Building capacity to help Africa trade better

What happened in 2011?


What happened in 2011?

Willemien Viljoen, tralac Researcher, provides an overview of key trade-related developments in 2011

Various multilateral, regional and domestic trade and trade-related developments have taken place during 2011: the Arab Spring highlights issues pertaining to poor governance; the Kyoto Protocol was extended; Russia, Samoa, Vanuatu and Montenegro joined the WTO; the COMESA-EAC-SADC Tripartite Free Trade Area negotiations were launched; a deadline was set for EPA talks; South Africa joined the political organisation of BRIC(S); and in South Africa the Walmart/Massmart merger was approved amidst concerns for jobs and local procurement.

The Arab Spring, December 2010 and ongoing

The revolutionary wave of demonstrations and protests that started in the Arab world on 18 December 2010 has been named the Arab Spring or the Arab Awakening. However, the important underlying message of the movement is that of a need for greater accountability and responsibility in both the public and private sectors. The Arab Spring has thrown the focus on issues pertaining to poor governance in various countries with demands being placed on jobs and accountability in times of increased inequality and economic uncertainty. This has been a wake-up call for improved governance, creating the need to reduce high levels of unemployment, accelerating private sector growth, economic diversification and the elimination of income disparities within countries and between countries of the region. In order to address these issues, transparency, disclosure and accountability, as the corner stone of good governance need to be strengthened.

Southern African Customs Union (SACU) Summit, March 2011

The third Heads of State and Government meeting of the member States of the Southern African Customs Union (SACU Summit) was held on 25 March 2011 in Pretoria, South Africa. At this Summit Heads of State agreed to discuss the progress made in addressing the various challenges facing the customs union and the development of the SACU approach to the COMESA-EAC-SADC Tripartite Free Trade Arrangement (FTA).

Heads of State endorsed five priority areas in the SACU work programme: regional industrial development; the revision of the revenue-sharing formula; trade facilitation; the development of the SACU institutions; and the common negotiating mechanism for future trade negotiations with third party countries. The overall objective for the SACU work programme was identified as regional industrialisation with the aim of providing regional economic growth, development and integration which is balanced, equitable and sustainable.

South Africa joins the BRIC(S) Summit, April 2011

On 14 April 2011 South Africa joined this political grouping of leading emerging economies, BRIC(S) for the group’s third Summit in China, for the first time as a full member. At the end of 2010 South Africa was invited to join the political group which includes Brazil, Russia, India and China and changed the acronym of the economic group from BRIC to BRICS.

Initially the inclusion of South Africa in the group prompted surprise as South Africa’s gross domestic product (GDP) is only one sixteenth of China’s output, has only 50 million inhabitants and has an annual growth rate of less than 3.5 percent. However, South Africa’s inclusion as a gateway to the rest of Africa is possibly a different story, providing institutional capacity, depth of financial markets and regulatory efficiency as a base for pan-African investment and developments. According to South Africa, its inclusion in this group can have a positive spill over effect for the rest of Africa. The BRIC countries have the capacity to bring investment, expertise and technologies that can help Africa accelerate its infrastructure development which can support inter-African trade and accelerate regional economic integration.

The theme of the BRICS Summit was Broad vision, shared prosperity, with countries agreeing on the need to strengthen cooperation and coordination among member countries on international and regional issues of common interest. To attain the goal of improved cooperation and coordination the BRICS Trade and Economics Research Network (BRICS-TERN) was launched on 19 November 2011. The aim of the network is to bring together like-minded organisation of the BRICS countries to work together on trade and economic issues and assist in policy making decisions. The initial focus of the network will be on the promotion of fair markets, inclusive growth and sustainable development.

Walmart/Massmart merger, May 2011

At the end of May 2011 the South African Competition Tribunal approved Walmart’s bid of a 51 percent stake in the local retailer Massmart. The hearings were dominated by arguments about the impact of the proposed deal on employment and local procurement. Some parties argued that the merger should be denied, while trade unions, the government and some retailers requested that if the merger is allowed, strict conditions about future labour practices and imports be imposed.

On 30 June 2011 the Competition Tribunal released its full reasons for approving the merger with conditions: the merger did not raise any competition concerns; more jobs are likely to be created by the merger; and the merger creates the potential for reinstating previously retrenched employees. The merging parties have also accepted the conditions, imposed by the Tribunal, of a two year moratorium on retrenchments and made two undertakings regarding collective bargaining: the parties will continue to honour existing labour agreements and will not challenge the status of the South African Commercial, Catering and Allied Workers Union (SACCAWU) as the largest representative union.

However, even before the publication of the Tribunal’s reasons, SACCAWU indicated that they will appeal the decision of the Tribunal, but the basis for challenging the ruling is still unclear.

The World Bank Group Trade Strategy, June 2011

In June 2011 the World Bank Group published its first Trade Strategy to guide its work over the next ten years. The Strategy is anchored on four main pillars for financial assistance, technical assistance and closer partnerships: trade competitiveness and diversification; trade facilitation, transport logistics and trade finance; support for market access and internal trade cooperation; and managing external shocks and providing greater inclusion to make globalisation beneficial for all.

