2010-01-20 tralac Newsletter
2010-01-20
Hotseat Comment
Trudi Hartzenberg, tralac's Executive Director and Colin McCarthy, a tralac Associate, comments on what 2010 holds.
Midway through January most people have settled into a normal work routine after the summer holiday, all with varying experiences of 2009 and expectations for 2010. What do we at tralac regard as the important developments of 2009 and what do we expect the most important and likely developments to be, or not to be, during 2010? Obviously our views are influenced by our mandate to build trade management capacity in southern Africa and to facilitate regional integration, capacity building and cooperation in the region.
The year 2009 will be remembered for the pernicious impact of a deep recession and the start of a dithering economic recovery, a recession which was transmitted to African economies through its negative impact on the prices of and demand for export commodities, as well as investment flows.
In the region relations among SACU member states became strained, with South Africa taking a rather dim view of Botswana, Lesotho and Swaziland signing an interim Economic Partnership Agreement (EPA). The rumour mill even speculated that this could bring about the demise of SACU. Disappointingly, crucial SACU institutions provided for in the 2002 Agreement also failed to be established. In the absence of a Tariff Board the management of the common external tariff, the defining feature of a customs union, remains the task of South Africa’s International Trade Administration Commission (ITAC).
In the wider region an important development was the COMESA-EAC-SADC summit in October 2009, which resolved “that the three RECs (regional economic communities) should immediately start working towards a merger into a single REC with the objective of fast tracking the attainment of the African Economic Community”. Integrating three regional arrangements into one aimed at developing a single market clearly forms part of the building bloc approach in moving towards an African Union, an approach that was initially provided for in the Lagos Plan of Action adopted in 1980.
In South Africa, the dominant economy of the region, there was considerable uncertainty and commensurate speculation among observers on where the political and administrative leadership would be located with respect to trade and industrial policy: with Trade and Industry, with a new Ministry and Department of Economic Planning, or with a Planning Commission under the chairmanship of a senior cabinet minister? The private sector is also anxiously waiting for a final version of a new trade policy as well as a new Industrial Action Plan. While these policies will attempt to achieve the objectives of a developmental state in South Africa they are also bound to have an impact on the region through trade and investment linkages. A critic could also observe that had the SACU Tariff Board been in place the South African government would have been forced to sacrifice some of its policy space in designing and implementing such policies.
What developments can be expected in 2010?
The Football World Cup, the largest event on the world sporting calendar, although taking place in South Africa later this year, can have a much wider impact in the region. An obvious spin-off will be tourism-related services that will benefit South Africa and neighbouring countries. But perhaps more important is the fact that the attention of the world will sharply be focused on South Africa and if the TV footage and news carried by the media in general are predominantly positive, South Africa as well as the neighbouring countries will gain from favourable perceptions that will benefit future tourism, trade in goods as well as investment. Generalisation in interpreting observations on and perceptions of a region is something African states have to live with. This can be deleterious, as illustrated by some reactions to the recent attack in Angola on the Togo football team, but it can also be beneficial. South Africa will do itself and the region a great service if a successful World Cup can be presented.
As far as economic growth is concerned it can be expected that the economic recovery will continue, albeit at a slower and more faltering pace than hoped for. The down turn was led by poor conditions in commodity markets; likewise the recovery is being led by an increased demand for minerals and an improvement in commodity prices. The recession has illustrated the benefit of having a diversified economy. It is hoped that lessons have been learned and that a return of commodity-led growth, and the mineral rents to be earned, will fund broad-based investment in infrastructure and human capital. In the long run African countries cannot afford comparatively high economic growth of which the benefits are not shared by the community at large.
It took eight years for a new SACU Agreement to be negotiated and concluded. This year it will be eight years since the conclusion of the Agreement in 2002. This year also marks the centenary of SACU. Can SACU really afford to end this year without the Agreement fully implemented and the missing institutions established? At tralac we are optimistic that real progress will be made. If not, serious questions can be asked about that ubiquitous problem with African regional integration, namely the weak commitment of participating governments to implement agreements. The real problems of changing fundamentally the management structure of the customs union is appreciated (on this a Hot Seat comment will shortly be published), but the survival of the world’s oldest operating customs union deserves full implementation.
The EPA issue is bound to be a prominent feature on the 2010 trade relations agenda. As a middle-income country that depends on favourable access to the EU market for its exports of beef primarily, and to a lesser extent table grape exports, a reconsideration of an EPA is virtually inevitable. South Africa is in the safe position of having in place the Trade, Development and Cooperation Agreement (TDCA). However, there are indications that the South African government and the European Commission can bring the current stand-off to an amicable end in the course of this year.
