Review of trade-related developments in 2013
Sean Woolfrey, tralac Researcher, provides a review of key trade-related developments in 2013
At the multilateral level, the first half of 2013 witnessed an eventful race for the Director-General position at the World Trade Organization (WTO). The nine candidates nominated by their respective governments to succeed outgoing Director-General, Pascal Lamy, who stepped down at the end of August having served eight years in the position, hailed from Latin America, Africa, the Middle East and the Asia-Pacific region. The field of candidates was eventually narrowed down to a shortlist of two, containing Mexican Herminio Blanco and Brazilian Roberto Azevedo, with the latter ultimately chosen as the new Director General.
Upon assuming his position, Azevedo wasted little time in proclaiming that his first priority as Director-General was to ensure a successful outcome at the WTO’s Ninth Ministerial Conference, held in Bali, Indonesia in December. Originally scheduled for 3 to 6 December, a number of sticking points on the Conference agenda saw negotiations carry over until 7 December, when a package of agreements was finally concluded. The most notable element of the ‘Bali Package’ is the new Agreement on Trade Facilitation, which aims to promote global trade by streamlining customs procedures and improving transparency in measures applicable to imports, exports and transit traffic through various publication and notification requirements. Other elements in the package focus on various issues related to development, including cotton, food security in developing countries and numerous other provisions for least developed countries. The package also includes a commitment to reduce agricultural export subsidies and to keep them at low levels, and to reduce obstacles to trade when agricultural products are imported through quotas.
In addition to developments at the multilateral level, the global trade agenda in 2013 was dominated by negotiations to establish two so-called ‘mega-PTAs’ – the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership. TTIP negotiations between the European Union (EU) and the United States (US) were formally launched in June, with the first round of negotiations taking place the following month. These negotiations aim to cut remaining tariffs on trade between the two economic superpowers, and to address technical regulations, standards and other potential ‘behind-the-border’ trade barriers. The negotiations will also examine possibilities for liberalising EU-US investment, services trade and public procurement procedures. While TPP negotiations have been ongoing for a number of years, 2013 saw an important development in the negotiations, when, in July, Japan became the twelfth country to join the negotiations, which aim to establish a free trade area involving various Pacific Rim countries. While Japans participation adds economic weight to the grouping, it also complicates the negotiations, especially given the country’s reluctance to open up its agricultural markets.
There were mixed developments in 2013 for Africa’s trade and economic relations with external partners. The theme of the Fifth BRICS (Brazil, Russia, India, China and South Africa) Summit held in Durban, South Africa in March was “BRICS and Africa: Partnership for Development, Integration and Industrialisation”, and a number of leaders from African states and from Africa’s regional organisations were invited to attend a BRICS-African Leaders Dialogue Forum on the margins of the Summit. This event gave African leaders a chance to build closer ties with leaders from the BRICS, which are becoming increasingly important trade partners and sources of foreign investment for many African economies.
The 2013 African Growth and Opportunity Act (AGOA) Forum, held in Addis Ababa in August, saw African and US representatives meet to discuss how to improve and renew AGOA in a way that would make it more compatible with the changing economic landscape in Africa. While US President Barack Obama gave his backing to an extension of AGOA, which expires in 2015, US officials indicated a concern that the lack of reciprocity inherent in AGOA would result in US firms finding themselves at a competitive disadvantage vis-à-vis European firms, should Africa’s regional groupings conclude their economic partnership agreements (EPAs) with the European Union. US officials also suggested at the AGOA Forum that they would explore the possibility of graduating certain countries or sectors out of the AGOA programme of trade preferences.
Progress in the various EPA negotiations taking place between the EU and Africa’s regional groupings continued to be slow during 2013. A second high-level meeting under the interim EPA for Eastern and Southern Africa (ESA) took place in May and covered issues such as development cooperation, customs issues, tariff commitments and rules of origin. The next such meeting is scheduled for some time in 2014. Some progress in the Southern African Development Community (SADC) EPA negotiations was made at a Technical Working Group (TWG) and Senior Official Meeting (SOM) that took place in South Africa in June. This meeting addressed a number of contentious issues that have arisen during the negotiations including issues relating to market access, rules of origin, trade-related measures and unresolved textual issues. In November, another TWG and SOM took place in in South Africa and EU officials have since indicated that they believe that agreement on the EPA is close, with only agricultural market access issues remaining as a stumbling block.
