Building capacity to help Africa trade better

2017 in trade – green shoots in Africa?


2017 in trade – green shoots in Africa?

2017 in trade – green shoots in Africa?

While globally protectionist sentiment and economic nationalism continue to rattle the multilateral trading system, here on the continent, even amongst serious political upheavals, we are seeing some positive, incremental progress towards advancing rules-based trade governance, and improving governance generally.

Despite the Trump administration rhetoric, and ongoing Brexit complications, it seems global trade is picking up, and protectionism is decreasing. In its most recent quarterly report, the WTO has found fewer trade-restrictive measures than in the previous period, and more trade facilitating measures than restrictive measures. International trade flows have increased in the last 12 months, and the WTO has also revised up its forecasts for global trade growth.

China continues to signal its increased interest in taking a leadership role in global trade, while the United States continues to disrupt, dispute and disempower global trade governance – not least by causing an impasse in the WTO appellate body.

The resurrection of the TPP is a bright spot for the role of regional trade agreements, but it may yet be the TPP-10, depending on the position of a now more prominent Canada, and even with Canada in, its impact remains to be seen. The trade diversion impact on outsiders – African countries in particular – will be limited by the absence of the US, but the modern, 21st century drafting is likely to permeate more broadly.

In Europe, Brexit negotiations remain the highest priority trade issue, while migration dominates the Africa-EU dialogue. Like all trading partners, African countries will have to line up to renegotiate arrangements with the UK. On Africa-EU trade, after entering into force last year, the SADC-EU EPA is beginning to make an impact in Southern Africa. While this EPA provides a basis for uninterrupted trade during the Brexit transition phase and from which to negotiate a future agreement with the UK, Brexit will also have implications for Africa’s trading relationships with the EU – the EPA itself may need renegotiation following Brexit as the UK’s share of quotas is extracted.

Elsewhere in global trade, the 11th WTO Ministerial promised little and delivered slightly less with Ministers unable to agree on a ministerial declaration. Non-decision decisions were made on fisheries and e-commerce – both committing to continue existing arrangements. On fisheries, members agreed to agree comprehensive disciplines by 2019. On e-commerce, along with the continuing the moratorium on electronic transmissions, members agree to continue with the work programme. Decisions were also taken on small economies and on intellectual property. But much longer is this list of decisions that were not taken. Critical among these for African countries are those decisions not taken on agriculture subsidies, public stockholding and market access among other areas.

There are some member states still hoping for a conclusion to the Doha Development Round, however there is arguably much broader agreement that this Round has run its course. This is a further reminder that the developing world, including much of Africa, will not be able to rely on the multilateral trading system to deliver development outcomes. This is not to say that the multilateral system does not have a role to play, but development in Africa must come from our own efforts and energies.

In our view, the most important outcome from MC11 is the declaration by 119 WTO members on trade and women’s economic empowerment.[1] In a year when women trading and female economic empowerment are being belatedly recognised as key drivers of growth and weapons against inequality, this is an important step.[2]

While not immune from global anti-trade and anti-multilateralism sentiment; Africa has nevertheless managed to take some important steps to more and better trade within the continent. In July, the text of Tripartite Free Trade Agreement was finally concluded – however, tariff negotiations are still ongoing and rules of origin are still to be completed for some products. Negotiations for the Continental Free Trade Area are also gaining momentum, with a framework agreement expected early next year.

These are important developments, but a signed agreement is only the beginning. These instruments are designed with development and growth outcomes in mind, which will only be realised if the commitments are delivered by the member states.

Several trade cases are also worth noting – Malawi Mobile’s loss in the COMESA Court of Justice; and the complicated attempt to use the SADC Finance and Investment Protocol in Lesotho v Swissbourgh Diamond Mines.

In SACU, the 2004 agreement is still yet to be fully implemented, however, after several years of impasse, discussions seem to have reached a turning point and a 2017 work programme offers a renewed opportunity to take important decisions about the future of the customs union. What the members do from this point to shape the nature of the relationship will have a critical impact on development in the customs union, as well as the broader integration agenda.

A regime change in Zimbabwe may well bring renewed vigour to the Southern African region, while we are closely watching political developments in South Africa. Whatever the outcome of the National Conference, and the 2019 election, we don’t expect to see a vast shift from the focus on policy space for development that currently features in South Africa’s trade policy.

The chicken wars in South Africa have been ongoing throughout the year. With dumping accusations, safeguard applications and bitter exchanges, this industry, in many ways, exemplifies the complexity of disentangling trade-related challenges from domestic structural problems. It also clearly highlights the consumer concerns associated with trade – will cheaper chicken now threaten food security later?

In East Africa, after one annulled election and a challenged second election, one of the first announcements of the re-elected President Kenyatta was for visa-free travel for Africans, and free movement of people from the East African Community.

Looking forward, we are expecting the Continental Free Trade Area agreement to be signed early in 2018. While this is a strong signal of a more open and integrated Africa, there is much work still to be done. The CFTA will not support the industrialisation and development aims of much of the Continent without serious investment and political will from all parties.

Nor will it necessarily counter the strong ‘policy space’ narrative emanating, in particular, from South Africa, but also reflected by other African nations. The irony being that South Africa, deep in the throes of domestic political shifts is insisting on policy space, and yet seems to be in a policy limbo

Also at the continental level – new leadership at the African Union Commission and a new Commissioner for the Department of Trade and Industry might bring renewed energy to Africa’s trade and industrial development agenda, with the CFTA as focal point.

The theme of tralac’s 2017 conference – where to for international trade governance – remains as relevant as ever. This year’s conference, held in Cape Town, concluded that while shifts were occurring in the international trade paradigm there was still much progress to be made on Africa’s trade and integration agenda. Conference participants emphasised the importance of engaging the private sector, and focussing on youth, women and broader sustainable development in when considering trade and integration.

In this context, we will continue to look at trade policy, practice and institutions; competition policy; industrialisation; the digital economy; sustainable development and the role of institutions. Increasingly our research will consider how distributional issues, gender, environment/climate, employment and poverty interact with the African trade and integration agenda.

These themes have shaped tralac’s work this year, and going forward we will continue to support developments in the continental and tripartite free trade areas, as well as Africa’s engagement with major trading partners. We will be focussing on the next steps for the continent – how these agreements can be operationalised and implemented to really deliver the economic and social outcomes that Africa needs. Critical to this is infrastructure investment, trade facilitation and education.

Rules‑based trade governance, supported by effective institutions, remains essential to Africa’s development and integration.

[1] Available at: https://www.tralac.org/images/docs/12548/mc11-joint-declaration-on-trade-and-womens-economic-empowerment-on-the-occasion-of-the-wto-ministerial-conference-in-buenos-aires-december-2017.pdf

[2] See the new tralac Trade Brief by Gavin van der Nest on this topic: “Women in Services Trade: Participation and Ownership, A Sub-Saharan African Focus”

About the Author(s)

Ashly Hope (Volunteer)

Ashly is a professional volunteer with the Australian Government’s Australian Volunteers for International Development Program. She served as Research Coordinator (Trade in Services and Regulation) at tralac. Ashly has experience in policy advice and analysis in financial regulation, international economic governance and international tax. She holds a BA (Political Science)/LLB from the University of Tasmania, and an LLM (Government and Commercial) from the Australian National University.

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