Investment Treaties between China and India, and Selected African

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the institutional capacity as well as the resources to fully implement or effectively enforce internationally recognized standards. This limits the ability of domestic producers to penetrate certain export markets, not only in more developed countries, but also in Asia, especially China and India.
While export and investment incentives, such as Export Processing
Zones (EPZs), to date have been successful in China and India, their potential to stimulate exports has not materialized in African countries, with a few exceptions. The preceding analysis suggests that the ineffectiveness of these incentives in African countries is due in part to significant implementation and enforcement challenges in the face of generally weak institutional capacities, as well as the lack of the requisite infrastructure and labor skills. Export incentives in African countries have also had mixed results in creating backward production linkages.
The proliferation of regional and bilateral trade and investment agreements in recent years on the African continent comprises not only reciprocal agreements among other countries in the South, including those in
Asia (China and India among them, but also preferential arrangements provided by developed countries in the North to facilitate market access for exports from Africa. The size of the benefits derived from such preferential treatment diminishes significantly when market barriers for other competitors are lowered. Trade diversion from such regimes challenges their desirability and sustainability. No bilateral free trade agreements are currently in effect between Asian and African countries, with the exception of a few unilateral preferential treatments of limited scale.
RIAs on the African continent are still very much nascent and have yet to significantly foster regional trade. To Chinese and Indian investors, they are not seen as particularly trade- or investment-facilitating. Some Chinese and Indian businesses already operating in Africa complain that these agreements spaghetti-like character actually inhibits rather than promotes international commerce.
In addition to formal international agreements, African-Asian trade and investment flows are also influenced—in varying degrees—by other instruments. Investment Promotion Agencies (IPAs) and public-private investors councils in African and Asian countries play an important role in facilitating international commerce between the two regions. China and
India have also established various other mechanisms in the hopes of stimulating trade and investment with Africa. One of the more recent—and certainly most notable—initiatives is the January 2006 release in Beijing of
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AFRICA
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CHINA AND INDIA
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S NEW ECONOMIC FRONTIER
“China’s Africa Policy a white paper that identifies a large set of economic issues over which China proposes to cooperate with Africa, including trade and investment.

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