A review of 2012
Sean Woolfrey, tralac Researcher, reviews the year that was – 2012
As the year draws to a close, it is a good time to look back at some of the events and issues that have dominated the global and regional trade agendas in 2012.
Due to ongoing troubles in the global economy, world trade growth in 2012 was sluggish, and the World Trade Organisation (WTO) has forecast growth of 2.5 percent for the year, well below the average of 5.4 percent for the last 20 years. A deceleration in developed country imports and corresponding weakness in the exports of developing countries contributed to this slowdown. The WTO estimates that exports from developed countries will have grown 1.5 percent in 2012, while exports from developing countries will have grown 3.5 percent during the year. In light of sluggish global trade growth, it is unfortunate that once again, relatively little progress has been made during the year at the Doha Round of WTO trade negotiations. This can be at least partly attributed to the fact that important WTO members such as the US and China have focused much of their attention this year on domestic political events and issues.
While the Doha Round has limped on, the WTO has been very active in other areas of its work. For instance, the organisation’s dispute settlement procedures continue to be a popular avenue for dispute settlement between WTO members. 26 trade disputes have been launched at the WTO thus far in 2012, the most since 2003. The WTO Secretariat has also carried out various trade monitoring exercises in 2012, including 20 Trade Policy Reviews (TPRs) of WTO Members. Notable TPRs undertaken this year include those of China, the United States and the five East African Community (EAC) states. Among other things, the various TPRs and other monitoring exercises have shown that while governments have generally been able to resist domestic pressures to erect new trade barriers, certain new restrictive measures have been introduced during the year, adding to the stock of existing trade restrictions and distortions which remain in effect. The WTO’s monitoring work has also shown that regional trade agreement (RTA) activity continues to be a prominent feature of the global trading environment. In 2012, 22 such agreements were notified to the WTO, bringing the total number of ‘in force’ RTAs notified to the WTO to 231. The WTO also estimates that there are over 100 such agreements which are in force but which have not yet been notified to the WTO.
At the multilateral level, 2012 also witnessed two important gatherings addressing issues that are increasingly integral to the contemporary trade agenda. The United Nations Conference on Sustainable Development held in Rio de Janeiro in June focused largely on moving towards a green economy and implementing an institutional framework for sustainable development. The outcome document from the Conference explicitly recognised international trade as an important vehicle for development and sustainable economic growth. To this end it called for a universal, rules-based and equitable multilateral trading system and for the parties to address trade-distorting subsidies and to bring about progress in trade in environmental goods and services. At the eighteenth session of the Conference of the Parties (COP18) to the United Nations Framework Convention on Climate Change held in Doha in November and December a new commitment period under the Kyoto Protocol was launched. The countries at COP18 also endorsed the completion of new institutions and agreed on ways to deliver enhanced climate finance and technology to developing countries.
In Africa, the 2012 trade agenda was dominated by the various regional integration initiatives underway at the continental, regional and sub-regional level. In January, African leaders gathered in Addis Ababa for an African Union Summit with the theme of ‘boosting intra-African trade’. At the Summit, the leaders endorsed a plan to establish a Continental Free Trade Area (CFTA) by 2017. According to the African Union roadmap for the continental agreement, the CFTA would grow out of the Tripartite FTA (T-FTA) currently being established by the 26 members of the Common Market for Southern and Eastern Africa (COMESA), the EAC and the Southern African Development Community (SADC).
Negotiations towards the T-FTA, which were launched last year, continued during 2012. Following the inaugural meeting of the Tripartite Trade Negotiation Forum (TTNF) in December last year, the TTNF met four times this year. Among other things these meetings have served to: i) forge a common understanding of the adopted negotiating principles; ii) facilitate agreement on the use of the Draft FTA Agreement and Annexes as a starting point for negotiations; iii) establish technical working groups in the areas of customs cooperation, non-tariff barriers and rules of origin; and iv) provide a platform for reviewing and monitoring progress on tariff offers and negotiation modalities. Other areas in which progress has been made on the T-FTA during 2012 include the financing of infrastructure projects and the signing of a Tripartite Agreement for the Implementation of the Programme on Climate Change Adaptation and Mitigation in Eastern and Southern Africa.