A meeting of senior officials in Arusha, Tanzania in July was supposed to pave the way for the conclusion of the EPA involving the East African Community (EAC), but the meeting failed to resolve the long list of outstanding issues, and it was mutually agreed that some of these issues would be referred to the relevant EAC ministers for political guidance. Prospects for an imminent conclusion to the negotiations were dealt a further blow when Burundi and Tanzania both cancelled meetings with EU ministers, claiming they were not ready to engage in renewed discussion. Despite this setback, European officials remain optimistic about the conclusion of the EAC EPA.
Within Africa, the 2013 Conference of African Union Ministers of Trade adopted the strategy for the implementation of the African Union’s Action Plan for Boosting Intra-African Trade and the strategic framework for the establishment of the Continental Free Trade Area by 2017. Progress on the other grand African regional integration initiative, the Tripartite Free Trade Area (T-FTA) between member states of the Common Market for Eastern and Southern Africa (COMESA), the EAC and SADC was slow in 2013. This is particularly disappointing given that negotiations were already well behind schedule at the start of the year. While the meeting of the Tripartite Trade Negotiations Forum in Uganda in October made some progress in a number of areas including sanitary and phytosanitary standards (SPS) and technical barriers to trade (TBT), little progress was made on the crucial issue of tariff liberalisation, as a number of countries indicated that they were not ready to present tariff offers. Rules of origin also remain a sticking point in the negotiations.
There was measured progress on regional integration within Africa’s various regional economic communities in 2013. COMESA’s Competition Commission officially became operational in January, and during the course of the year, the bloc also launched a fund to support small and micro enterprises, the COMESA Innovation Council and an online monitoring and evaluation system to facilitate data capture and reporting on the implementation of COMESA programmes in all 19 member states. During the year, COMESA also began consulting with member states on the implementation of the COMESA Protocol on the Free Movement of Persons.
In the EAC, the 27th ordinary meeting of the EAC Council of Ministers approved negotiations towards the Republic of South Sudan joining the East African Community, while the 11th Extraordinary Summit of EAC Heads of State, which took place in April, reiterated its earlier directive to the Council of Ministers to expedite the conclusion of the Protocol on the Establishment of the EAC Monetary Union. The Protocol, which aims to strengthen economic cooperation between the EAC member states through the introduction of a common currency, was eventually signed by the presidents of the five EAC states at the 15th Ordinary Summit of the East African Community Heads of State, held in Kampala, Uganda on 30 November.
Notable developments relating to SADC integration in 2013 included the ongoing mid-term review of the SADC Regional Indicative Strategic Development Plan (RISDP), the finalisation of the Industrial Development Policy Framework for the region, the implementation of the Regional Infrastructure Development Master Plan and the hosting of a SADC Regional Infrastructure Investment Conference in Mozambique in June. The infrastructure conference was attended by heads of state from the region as well as representatives from the business and financial communities, and provided an opportunity for the presentation of the SADC Regional Infrastructure Development Master Plan to a range of potential investors, funders of infrastructure and key international cooperating partners. One of the most significant outcomes of the 3rd Summit of SADC Heads of State and Government, held in Malawi in August, was a decision to renegotiate the Protocol on the SADC Tribunal. In particular, it was decided that any new Tribunal would have limited jurisdiction and fewer powers and that the region’s dispute settlement mechanism would allow only for inter-state disputes.
Finally, in SACU, some progress was made in 2013 on regional industrial development and on trade facilitation. With respect to the former, the work programme on regional industrial development was streamlined as an overarching objective of the SACU Work Programme, and agro-processing and the automotive sector were targeted as sectors ripe for cross-border collaboration. On the latter, preparations began in the second half of 2013 for the launch of the regional Preferred Trader scheme in 2014. Less progress was forthcoming in 2013 on the crucial issues of the SACU revenue sharing formula and the development of SACU Institutions.