How going digital in Africa could set a precedent for future FTAs

Legislation | | MIC Customs Solutions |

Making the new African free trade agreement digital could open up a new future for such deals, one expert believes.

The African Continental Free Trade Area (AfCFTA) Agreement came into force last month, and with it came a new era of economic hope for the continent.

It has laid the foundations for what could be the world's biggest free trade zone in terms of the number of participating countries, plus it is expected to lead to a 60 per cent boost in intra-Africa trade by 2022.

This could help to put the African nations on a much more level playing field with other countries in the rest of the world in terms of trade.

However, the FTA is also interesting because it could represent a major step forward in how such deals are applied in the 21st century.

Craig Atkinson, a research fellow with the World Trade Institute, wrote in an article for Trade Forum magazine that he believes the AfCFTA could make history by becoming a 'born digital' FTA.

The economic expert explained that although typically hugely beneficial for participants, FTAs tend to be challenging to understand and apply. This is worsened by the fact that the legal texts to back them up are often not available electronically or fail to be regularly updated.

Indeed, the 2018 ECORYS study on FTAs backed this up, leading to findings that some potential beneficiaries - especially small businesses - are not using free trade agreements as much as they could due to a lack of understanding.

However, Mr Atkinson pointed out that legal technology - and technology in general - has improved to such an extent that it could boost the functionality of trade agreements going forward, whether that is for businesses, policymakers or customs firms.

He explained that if the workings behind the AfCFTA are made digital from the very start through the creation of a 'machine consumable' translation of the text, the FTA would be accessible to all - it would be the first 'born digital' FTA.

As time moves on, everything from computational clauses to meta-data information could then be integrated into digital formats, ensuring FTA information is at the fingertips of anyone who needs it.

Mr Atkinson cited the example of New Zealand providing domestic laws in Extensible Markup Language (XML) as a case in point for how this might work, only that it would be far more interactive and even functional if it were to be applied to the AfCFTA.

If the relevant clauses of the AfCFTA were expressed as algorithms, it might, for instance, be able to include online schedules that incorporate the rules necessary to automate cross-border transactions requiring determination of calculations.

A digital FTA could support trade facilitation systems and automate cross-border e-commerce, ensuring everyone, even without legal training, could benefit.

"If executed correctly and practically focused, the benefits of the AfCFTA can be more easily realised and its intended beneficiaries can get the most out of it. There is more than enough legal, developer and technical talent in Africa to ensure such a version of the agreement could be achieved. All that is needed is the will to make it happen," Mr Atkinson concluded.

This is certainly a fascinating idea and, with almost everything happening online in the 21st century, one that would be both useful and practical.

Storing data online and automating as much as possible through algorithms would certainly simplify any FTA and ensure they are not daunting even for micro-businesses making their first foray into international trading.

We look forward to seeing if Mr Atkinson's reasoning comes to fruition for the AfCFTA and future agreements. In the meantime, don't forget that MIC's suite of products can ensure you are fully compliant with any global FTA, as well as with international customs requirements.

All the information is available on our website, or you can contact one of our experts for tailored advice.