2009-10-07 tralac Newsletter
2009-10-07 tralac
Hotseat Comment
Gerhard Erasmus, a tralac Associate, comments on Variable Geometry, South-South Solidarity and Regional Integration: New Themes and old Agendas.
When it comes to economic development and integration into the global economy, regional integration is high on the agenda of African governments. Their efforts face many challenges; some of which are exogenous and cannot be avoided. Others flow from the nature of the exercise and domestic conditions. Certain recent developments will compound their efforts and will bring additional challenges. They merit careful scrutiny.
In the ESA EPA the concept of variable geometry has now been written into the text. Article 4 lists the principles on which this trade regime will be based. One of them is “variable geometry to allow an ESA State in a position to do so to undertake liberalisation within an earlier timeframe and schedule.”
What are the implications for trade with the EU and Africa’s own regional integration efforts? If a country such as Mauritius, who strongly supports this concept, wants to pursue ties with Europe at a faster pace there may be strong national reasons for doing so. However, that may be at odds with African regional integration plans.
One implication may be that a state such as Mauritius will be selective regarding future African integration schemes and that it will “do its own thing”. Will others in comparable positions (Mozambique?) follow suit? Does it make more sense to focus on own interests and important first world markets? How important are regional African markets for these countries?
The ambitious plan to establish a tripartite FTA in southern and eastern Africa (comprising 26 states) might also be affected. It will create a sizable and potentially attractive market; especially if countries such as Egypt and South Africa are members. However, membership, the key to the benefits, will require respect for common rules (e.g. rules of origin) and internal tariff schedules. Some tough choices may become unavoidable.
The EPA negotiations are often criticized for undermining African regional integration efforts and the potential for South-South trade. The regional MFN clause is singled out for particular criticism; under it the EU will automatically enjoy the same preferences granted by African states to major trading nations in terms of future trade deals. This will include certain candidates from the South; such as China, India and Brazil.
South-South trade agreements are very much in favour. However it would be a mistake to think that such trade deals will be about brotherhood and solidarity. There will be tough negotiations, multilateral rules to obey, and careful analyses of national priorities. The recent example in South Africa when the merger between a local cell phone company with an African wide network (MTN) and Bharti, (an Indian cell phone giant) had to be abandoned because of opposition by the two governments to foreign control, is a case in point. Ultimately national interests and policies prevailed.
Where do these developments leave us? The following may be observed:
- The end of the non-reciprocal preferential era of trade under arrangements such as the Cotonou Agreement forces the nations of Africa to develop strategies and policies for coping with rules-based trade amongst themselves and with the rest of the world. There are new challenges for domestic and regional trade arrangements. Provision has to be made for new laws and institutions, legal remedies, transparency, dispute settlement and the rule of law generally.
- The African regional integration process now unfolding is primarily a response to the challenge of economic development and global integration. It requires institutions and regional arrangements that will, first of all, guide national development strategies and compliance with the applicable WTO rules.
- The promotion of Pan African integration is about a different agenda. It will not be easy to reconcile it with the new generation regional arrangements now being negotiated. Grand political schemes about African integration have to be revisited and need new strategies.
- When big and small, rich and poor, are grouped together in regional trade arrangements it is quite difficult to develop common policies. The same applies when new South-South bonds are forged. The respective economies are often at different stages of development and do not have the same needs.
- In some cases these nations have been locked together into regional structures of very long standing and with de facto integration over a wide spectrum. Their fates are intertwined; as is the case in SACU. Regional realities cannot be ignored. South Africa’s stability and development cannot, for example, be promoted if surrounded by a regional sea of instability and squalor.
The overall implication seems clear: Tough choices will have to be made; for which strong leadership and clear policies are required.
Special Features
Discussion note: Regional agreements on trade in services in southern Africa
JB Cronjé discusses Regional agreements on trade in services in southern Africa: Some SADC EPA States (that is also members of SACU) agreed to continue negotiations with the EU to conclude a WTO compatible economic integration agreement (EIA) on trade in services. The SACU Agreement currently only applies to trade in goods. Consequently nothing in the SACU Agreement prevents its member countries to either negotiate the services component of a preferential agreement with third parties on their own or obliges them to negotiate as a collective in such occurrence. At a recent SACU Special Council of Ministers Meeting the Council directed the Commission to develop a SACU vision, strategy and workplan with timeframes in respect of certain selected issues. Read more here...Monitoring Trade and Climate Change
- New article: The Pittsburgh Summit 2009 and South Africa’s Renewable Energy Initiative.
- Click here to view previous articles...
tralac Media Library
- View a new interview by Dr Patrick Low, Chief Economist of the WTO. He comments on Climate Change and the vulnerability of African countries.
- View the tralac Media Library here...
Weekly Customs, Excise, Tariff and Trade Remedy Summary Notification
- Download the notification here.
