The historically low levels of intra-African trade have made Africa vulnerable to external economic shocks and have fostered a dependency on the rest of the world. As a result of these low levels of trade many African countries have not been able to use trade to enhance specialisation between countries and accelerate development and integration. The high cost of doing business in the region due to infrastructural gaps, duplicate border procedures and high transportation costs are a major deterrent for opportunities to enhance both intra- and extra-regional trade.

To reduce trade barriers among African countries various trade liberalisation schemes have been launched in African regional economic communities to reduce tariffs and non-tariff barriers, harmonise customs duties, facilitate trade and abolish restrictions on cross-border investments. However, high tariffs are still in place on imports of sensitive goods, while persistent non-tariff barriers, including roadblocks and checkpoints, inadequate customs procedures and inconsistent regulations continue to present serious obstacles to intra-regional trade. Inadequate infrastructure also remains one of the key barriers to intra-Africa trade, investment and private-sector development.

This paper examines intra-African trade in goods and services of three east and southern African countries – Kenya, Zambia and Uganda – through the analysis of ten years of trade data, from 2002 to 2011. The trends seen in these countries provide a brief overview of the current position of intra-African trade, infrastructure and investment, specifically in the east and southern Africa region.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The author was a tralac intern at the time of writing. tralac’s Internship Programme provides an opportunity for recent graduates to work on trade-related matters, specifically relevant to countries in eastern and southern Africa.

The world’s economic and trading environments have changed since the 2010 publication of tralac’s South Africa’s way ahead: Shall we samba? In this update to that publication, we examine how the South American Mercosur economies of Brazil in particular have fared from these changes, with again a special focus on agriculture and Brazil’s trading relationship with South Africa. Trade data is updated to December 2011 where possible, but with a literally last minute inclusion of some comments on Brazil’s 2012 trade.

As Brazil is a key agricultural trading partner in this BRIC relationship, the focus of this Samba update will place Brazil against a BRIC background and to complement this we will reference some of the papers intended for a new BRIC book to be published in cooperation with the National Agricultural Marketing Council (NAMC).

In general, we find that while the scars of the bleak year of the 2009 global downturn are apparent, Mercosur countries have recovered better than South Africa. Given the direct definitional economic relationships between trade performance and Gross Domestic Product (GDP), the emphasis in this Update is on trade as this is crucial in determining economic wellbeing.

We cannot, of course, directly predict the future, but recent past performances give valuable clues as to how countries may weather the storm clouds that have not fully dissipated since 2009 and indeed are still growing in Europe and other places.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

In recent years countries have increasingly focused on enhancing market access through regional integration in light of the stalled decade-long WTO Doha Round of trade of negotiations. Africa is no exception and in 2008, Heads of State and Government from the member states of the regional economic communities (RECs) of the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC), agreed to establish a Free Trade Area (FTA).

The aim of the FTA among others is to enhance market access, harmonise policies in areas of common interest and address the issue of multiple membership. This new configuration would see an expanded market covering 26 countries with an estimated population of 500 million people and a GDP of US$624 billion.

The objective for this book is to examine the trade and specifically agricultural production, agri-business and the agricultural policy regimes in East and Southern Africa. A computer analysis of the benefits of the proposed is also presented, along with a review of sensitive products and non-tariff barriers in the region. Member states of SADC, EAC and COMESA are due to begin negotiations to establish the Tripartite FTA in 2011.

© 2011 Trade Law Centre for Southern Africa and the National Agricultural Marketing Council

Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac) and the National Agricultural Marketing Council (NAMC). The views expressed by the authors are not necessarily the view of any of these institutions.

Readers are encouraged to quote and reproduce the material contained in these books for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.

This paper examines the implications of the so-called tripartite countries of the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) entering into a genuine Free Trade Agreement (FTA). We use the Global Trade Analysis Project (GTAP) latest pre-release Version 8 database to assess the welfare and trade gains from this FTA, as determined by duty-free merchandise goods access and with a small (2%) reduction in assumed non-tariff barriers to both merchandise goods and services barriers also factored in. Importantly, our simulation starts from the assumption that the three regional blocs of COMESA, EAC and SADC have their FTAs operating in a comprehensive manner in that all three have tariff-free trade within their blocs but not outside their blocs. Thus, our results relate to combining these three blocs into one large tripartite FTA.

The paper includes developments such as the implementation of the Trade, Development and Cooperation Agreement (TDCA), and, most significantly, the assumption that the Economic Partnership Agreements (EPAs) between all African countries except South Africa and the European Union (EU) will be implemented.

