance is aimed to stimulate local economies and decrease economic dependency

through the development of sustainable agriculture, youth entrepreneurship, and

improved access to power.

African governments despite being part of the global governmental organizations, they

have little bargaining power there. Therefore, for the African continent to become self-

sustainable and assume leverage in the international arena, African countries might need

to shift their focus towards deeper regional integration, especially that the universal

formulas of success do not show promising results as the African development is a low

rise. Increasing intra-African trade might be the key to accelerate economic growth as it

will foster the development of the industry competition, improve productivity, and

develop local infrastructure without having the obligations to fulfil attached

conditionalities.

The first step towards economic independence was the initiative of Africa’s Continental

Free Trade Area (CFTA) that will establish free trade among all 54 states on the

continent. The current rate of intra-African rate constitutes around 12% compared to

60% for Europe, 40% for North America, and 30%t for the Association of Southeast

Asian Nations (ASEAN). The establishment of the CFTA is forecasted to boost trade

37

between African states by 50%. The establishment of the CFTA must revolutionize

Africa and move it towards the direction of an independent economic development.

In Barack Obama’s (2015) address to the African Union, he stated that: “So many

Africans have told me, we don’t want just aid, we want to trade that fuels progress”.

Trade is not aid. It has become the realm of the African stance in the last years. Despite

trade being the getaway of the development today, the biggest growth African, trade

among African countries, the opportunity is lacking behind to show pessimistic

statistics.In 2014 in Europe, for example, 69% of exports were to other countries on the

continent. In Asia, that figure stood at 52% and in North America at 50% (World

Economic Forum on Africa, 2016). Africa had the lowest level of intra-regional trade, at

just 18%.

The potential of increasing African cooperation among its countries is visible; however,

with the predominant obstacle in the region considering high customs, tight visa

restriction, the African failure to produce value-added goods, and to diversify their

economies slow down the process of the regional integration. To accelerate the intra-

regional trade, Africa will need to take a different path to transform its trading partners

through technological advancements.

Nonetheless, to achieve technological advancement, infrastructure development must

top the developmental priority list in Africa, particular in two crucial areas: electricity

and transport (Djiofack-Zebaze & Keck, 2009, 934). Electricity is the basis of an

industrial economy and hence trade. However, the World economy forum on Africa

38

statistical review in 2016 reveals that less than 30% of Africans have access to

electricity, compared to about 40%.

Transportation is the driving wheel of trade. Africa is a vast continent in which most of

the trade passes sea roots rather than land, 90% of all trade to be precise (World

Economic Forum on Africa, 2016). Therefore, the industrialization of roads and trade

railways might improve the intra-African trade. A project such as the Standard Gauge

Railway that will connect Kenya, Uganda, Rwanda and South Sudan which will

increase the trade volumes, enable the government to collect more taxes and monitor

illegal activities more concisely.

Often Africa is presented as an underdeveloped region; although it might be true for

some countries, it is far from the truth when discussing innovation. The internet plays a

vital part in the economic activities of the continent. When considering penetration rate,

some countries are leading the way. For example, Nigeria, Egypt, and Kenya (Djiofack-

Zebaze & Keck, 2009, p.932). Internet for all. It’s not just with electricity access that

Africa lags behind. It’s also with one of the most powerful tools for boosting trade,

opening new economic opportunities and fostering innovation and entrepreneurialism:

the internet.

39

Economic Partnership Agreements

The WTO’s negotiations have taken an immense time without being able to conclude

with any concrete measures due to the consensual nature of the organization. Therefore,

the international community has shifted its negotiation path to indulge more in

multilateral treaties in matters concerning trade and its ties to development. The

optimization of multilateral negotiations is usually carried out between developed

countries and their developing partners in trade. African, Caribbean, and Pacific (ACP)

have concluded long negotiations after fifty years long non-reciprocal trade regime with

Europe (Schmieg, 2016, p.5). This view the path for the birth of the Economic

Partnership Agreements (EPAs) that succeeded the Yaoundé, Lomé and Cotonou

Agreements which were terminated in 2007 for their discriminatory nature that granted

preferential treatment for ACP partners (WTO). The WTO deemed the EU practices not

benefiting under the organization rules.

The negotiations signified a turning point for ACP countries as they for the first time

were required to negotiate on an equal footing with the developed parts of the world

through asymmetric trade agreements. Although their regional agendas were still not

completed, they have succeeded to engage in the talks and take a step forward.

