2009-11-25 tralac Newsletter
2009-11-25 tralac
Hotseat Comment
Taku Fundira, a tralac Researcher, comments on tralac’s capacity building initiatives: Trade data analysis week held in Pretoria, South Africa, 16-20 November 2009.
Trade liberalization has gained increasing attention both at the bilateral and multilateral level in the past two decades. Although the current round of multilateral negotiations is making very slow progress, the proliferation of bilateral trade negotiations to establish Free Trade Areas (FTAs) amongst trading partners, has become a defining trend of recent international trade governance.
African countries have been very active participants in FTA negotiations, amongst themselves and also with external partners. They have for example been negotiating with the European Union to conclude WTO compatible Economic Partnership Agreements to replace the Cotonou Agreement, which provided preferential access to the EU market for these countries. These negotiations were essential because the trade chapter of the Cotonou Agreement was covered by a WTO waiver which expired at the end of 2007.
These developments have created serious challenges for African countries in terms of capacity to (a) identify offensive and defensive interests; and (b) to negotiate effectively with trading partners. These challenges have created a demand for capacity building to ensure that African countries are better able to formulate trade policies and trade negotiating positions that are informed and based on country specific priorities.
Tralac endeavours to build the capacity to assist African countries to trade better. From 16 – 20 November, tralac in collaboration with the National Agricultural Marketing Council (NAMC) held a trade data analysis week in Pretoria, South Africa. The trade data week (these have become known as Geek Weeks among participants) brought together a group of researchers and policy analysts engaged in agricultural trade analysis. The objective was to provide an opportunity for different organisations in South Africa engaged in agricultural trade analysis to work together on a specific project and to share their experience using different methodologies and data sets. An active network of agricultural trade researchers now exists in Southern Africa.
Organisations participating in this recent exercise included tralac, NAMC and the Western Cape Department of Agriculture. The focus was on South Africa’s agricultural trade relationship with Chile and Argentina. The Argentina analysis is an update of previous work conducted and published by tralac recently.
Initial findings from the Chile analysis reveal that Chile has liberalised its trade extensively over the past 20 years. This was a result of sound macroeconomic management, institutional and structural reforms. GDP per capita has increased significantly and poverty has been reduced by 26% over this period while GDP growth averaged 5.6% per annum, with agriculture only contributing about 4% of GDP. The country has also experienced a net surplus in agro-food trade during this period. The achievements in the agro-sector have been supported by a number of policy initiatives such as, government support to agriculture which amounts to 4% of total farm receipt (PSE) and subsidisation of new plantations (forestry) up to about 75% of cost, among others.
In terms of trade flows we analyse Chile’s agricultural trading relationship between 1997 and 2008 using the World Trade Atlas data. The initial analysis reveals that:
- Chile imported US$ 4.5 billion of agricultural products in 2008 and imports grew at an average growth of 12% over the review period;
- The major suppliers of agricultural imports were Argentina, the EU, the US, Paraguay and Brazil, South Africa was ranked 42 with a market share of a less than 0.1% in 2008;
- Top import products were Bovine meat; Corn (Maize); Wheat and Soybean oilcake in 2008;
- Chile’s agriculture exports were US$10 billion in 2008 having grown by 8% over the review period;
- Top export destinations were the EU, US, Japan and Venezuela. South Africa was ranked 72 most important destination with a share of less than 0.1% in 2008; and
- Main export products were Wine, Grapes, Fish and Apples.
Based on our initial analysis, it is clear that Chile is a direct competitor of South Africa because of the similarity in products traded and also the markets for the products. From an economic point of view, any bilateral agreement will yield very little benefits for South African agriculture and fisheries. However, opportunities still exist where South Africa and Chile can cooperate and have a partnership. Any conceivable partnership will be based on learning from each other and exchange of expertise in related and relevant fields.
Chile has achieved a lot in the last two decades in terms of economic growth and poverty alleviation. The fact that both countries are developing countries with similar experiences from a political economy perspective and both are proponents of the concept of stronger South-South co-operation makes a strong case for a partnership.
For South Africa, lessons can be learnt from Chile on strategies to reduce poverty, boost agricultural development and growth as well as enhancing export competitiveness. For Chile, the well developed and stable economic environment that South Africa offers creates a possible gateway to the rest of Africa. Political rather than economic considerations will weigh more for any partnership that will benefit the South African agricultural sector.
