The World Trade Organisation (WTO) Members decided at the 1996 Singapore Ministerial Conference to set up three new working groups on trade and investment, competition policy, and transparency in government procurement. They also instructed the WTO Council for Trade in Goods to look at possible ways of simplifying trade procedures, or, as it became known as, ‘trade facilitation’. These four issues collectively became known as ‘the Singapore Issues’. They were subsequently included on the Doha Development Agenda (DDA), with negotiations to start after the 2003 Cancun Ministerial Conference, ‘on the basis of a decision to be taken, by explicit consensus at that session on modalities of negotiations’.

The basic problem for the WTO was that these negotiations would only proceed following a clear consensus decision to do so, and this was especially crucial for competition policies and investment as the WTO already had an Agreement on Government Procurement. Were Singapore Issues a bridge too far? Yes they were, and the outcome from Cancun was that talks collapsed with the three Singapore Issues of investment, competition policies and procurement shouldering a significant and possibly unfair portion of the blame. Trade facilitation did however find common ground. 

In some respects, for Africa the international conflict of Cancun continues. Even though the arena has shifted the developing countries still see these issues through the prism of exporting countries that are trying to force open markets of the poorer importing countries, thus attempting to ensure economic development in their nations at the expense of the developing countries’ policy space. The extent to which ‘ex-Singapore issues’ are being introduced into the African and other regions through bilateral and regional agreements negotiated with the EU and the US as the dominant economies becomes an important one, and in general the EU seems to be pursuing them with some vigour and rigour while the US is adopting a more benign approach.

This paper focuses on the Trans-Pacific Partnership (TPP) for developments in investment, competition policy and procurement, because we believe it is both the most advanced of the mega-regionals in its negotiations (because of the economic and development status diversity of its members) and because its potential outcome holds the most interest and important lessons for South Africa and its regional negotiations. Developments in the WTO trade facilitation package negotiations and the implications for Africa are also considered.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

In some respects the end of 2014 brought some light to a quiet year on the trade front. This Trade Brief reviews some of the trade-related developments of the past year at the global, continental, and regional levels.

As could be expected, the experiences at the global, continental and regional levels were quite varied. There have been concerns in recent years that the multilateral trading system has been heading to a stale-mate. The Doha Development Round of the World Trade Organisation (WTO), which started in 2001, had been progressing at a considerably slow pace. Meanwhile, bilateral and regional trade agreements continued to be on the rise, epitomised by negotiations towards two mega agreements involving the United States namely the Transatlantic Trade and Investment Partnership with the EU, and the Trans-Pacific Partnership (TPP) with the Asia-Pacific region.

In November, a significant breakthrough was reached in bilateral negotiations between the US and India which brought momentum towards conclusion of WTO negotiations on the Trade Facilitation Agreement (TFA), adopted in Bali in December 2013 with the aim of ‘expediting the movement, release and clearance of goods, including goods in transit’. Resultantly, negotiations were effectively concluded and the General Council of the WTO adopted the amendment to the WTO agreement that inserts the TFA, as well as other decisions on public stockholding for food security purposes and post-Bali work.

The breakthrough in negotiations between the US and India was achieved just before the G20 Summit. The previous month, there was another significant development namely the launch of the World Bank’s Global Infrastructure Initiative (GII). This is a multi-year programme that seeks to unlock additional infrastructure financing in the region of US$ 1 trillion annually for developing countries up to the year 2020. The G20 Summit also endorsed the initiative and established its own Global Infrastructure Hub, which will work with the Global Infrastructure Initiative in some of the key activities.

The growing focus on the importance of investing in infrastructure to address supply-side constraints has not only been at the global level, but at the continental level in Africa as well. There has also been a growing recognition of the importance of home-grown solutions, with structural transformation increasingly being at the core of national growth and development plans developed as such. This recognition is now at the centre of developmental efforts and has informed the Common African Position (CAP) on the Post-2015 Development Agenda, adopted by the 22nd Summit of African Union Heads of State and Government held in Addis Ababa, Ethiopia, from 21 to 31 January 2014.

Efforts towards establishment of the CFTA significantly gathered pace. A series of meetings were held throughout the year, culminating in the 9th Conference of African Union Ministers of Trade, held in Addis Ababa, Ethiopia, from 1 to 5 December, 2014. There is now considerable momentum towards the commencement of negotiations towards establishment of Africa’s own mega FTA. The robustness of the institutional framework that will be set up by the end of January 2015 following a High Level African Trade Committee (HATC) meeting will be critical for the effective development of the CFTA within the indicative timeline of 2017 that was set at the beginning of the process.