The objectives of EPAs were ambitious. The agreement was expected to promote

development and building a strong regional market that will allow negotiations at a

regional level. The agreement also aimed at boosting trade and investment, facilitating

the integration of ACP economies in the global economy and stimulating deeper

economic reforms. The liberalization of market access has laid in the premises of the

agreement that will allow an immediate access to EU market for ACP goods and

40

services. The agreement could also work vice-versa were a significant amount of goods

and services could enter African markets over time. The agreement was expected to

revolutionize ACP-EU relations and depart from the conventional aid paradigm to

embrace a stable business model (Schmieg, 2016, p.9). However, the aspirations that

accompanied the agreements set the bars too high for ACP countries.

Most of the ACP parties were skeptical about the agreement as the potential gain did

not look promise whereas most of these countries already had a full access to EU

market since 2001.The opposition for the agreements grew strong due to the significant

efforts that were required to open ACP markets to Europe fearing the losing their fiscal

control in collecting import duties revenue, unfair competition from subsidized

European agriculture, and driving small business out of the market due to the heavy

competition from European products.

Despite the potential risks that ACP countries have anticipated, the risk of losing their

Cotonou preferences and compete with all other developing countries have provided a

greater incentive to negotiate the agreement. However, the results of the negotiations

were not compliant to the expectations as the end of end of 2007, of the 76 negotiating

ACP countries only 36 had concluded EPAs with the EU (Nnamdi & Iheakaram, 2015).

Meanwhile, By end of 2014, the number of ACP EPA parties had risen to 49. A total of

27 countries opted out, 15 in Africa, 12 in the Pacific (Nnamdi & Iheakaram, 2015).

The negotiating parties limited the agreement to trade in goods (with the exception of

the Caribbean EPA) with a promise to negotiate services in the future. However, the

agreement had failed in attaining the development agenda with the exception of West

Africa, that negotiated a development package to financial needs of the implementation.

41

What is EPAs?

Unlike previous unilateral trade preferences and agreements between the EU and ACP

countries, the EPAs has broadened the coverage of products exported to EU. As under

the unilateral regime, 97% of ACP products entered the EU market on a preferential

basis (Thele, Jepessen, Gjodesen-Lund, & Van Biesebroeck, 2015, p.43). Meanwhile,

EPA’s has granted a complete access to EU markets in 2008 by improving the rules of

origin (RoOs) through the introduction of the cumulation provisions. These provisions

have made the RoOs more lenient in allowing countries to sources from neighboring

countries and export them to the EU opening trading channels not only with the EU;

however, also with regional trading partners.

However, a drawback that prevented the development of regional value chains for

exporting to the EU is the administrative customs cooperation which has not been

addressed yet.

Furthermore, tariffs will be reduced on a course of 25 years for at last 75% of products

as the liberalization may develop only over time (Thele, Jepessen, Gjodesen-Lund, &

Van Biesebroeck, 2015, p.52). However, due to the strict agricultural policies of the EU

for agricultural subsidies, agricultural products were not subjected to liberalization.

Table 2. The table below summarises liberalization commitments in all EPA regions.

42

Central

Africa

EAC ECOWA

S

ESA SADC CARIFORU

M

Pacifi

c

No. of EPA

countries

1 out of 8

5 16 4 out of 11 6 15 2 out

of 14

Degree of

liberalisatio

n

Cameroo

n: 80%

82.6

%

75% Madagasca

r: 81%

Mauritius:

96%

Seychelles:

98%

Zimbabwe:

80%

SACU: 80%

Mozambiqu

e: 81%

86.9% Fiji:

87%

PNG:

88%

Time frame 15 years 25

years

20 years 10 years 12 years 25 years 15

years

Source: European Centre for Development Policy Management (ECDPM).

The agreement encourages countries to pursue economic transformation and diversify

their economies through industrialization. Despite the agreement is still regulating

export restrictions, countries are allowed to use them under specific circumstances.

EPAs encompasses trade restriction rules that are under the WTO agreements and do

not introduce any new restrictions.

The agreements contain some degree of flexibility that allows countries to pursue their

economic transformation reforms, including the use of industrial policies to diversify

43

their economic base. For example, while the agreements regulate export restrictions,

countries can still use them under specific circumstances (Nnamdi & Iheakaram, 2015,

1855). EPAs do not have stricter rules on other trade-related issues than the WTO,

which means that most LDCs have the same degree of flexibility than under the WTO.

Besides, European products will be able to access EPA signatories’ markets once those

agreements enter into force.

On the development side, the only region that negotiated a comprehensive development

package is Economic Community of West African States (ECOWAS) due to the least

developed nature of most of the countries in the union. They have negotiated at €6.5

billion in finances for the period 2015-2019 (Economic Community of West African

States, 2017). A follow-up agreement that would support EPAs which would focus on

trade, agriculture, infrastructure, energy, and capacity building for civil society

development paying a special attention to the West African region.

How Relevant are EPAs for the Developing Trading Regime?

EPAs aspiration to create a free trade zone remains solely focused on trade in goods.