News
SA minister calls on WTO
The Doha round of negotiations at the World Trade Organisation (WTO), currently ongoing, must take into account the needs of developing countries, South African Minister of Trade and Industry Rob Davies said on Monday.
African finance ministers call for voice in G20
Ministers of finance from across Africa have called for their countries to have a voice in the Group of 20 (G20) nations in order to ensure the body considers their long-term development needs.
EU, Brazil push US on Doha deadline
The European Union (EU) and Brazil will today (Tuesday) put pressure on the United States to set out its demands to conclude the Doha round of multilateral trade talks in 2010 to boost dwindling global trade, a draft document showed.
Stop rubber stamping trade deals, says official
African parliaments should take account on international trade negotiations as parliamentarians have in the past not been “robust” enough in ensuring that such talks deliver on development priorities.
EAC service industry players meet
East African services industry practitioners and representatives met to discuss and seek ways of building services coalitions to confront challenges in the sector and help unlock the region’s economic potential.
‘Poor countries being ignored in economic crisis’
The marginalisation of the world’s poorest countries needs urgently to be considered by the global community while addressing ways out of the economic crisis, India’s ambassador to the World Trade Organisation (WTO) Ujal Singh Bhatia has said.
SA, US strike new business partnership
Business Unity South Africa (Busa) has agreed to establish a United States-South Africa business partnership with the Corporate Council for Africa (CCA) following a two-day dialogue on trade and investment held in the US.
Poor infrastructure hampers regional trade in eastern and southern Africa
Poor infrastructure in eastern and southern African countries remains the biggest challenge for the development of trade in the region..
Events
Updated: tralac Annual Conference 2009
The tralac Annual Conference 2009 Report and audio recordings of speakers' presentations are now available. Click here to access the Annual Conference 2009 page on tralac's website.Publications
Anti-dumping on TOFA: Hopping a country too far?
New working paper: Anti-dumping on TOFA: Hopping a country too far? by Gustav Brink, a tralac Associate. The circumvention of anti-dumping duties has given rise to significant discussion on the topic in the World Trade Organisation. At present the WTO Anti-Dumping Agreement does not contain any anti-circumvention provisions and it is up to each country to regulate the use thereof. South Africa’s Anti-Dumping Regulations provide for several different forms of anti-circumvention, including country hopping, i.e. where an importer switches supply from a producer in one country to a related producer in a third country as a result of the imposition of preliminary or definitive anti-dumping duties or the initiation of an investigation against the exporter in the first country. This is not recognised as circumvention by any other country. Read more here...Safeguards and trade remedies in the SADC and ESA Economic Partnership Agreements
New working paper: Safeguards and trade remedies in the SADC and ESA Economic Partnership Agreements by Prof. Gerhard Erasmus, a tralac Associate. This paper discusses the “Trade Defence Instruments” in the Economic Partnership Agreements (EPAs) currently being negotiated between the European Union (EU), on the one hand, and different configurations of ACP (African, Caribbean and Pacific) countries on the other. These “instruments” cover remedies against unfair trade practices (anti-dumping and countervailing measures) as well as safeguards. ACP concerns about infant industry protection, food security and agriculture are also on the agenda. Read more here...Sino-African agricultural cooperation: Lessons for Africa’s agricultural development
New working paper: Sino-African agricultural cooperation: Lessons for Africa’s agricultural development by Ron Sandrey and Hannah Edinger. As part of the Forum on China-Africa Cooperation process, China has identified agricultural cooperation with Africa as a key priority sector of interaction. This cooperation with the continent has been ongoing and spans over the last five decades. Since the 1990s greater impetus has been placed on this relationship. Rich in agricultural resources, this support both financially and technically should be embraced and best harnessed by the continent to “feed itself”, given the issues of African food security and rural poverty, which came to the forefront once again during the big food price increases of 2008. Read more here...
AGOA.info
July data updated, new trade data out this Friday
Trade data to July 2009 was recently updated on AGOA.info. Compared to the previous year, many AGOA beneficiaries have experienced a significant decline in their US-bound exports, partly as a result of lower demand as a consequence of the current economic crisis. Lower international oil prices have in turn severely reduced the value of exports from countries such as Angola and Nigeria, which are the two leading exporters under this trade Act.
Updated bilateral US-Africa country trade profiles
Profiles of disaggregated bilateral US-Africa trade, by country, has been updated to reflect July 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, is available 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 is available at this link.
The current quota period commenced in October 2008 and lasts up until September 2009. Quota utilisation (to August 2009) is 14.7% overall, and 28.54% under the LDC sub-quota. Follow the link to the data here.
Trade acronyms and terminology
Visit AGOA.info's alphabetically-ordered database of trade-related acronyms and terminology
Latest AGOA news
- South Africa: "Extend AGOA", says Minister Davies
- South Africa urges the US to extend its duty-free trade law
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- 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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