As 2014 drew to a close, it became evident that 2015 will be a highly important year. Progress that will be attained on the different fronts will be crucial for the trade and development prospects of African countries in the short, medium and long term.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The accession of South Africa into the ‘BRICS’ formation has attracted wide attention internationally. Some welcomed the step while others questioned it. A closer look at BRICS reveals that these countries share some fundamental features while they differ in other respects.

The BRIC acronym was coined by Jim O’Neill of Goldman Sachs in 2001. The founding members of this political formation are Brazil, Russia, India and China. The formation of the BRIC was motivated by global economic developments and changes in geopolitical configurations. South Africa joined the group in 2011, thus opening the possibility of putting Africa on the BRICS’ agenda. South Africa’s admission to the group was motivated by China and supported by Russia. Its accession to the BRICS generated much discussion about the country’s suitability to be part of the formation.

One of the real issues raised is that South Africa does not measure up to the other BRIC economies in terms of population, trade levels and performance, and growth rates. A formation such as the BRICS is of value to South Africa only if the country’s strategic development interests (relating, for example, to agriculture) are to be on the agenda. South Africa faces particular challenges related to market access into the BRIC countries.

Agricultural issues amongst the BRICS are discussed under the Standing Expert Working Group on Agriculture and Agrarian Development. The issues that are prioritised include:

• The development of a general strategy for access to food (this is where market access needs to be tabled), which is tasked to Brazil;

• Impact of climate change on food security, which is allocated to South Africa;

• The enhancement of agricultural technology, cooperation and innovation that is allocated to India; and

• Creation of an information base of BRICS countries that is allocated to China.

In 2012, at the annual conference of the Agricultural Economics Association of South Africa, the National Agricultural Marketing Council (NAMC) co-hosted a workshop aimed at establishing a dialogue on how agriculture can benefit from South Africa’s membership of the BRICS. It emerged clearly from the workshop that agriculture needs to be better positioned to benefit from the BRICS formation. One important issue that was noted was that market access for South African agricultural produce into the BRICS countries could be improved.

In this regard, an honest question was raised whether, as the country’s agriculture stakeholders, we fold our arms and do nothing since this is a political formation (while market access is an economic issue), or whether we use this political formation to address our socioeconomic issues as they relate to these countries. Market access is one of the issues of interest to South Africa’s agriculture industry within the BRICS formation, together with issues such as the diffusion of technologies and collaborations.

The research that is presented in this book addresses a range of important issues related to the trade and investment relations among the BRICS countries, in particular the performance of their agricultural sectors. There is also a focus on the relationship between BRICS and Africa, and what this means for South Africa’s trade relations with other African countries.

© 2013 Trade Law Centre, National Agricultural Marketing Council, Royal Danish Embassy, and Swedish Embassy, Nairobi

Publication of this book was made possible by the support of the Trade Law Centre (tralac), National Agricultural Marketing Council (NAMC), the Royal Danish Embassy, and the Swedish Embassy, Nairobi. The views expressed by the authors are not necessarily the view of any of these institutions.

Readers are encouraged to quote and reproduce the material contained in these books for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.

Why do countries seek trade agreements? Despite numerous and vocal critics, virtually every World Trade Organisation (WTO) member is involved in at least one (and often numerous) FTA or preferential trade agreement (PTA). Sometimes it is for no other reason than being left behind, as a competitor has trade preferences in your markets. Sometimes, as in the case of the smaller open economies such as Chile and New Zealand, it is a desire to complement their unilateral domestic reforms, while at other times it is the desire of a large economy to force a smaller country into granting trade concessions.

There are dangers and pitfalls in trade negotiations to be aware of. One of these is policy space, which should be an ongoing concern for many developing countries as negotiated concessions restrict future government policy options. Associated with policy space is the particular concern that some developed countries are insisting upon a clause that entitles them to automatically have any future concession negotiated with a third party to be granted to them as well (analogous to the WTO Most Favoured Nation (MFN) clause). Another danger is trade creation versus trade diversion. Only by a careful analysis of these overall effects can an indication be made as to whether or not an FTA will be unambiguously positive for a country.

The objective of this paper is to outline the process of a trade negotiation and, in particular, a pathway to follow. This paper runs a parallel pathway to a companion paper assessing the China-New Zealand Free Trade Agreement (FTA), and both heavily rely upon the New Zealand Ministry of Foreign Affairs and Trade publications for background data and information. It also references extensively the 2005 paper on regional and bilateral FTAs by Martin Khor, the Director of the Third World Network, and refers to the Chilean examples as, along with New Zealand, this South American country leads the world in ‘genuine FTA relationships’. And the term ‘genuine FTA relationships’ is emphasised as many so-called FTAs are in reality less rigorous preferential trade agreements (PTAs), with a genuine and comprehensive FTA being a PTA ‘on steroids’ (note in particular the term ‘comprehensive’).

