The Samoa Agreement, Africa’s Regional Integration Efforts, Trade Litigation, and Investment Disputes

Welcome to the 2024’s first edition of ?Patrick’s Trade Digest. This year ?we will be tracking interesting developments in ?Africa’s ?regional and continental? ?integration efforts , supply chains, trade litigation, investment disputes, climate change, geopolitics ?and many more. Meanwhile here are some of the interesting issues and headlines worth following ?as we settle in 2024.

Investments Disputes

Tanzania v Indiana Resources

In 2015 Tanzanian government ?revoked the mining licenses of Indiana’s subsidiaries, Nachingwea Nickel Ltd (NNL) and Nachingwea UK Ltd (NUKL).Indiana, as the majority shareholder in these companies, subsequently filed a claim against Tanzania at the International Centre for Settlement of Investment Disputes (ICSID),.The ICSID tribunal ruled in favour of Indiana, awarding the company $114 million in compensation plus interest. Tanzania ?has however ?challenged the award and sought its annulment and in the annulment proceedings in the interim, a ‘Stay of Enforcement’ was granted by ICSID, requiring Tanzania to provide an undertaking to comply with the Award if the annulment request is unsuccessful. In this regard , Tanzania has made a commitment to pay Australian mining firm Indiana Resources Limited and its subsidiaries $118 million if the country loses in the final decision of the annulment application. This case is just one among the many that African countries have faced at the ICSID with most ending up against African countries. You may also want to see the discussions around the reforms in the Investments Dispute Settlements in Africa, which have partly been captured by AfCFTA Investment Protocol. The Digest shall cover these arguments in its future editions.

?Africa- Gulf Economic Relations

In December 2023,? UAE and Congo-Brazzaville finalised a ?Comprehensive Economic Partnership Agreement(Cepa). (Cepa),will facilitate greater trade and investment flows as the two nations pursue deeper economic ties and builds on growing bilateral cooperation between the two sides, which in H1 2023 saw non-oil trade increase 134 percent over H1 2022 to reach $US2.1 billion. See more here. This is just one of the latest deals that underline the growing ?UEA growing interest in Africa in recent times. Other significant deals by the Gulf States have targeted seaports, telecommunications, airlines, and airports. For instance, according the sources, DP World, a Dubai-based port operator known for its significant role in global supply chain solutions, has invested more than $1.8 billion in Africa over the past decade. ?What this could mean also is that there would be ?more competition in Africa’s market with the US, India, Russia and China, who have enjoyed influence on the continent. But at the same time, it is important for African countries to be proactive in these deals to ensure the FDI associated with these forays becomes transformative for local economies.

EU- Africa Economic Relations

2023 closed on a high for ?EU-Africa relations , and this was capped with a couple of deals.

The SAMOA Agreement

On 20 July 2023, the EU Council?greenlighted?the signature?and?provisional application?of the partnership agreement, as the new legal framework for the?next twenty years, succeeding the Cotonou agreement which was between the EU and the ACP nations in 2000 . The new EU-OACPS partnership agreement (Samoa Agreement) was?officially signed on 15 November 2023?by the EU and its members states and OACPS members in Samoa. The ?agreement, which provisionally started application on 1st January 2024, ?covers human rights, democracy and governance, peace and security, human and social development, inclusive, sustainable economic growth and development,? environmental sustainability and climate change, migration, and mobility. However, based on the experiences of the Cotonou Agreement, scepticism remains strong concerning EU intentions in this pact. For instance, 35 ACP countries including 20 African countries, 9 Caribbean states and six in the Pacific refused to sign the ?agreement.

EU- Kenya EPA ?

On 18th December 2023, he EU and Kenya today signed an Economic Partnership Agreement (EPA) to boost bilateral trade in goods, increase investment flows, and contribute to sustainable economic growth. According to EU, “The EPA provides a platform to support job creation on both sides, along with targeted cooperation to enhance Kenya's economic development.” ?As part of the EAC, one of Africa’s most integrated economic blocks, Kenya’s decision has been met with mixed reactions especially from quarters which see Kenya? as having bypassed other EAC countries. Understandably , Nairobi was forced to enter into a temporary special arrangement with the EU to allow duty-and quota-free entry of Kenyan goods ahead of the January 2017 deadline set by the EU. The jury is still out there whether in these circumstances , Kenya should be walk alone ?in its trade dealings with external partners , or whether there should be an EAC position. Ther are some analyses on this ?that might interest ?readers especially the importance of? EAC’s Common Market Protocol (CMP) whose article 37 Article 37 of the EAC require partner states to coordinate their trade relations and to promote international trade and trade relations between the community and third parties. See for instance ?the views by Harrisson Mbori and James Gathii in their piece ‘Bilateralizing the EU-EAC EPA: An Introductory Legal Analysis of the Kenya-UK Economic Partnership Agreement’, and the author’s piece ‘ The North-South Trade Agreements and Integration in Africa: A Focus on the Proposed USA - Kenya Free Trade Agreement’ for more debates around this.

That said, the main objective of the EPA is to liberalise trade between the EU and Kenya. According to the EU, Kenya will open its market gradually to imports from the EU, benefitting from transitional periods. In addition, Kenya will be able to exclude sensitive products from liberalisation. Also, Kenya may benefit from other provisions that consider its development needs such as special safeguards for agriculture, measures on food security and infant industry protection. See more here. ?However there are concerns ?regarding whether the pact will be truly benefit Kenya , and by extension the EAC with the most outstanding of them being ?whether will allow cheap imports into the region, thereby endangering a fragile EAC economy. ?It is important to consider the concerns as Kenya goes into the implantation phase of the EPA. Some of these challenges are in fact backed by research ?such as the 2015 policy paper by Kenya Institute for Public Policy Research and Analysis (KIPPRA) which concluded that ‘In order for Kenya to benefit fully from EPAs, there is need to, among other things, urgently address supply-side constraints such as inadequate infrastructure, and low productive capacity of producers which limit exportable surplus’

Can litigation strengthen regional integration in Africa?-Uganda vs Kenya

In one of the latest trade wars in the East Africa Community, Uganda has taken Kenya to the East African Court of Justice(EACJ) after Kenya declined to issue Uganda National Oil Corporation (Unoc) with licence to operate as a local oil marketer marketer , and handle fuel imports headed to Kampala. It is important to note that Kenya’s High Court had earlier stopped Kenya’s energy and petroleum agency from issuing the licence to UNOC. Therefore Uganda, in its court papers contends that ?these orders contravene the EAC Treaty. This is a litigation worth keeping tabs on especially on what orders the EACJ would eventually issue, and how this decision will impact integration efforts in the EAC.

?Trade and Environment: Uganda, Tanzania oil projects

Apparently, French energy giant Total Energies on Thursday said it had launched a land acquisition assessment for controversial $10 billion projects in Uganda and Tanzania slammed by environmentalists. For starters , the energy ?company is involved in the Tilenga drilling project in Uganda and 1,443-kilometre East African Crude Oil Pipeline (Eacop) to the coast in Tanzania with the output set for 2025.

Trade Remedies: Madagascar and Safeguards

According to WTO, On 29 December 2023, Madagascar notified the WTO's Committee on Safeguards that it initiated on 27 December a safeguard investigation on polypropylene woven sheaths and bags. A rarely use trade policy tool especially in Africa, ?a safeguard measure simply means ?restricting ?imports of a product temporarily in order to ?protect a specific domestic industry from an increase in imports of any product which is causing, or which is threatening to cause, serious injury to the industry. This intervention is governed or disciplined by the WTO Safeguards Agreement.

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Thanks for reading and please share your thoughts .

Happy 2024