What are the alternatives to neoliberal trade?

The African Continental Free Trade Area and alternatives to neoliberalism.

Dar es Salaam Port, Tanzania. Image credit Rob Beechey for the World Bank via Flickr (CC).

On the April 2, 2019, The Gambia ratified the agreement establishing the Africa Continental Free Trade Area (AfCFTA). In doing so, it joined 21 other African countries, thus helping usher the agreement into force as the threshold of 22 ratifications was reached. But what does this really mean for Africa? Temporarily ignoring the African Union’s pronounced implementation deficit and focusing on the limits of free trade; how far can the initiative realistically go in its effort to “promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of [African countries]?”

Even in its infancy, the AfCFTA occupies a special place in history. The free trade area is poised to be the world’s largest since the World Trade Organization was established in 1995. If all 55 African Union (AU) Member States join, it will create a single market of about 1.2 billion people with an estimated gross domestic product of $ 2.5 trillion. Although Benin, Eritrea, and Nigeria are yet to sign the agreement—which was adopted on March 21, 2018—it is still among the AU’s fastest to enter into force, trumping treaties like the Protocol on the Rights of Women in Africa (slightly over 2 years), African Youth Charter (about 3 years), and African Charter on Democracy, Elections and Governance (just over 5 years), with a ratification speed more akin to that of the AU’s Constitutive Act (less than 7 months).

For some, the AfCFTA is the culmination of the continent’s forefathers’ and foremothers’ pan-African vision, perhaps as articulated most strongly by Ghana’s first Prime Minister and President, Dr. Kwame Nkrumah. “By creating a true political union of all the independent States of Africa,” he urged in his famous speech at the inception of the Organization of African Unity (OAU) in 1963:

We can tackle hopefully every emergency, every enemy and every complexity… Unite we must. Without necessarily sacrificing our sovereignties, big or small, we can, here and now, forge a political union based on Defense, Foreign Affairs and Diplomacy, and a common Citizenship, an African currency, an African Monetary Zone and an African Central Bank. We must unite in order to achieve the full liberation of our continent.

Along with its predecessor, the 1991 Treaty Establishing the African Economic Community (Abuja Treaty), the AfCFTA is an additional step towards regional integration and, more specifically, towards the anticipated establishment of a continental customs union. Such bold moves carry with them the potential to orchestrate a remarkable geopolitical shift, with Africa repositioning itself on the global stage. But they also come with deep, lingering questions and concerns about whether this is the right time and move for the continent.

In rejecting Nigeria’s signing of the AfCFTA agreement, the National President of the Nigeria Labour Congress characterized it as an “extremely dangerous and radioactive neoliberal policy initiative.” Indeed, free trade advocacy is among neoliberalism’s key features. In the early 1800s, classical economist David Ricardo’s appealingly logical but unempirical theory of comparative advantage provided a basis for the idea that trade that is, at least in theory, unhampered by government regulation is universally beneficial. Economists later elevated Ricardo’s theory to a “law,” and in the 1990s those with a neoliberal bent lauded free trade’s facilitation of economic growth as market forces efficiently allocate labor, capital, and technological resources.

Yet, neoliberal agendas have generally not served the continent well. Economists Thandika Mkandawire and Charles Soludo describe how the structural adjustment programs (SAPs) introduced in Africa by the World Bank and International Monetary Fund in the 1980s and 1990s failed to improve economic performance and made no clear contribution to poverty reduction. In fact, such programs weakened the public sector, ravaged social services, increased inequality, and had a disproportionate impact on women who were often forced to bear the burden of weakened social safety nets. In response to such damage, researcher and human rights activist Mahfoudha Alley Hamid made a powerful call during the Non-Governmental Organization Forum at the United Nations Fourth World Conference on Women for international financial institutions to “realize that the SAPs are sapping us.” Clearly, the continent cannot afford to be the perpetual testing ground for unsubstantiated economic theories or, as Ruth Castel-Branco depicted in her recent article on Cyclone Idai, the overexposed playground for global capital.

While Ricardo’s theory revolutionized thinking, in some ways it was a product of its time and it has since been updated to account for technological innovation, non-agricultural production, and other dynamics. Nonetheless, it has been challenged on several grounds including for its assumptions about the inability of labor and capital to cross borders (a limitation Ricardo himself recognized), its willful blindness toward the role of slavery and colonialism in shaping the British Empire’s comparative advantages, and its lack of empirical support. All these criticisms also weaken the case for free trade. Among the stronger arguments against it are the seemingly contradictory economic trajectories of many countries from the global North and the Asian Tigers (i.e. Hong Kong, Singapore, South Korea, and Taiwan). Rather than “getting out of the way” as prescribed to Africa within the Washington Consensus, these states actively protected domestic industries and also benefited from a less rigid intellectual property regime than the one currently imposed by the World Trade Organization (WTO).

Protests against the WTO beginning in the late 1990s and broader debates about the limits of free trade led to the proposal of more people-centered fair trade that sought to improve livelihoods and give greater voice to those traditionally marginalized by free trade. Even so, adherents of free trade were not ready to let the idea go. They further complicated the debates about whether free trade should be “fair” with questions about whether free trade was really “free.” Was it truly being implemented in the manner intended by its theorists?

Despite their theoretical, empirical, and possible practical deficiencies, free trade ideas have largely maintained their power, ignoring these deficiencies in a dogged defense often coupled with the mantra made famous by former British Prime Minister Margaret Thatcher: “There Is No Alternative.” Indeed, drawing from Michael Henry Davis and Dana Neacsu, one of the dangers of free trade ideology is its hegemonic foreclosure of alternatives.

Last month, the United Nations Economic Commission for Africa encouraged African scholars to conduct more research on the AfCFTA. There is great need for robust intellectual engagement with this initiative and such engagement must go far beyond the usual suspects, namely: intra-African bodies, economists, and international trade lawyers. History, including the recent history of the United Kingdom’s referendum to leave the European Union, has shown us that trade is far more than a technocratic exercise involving goods and services. It is a complex site of both local and global governance.

As Africa embarks on one of its most ambitious initiatives since the formation of the OAU, interdisciplinary and engaged research must unpack the AfCFTA. Immune to assumptions about the AfCFTA’s necessity or even inevitability, scholarship must both seek to understand the possibilities of continental free trade and grapple with alternative pathways to the Africa we want.

Further Reading