Cross-Cumulation Arrangement as FTA Under GATT Article XXIV

ABSTRACT A cross-cumulation arrangement helps manufacturers meet the demands of the global value chain economy by facilitating the sourcing of intermediate products within the territories of participants in the arrangement. It is a de facto free-trade area formed by a network of bilateral free-trade areas underpinning the arrangement. However, a cross-cumulation clause provided in a bilateral free-trade area that underpins a cross-cumulation arrangement is inconsistent with General Agreement on Tariffs and Trade (GATT) Articles I and III because the intermediate products from the participants in the arrangement are more favorably treated than products from non-participants in the arrangement. The GATT inconsistencies of a cross-cumulation clause cannot be justified by the GATT Article XXIV exception, because a cross-cumulation clause of a bilateral free-trade area derogates from the free-trade area’s aim by facilitating trade in intermediate products between the free-trade area parties and non-parties to the free-trade area that are participants in the arrangement. In contrast, a cumulation clause provided in a free-trade area contributes to the free-trade area’s aim by facilitating trade in intermediate products between the parties to the free-trade area. To bring a cross-cumulation arrangement such as the Regional Convention on Pan-Euro-Med Preferential Rules of Origin into conformity with World Trade Organization law, the arrangement and its underlying free-trade areas should be recognized as a de jure free-trade area under GATT Article XXIV and notified to the World Trade Organization as such. A large cross-cumulation arrangement as a mega-free-trade area is likely to contribute to the world trading system by harmonizing divergent free-trade area rules of origin and providing an efficient mechanism for the formation of a mega-free-trade area.

Implications of the African Continental Free Trade Agreement (AfCFTA) on the Economy of African States

The failure of some African Union member-nations including Nigeria to endorse the African Continental Free Trade Agreement (AfCFTA) that would create one of the largest free trade areas in the world has provoked a lot of controversies that are yet to be resolved. While some of the relevant stakeholders in the countries that have refused to sign the treaty are urging the heads of their countries' governments to withhold assent until when all the contending issues regarding the AfCFTA are amicably settled, others desire to have the agreement signed in order to harness its benefits for the continent. As the controversies rage, it appears that the implementation of the much awaited agreement has been put on hold, thus thwarting the progress of the continent. This chapter therefore wades through the controversies and points the way ahead for the AfCFTA to be acceptable by all.