The full analysis conducted during the Geek week will be presented in the form of a working paper.
Below is feedback from some participants:
- “It was a wonderful opportunity to learn about team work; improve in trade related analytical skills and moreover as young economist I got to be motivated that there is still so much research work to be done as far as trade issues are concerned within the South African context and worldwide.” - Heidi Phahlane (NAMC)
- “I attended the Geek Week on the 16th to the 18th of November 2009. It was my first time attending a Geek Week and it was a great learning experience. I learned about the different sources of trade data and how to optimally use these sources for data analysis. The data analysis included an examination of the Chilean agricultural trade data, a reconciliation exercises comparing South African export data and Chilean import data and a ‘trade chilling’ exercise to see where there may be potential trade. It was a hands-on session which aided the learning experience, the researchers showed us how to do the analyses step by step and they assisted us when we needed help.” – Louise Kotze (NAMC)
Special Features
The World Trade Organisation: an African Perspective, more than a decade later
New book: The World Trade Organisation: an African Perspective, more than a decade later: The current Round of trade negotiations is the first 'Development Round.' Given the challenges of addressing development issues in the context of trade negotiations in the WTO, which is not a development institution, it should not be surprising that the current negotiations are proving extremely difficult. The WTO remains however the core of the rules-based system of international trade governance, providing also the rules for RTAs that are still growing rapidly, both in number and in scope and coverage. The WTO was established in 1995 as the institutional anchor of the multilateral trading system. Since then significant developments have taken place, on the trade agenda as well as in the participation of developing countries in the WTO. This collection of papers provides an African perspective on the first decade of the WTO. Substantive trade issues such as agriculture remain, despite their declining importance in terms of overall economic activity even in African countries, of key importance to Africa. Key issues on the agriculture agenda are not addressed on the Regional Trade Arrangement (RTA) agenda and so the WTO remains the only forum within which to address these. Africa is still engaging at the margins of the international economy and this collection of papers explores some of the challenges as well as prospects for Africa within the WTO. Download the book here...Monitoring Trade and Climate Change
tralac is monitoring preparations for the United Nations Climate Change Conference taking place in Copenhagen, Denmark in December 2009.- View a NEW interview by Dr Patrick Low, Chief Economist of the WTO. He comments on the impact technology will have on climate change and the success of Kyoto....
- Follow this link to more articles…
tralac Media Library
- View a NEW interview by Dr Patrick Low, Chief Economist of the WTO. He comments on the impact technology will have on climate change and the success of Kyoto...
- View all previous interviews here...
Weekly Customs, Excise, Tariff and Trade Remedy Summary Notification
- Download the notification here.
News
African states need advice body outside WTO for talks
Since before the creation of the World Trade Organisation (WTO) in 1995, two groups of people have confronted each other in terms of trade liberalisation: those in support, who regard the pursuit of growth as paramount, and those in opposition, who see unfettered trade as the cause of many socioeconomic problems.
India readying bilateral deals with 12 nations
The Indian commerce ministry is working on a plan-B of bilateral trade agreements should the eight-year-old Doha round of negotiations at the World Trade Organisation (WTO) involving 153 countries fail to reach a conclusion by the new deadline of 2010 and free up trade in goods and services.
Regional blocs to launch Free Trade Area by 2012
Three regional trading blocs in Africa – the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC) – plan to launch a Free Trade Area (FTA) by 2012.
ACP anger at EU banana proposal
A proposed banana deal by the European Union (EU), which would end the so-called “banana wars” which have been ongoing for some 16 years, has been criticised by governments of African, Caribbean and Pacific (ACP) countries which fear for the livelihoods of their farmers.
EAC faces revenue challenges
Temporary loss of revenues is one of the challenges that will face members of the East African Community (EAC) once the bloc’s Customs Union comes into force in January 2010, Rwandan President Paul Kagame has said.
India pushes for WTO reform
India has proposed urgent reforms in the functioning of the World Trade Organisation (WTO), the Press Trust of India reported on Saturday.
Developing countries prepare tariff deal without WTO
As the Doha Round of the World Trade Organisation (WTO) stumbles into its ninth year, a group of 22 developing countries are poised to clinch their own deal to cut tariffs and boost trade among themselves.
Trade in services holds back EPA deal
Trade in services remains an unresolved issue holding back further negotiations between the East African Community (EAC) and the European Commission (EC) on the Economic Partnership Agreements (EPAs).