The Trade Strategy does not propose a major change in the main areas of World Bank support, but rather focuses on actions to improve the effectiveness of support and the reorientation of activities in some areas. The Strategy will be implemented through region specific work programs and activities by central units which will utilise three main instruments: lending and technical assistance programs, knowledge sharing and the promotion of policy dialogue and improved external partnerships and coordination.

COMESA-EAC-SADC Tripartite Free Trade Area (FTA), June 2011

The second COMESA-EAC-SADC Tripartite Summit was held on 12 June 2011 in Johannesburg, South Africa with the theme to deepen the integration in the Tripartite and the vision to move towards a single market. The Heads of State of the 26 member countries adopted a developmental approach to the tripartite integration process anchored in three pillars: market integration based on the Tripartite FTA; infrastructure development; and industrial development.

At the conclusion of the Summit the Heads of State launched the negotiations for the establishment of the Tripartite FTA and adopted the Roadmap for Establishing the Tripartite FTA and the Tripartite FTA Negotiating Principles, Processes and Institutional Framework. The first-phase of negotiations will address tariff liberalisation, rules of origin, customs cooperation and customs-related matters, non-tariff barriers, sanitary and phytosanitary measures, technical barriers to trade and dispute settlement. The movement of business persons will be negotiated in parallel with the first-phase as a separate track of negotiations. The second-phase will focus on trade in services and trade-related issues, including intellectual property rights and competition policy. A timeline of 24-36 months has been set for the completion of the first-phase negotiations with no specific timeframe indicated for the second-phase of negotiations. The negotiations will be undertaken by the Tripartite Trade Negotiations Forum (TTNF) which had its inaugural meeting from 7-9 December 2011 in Nairobi, Kenya. The negotiation process will start in February 2012.

Deadline for Economic Partnership Agreements (EPAs), September 2011

After almost a decade of negotiations on the Economic Partnership Agreements (EPAs) between the African, Caribbean and Pacific Group of States (ACP) and the European Union (EU), Brussels have set a deadline for the EPA talks. 18 out of the 36 ACP countries that are yet to conclude or implement an EPA have until 1 January 2014 to do so. On 30 September 2011 the European Commission (EC) adopted a proposal to amend the market access conditions for certain countries which have negotiated EPAs with the EU.

Since 1 January 2008 the EC has applied an interim regulation, to allow certain ACP countries which have initialled an EPA to benefit from continued EU market access, but the new market access regulation states that a country should be removed from the regulation if a state indicates that it intends not to notify an agreement; ratification of an agreement has not taken place within a reasonable period of time such that the entry into force of the agreement is unduly delayed or; the agreement is terminated or a state terminates its rights and obligations under the agreement but the agreement otherwise remains in force. The result of the new regulation is that countries, including Botswana, Lesotho, Mozambique, Namibia, Kenya, Zambia and Tanzania, which have either not signed or implemented their agreements, will be removed from the market access regulation at the beginning of 2014.

Climate change talks, November 2011

The 17th Conference of the Parties (COP 17) to the United Nations Framework Convention on Climate Change (UNFCCC) and the 7th Session of the Conference of the Parties serving as the Meeting of the Parties (CMP 7) to the Kyoto Protocol was held in Durban, South African from 28 November to 9 December 2011. The climate talks resulted in a decisive outcome on: a second commitment period of the Kyoto Protocol from 1 January 2013 to the end of either 31 December 2017 or 31 December 2020; the adoption of a universal legal agreement on climate change no later than 2015; a web-based registry for developing countries to record mitigation actions; carbon-capture and storage projects under the Clean Development mechanism (CDM) of the Kyoto Protocol; the implementation of the Green climate Fund and the operationalisation of the Technology Mechanism. Cop 18 and CMP 8 will be held in Qatar from 26 November to 7 December 2012.

South African National Development Plan, November 2011

On 11 November 2011 the South African National Planning Commission released the National Development Plan (NDP), highlighting the vision of the Commission for development and growth in South Africa by 2030. The Plan aims to address poverty and exclusion while nurturing economic growth in order to expand existing opportunities, build capacities and involve communities in their own development to raise the overall standard of living.

The NDP focuses on addressing various challenges and harnessing opportunities in the South African economy, including increased levels of employment; development of economic infrastructure; a transition to a low carbon economy; the inclusion of rural communities; improving South Africa’s position in global and regional integration; improved levels of education, innovation; and training and the abolition of corruption.

The NDP calls for resources so that communities can become their own engines of development, supported by the government. The Planning Commission want to ensure that poor people have the environment, services and skills to improve their lives, while government creates the conditions and environment for higher levels of public and private investment to create jobs and ensure rising income levels.

The WTO Ministerial Conference, December 2011

On 15-17 December 2011 the World trade Organisation’s (WTO) 8th Ministerial Conference was held in Geneva, Switzerland. The Ministerial Conference took place along three broad themes: the importance of the multilateral trading system and the WTO; trade and development; and the Doha Development Agenda. However, at the conclusion of the Ministerial Conference there were no great surprises, with no concrete moves forward on the Doha Round of Trade Negotiations. The decisions made at the end of the Conference were mostly approved extensions of deadlines; including those related to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The most notable achievements of the meeting were the last-minute deal for the reform of the rules on government procurement and the accession of Russia, Samoa, Vanuatu and Montenegro to the WTO.



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