Despite the initially stated ambition, most EPAs, with the exception of the Cariforum

EPA, remain trading in services is not covered nor other trade-related issues such as

investment, competition or data protection (Nnamdi & Iheakaram, 2015). Although the

signatories are all members of the WTO and still abide by its rules, the main feature is

their reciprocity and their non-discriminatory nature as the WTO failed to pursue any

progress in the matter.

44

Creating multilateral agreement and free trading zones require many developing

countries, and in particular, LDCs, to be institutionally ready and the capable to reach

for changes and implementation that go deeper than what the WTO has covered.

As international markets become more and more globalized and given the WTO

incapacity to address the evolving issues of trade-related aspects today, large trading

nations switching to bilateral and plurilateral agreements to improve their regulatory

frameworks and adapt to the changes of international trade. It can be noticed for the EU,

the US, Japan, India, and China (WTO, 2017). However, with the election of President

Trump, the US has changed its path towards more protectionist measures. Despite the

recent developments, the world is witnessing the negotiations of three large mega-

regional trade agreements. These are the Trans-pacific partnership (TTP), involving 12

countries, namely the US, Japan, Canada, Australia, Singapore, Mexico, Chile, New

Zealand, Brunei, Peru, Vietnam and Malaysia; the Transatlantic Trade and Investment

Partnership (TTIP) between the European Union (EU) and the U.S; and the Regional

Comprehensive Economic Partnership (RCEP) with 16 countries, among which the 10

member states of the Association of South East Asian Nations (ASEAN) – Brunei,

Myanmar, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand

and Vietnam – and the 6 states with which ASEAN has existing FTAs, namely

Australia, China, India, Japan, South Korea and New Zealand (Nnamdi & Iheakaram,

2015). If these deals are successfully concluded, they are expected to have significant

implications for the regulatory nature of trade.

The adoption of multilateral treaties will adapt current international trade and

investment rules to the business environment, especially to the LCDs and in domestic

45

policies that apply to all countries once developed. Due to the adaption of complex

regulations, the agreements will encompass a dispute settlement mechanism that would

allow a speedy process between governments and business to address the trade-related

issue on a specific focus on the aspects mentioned in the agreements. By that, the

signatories are shifting from their dependence on the WTO rulings and heading towards

a more focused approach which will allow a better policy integration and eventually

will lead to a more sophisticated market for all parties.

46

Conclusion

The struggle for fair global trade seized to be a myth to become a legitimate concern. A

thorough assessment of the international trade impact on Africa and the correlation of

African countries global stance and their usage of the WTO Dispute Settlement system

in litigating their bargaining powers reveals the complexity and intertwines of trade

affairs. The African relations with the WTO revealed a story that has a rather reverse

ending: "and so they lived unhappily ever after." The reason for such relation is the

nature of free trade which has significant costs. The researcher believed that the usage

of the WTO legal system may bring these costs down and improve the African political

and economic development tendencies.

Although the usage of the WTO Dispute Settlement system is encouraged, the review of

the statistical data of the African countries revealed the limits of their participation. The

increase of African participation as third parties through the utilization of the Advisory

Centre on WTO Law and taking the opportunities of the pro bono cases and discounted

rates that international law firm offer would strengthen the voice of the African

continent and involve more countries apart from South Africa and Egypt. However, it is

to be noted that the biggest obstacle that African countries face is related to the

multilateral trade system integration. The supply-side constraints that African countries

face due to the overflow of foreign products to their markets and the huge portions of

aid that does not allow these countries to diversify their economies are bigger concerns.

There no concrete records or evidence that would support the premises that African

countries’ exports are damaged with the limited use of the Dispute Settlement system.

The premises rely on the type of products that African countries export. In fact, most

African exports enter their respective markets unhindered under a preferential condition

47

such as the case with the EU market. The thesis attempted to present different ways the

African countries can be more productive and litigate their limited sources throughout

the involvement in trade negotiations. As African countries increase their share in world

trade, it would be expected that they would resort to the dispute settlement system more

frequently to protect their rights and legitimate expectation.

The researcher tried to demonstrate the positive effects of the legal involvement of the

respective sectors of African countries and how it benefits their economic development.

The constraints that hold back the development of the African countries are related to

unfavorable provisions in the DSU, high costs, lack of political will, fear of retaliation

and weak technical expertise. The researcher suggested that these restraints could be

overcome through the alternative solution for Africa. However, the researcher did not

deny the benefits of that the DSU brought to African countries through their favored

conditions and create a platform for small developing countries to engage in trade with

economic hegemons such as the EU and the US. The researcher has analyzed different

alternatives for African countries to develop their economies and develop their

international stance. However, more research is necessary to demonstrate the effects of

the low participation of African in the WTO Dispute Settlement system. The researcher

hopes to continue researching the topic in future studies.

48

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