Proving Hegel Wrong: Learning the Right Lessons from European Integration for the African Continental Free Trade Area

This paper sets out to disprove the German philosopher Hegel’s dictum about people learning nothing from history, by looking at the lessons to be learned for the African Continental Free Trade Area (AfCFTA) from the European Union’s experience of regional integration. Since its foundation in 1957, European integration has had a chequered history, with its fair share of triumphs and setbacks. This paper focuses on the evidence from economic studies and the lessons to be gleaned from the Single Market Programme (SMP), which was initiated in 1993 and ushered in the creation of a unified European market. The parallels are far from perfect: structurally, in the level of development and resources available to support regional integration, there are major differences between the SMP and the AfCFTA. Nevertheless, this paper highlights nine major lessons for the African continent from the SMP, including the scale of benefits to be expected, the role of multinational corporations, the need for an effective competition policy and the importance of public buy-in to the process. © 2021 African Export-Import Bank. Publishing services by Atlantis Press International B.V. This is an open access article distributed under the CC BY-NC 4.0 license (http://creativecommons.org/licenses/by-nc/4.0/). Journal of African Trade Vol. 8(2); December (2021), pp. 115–132 DOI: https://doi.org/10.2991/jat.k.210908.001; ISSN 2214-8515; eISSN 2214-8523 https://www.atlantis-press.com/journals/jat Email: mold@un.org Peer review under responsibility of the African Export-Import Bank 1Georg Wilhelm Friedrich Hegel (1770–1831), considered one of the major figures of modern Western philosophy. It is undoubtedly a very ambitious agenda and, as such, its implementation needs to be well informed by both academic research and past precedent. A major precedent is the EU: since its inception in 1957, the EU has frequently served as a model for other regional organiza tions (Schiff and Winter, 2003; Molle, 2016; Lenz, 2018; Juma and Mangeni, 2018). Yet it too has had to contend with cynicism. 2 A lot of the internal criticisms spring from genuine disagreements about how the EU project should proceed (James, 2016). For some reason, US-based economists issue particularly harsh judgments, with the project of monetary union being singled out for especially vehement criticism. 3 The critical voices also cut across political divides, coming from both the political left and right (e.g. Feldstein, 2012; Krugman, 2015; Stiglitz 2020). Rodrik (2017), for instance, claims that “Today, the [European] Union is mired in a deep existential crisis, and its future is very much in doubt. The symptoms are everywhere: Brexit, crushing levels of youth unemployment in Greece and Spain, debt and stagnation in Italy, the rise of populist movements, and a backlash against immigrants and the euro. They all point to the need for a major overhaul of Europe’s institutions.” There is no denying that the EU project has suffered some severe setbacks—among them, the collapse of the European Exchange Rate Mechanism in 1992, the ‘Greek’ crisis of 2011 and, most recently, in 2016 the referendum of the UK to leave the EU. The institutions of the EU are also frequently accused of being in decline, as exemplified by slow decision-making and an excessive bureaucracy, although whether these arguments are sustainable has been contested (Nugent and Rhinard, 2016). Yet what surprises many people is the resilience of the idea of a united Europe (Lenz, 2018). Broadly speaking, European citizens are still attached to many of the freedoms that the EU has bestowed. In a Pew Research (2019) poll held in 2018, a median of 74% of respondents still believe that the EU promotes peace, and most also think it promotes democratic values and prosperity. 4 Arguably it is precisely because the European model of integration can simultaneously celebrate major achievements and needs to address some fundamental flaws that it makes such an interesting and informative case study. It is a flawed model, but not one without many redeeming features. As a case study on how to achieve regional integration, then, the EU represents an experience that is unparalleled and impossible to ignore. As a proposition, it contains many lessons for the AfCFTA, as the continent embarks on the crucial stage of implementation. A word on the selection of papers for review. The studies in this paper in the main refer specifically to the Single Market period. Otherwise, the assessment would not compare like with like. Hence the author has tended to ignore excellent studies or reviews like that by Crafts (2016) or Badinger and Breuss (2004) that cover the period from 1960 to 2000, even although there is significant temporal overlap. In addi tion, the paper does not delve into the theory behind the empirical results, but the interested reader can find plenty of relevant literature. 5 Some clarifications are also in order about the paper’s analytical scope. It is focused principally on the economic implications and implemen tation of the Single Market—beyond flagging the importance of popular support and understanding, it does not delve much into political dimensions. Yet those political dimensions are difficult to extricate from such discussions. Regional integration is inherently political, with countries deciding to cede a degree of national sovereignty in exchange for the economic and political benefits stemming from regional integration. 6 There is also an emphasis on reviewing macroeconomic rather than microeconomic papers. There is undoubtedly a wealth of studies to draw upon. However, because of the vast volume of literature, this review has by necessity been selective, focusing generally on more recent studies rather than older studies, on the grounds both of more complete data and (presumably) better methodological approaches. 7 2. PARALLELS WITH THE SINGLE MARKET PROGRAMME 1992 “Because of the success of the European Union, we are all compelled to unconsciously compare the African experience with the European experience. We read the European experience in a very teleological sense, in the sense that we assume that whatever happened in Europe since the Second World War was part and parcel of a deliberate process to build the Europe that we see today. We interpret every event in the past as if it was a necessary and well thought out activity that led to this integration of Europe.” Mkandawire (2014:1) The SMP represented a major acceleration towards the European goal of achieving ‘ever-deeper re