Our GTAP results are indicative only, but as we are using the pre-release Version 8 GTAP database with extensive African country disaggregation we feel that these results offer a very realistic view of the final outcome. They are, to coin a phrase, ‘the best game in town’, as the use of a model such as GTAP forces consistency and closure in the resource allocative process and GTAP is the international model of choice for trade analysis.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

tralac has been collaborating with the National Agricultural Marketing Council (NAMC) in South Africa during the past year on a project which focuses on the proposed Tripartite Free Trade Area (FTA). The Tripartite FTA is envisaged to consist of the 26 member states of the East African Community (EAC), the Common Market for East and Southern Africa (COMESA) and the Southern African Development Community (SADC), establishing a free trade area stretching from Cape to Cairo. The research papers focus on different aspects of the trade in goods agenda; including a review of intra-African trade and agri-business development in this region. These papers are included in a book, entitled Cape to Cairo – an Assessment of the Tripartite Free Trade Area.

The purpose of this paper is to analyse the implications for South Africa of the proposed COMESA-EAC-SADC tripartite free trade agreement, with a focus on agricultural trade. Any analysis of this nature needs to take into account the problem of regional data quality. African countries are notorious for the lack of openness, timeliness and reliability of trade data. For this reason, a wide range of data sources has been investigated and, where possible, the best data for the specific components has been used.

First, the recently-built Global Trade Analysis Project (GTAP) African database is used to present what is possibly the most accurate report on intra-Africa trade data, including agricultural trade. As this analysis is built upon 2001 data, however, the COMTRADE data base is then used to update the analysis to the 2006 to 2008 period. This is followed by an examination of the ‘mirror’ data for most of the major countries exporting agricultural products to Africa using World Trade Atlas (WTA) data for the December years through to and including December 2009, and then by an analysis using the United Nations Food and Agricultural Organisation (FAO) data to look at a consistent but slightly dated analysis of African imports by product. Finally, given the focus on the implications for South Africa, South African agricultural trade with the tripartite region is analysed, again using WTA data.

Compounding the problems of timeliness and completeness of the data are the inconsistencies in the sector definitions used. In general, this analysis is based on the definitions used by the World Trade Organisation (WTO), but this has not always been practical, and the approaches used to facilitate consistency are discussed at the appropriate points in the analysis. The chapter starts by introducing the trade data and its components, namely agriculture (processed and unprocessed), resources, and manufacturing as used in the GTAP database.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The timing of the third book in tralac’s ‘South Africa’s way ahead’ series exploring trade policy options fits perfectly with the recent interest in examining both South Africa’s Industrial Policy and Trade Policy. The book details the implications of taking the current SACU-Mercosur partial trading agreement (PTA) further to a full free trade agreement (FTA), and we consider that it makes a valuable contribution both trade and industrial policy insights with the Mercosur countries of Brazil and Argentina in particular. We conclude that such an FTA is worthy of serious consideration.

The book starts by detailing the political, economic and trading regimes and settings for both Mercosur and SACU before examining the agricultural production and policy profiles and trade regimes and performances of Brazil, Argentina and South Africa in particular. These three countries have much in common in that they are all, with Brazil and to a lesser extent South Africa, becoming significant actors upon the global agricultural trade reform stage resulting from their common positions as champions of a more liberal agricultural trading world. Specifically for South Africa we find that there are many similarities in the production patterns of the three countries, and while they are to a large degree competitors on in global markets for many products there are also many complementarities.

While recognising that models are never exactly right but arguing that they provide valuable insights, we use the internationally accepted benchmark GTAP global computer model as the analytical tool to examine an FTA between SACU and Mercosur that eliminates custom’ tariff barriers and a representative but conservative estimate of both non-tariff and service constraints between the parties. The results show that there are comfortable welfare gains to South Africa from; a better use of land, labour and capital (enhanced allocative efficiency); increased net investment increasing the amount of capital employed in the economy; and a small contribution from increased labour employment.

This FTA is not good for the South African agriculture sector, however. Imports of agricultural products increase leading to marginal reductions in the prices of all agricultural products. While this is bad news for farmers, it translates into good news for consumers as the reduced agricultural prices across the board help to lower the consumer price index which in turn contributes to the overall welfare gains for South Africa.

The gainers are the vast majority South Africans who are consumers and losers are mainly the small number of commercial farmers. The results for the manufacturing sectors are better news for South Africa, as despite a reduction in the value of production in the motor vehicle and parts sector there was an increase in overall value of manufacturing output. The big gainers were the chemicals, rubber and plastics sector and non-ferrous metals. Importantly, we run an extra scenario whereby changes to the vehicle sector were constrained, and while our modeling has several limitations the results suggested that protecting the motor vehicle sector against Brazilian imports is not in the best interests of South Africa or South African agriculture.

