6th Annual Africa Transfer Pricing Summit – 15 November 2017
On 15 November Willemien Viljoen, tralac researcher, participated in a panel discussion on Regional Customs Trends during the 6th Annual Africa Transfer Pricing Summit in Cape Town. The panel discussion, titled ‘Trade barriers and the emerging custom miss-invoicing narrative’ focused on trade barriers as practical and monetary impediments on the African continent, despite many regional efforts to ease cross-border business activity.
The purpose of the session was to discuss current regional progress to date and whether Africa is indeed going backward despite governmental rhetoric to the contrary. The session also covered growing commentary on customs invoicing and its impact on the transfer pricing analysis. Some specific topics discussed by the panellists include:
The low levels of intra-Africa trade, the products traded among African economies and the main intra-Africa supplier economies and destination markets. Furthermore, the factors which contribute to these low levels of trade, including a mismatch between supply and demand due to an overreliance on natural resources and agriculture by the majority of African economies. Due to the lack of diversification and value addition the capacity for intra-Africa trade is limited; requiring African countries to export raw natural resources and agricultural products beyond Africa’s borders (mainly the EU) and import manufactured goods from emerging and developed economies.
Trade barriers also play a significant role in hampering intra-Africa trade. These barriers include a lack of hard and soft infrastructure, inefficient customs operations, sanitary and phytosanitary measures and technical barriers to trade. However, multinational corporations often find it easier to either circumvent some of these barriers or to absorb the associated costs. Often NTBs curtail intra-Africa trade especially for small and medium sized enterprises.
In order to increase intra-Africa trade the lack of industrialisation and persistent NTBs need to be addressed. However, industrialisation decisions need to be carefully considered in terms of competitiveness given the need for investment, infrastructure, technology, human capital requirements and trade-related services. Will the Tripartite Free Trade Area and the Continental Free Trade Area be able to address some of these challenges and shortcomings through regional industrialisation programmes and value chains, regional infrastructure investment, increased services trade, the transfer of knowledge and limiting NTBs?
What will Africa’s future trading relationship with traditional trade partners, the US and EU look like post AGOA and post Brexit? Will African countries engage in bilateral trade negotiations or will they remain dependant on market access granted under unilateral preferences?