The Tripartite Agreement of COMESA/EAC/SADC will feature prominently in discussions and inter-governmental deliberations in 2010. However, it would be prudent not to expect too much. Is there some lesson in the fact that 2010 was supposed to be the year in which the SADC customs union was envisaged, a goal that has now been postponed? During this year tralac will consider the integration paradigm most suitable for Africa’s circumstances. We remain convinced that regional economic integration is a necessary condition for Africa to develop, but we also believe that the appropriate model is not necessarily the one currently adopted.
tralac trusts that the undertaking of a new South African Industrial Action Plan to be published by the end of January will materialise. Preliminary indications are that the Action Plan will again be too wide, lacking a focused approach. However, our main concern is that the policy will not give adequate attention to the need to coordinate trade and industrial policy in the region.
Tell us what you think...
Special Features
The integration process in the East African Community
JB Cronjé, a tralac Researcher, discusses the integration process in the East African Community. On 1 January 2010 the East African Community (EAC) met an important milestone in its linear regional integration process toward the establishment of a Political Federation. Read more here...Weekly Customs, Excise, Tariff and Trade Remedy Summary Notification
Download the notification here. News
SA to focus on trade as global crisis recedes
South Africa is likely to focus on stimulating targeted sectors of the economy and strengthening trade relations with key partners in Africa, Europe, and the East this year as growing global trade flows are expected to reflect a world emerging from recession.
SACU: ‘Internal interests first, EPA later’
It is imperative that the Southern African Customs Union (SACU) moves towards aligning its internal activities faster before concluding a final Economic Partnership Agreement (EPA) with the European Union (EU), says Swazi Minister of Commerce, Trade and Industry Mrs Jabulile Mashwama.
COMESA, ESA sign MoU
The Common Market for Eastern and Southern Africa (COMESA) and the Millennium Development Goal Centre (East and Southern Africa) have signed a Memorandum of Understanding (MoU) aimed at assisting member states in achieving the Millennium Development Goals (MDGs).
WTO head sees rising protectionism
Head of the World Trade Organisation (WTO) Pascal Lamy warned on Monday that protectionist pressures arising from the financial crisis are likely to increase in the face of rising unemployment.
East African EPA deal: Impasse on services persists
Although the East African region has concluded a deal on market access to the European Union (EU), fundamental disagreements on trade in services remain.
EU aims to settle trade dispute
The European Union (EU) believes negotiations with South Africa and others for an Economic Partnership Agreement (EPA) could be finalised by the end of the year if there is “real political will” to settle the agreement.
World Bank urges developing nations to invest more in trade logistics
Developing countries stand a better chance of emerging from the global recession in a stronger and more competitive position if they invest in better trade logistics, World Bank Vice-President for Poverty Reduction and Economic Management Otaviano Canuto said on Friday.
EAC Customs Union needs commitment of partner countries
Governments of the five member countries of the East African Community (EAC) should refrain from protectionist inclinations and guard their common commitment to the Customs Union that entered into force on 1 January 2010, a senior official of the regional economic bloc has said.
Lamy calls for mindset change to align trade and human rights
Although the trade and human rights communities distrust each other, “human rights and trade rules, including WTO rules, are based on the same values: individual freedom and responsibility, non-discrimination, rule of law, and welfare through peaceful cooperation among individuals,” WTO Director General Pascal Lamy told a colloquium on human rights in the global economy in Geneva on 13 January 2010.
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 November has been published
New trade data to November was released recently and updated on AGOA.info.
Aggregate exports from eligible African countries $ 39bn, while imports were valued at $ 12.7bn. These figures remain substantially weaker that comparative data for 2008, owing to much lower oil revenues this year. Of the $39bn in exports, over $29bn (77%) qualified for duty-free access under AGOA. See aggregate data here and AGOA data at this link .
Proposed amendments to AGOA legislation - HR4101
Bill 4101 was introduced by Sen. Bill McDermott during November 2009, 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. The recently completed quota period commenced in October 2008 and terminated in September 2009. 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-November 2009 was 3.39% and 6.62% under the LDC sub-quota. A new overall quota has also been set: details at this link .
Latest AGOA news
- Madagascar: Post-AGOA reflections
- Forget the World Cup, 2010 could be a difficult trade year for Africa
- Africa weighs Obama's first year
- Has Obama been good to Africa?
- ‘US export window has failed in Nigeria’
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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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