Bilateral Investment Treaties and Intra-African Trade: Implications for African Continental Free Trade Agreement
Published 24 January 2024
Abstract
The inconsistency problem has provided an apparent stimulus for African countries to adopt bilateral investment treaties (BITs) as a strategy to attract foreign direct investment (FDI) and improve trade in the region. Unfortunately, despite the increase in BITs concluded, the volume and composition of trade in Africa remains low. Therefore, this article evaluates existing BITs and intra-African trade with a view of shedding light on the implication of prevailing African countries' BITs on the African Continental Free Trade Agreement (AfCFTA). This is particularly because the AfCFTA aims to increase trade in Africa by transforming the primary sector and accelerating export diversification to manufactured goods. Specifically, the article considers BITs African countries signed with the rest of the world from 1960 to 2018. The article utilises the descriptive statistical technique and establishes that BITs that emphasise the inclusion of the national treatment clause inhibit trade in Africa by hindering the growth in the number and size of local industries. Based on this, the research suggests that, to increase intra-African trade during the AfCFTA, there is a need to enter into BITs that deemphasise the national treatment provision. However, if BITs must include the national treatment clause, they must emphasise the use/supply to a large extent of local materials and intermediate products that can be produced in the domestic economy. This is crucial to create proper linkage for the growth of domestic industries and overall development of the manufacturing sector and increase trade in the region at the commencement of the AfCFTA.
This paper will be part of the third TDM Special Issue on "The African Continental Free Trade Agreement (AfCFTA)". More information here www.transnational-dispute-management.com/news.asp?key=1809