There are several other aspects of a possible FTA covered in this book, as a modern FTA is about more than just merchandise trade. A literature review of the relevant non-tariff barriers (NTBs) is presented which finds that technical barriers to trade seem to be the most common NTB facing exports to Brazil, Argentina and South Africa. Also, in the GTAP model we proxy a reduction of NTB resulting from an FTA and this provides a valuable perspective on the importance of these barriers.

Trade remedies traditionally consist of anti-dumping measures, countervailing duties and safeguards. We provide an analysis of how these are embodied within the trade policies of the main parties and show that they may become important should SACU and Mercosur move towards a comprehensive FTA.

For services, the SACU-Mercosur agreement is limited in scope and currently excludes any reference to trade in services. A key problem here is that SACU is embroiled in a number of regional and bilateral arrangements without having a common negotiating structure and no common position on how to treat the liberalisation of trade in services. In contrast the South American countries are more prepared and organised to liberalise trade in services.

While outside of the SACU-Mercosur mandate, Chile is a closely related South American country that shares many characteristics with South Africa. As an adjunct to the main research we similarly examine these implications for a South Africa/Chile FTA. While not providing major gains, this relationship has some intuitive appeal as there appear no obvious sensitive sectors such as clothing with China or autos and sugar with Brazil that are likely to lead to a cautious approach from South Africa.

Importantly, the implications for the Botswana, Lesotho, Namibia and Swaziland (BLNS) are examined in detail. Again most of the interest is in the agricultural sectors, and given that Mercosur is the global benchmark producer of cattle meat and sugar, both of which are important exports from the BLNS under EU preferences, this is to be expected. There are perhaps smaller reductions than feared in both of these sectors and limited changes in other agricultural products. However, the SACU tariff revenue pool implications for the BLNS countries are substantial and sobering following an FTA with Mercosur. Thus, it is not the direct trade effects from these FTAs that are the main interest to the BLNS but rather tariff revenue pool implications and this research puts some numerical values around that conflict.

© 2010 Trade Law Centre for Southern Africa and the National Agricultural Marketing Council

Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac) and the National Agricultural Marketing Council (NAMC). The views expressed by the authors are not necessarily the view of any of these institutions.

Readers are encouraged to quote and reproduce the material contained in these books for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.

The objective of this paper is to examine the merchandise trading profile between Africa and China. This trade has seen dramatic growth in recent years, with this growth rate almost always higher than the increasingly documented Chinese export penetration into global markets. Chinese imports from Africa are heavily dominated by resources, and in particular mineral fuels (84 % of the aggregated African total) and precious metals (another 3.2 %). Chinese exports to Africa are much more diverse and cover most of the general manufacturing sectors. Looking at the often mirror data of African imports from the global economy, the notable feature again is the dramatic rise of China in all of the markets that consistent data is available for.  In addition, an update on the direct China-Africa trade for the six months ending June 2009 is given in the Annex (where Chinese imports declined by 51% on the comparable period during 2008, with the average unit price of most of the main imports falling by a similar figure indicating that this decline was largely price-driven).

We suggest that given the nature of African exports into China and the consequentially low average tariff assessed on these imports, China may wish to consider extending its currently limited preferences for Africa into a much more ambitious scheme. This trade scheme could almost resemble a Chinese variant of the African Growth and Opportunities Act (AGOA) US-initiated trade liberalization program intended to promote African exports to the US market or the Economic Partnership Agreements (EPAs) that are being negotiated for African access into Europe. The direct costs to China of such a trade arrangement would be minimal and the political gains from giving Africa an opportunity to promote its resource and manufacturing base, a base that is increasingly being underpinned either directly or indirectly through infrastructural building from China itself, is very large.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

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, largely as a result of two factors. The first is South Africa’s concerns about the revenue-sharing arrangement in terms of which South Africa is making transfers to the smaller member states. Second are the negotiations with the European Union (EU) to conclude an Economic Partnership Agreement (EPA). All SACU member states are included in the SADC EPA group that is negotiating with the EU. South Africa has not yet signed the Interim EPA and has intimated that if the other member states implement the interim agreement, it may withdraw from SACU. This is a credible threat particularly for countries like Lesotho which rely for more than 50 percent of government revenue on the SACU revenue pool, and have very few alternative sources of revenue to tap into.

At a political economy level the Zimbabwe situation is causing growing concern, and the political parties, even at the end of 2008, nowhere near an agreement on a way forward to govern the country. Very important regional issues came to the fore from the Zimbabwe catastrophe. Sustainable regional development is difficult to negotiate when even one member state is in crisis.

The global financial crisis has also impacted on the region in 2008 and more serious impact is still expected. The depth and extent of this crisis and the general economic slowdown (some are already speaking of recession) reflects not only on economic performance as employment, income and other indicators slide, but also in policy stance. Undeniably, countries in the region are becoming more protectionist and this can be expected to impact on the regional integration agenda and specifically on the implementation of the liberalisation agenda. There is also evidence of more reactive policy decisions, as contingency protection increases and policy generally becomes more inward looking. This is not necessarily in the interest of longer-term development.