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The African Growth and Opportunity Act (AGOA) forms a part of United States trade legislation that provides non-reciprocal preferential market access to the US market for qualifying exports made in African beneficiary countries. The legislation was enacted under former President Bill Clinton in 2000, and extended (and to some extent broadened) by President George Bush during his term in office. Under President Obama, important extensions were recently passed while the current US Administration’s recently released Africa policy undertakes to promote an extension of AGOA beyond its current expiry date in 2015.

While AGOA is largely focused on enhanced US market access (in support of trade flows) for African countries by removing US import tariffs and other restrictions, the legislation goes well beyond this aspect and is in effect a policy framework covering trade-capacity building, general development assistance, bilateral political and business engagement (for example, through the annual AGOA Forum), healthcare assistance, investment support and financing, and security-related cooperation. Regional trade hubs located in Gaborone, Nairobi, Accra and Dakar provide and implement some of the support measures envisaged (and required) by the AGOA legislation.

Although AGOA is very generous it also has numerous shortcomings, many of which lie in the fact that it represents US trade legislation, rather than a bilateral trade agreement. As a result, preferences are neither permanent nor necessarily predictable; recent experience and uncertainty around the extension of AGOA’s apparel provisions in as far as they relate to the third-country fabric provision are a case in point, as are substantial gaps and other restrictions relating to the legislations’ product coverage.

The objective of this policy brief is to provide an overview of AGOA’s wearing apparel provisions given their recent legislative extension, but also to place Africa’s apparel exports to the US into broad context with regard to (a) trade flows trends since AGOA’s inception, (b) Sub-Saharan African apparel exports five years prior to AGOA’s inception compared to today, and (c) AGOA apparel exports in the context of global apparel imports into the US market.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

European countries through the European Commission (EC) have embarked on a reform process that aims to focus the non-reciprocal trade preferences offered under the European Union (EU) Generalised System of Preferences (GSP) on fewer countries. The proposed reforms can be placed within a much broader context, not only of lower EU import tariffs and dwindling preference margins, but also of the EU’s reassessment more generally of its provision of relatively generous nonreciprocal market access preferences to a large number of countries.

The proposed GSP programme changes follow recent reforms of the GSP Rules of Origin (RoO) that were implemented at the start of 2011, and which in turn also included a number of measures that simplify the applicable origin requirements and reduce the number of product-specific rules. The amended RoO also contain a number of provisions that apply only to Least Developed Countries (LDCs).

The main beneficiaries of the proposed GSP scheme will be LDCs, not so much through changes to their preferences (they already receive almost full duty- and quota-free market access) but rather through the higher concentration of preferences and perhaps reduced competition in the EU market. LDCs’ benefits under the proposed scheme are therefore primarily through gains in relative preference margins.

The new scheme would also be open-ended, which means that traders both in the EU and GSP beneficiary countries will enjoy greater economic certainty with respect to their trading relationship. Up until now, the GSP was subject to 10-year cycles with periodic renewals mostly in three year intervals. The current legislative period covers the 2009-2011 period with roll-over legislation already adopted which extends the current scheme to the end of 2013 at the latest (or to any such earlier date when the revised GSP is finalised and implemented). The proposed legislation for a new GSP still needs to be debated in the European Parliament and Council. 

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The African Growth and Opportunity Act (AGOA) has formed the basis for preferential US-African trade over the past decade. However, AGOA is about more than just trade, but represents a policy framework covering issues such as the development of trade capacity, general development assistance, investment, healthcare assistance and security-related cooperation. Trade remains an important focal point, however: since inception, US policy has taken the approach that export-led growth would play a key role in assisting Africa’s development. A slight change in emphasis was expressed by US Secretary of State Hilary Clinton and other officials when addressing the 9th AGOA Forum in Nairobi last year, where the importance of regional trade and the removal of regional trade barriers were repeatedly highlighted. This stance was reinforced at the 10th AGOA Forum held recently in Washington.

Midway through 2003, the countries of the Southern African Customs Union (SACU) began negotiations with the US for a Free Trade Area (FTA). These were intended to be concluded within 18 months, but were postponed indefinitely a year later as a result of widely divergent views on the scale and scope of the proposed agreement. In July 2008, SACU and the US then signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) whose stated objective was to ‘promote an attractive investment climate and to expand and diversify trade between SACU and the United States’. The TIDCA established a platform for bilateral consultations on a range of trade issues, including trade facilitation, technical barriers to trade, and trade and investment promotion, but also to act as a stepping stone for a future SACU-US FTA. This remained a longer term objective for both negotiating parties, and new signals are emerging that this issue may soon be revisited more formally. In the meantime, South African officials have been reported as favouring an extension of AGOA and South Africa’s continued participation and eligibility under AGOA.

