2009-09-02 tralac Newsletter
2009-09-02 tralac
Hotseat Comment
JB Cronjé, a tralac Researcher, comments on trade and climate change.
The science behind global warming is well established. There is growing acceptance that the average temperature of the earth is on the rise as a result of the emission of greenhouse gases caused by human activity. The global greenhouse gas levels (measured in carbon dioxide equivalents) are likely to grow over the coming decades resulting in a further increase in temperature.
The Intergovernmental Panel on Climate Change (IPCC) was launched by the World Meteorological Organisation and the United Nations Environment Programme to undertake scientific assessments of studies on climate change. Their first assessment led to the adoption of the United Nations Framework Convention on Climate Change (UNFCCC) to achieve stabilization of greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system. As a result a supplementary agreement, the Kyoto Protocol, was concluded to establish legally binding obligations on industrialised countries for the reduction of greenhouse gas emissions to at least 5% less than 1990 levels over the first commitment period from1998 to 2012. At the 13th UNFCCC Conference of the Parties meeting in Bali, Indonesia, the parties agreed on a “Bali Action Plan” with the aim of reaching an agreement on both long-term cooperative action on climate change and a post-2012 regime in terms of the UNFCCC and Kyoto Protocol respectively. The objective is to conclude both negotiating efforts at the 15th Conference of the Parties to the UNFCCC meeting in December 2009 in Copenhagen, Denmark.
The IPCC has extensively studied a stabilization of emissions scenario considered to be representing the upper sustainable limit for avoiding dangerous human interference with the climate system. According to this scenario global emissions should be limited to a maximum of 550 parts per million (ppm) carbon dioxide-equivalent (CO2-eq) which would correspond to an average earth surface temperature increase of 3° C. This would imply an annual reduction in global GDP of 0.25 to 2.5%. In 2005, the global average atmospheric concentration for CO2 was 379 ppm with a further addition of 2 ppm each year.
The impact of climate change will be experienced most directly through changes in the frequency and intensity of extreme weather events such as droughts, hurricanes, typhoons, floods and heavy precipitation. Consequently the trade-related areas most vulnerable to climate change are agriculture, fisheries, forestry, tourism and trade infrastructure that is at risk of damage from rising sea levels and the occurrence of extreme weather events. However, the countries that will be most adversely affected from climate change also have precious little to do with global greenhouse gas emissions.
Mitigation and Adaptation is the two major approaches for dealing with climate change. Climate change mitigation refers to policies for reducing greenhouse gas emissions and/or enhancing the capacity of carbon “sinks” (oceans and forests) to absorb carbon dioxide. Climate adaptation on the other hand refers to responses to reduce the negative consequences of climate change by increasing the ability of humans and ecosystems to deal with changes. The most pressing issue that needs to be dealt with in this regard is technology development and transfer including a solution on how to deal with intellectual property rights relating to such technologies.
The emission of carbon dioxide is an externality to economic activity, meaning that it is not regulated or priced in the market place. A key policy instrument approach to internalize the environmental externality is by setting a price on the carbon content of the energy consumed or on the CO2 emissions generated in the production and/or consumption of goods. The two types of pricing mechanism used to encourage change in behaviour are internal taxes and cap-and-trade systems.
Carbon taxes are usually calculated by measuring the carbon content of fossil fuels that is produced during combustion. A carbon tax can also be used in combination with an energy tax based on the energy content of energy sources. The tax can either be levied on consumers or producers.
The cap-and-trade system on the other hand fixes a cap on total emissions that are translated into allowances (permits) to cover emissions. These permits can be traded or auctioned at a price determined by the market. A number of emission trading schemes have been introduced at the national level including in the USA and EU. However a number of challenges need to be addressed to curb the volatility of the carbon market. The Kyoto Protocol created an international emission trading system combined with a clean development mechanism that allows industrialized countries to offset their emissions in developing countries by investing in environmental-friendly projects.
In the absence of a uniform approach to combat climate change concerns over carbon leakage and competitiveness can lead to the implementation of border adjustment measures to level the playing field between taxed domestic producers and untaxed foreign competition.
Special Features
tralac Media Library
- View an interview by Mr Chiedu Osakwe, Accessions Division WTO. He comments on the special and differential treatment LDCs receive when acceding to the WTO.
- View an interview by Dr Dickson Yeboah (Institute for Training and Technical Cooperation WTO). He comments on the importance of services liberalisation for African countries.
- View all previous interviews here...
Weekly Customs, Excise, Tariff and Trade Remedy Summary Notification
- Download the notification here.
News
Delayed EPA signing won’t curb exports
The delay in signing the interim Economic Partnership Agreement (EPA) between the East African Community (EAC) and the European Union (EU) has had no impact on Tanzania’s exports to the European bloc, European Commission (EC) officials said yesterday.
Italy, SA to intensify trade
South Africa and Italy already have a significant trade relationship, but both countries feel there is potential to take the relationship further, South Africa Trade and Industry Minister Dr Rob Davies and Italian Economic Development Minister Claudio Scajola highlighted on Monday.
G20 nations to inject new life in Doha talks
Trade ministers will meet in New Delhi, India this week to inject fresh impetus into the long-running Doha round of multilateral trade talks in the run-up to the Group of 20 (G20) summit in Pittsburgh later next month.
