The Political Economy of Preferential Trade in the Global Economy: Why Africa Needs to Refrain from Mega-regionals and Other FTAs with Third Parties

This chapter revisits the old question of regionalism versus multilateralism and discusses some of the recent FTA initiatives that have gained traction outside the multilateral trading system under the WTO. These include mega-regional FTAs negotiated by large country groupings, as well as bilateral FTAs African countries have with third parties. In particular, Economic Partnership Agreements (EPAs) put an end to the unilateral trade preference scheme of the European Union with ACP countries under the Lomé Convention. The basis for reciprocity of EPAs (and any other FTA) implies that any benefit negotiated under the AfCFTA will need to be extended to the EU (or any other third party). This could diffuse the expected AfCFTA gains that would accrue to Africa alone, and possibly also bring on legal arbitration due to incompatibilities or the ability of member States to comply with obligations that preceded the AfCFTA. Against this backdrop, the chapter discusses what actions are needed to curb these impacts and how fit the AfCFTA Agreement is to address these challenges. Lastly, the chapter tries to make a case for African countries to refrain from joining agreements that divide the continent as a bloc, as well as frontload the agenda for future multilateral negotiations in the WTO, in particular on trade in services and investment.