Given recent legislative proposals, there appears to be some consolidation in US policy on preferential trade. Some of this legislation has originated in the House of Representatives – one of the two chambers of Congress – while similar reform proposals are expected in the Senate shortly. Proposed changes to the AGOA legislation include an extension to 2019 (and beyond, subject to conditions). Aspects of the proposed legislation could pose a serious threat to Africa’s exports to the US and would for the post-2015 period see a number of high-profile countries lose their eligibility status under the Act. Also included is an extension of trade preferences to other least-developed countries (such as Bangladesh and Cambodia) through an extension of the US GSP, which would erode current AGOA preferences especially in the critical textile sector.

This paper provides an overview of the current AGOA legislation and tracks legislative amendments over its first decade. This is followed by an analysis of African exports to the US, with a more detailed focus on three sample sectors (the automotive sector, the clothing manufacturing sector and the fruit and fruit juice sector) that benefit from AGOA and which are of relevance to SACU. A review of trade between SACU member states and the US (bi-directional) reveals that most SACU exports enter the US duty-free (mostly under AGOA, but also in other duty-free categories), whereas SACU imports from the US are still to a significant extent subject to tariff barriers. The paper concludes by reviewing the proposed legislative amendments that are currently being considered by the US Congress, some of which are likely to have a significant impact on current recipients of AGOA preferences.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The current Round of trade negotiations is the first ‘Development Round’. Given the challenges of addressing development issues in the context of trade negotiations in the WTO which is not a development institution it should not be surprising that the current negotiations are proving extremely difficult.

The WTO remains however the core of the rules-based system of international trade governance providing also the rules for RTAs that are still growing rapidly both in number and in scope and coverage.

The WTO was established in 1995 as the institutional anchor of the multilateral trading system. Since then significant developments have taken place on the trade agenda as well as in the participation of developing countries in the WTO.

This collection of papers provides an African perspective on the first decade of the WTO. Substantive trade issues such as agriculture remain despite their declining importance in terms of overall economic activity even in African countries of key importance to Africa.

Key issues on the agriculture agenda are not addressed on the Regional Trade Arrangement (RTA) agenda and so the WTO remains the only forum within which to address these. Africa is still engaging at the margins of the international economy and this collection of papers explores some of the challenges as well as prospects for Africa within the WTO.

© 2009 Trade Law Centre for Southern Africa

Publication of this book was made possible by the support of the Trade Law Centre (tralac) and the Swedish International Development Cooperation Agency (Sida). The views expressed by the authors are not necessarily the view of any of these institutions.

Readers are encouraged to quote and reproduce the material contained in these publications for educational, non-profit purposes, provided the source is acknowledged. Please contact us to obtain authorisation for reproducing this material.

The impact of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) on access to essential medicines in the developing world is an issue that has gripped stakeholders for years. The landmark Doha Declaration on TRIPs and Public Health, the 30 August Agreement of the WTO General Council (2003), and most recently, the December 2005 Decision of the TRIPs Council to permanently amend Article 31 of TRIPs, have increased the legal certainty on flexibilities available to developing countries. These developments have been criticised as remaining insufficient to address concerns about drug prices, and consequently, increased access to treatment for the poor. Instead of focusing on the debate above, this paper examines the degree to which countries in eastern and southern African have utilised the flexibilities contained in the 30 August Agreement to increase access to treatment in their countries. Three countries were chosen for their diversity in pharmaceutical manufacturing capacity and developmental status: South Africa, Kenya and Zambia.

The paper further examines the use of competition law and policy as a tool for reducing prices and consequently increasing access to essential medicines and points out the advantages to developing countries of using competition law and policy: first, the TRIPs Agreement accords member countries considerable flexibility in implementing competition law and policy most appropriate for its purposes; second, countries have leeway to define what constitutes anti-competitive behaviour; third, competition law and policy is well suited to implementation by an independent competition authority vested with strong investigative powers; and finally, competition law and policy has been successfully employed by South African activists and stakeholders to reduce the prices of essential medicines.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

Quotas to restrict imports of textiles and clothing into developed countries, notably Europe and the United States, have been in place for at least the past four decades. During the early phases of quotas these were imposed arbitrarily by importing countries, without any kind of formal structure or explicit multinational agreement and coordination.

This paper tracks developments of the global textile and clothing quota regime from its early stages in the 1960s to the final integration of the sector into world trade on 1 January 2005. This is followed by a brief analysis of trends in textile and clothing trade, focusing on key markets in general, and that of the United States in particular, while highlighting the importance of the sector for developing countries. With the Agreement on Textiles and Clothing (ATC) likely to cause substantial shifts in both trade and production within the sector, with a resultant range of economic impacts, the paper concludes by outlining key outcomes that can be expected in the post-quota environment.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.