Environmental Exceptions under Article 26 of the African Continental Free Trade Area (AfCFTA) – Any Lessons Learnt

The African Continental Free Trade Area (AfCFTA) is the largest in the world in terms of participating countries since the formation of the World Trade Organisation (“WTO”). The major objectives of the AfCFTA are stated in Article 3 of the agreement establishing the AfCFTA. In general, the intention is to boost trade among African countries through creating a large free trade area that is intended to turn Africa into a single economic force. A point of debate is whether the AfCFTA will achieve its objectives when it permits environmental exceptions to trade that have posed problems under the WTO. Have any lessons been leant?

The AfCFTA will not introduce a free for all in terms of how trade will be carried out in Africa. There are permissible exceptions to trade. Article 26 (a) and (g) of the Protocol on Trade in Goods under the agreement establishing the AfCFTA permits members to take certain unilateral trade measures in pursuit of environmental protection. Article 26 (a) and (g) state as follows;

“‘Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

“Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between Sate Parties where the same conditions prevail, or a disguised restriction on international trade, nothing in this protocol shall be construed as preventing the adoption or enforcement of measures:

  1. Necessary to protect morals or to maintain public order
  2. Relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production and consumption.”

Article 26 (a) and (g) of the Protocol on Trade in Goods reproduces the essence of Article XX (a) and (g) of the GATT 1994 and is largely similar to Article 9 of the SADC Protocol.

The effect of Article 26 (a) and (g) is that a member African state can unilateraly effect measures that are counter to trade against another African state if it can justify its measure as necessary to protect human, animal or plant life or health or if the measure is intended to conserve exhaustible natural resources. For example, under the AfCFTA, member State X can lawfully impose a trade embargo on State Y for employing archaic fishing methods that cause high mortality rates on certain endangered species[1]. Will the AfCFTA be effective if member States abuse the environmental exceptions by imposing protectionist measures with its blessings under the guise of protecting the environment? Will Article 26 (a) and (g)  not open flood-gates for protectionism if member States are given room to choose for themselves which measures are necessary to protect human, animal or plant life or health without any oversight process before such measures are imposed?

It can be argued that since the AfCFTA reproduced Article XX (a) and (g) of the GATT 1994 in verbatim, it intends its Dispute Settlement Body (“DSB”) to apply the same two-tier test applied by the WTO in determining whether or not an environmental measure imposed by a member State is justified. The first tier of the test is to examine if the measure falls under the environmental exceptions provided under Article 26 (a) and (b).If it does not fall under the environmental exceptions, it is an illegal measure. If it does, it is provisionally justified and is then subjected to the second, more rigorous second-tier of the test under the Chapeau to Article 26. The Chapeau to Article 26 tests if a measure imposed by a State Party against another State is permissible under the AfCFTA.

The Chapeau sets out three standards in assessing if an environmental measure is not justifiable and these are;

  • arbitrary discrimination
  • unjustifiable discrimination
  • a disguised restriction on international trade[2].

In US-Shrimp, in applying the Chapeau to Article XX (which is identical to the Chapeau to Article 26),  the Appellate Body held that the chapeau is (1) a balancing principle to meditate between the right of a member to invoke an Article 26 derogation and its obligation to respect the rights of other members; (2) a qualification making the Article XX exemptions “limited and conditional” (3) an expression of the principle of good faith in international law;  and (4) a safeguard against abus du troit, the doctrine that requires the assertion of a right under a treaty to be exercised bona fide or reasonably.[3]

In its interpretation of the Chapeau, the Appellate Body in US- Shrimp ruled that in order for a measure to be applied in a manner which constitutes “arbitrary or unjustifiable discrimination between countries where the same conditions prevail” (1) the application of the measure must result in discrimination (2) the discrimination must be arbitrary or unjustifiable in character; and (3) the discrimination must occur between countries where the same conditions prevail.[4] These three elements were explained in various cases by the Appellate Body under the WTO.

In the Shrimp /Turtle case, the unilateral measures applied by the US to protect sea turtles were found to be in violation of the Chapeau’s criteria against arbitrary and unjustifiable discrimination.

At face value, the Chapeau to Article 26 appears to be the last stand for trade objectives that stand like a sentinel guarding against intrusion of environmental objectives into the domain of free trade. One question comes to mind, has the AfCFTA done enough to balance trade and environmental objectives in a manner which protects genuine environmental measures while weeding out protectionist measures disguised under environment protection?

Considering that the AfCFTA is work in progress, the use of Article 26 inherited from the GATT 1994 will work for now. However as the African states become stronger from the benefits of the AfCFTA their foreign policy interests  will likely manifest in ways that may be counter-productive to the interests of trade. This may result in abuses of Article 26 through carefully crafted measures deliberately intended to slip through the scrutiny of Article 26. It will therefore be necessary for the AfCFTA to improve from what was inherited from the WTO for it to remain effective.

A constant criticism of the Chapeau to Article 26 is that it operates retrospectively. In other words, the Chapeau works to correct an abuse of Article 26 that would already have taken place. By the time that the Dispute Settlement Body hears the dispute and takes corrective measures, the industry of the state against whom the counter- trade measure had been imposed against under the guise of environmental protection may have been destroyed.

It is suggested that the AfCFTA look to a long term solution of putting in place an oversight process that prohibits the imposition of environmental measures by member States before such measures have been assessed and approved by the AfCFTA. This will prevent situations where a measure that is protectionist is only corrected after the damage has already been done. As work in progress, the AfCFTA is not yet perfect. However it is the best shot that Africa has at turning itself into an economic powerhouse.

By Simon K. D. Chivizhe – AB & David-Zimbabwe

[1] US – Shrimp, AB Report, WTID558/AB/R

[2] Matsushita.M, Schoenbaum.T.J, Mavroidis. P.C, & Hahn, M; The World Trade Organisation: Law, Practice and Policy, 3rdEdition, Oxford (2015) p730

[3]US-Shrimp, AB Report, para [157]

[4]Ibid, para [150]