MFN in Services Trade: A Comparative Analysis of the General Agreement on Trade in Services and the African Continental Free Trade Area Agreement
Published 28 October 2020
The Most-Favoured-Nation (MFN) as a principle of international trade stipulates that trading partners are obliged to offer the same levels of market access to every trading partner irrespective of country origin. However, due to inequality in income levels and various other social, economic, and political factors, States have considered it necessary to take regulatory measures inconsistent with this obligation. Research has shown that, apart from regulatory regimes, States are more inclined to enter into Preferential Trade Agreements (PTAs) with selected trading partners. This research compares the MFN principle at the multilateral level by examining the General Agreement on Trade in Services (GATS) and at the regional level by analysing the African Continental Free Trade Area Agreement (AfCFTA). The focus is on analysing the difference between the unconditional MFN in the GATS and the novel reciprocal MFN in the AfCFTA. The research undertakes a review of the literature and scholarly articles on the GATS and the AfCFTA, to analyse the legal implication of key distinguishing terms such as unconditionality and reciprocity. Further, it provides an overview of the foundation of the AfCFTA to determine the rationale behind the newly formulated reciprocal MFN clause. The analysis indicates that politically AfCFTA Members need to have absolute autonomy in negotiating trade preferences. The article further highlights practical and administrative challenges to the implementation of the AfCFTA MFN. On this basis, it is recommended that the term reciprocal is clearly defined to minimise complexity and uncertainty in the negotiation process. As existing agreements under the Regional Economic Communities form part of the AfCFTA legal architecture, Members must focus on the overall reduction of trade barriers as opposed to creating new preferential agreements.
This paper will be part of the TDM Special Issue on "The African Continental Free Trade Agreement (AfCFTA)". More information here www.transnational-dispute-management.com/news.asp?key=1809