2009-12-17 tralac Newsletter
2009-12-17 tralac
Hotseat Comment
Willemien Denner, a tralac Researcher, gives an overview of trade developments in 2009.
The focus of 2009 has mostly been on the continuation of the global financial and economic crisis and the negative impact on international trade for both developed and developing countries. The decline in world trade has impacted the African continent through reduced exports and commodity prices and a decline in capital inflows. It is predicted that Africa’s growth for 2009 will only be 2.3 percent and for 2010 3.9 percent, which is a dramatic decline from the 6.1 percent growth achieved prior to the global crisis. Although the impact of the crisis has been a main focal point in the current year, important multilateral and regional trade developments have taken place in 2009.
South Africa’s Trade Policy and Strategy Framework
The Department of Trade and Industry has argued that the trade liberalisation of the 1990s has not been able to transform South Africa’s production and exports away from natural resources. Thus there is the need to subordinate trade policy to the National Industrial Policy Framework to promote diversification. The Framework’s strategic tariff policy approach calls for the strategic review of tariffs to support industrial development and assumes a developmental approach to tariff reform. In general tariffs on mature upstream input industries can be reduced or eliminated to lower input costs for the downstream labour-intensive manufacturing sector. Tariffs on the downstream industries can be retained or raised to ensure long-term sustainability and job creation. The tariffs on agriculture also require special attention given the importance of the agricultural sector in South Africa and the distorted nature of international agricultural trade. The tariff policy for agriculture is focused on maximising potential value addition and employment creation.
Proposed Tripartite Free Trade Agreement (FTA)
On 9 November 2009 the Chief Executives of the Secretariats of the Common Market of Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) cleared various documents for consideration by the member states in preparation for the next Tripartite Summit in April or May of 2010. The main document is the draft agreement establishing the Tripartite FTA with 14 annexes on complementary areas including the promotion of customs cooperation and trade facilitation, combating unfair trade practices and import surges, the use of simplified rules of origin and the liberalisation of priority services. The main proposal of the draft agreement is to establish the FTA on a tariff-free, quota-free and exemption-free basis through the combination of the existing FTAs of COMESA, EAC and SADC. The expectation is that all three FTAs will not have exemptions or sensitive lists by 2012. The aim is to have a finalised Tripartite Agreement by June 2011.
Southern Africa Customs Union (SACU)
The third Word Trade Organisation (WTO) trade policy review of SACU took place during November 2009. Since 2003 the SACU economies (Botswana, Lesotho, Namibia, South Africa and Swaziland) have collectively expanded at an average annual rate of about 4 percent in real terms. However, the economic development of the member countries show substantial differences, with Botswana and South Africa being classified as upper middle-income countries, Namibia and Swaziland as lower middle-income countries and Lesotho as a least developed country (LDC).
On 17 September 2009 there was a Special SACU Council of Ministers Meeting in Swaziland to deliberate two main issues: the challenges facing SACU and the future of the Customs Union. There is a need to pursue a common vision and strategy, taking into account the different levels of economic development of the member states, on trade, trade negotiations and new generation issues, like services and investment in trade agreements. Collective efforts are needed to resolve the outstanding issues in the negotiations regarding the interim and final Economic Partnership Agreements. The meeting called for the conclusion of the establishment of the SACU institutions and policies to support regional economic integration, industrialisation and economic development. Priority areas for further work were identified. These include capacity in the Secretariat, the possible review of the 2002 SACU Agreement, initiatives to promote intra-SACU trade and the roadmap for the Economic Community and Monetary Union.
Economic Partnership Agreements (EPAs)
The negotiations on the EPAs between the European Union and the African, Caribbean and Pacific (ACP) Group of States started in September 2002 and were planned to be completed by 31 December 2007. However, only the EPA with the Caribbean group of countries have been finalised and was approved by the European Parliament in March 2009. Progress on the negotiations for 2009 was the following:
- In Central Africa Cameroon signed an Interim Economic Partnership Agreement (IEPA) in January;
- In West Africa the IEPA signed by Côte d’Ivoire in 2008 was approved by the European Parliament in March;
- An IEPA was signed by the east African countries of Zimbabwe, Seychelles, Mauritius and Madagascar in August;
- In SADC an IEPA was signed by Botswana, Lesotho, Swaziland and Mozambique in June; and
- In the Pacific country cluster Papua New Guinea signed the IEPA in July and Fiji in December.
Seventh Session of the WTO Ministerial Conference; 30 November – 2 December 2009
This Ministerial Conference was the fist to be held since 2005 and was entitled ‘The WTO, the Multilateral Trading System and the Current Global Economic Environment.’ The conference provided for plenary sessions for Ministers to make prepared statements on various topics and working sessions for interactive discussions on the activities of the WTO and the contribution the WTO has made to recovery, growth and development. The conference was not a negotiation session, but a way for WTO member states to evaluate the functions of the organisation. The conference called for the swift conclusion of the Doha Development Agenda as an essential stimulus package for developing countries and LDCs in the current financial crisis. Member countries expressed their concern regarding the proliferation of bilateral and regional trade agreements as an obstacle for the multilateral trading system and reiterated that these approaches to trade liberalisation should support each other. Aid for trade was also identified as an important manner in which supply-side constraints can be addressed by developing countries and LDCs.