Lamy calls for ‘hard look’ at Doha progress
World Trade Organisation (WTO) head Pascal Lamy warned member states on Tuesday that a serious assessment of progress towards a global trade deal is needed if an accord is to be reached next year.
Events
Updated: tralac Annual Conference 2009
The tralac Annual Conference 2009 Report and audio recordings of speakers' presentations are available. Click here to access the Annual Conference 2009 page on tralac's website.Publications
The World Trade Organisation: an African Perspective, more than a decade later
New book: The World Trade Organisation: an African Perspective, more than a decade later: The current Round of trade negotiations is the first 'Development Round.' Given the challenges of addressing development issues in the context of trade negotiations in the WTO, which is not a development institution, it should not be surprising that the current negotiations are proving extremely difficult. The WTO remains however the core of the rules-based system of international trade governance, providing also the rules for RTAs that are still growing rapidly, both in number and in scope and coverage. The WTO was established in 1995 as the institutional anchor of the multilateral trading system. Since then significant developments have taken place, on the trade agenda as well as in the participation of developing countries in the WTO. This collection of papers provides an African perspective on the first decade of the WTO. Substantive trade issues such as agriculture remain, despite their declining importance in terms of overall economic activity even in African countries, of key importance to Africa. Key issues on the agriculture agenda are not addressed on the Regional Trade Arrangement (RTA) agenda and so the WTO remains the only forum within which to address these. Africa is still engaging at the margins of the international economy and this collection of papers explores some of the challenges as well as prospects for Africa within the WTO. Download the book here...Measuring the gains from currency union membership in southern Africa
New working paper: Measuring the gains from currency union membership in southern Africa by Johan Fourie and María Santana-Gallego. African countries have latched on to growing empirical evidence that creating a currency union may result in large trade gains. This is based on the belief that lower transaction costs would lead to large increases in intra-regional trade volumes, augmenting growth. Yet there is growing evidence that not all countries may benefit from entering a currency union. This paper is an attempt to measure the gains from trade that are realised when entering a currency union. Using a standard gravity framework, we find that countries that decide to give up their currency and adopt an existing one or create a new common currency area stand to benefit significantly from a shared currency. However, these benefits are greater for a select few and the gains in terms of trade will depend on how open the country is and the intensity of trade flows with the other members of the currency union. 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...AGOA.info
Trade data to September has been updated
All AGOA data has been updated on AGOA.info to include September 2009 trade flows. These statistics reveal that aggregate trade between AGOA eligible countries and the US has declined from $50bn to $24bn in the year to September, compared to last year. Much of the decline is due to much lower oil exports from Africa. However, even non-oil exporters like South Africa have seen a decline in US-bound exports, down 42% year-on-year to $1.8bn. While virtually all SADC countries have seen a contraction in exports, one country stands out: Malawi has more than doubled its exports to the US to $53mn. See aggregate export data here, and AGOA exports at this link.
Other AGOA data includes 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. Clothing export data to August 2009 shows exports of clothing are down 12% year-on-year (clothing exports made from third country fabrics are 9% lower in the current year). Export data is available at this link .
Possible changes to AGOA legislation
Bill 4101 was introduced by Sen. Bill McDermott a few days ago, and has been referred to the US Committee on Ways and Means. It is also known as the "New Partnership for Trade Development Act of 2009". Visit AGOA.info for further analysis.
The recently completed most recent quota period commenced in October 2008 and terminated in until September 2009. October 2009 should be published shortly (official release date is 13 November). Quota utilisation for the full year was 15.7%, and 30.5% under the LDC sub-quota (applicable to the use of third country fabrics). For the new quota year (October 2009 - September 2011, the fill rate for October was 1.2% and 2.33% under the LDC sub-quota. A new overall quota has also been set: details at this link.
Bilateral and regional trade profiles
Bilateral US-Africa trade profiles on a country-by-country basis have been updated. Follow this link to individual country profiles as well as various regional country configurations. Examples include:
South Africa , Lesotho , Botswana , Namibia , Swaziland , BLNS , SACU , SADC , etc.
Trade acronyms and terminology
Visit AGOA.info's alphabetically-ordered database of trade-related acronyms and terminology
Latest AGOA news
- Madagascar: Further AGOA eligibility depends on political change
- Botswana: 5000 workers lose jobs as textile factory closes down
- Nigeria: Federal government set to revive textile sector
- The Gambia: AGOA business forum opens in Gambian capital
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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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