The highlights of 2012 for COMESA included the launch of an innovation leadership training programme in conjunction with Harvard University’s Kennedy School of Government, the beginning of live operations of COMESA’s much anticipated Regional Payment and Settlement System (REPSS) and Uganda’s accession to the COMESA FTA. The transition period for the implementation of the COMESA Customs Union, meanwhile, was extended for a further two years in order for outstanding issues and concerns to be addressed. For the EAC, the highlights of 2012 included the holding of the second TPR and the establishment of closer ties with the United States through a new trade and investment partnership. The EAC also formulated an action plan for the implementation of an EAC Industrialisation Policy and Strategy and continued with negotiations on the EAC Monetary Union Protocol. Nevertheless, integration in the EAC continues to be hampered by difficulties relating to the implementation of the single customs territory and the Common Market Protocol.
For SADC, the highlights of 2012 – the year in which the SADC FTA is supposed to be fully implemented – included the signing by most SADC member states of the SADC Protocol on Trade in Services, the launch of the Revised Strategic Indicative Plan of the Organ (SIPO) and the launch of a new SADC website. On a less positive note, the fate of the SADC Tribunal was sealed at the Summit in Maputo in August when it was decided that the region’s citizens would not have direct access to the court. According to the final communiqué from the Summit, SADC leaders “resolved that a new Protocol on the Tribunal should be negotiated and its mandate confined to interpretation of the SADC Treaty and Protocols relating to disputes between Member States”. Within the Southern African Customs Union (SACU), much of 2012 was devoted to developing a common industrial policy as well as discussions on potential modifications to the existing SACU revenue sharing arrangement. Furthermore, negotiations towards a SACU-India preferential trade agreement also gathered momentum during the year, and it is hoped that an agreement will be forthcoming next year.
With regard to African countries’ trade relations with non-African partners, one of the most important events of 2012 was the extension of the ‘third country fabric’ provisions of the United States’ African Growth and Opportunity Act (AGOA). These provisions, which allow for eligible African countries to use imported fabric in their garment exports to the US, were set to expire this year but have now been extended to 2015.
On the Economic Partnership Agreement (EPA) front, the European Parliament voted in September to extend by two years the January 2014 deadline set by the European Commission for ACP countries to have taken steps to ratify and implement their relevant EPA agreement. Under the new proposal, countries not having taken these steps within the specified timeframe will lose their preferential access to the EU market provided under the various EPAs, and will either fall under one of the schemes of the new Generalised System of Preferences or will have no preferences. Regarding the specific EPA agreements, the interim EPA between the EU and four countries of the Eastern and Southern Africa (ESA) bloc – Mauritius, Madagascar, Seychelles and Zimbabwe – came into effect in May this year, becoming the first interim EPA between the EU and an African region to be applied. Meanwhile, despite progress in some areas, negotiations towards the conclusion of the EAC and SADC EPAs remain bogged down by numerous contentious issues such as agricultural market access, export taxes, the ‘MFN clause’, rules of origin and various so-called ‘new issues’.
In South Africa, a number of trade-related issues hit the headlines in 2012. In January, Minister of Trade and Industry Dr Rob Davies announced plans to introduce special economic zones (SEZs) in the country in order to advance the government’s strategic objectives of industrialisation, regional development and job creation. March saw the conclusion of the long-running Massmart-Walmart saga, as the Competition Appeal Court approved the merger of the two companies subject to certain conditions. Then in June, Brazil initiated a dispute against South Africa at the WTO following South Africa’s imposition of anti-dumping duties on imports of frozen chicken from Brazil earlier in the year. Finally, in September, Minister Davies indicated that the government would refrain from entering into bilateral investment treaties in the future, except under certain compelling circumstances, thereby signalling a notable shift in South Africa’s approach to foreign investment.
Various tralac Discussion Notes: http://www.tralac.org/discussions.html
COMESA website: http://www.comesa.int/
EAC website: http://www.eac.int/
SADC website: http://www.sadc.int/
WTO website: http://www.wto.org/
TradeMark Southern Africa: http://www.trademarksa.org/latest-news
European Centre for Development Policy Management (ECDPM) website: http://www.ecdpm.org/