United Nations Climate Change Conference; 7 – 18 December 2009
The Climate Change Conference in Copenhagen is seen as the climax of two years of negotiations with delegates of 192 nations attending the conference. The high level portion of the conference is taking place this week, with Ministers of the various nations attending the conference on 15 and 16 December, followed by the Heads of State of 110 nations attending the last two days to hopefully conclude a climate change deal. Although there have been some difficulties at the conference, the parties are still confident that a deal will be reached. The key to concluding an agreement is providing poor countries with the necessary finances to fight the effects of climate change. It has been estimated that US $ 10 billion per year is needed in the short-term from 2010-2012 for developing countries and LDCs to address climate change, with additional financing necessary in the long-term. Most participants have indicated that if it is not possible to reach a legally binding deal in Copenhagen, they must decide on the date by when there will be a legally binding text.
Sources: UNFCCC; South Africa’s Trade Policy and Strategy Framework (September 2009); European Commission; WTO; Press Release on the Special SACU Council of Ministers Meeting and the official website of COMESA at www.comesa.int.
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Special Features
Seasons Greetings from tralac
- Kindly take note that tralac's offices will be closed between 21 December 2009 and 3 January 2010. This is our last Newsletter for 2009 and we won't be posting daily news on our website between 21 December 2009 and 8 January 2010. The first Newsletter for 2010 will be sent out on Wednesday 13 January 2010.
Kind regards from Trudi Hartzenberg and the tralac Team.
Monitoring Trade and Climate Change
tralac is monitoring the United Nations Climate Change Conference currently taking place in Copenhagen, Denmark.
- Read an article by Willemien Denner, a tralac Researcher: Update on the United Nations Climate Change Conference (7-18 December 2009).
- Follow this link to more articles…
Regional Generic Medicines Association for SADC Inaugurated
The inauguration of the Southern African Generic Medicines Association (SAGMA) today is an important development for the future of generic medicines in SADC and its fourteen member countries. The Mission of SAGMA is to achieve self-sufficiency and reliability in the local production and/or promotion of affordable, efficacious, quality generic medicines in the Southern Africa Development Community (“SADC”). This initiative has been sponsored by the United Nations Industrial Development Organization (UNIDO) and spearheaded by the National Association of Pharmaceutical Manufacturers of South Africa (NAPM) together with active participation from other SADC member countries. Read more here...tralac Media Library
View all previous interviews here...Weekly Customs, Excise, Tariff and Trade Remedy Summary Notification
- Download the notification here.
News
Trade discord fuels US-China tension in Copenhagen
China is demanding that a global agreement to reduce greenhouse gases prohibit countries from imposing trade sanctions, further pitting the world’s top emitter against lawmakers in the United States.
EU-Latin America “banana wars” resolved
Banana-producing countries in Latin America and the European Union (EU) signed an agreement on Tuesday to end the so-called “banana war” they have been pursuing for the past two decades.
SACU request revenue share increase
Members of the Southern African Customs Union (SACU) have submitted a proposal to South Africa to increase annual revenue shares for each member state.
EAC, COMESA, SADC open one-stop customs post
Member countries of the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC) have opened the first-ever one-stop border post (OSBP) facility that will increase the region’s trade and reduce cross border delays by up to 50%.
Progress in SA-EU negotiations auspicious for SACU – Malin
The deadlock in trade negotiations between South Africa and the European Union (EU) that threatened to break up the world’s oldest customs union, the Southern African Customs Union (SACU), is set to ease off thanks to progress being made in ironing out differences between the two parties.
Namibia should focus on services sector – EU Ambassador
With its small population, Namibia could concentrate on developing its services sector even more as it would be rather difficult to compete with larger economies such as South Africa in the manufacturing sector, the EU ambassador to Namibia has said.
Namibia praised for EPA stance
Namibia’s refusal to conclude an interim economic partnership agreement (EPA) with the European Union (EU) until the western bloc has addressed all the country’s concerns has been praised as “commendable” by trade law analyst Enga Kameni.
Events
Workshop on Flexibilities in International Intellectual Property Rules and Local Production of Pharmaceuticals for the Southern Central and West African Region
7-9 December 2009, Cape Town. Organised by the International Centre for Trade and Sustainable Development (ICTSD), United Nations Conference on Trade and Development (UNCTAD); The Federal Ministry for Economic Cooperation and Development (BMZ); and Capacity Building International (InWent) with local collaboration with The Trade Law Centre for Southern Africa (tralac). Read more here...African Dialogue on Technology Transfer for Local Manufacturing Capacity on Drugs and Vaccines
10-11 December 2009, Cape Town. Organised by the International Centre for Trade and Sustainable Development (ICTSD), United Nations Conference on Trade and Development (UNCTAD); with the support of the World Health Organization and the European Commission and local collaboration with The Trade Law Centre for Southern Africa (tralac). Read more here...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
New AGOA trade data to October published
Trade data between the US and Africa was published a short while ago and updated on AGOA.info. Aggregate exports (to October) from eligible African countries $ 34bn, while imports were valued at $ 11.6bn. These figures remain substantially weaker that comparative data for 2008, owing to much lower oil revenues this year. Of the $34bn in exports, over $26bn (77%) qualified for duty-free access under AGOA. See aggregate data here and AGOA data at this link.
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Proposed amendments to AGOA legislation - HR4101
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 details.
Other AGOA data includes disaggregated bilateral trade profiles for each AGOA country individually (as well as within various regional configurations), 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.
Latest AGOA news
- Madagascar eligibility: US Dept of State press release
- Nigera: More US investors coming to country
- Kenya to roll out special trade zones in six months
- Kenya: Experts fault tax incentives for EPZ companies
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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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