News from Africa

The AfCFTA Digital Trade Protocol

The hopes of the Secretariat to complete the negotiations on the Protocol by 23 July have not succeeded. The meeting of the negotiators has been rescheduled. At a meeting organised by one of the union members of the Nedlac trade committee on 21 June, the SA DTIC attended to give its view on the Protocol. The DTIC told the meeting that it had not been satisfied with the first 3 Protocols adopted earlier this year (on Intellectual Property, Investment and Competition). It particularly took exception in the draft Digital Trade Protocol as there is a provision that would make permanent a moratorium on duties on electronic transmissions. SA was against this moratorium at WTO (see our previous Newsletters on this issue) and wanted to ensure that it had the right in the future to impose such duties if it wished. The DTIC felt that such a moratorium would present African states from harnessing data flows. The DTIC also objected that taxation had been included as this was a matter for national sovereignty (although the reference had in fact been removed in the 2^nd draft). The DTIC was concerned about liberalizing cross-border data flows through the Protocol, as data flows were not limited to Africa and other (non-African) interests would benefit. Finally, the DTIC found the protocol too biased towards Big Tech, and regretted that it failed to dwell on the AUC’s Digital Transition Strategy which had stressed the need for emphasis on development.

EFSA responded to the first point, saying this was a protocol addressed only to African states, designed to encourage inter-continental trade. Given that the AfCFTA was committed to removing tariffs, it sounded bizarre that SA could be contemplating a new tariff to apply to other Member Parties. On the issue of taxation, EFSA agreed that each country had to be left to set its own taxes, but pointed out that information on taxation was essential for online sales across frontiers. What we had hoped for was a reference to the need for all Member Parties to make their tax rates clear so that sellers could inform buyers of the total cost of a product including all cost elements. This was in line with the SA consumer protection law which requires sellers to inform buyers of the total cost of a product before a purchase was made.

Subsequently, the DTIC has asked EFSA to provide specific wording for amendments to the Protocol.