Mboweni's SADC bank [Opinion]
One of the oldest established common monetary areas, consisting of Lesotho, Namibia, South Africa and Swaziland, where the rand is the main currency, could be a springboard for regional integration, South African Reserve Bank Governor Tito Mboweni said on Thursday.
Regional trade is about give and take
It’s “do or die” for the Southern African Customs Union (SACU), as disagreement over the development consequences of the European Union’s (EU) proposed economic partnership agreements (EPAs) with African states has threatened to split the world’s oldest customs union a year before its centenary in 2010.
Climate, financial crisis talks hinge on Doha outcome, says WTO
The World Trade Organisation (WTO) has warned that in case the ongoing Doha round of global trade talks fails, it could have an adverse impact on the parallel multilateral discussions on mitigating climate change and the financial crisis.
SA wary of EU trade pacts
The European Union (EU) has been criticised by Trade and Industry Minister Rob Davies for being too focused on commercial interests, thereby undermining efforts to forge a new, fairer trade pact with South Africa.
COMESA advisor urges unity over EPAs
Chief technical advisor to the Common Market for Eastern and Southern Africa (COMESA) Dr Moses Tekere has said the decision by some countries not to sign interim economic partnership agreements (EPAs) with the European Union (EU) will undermine regional integration and cohesiveness in the Eastern and Southern Africa (ESA) region.
Events
tralac Annual Conference, 3-4 September 2009, Cape Town, South Africa
- Trade Policy Developments in Southern Africa
The aim of the 2009 Annual conference is to critically review key trade-related developments for Southern Africa and will provide a forum for the discussion of these and other important trade issues for Southern Africa:
- The signing of the Interim Economic Partnership Agreement (IEPA) with the European Union.
- What can the establishment of the Tripartite Free Trade Area (FTA) mean for regional integration in Southern Africa?
- The new South African trade policy document, its position on regional integration, specifically on SACU and SADC and the country’s quest for South-South partnerships.
- The multilateral level progress in the Doha Round of trade negotiations.
- Registration is now closed as the conference is booked out.
Publications
This week we are highlighting on a book published earlier this year: The Monitoring Regional Integration in Southern Africa - Yearbook 2008. This book is available for download electronically in pdf-format.
2008 has been an eventful year for the southern Africa region. The Southern African Development Community (SADC) launched its Free Trade Area in August. In October at a Tripartite Summit, SADC, the East African Customs Union (EAC), the Common Market for East and Southern Africa (COMESA) announced their intention to create a Free Trade Area encompassing the member states of all three regional economic communities. Meanwhile the Southern African Customs Union (SACU) has experienced growing internal dissent. The 2008 collection of papers reviews the developments in the southern African region, hoping to stimulate debate about regional integration matters at a time when important decisions for the region’s longer-term future are being taken. Read more here...
AGOA.info
2009 AGOA Forum
Kenya recently hosted the 8th USA-Africa AGOA Forum, an annual event mandated by the AGOA legislation. The Forum took place over three days from 4-6 August, with the first day dedicated to private sector and civil society sessions, and the following two to the Ministerial. Sessions were open to all delegates. Read more here.
June 2009 trade data now available
New trade data for the first half of the year (to June 2009) has been updated on AGOA.info.
Updated bilateral US-Africa country trade profiles
Profiles of disaggregated bilateral US-Africa trade, by country, has been updated to reflect June 2009 data. This also includes various regional profiles - SACU, BLNS, COMESA, ECOWAS, and CEMAC. Follow this link.
Other updated AGOA data sections include disaggregated bilateral trade profiles for each AGOA country individually (as well as within various regional configurations) , aggregate bilateral trade, preferential trade under AGOA / GSP and sectoral data from AGOA-eligible countries by value and as a proportion of US imports, as well as sectoral new AGOA and GSP AGOA data. Textile data, which is categorised by rules-of-origin category (for example, it distinguishes garments made from local or third country fabric), is available both by value and by volume. Data to June 2009 shows exports of clothing are down 8% year-on-year (clothing exports made up of third country fabrics are 5% lower). Export data to June 2009 is available at this link.
The current quota period commenced in October 2008 with the latest available quota utilisation rates for the period October-July showing an overall uptake of 13.17% (11.90% to June), and 25.58% (23.13% to June) under the 3rd country sub-quota. The total allowable quota for the October 2008-September 2009 annual period has been set at 1,711,900,006 square meter equivalents (SME), which for the first time is lower than the quota allocated to a previous year (2007/8: 1,746,798,542).
Follow these links to diagrams showing clothing exports under AGOA, and quota utilisation during the current quota period.
Trade acronyms and terminology
Visit AGOA.info's alphabetically-ordered database of trade-related acronyms and terminology
Latest AGOA news
- East Africa: Exporters struggle to meet criteria for AGOA products
- Comment: "Change you better believe in…or else"
- Four ways to help Africa
- Comesa: AGOA should focus on investment
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- Did you know? You can search AGOA.info's news archive (now containing over 1,000 articles) through the built-in search functionality.
- Read these and other AGOA-related news articles in AGOA.info's news area, which is continuously updated with articles sourced from a wide range of African and foreign publications.
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