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.

This book was launched on 30 March 2009 at The Aquarium, V&A Waterfront, Cape Town.

Download the pdf Foreword, Contents, Introduction and Authors’ Profiles (323 KB) .

© 2008 Trade Law Centre for Southern Africa, Konrad-Adenauer-Stiftung and Namibian Economic Policy Research Unit

Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac), the Konrad Adenauer Foundation and the Namibian Economic Policy Research Unit (NEPRU).

Readers are encouraged to quote and reproduce the material contained in these books for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.

South Africa is interested in strengthening trade relations with developing country partners and is articulating a strong ‘Look East’ policy. Trade links with China and India seem to be high on the agenda. This is important in the context of the Southern Africa Customs Union (SACU) too. South Africa is the largest and most developed country in this customs union, and its preferences are likely to influence SACU’s trade agenda. This book assesses the potential impact of a free trade agreement (FTA) between South Africa (SACU) and China, and an FTA with India. These are two very fast growing developing countries which are also important sources of foreign direct investment in Africa. The two FTAs are likely to deliver very different impacts, and to raise important policy questions for South Africa and SACU.

The focus of this book is on South Africa’s trade relationship with China and India. We note at the outset that, as a member of the Southern African Customs Union (SACU), South Africa does not articulate an independent trade policy, but determines a common external tariff together with its SACU partners. Nonetheless, South Africa’s trade policy stance can be expected to play an important role in SACU’s trade policy, given that the South African economy dwarfs the collective economic power of its SACU partners.

This book provides much needed input to trade policy analysis for South Africa and, by implication, for SACU too. The trade modelling work builds on that developed in an earlier tralac monograph, ‘South Africa’s Way Ahead: Trade Policy Options’. South Africa’s gold exports to India add an important dimension to the impact of an FTA between these partners, while, of course, China’s manufacturing exports to South Africa and concerns about sensitive sectors such as clothing and textiles raise industrial development questions for South Africa.

© 2008 Trade Law Centre for Southern Africa, Tru-Cape Fruit Marketing (Pty) Ltd and the National Agricultural Marketing Council (NAMC)

Publication of this book was made possible by the support of the Trade Law Centre for Southern Africa (tralac), Tru-Cape Fruit Marketing (Pty) Ltd and the National Agricultural Marketing Council (NAMC). The views expressed by the authors are not necessarily the view of any of these institutions.

Readers are encouraged to quote and reproduce the material contained in these books for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.

In assessing the future trade policy options for SACU, China and India’s dramatically increasing role as trading giants on the world scene has to be taken into account in these considerations. The focus in this paper is on how the SACU trading relationships with both China and India may be advanced by the adoption of free trade agreements between SACU (that includes South Africa and the BLNS – Botswana, Lesotho, Namibia and Swaziland) and China and SACU and India. To assist with this analysis the internationally accepted benchmark Global Trade Analysis Project (GTAP) database and the associated general equilibrium model will be used as the analytical tool.

The results for a SACU-China FTA show that both Botswana and the rest of SACU (Lesotho, Namibia and Swaziland as one ‘region’) gain modestly in terms of enhanced welfare. In trade, the direct effects are of less importance than the indirect effects as Chinese imports in particular replace those from South Africa and other sources. For the rest of SACU, the increases in production are greater but they are spread unevenly across sectors. Gains in the production value of ‘other agriculture’, ‘other meats’, textiles and non-ferrous metals (NFM) are recorded, while exports overall decline to South Africa but increase to both China and the rest of the world. Overall imports into the rest of SACU increase by more than exports, with big increases in textile imports from China leading the way.

For the Indian FTA we find that a simulation of comprehensive tariff reform in India is dominated by the massive effects on South Africa’s gold sector, and given the implausibility of this, we have opted for an alternative simulation that holds the Indian non-ferrous metal (gold) tariffs at their initial value. The welfare results are a decline in real GDP of 0.12% in Botswana but a marginal increase of 0.04% in the rest of SACU. For Botswana there are minor declines in output for many sectors but larger declines for apparel, vehicles and their parts, and especially services. Botswana’s import profile shows modest increases from India and the rest of the world that more than displace South African imports. Changes for trade in the rest of SACU are even more modest, with slightly increased exports to India and a richer South Africa just ahead of declines to the rest of the world. For imports, the Indian displacement of South African exports (around $40 million in each case) paves the way for increased imports of $6 million from the rest of the world, giving the final modest increase of $7 million overall. The direct effects of these FTA results are modest, with most of the changes coming about as the BLNS trade with South Africa changes at the margin.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.