News Archive August 2017

2017 Annual and out-of-cycle AGOA eligibility reviews: Transcripts from the Public Hearings

The Trade Preferences Extension Act (TPEA) of 2015, which extended the AGOA trade preference program through 2025, requires that the Administration annually publish a Federal Register notice announcing the Country Eligibility Review and a request for public comment whether beneficiary sub-Saharan African countries are meeting AGOA’s eligibility requirements.

The TPEA also requires that the AGOA Subcommittee of the Trade Policy Staff Committee (TPSC) hold a public hearing to receive testimony regarding the eligibility of countries under AGOA. This was the purpose of the hearing on August 23, 2017, which was also announced in the Federal Register notice published on July 11, 2017.

On June 20, 2017, the Administration published a Federal Register notice announcing the initiation of an out-of-cycle review to determine whether Rwanda, Tanzania, and Uganda are meeting the AGOA eligibility requirements in response to a petition filed by the Secondary Materials and Recycled Textiles Association, or SMART.

Rwanda, Tanzania, and Uganda are also subject to the AGOA Annual Review, to determine whether they are meeting all of the AGOA eligibility requirements and not only those raised by SMART in its petition. The public hearing for the out-of-cycle review of the three countries was held on July 13, 2017.


Annual Review of the eligibility of the Sub-Saharan African countries to receive the 2018 benefits of the AGOA

Oral testimony by Ms. Celeste Drake, American Federation of Labor & Congress of Industrial Organizations (AFL-CIO)

I thank you for your consideration of the AFL-CIO’s petitions regarding Swaziland’s and Mauritania’s failure to establish or make continual progress toward establishing internationally recognized worker rights pursuant to Section 3701(1)(F) of the United States Code and for the opportunity to testify today.

We note that progress has been made in Swaziland since we initially filed our petition, including the registration of TUCOSWA, a union federation, the release of jailed union activists, and amendments to the labor law. This is very clear evidence that AGOA conditionality, once utilized, can play a very important role in ensuring respect for workers’ rights.

Additionally, after we filed our pre-hearing brief, Parliament passed and the King approved revisions to the Pubic Order Act and the Suppression of Terrorism Act., 

As to these laws, we understand that improvements were made that responded to some of the unions’ concerns. However, since neither the AFL-CIO nor our partners in Swaziland have had an opportunity to actually review the new legislation, we will reserve judgment on them until we can review them. We will provide our analysis on these laws in our post-hearing brief, and we may accordingly revisit our ultimate recommendation regarding the reinstatement of AGOA benefits for Swaziland.

Today, however, I would like to provide a brief update on Swazi laws and practices that remain inconsistent with internationally recognized worker rights.

In 2014, President Obama withdrew Swaziland’s AGOA eligibility because, despite extensive consultation and engagement, Swaziland had failed to demonstrate progress toward protecting freedom of association and the right to organize.

“Of particular concern,” wrote the United States Trade Representative’s Office at the time, was “Swaziland’s use of security forces and arbitrary arrests to stifle peaceful demonstrations.”

Unfortunately, despite other recent legislation, Swaziland’s Public Service Bill of 2015 remains out of compliance with international norms. The law continues to interfere with the right of working people to organize and act together to defend their interests, and the government had ignored TUCOSWA’s recommendations to fix it.

Moreover, the Government of Swaziland continues to brutalize workers and interfere with legitimate trade union activities. In April 2016, the police commissioner issued a statement urging the police to kill trade unionists on sight. This vicious directive cannot be dismissed as mere hyperbole given that the police have apparently taken the commissioner’s anti-worker attitude to heart.

In August and September of 2016, police attacked striking workers at Swaziland plantations, forcing 30 to seek medical treatment, including 8 who has suffered fractured bones. In October 2016, police assaulted union activist Samkelisiwe Gladys Matsebula. The assault included placing a plastic bag over her head, an act which under U.S. law would be treated as attempted murder, and it required her eventual hospitalization. Whether the police were actually trying to end her life or just trying to scare her into thinking so is immaterial. The terror inflicted is the same.

These events demonstrate an utter lack of respect for internationally recognized worker rights, not progress toward establishing them.

Further, it is clear and alarming evidence that the Code of Good Practice on Protest and Industrial Action is not yet being fully respected by the authorities. It is clear that frontline police forces are not appropriately informed, trained, or monitored for use of best practices.

Apart from perpetrating violence against working people, the Swazi government also continues to erect barriers to worker organization. In June 2016, the Commissioner of Labor interfered with the recognition of the Amalgamated Trade Unions of Swaziland by urging an employer, Swaziland Meat Industries, in writing not to recognize the union.

In April of this year, the commissioner doubled down on his effort by meeting with some ATUSWA members, urging them to leave ATUSWA in order to revive a now defunct union.

The government has also supported an apparently yellow union, FESWATU, in an apparent effort to weaken and marginalize TUCOSWA. The union, mostly active in the timber and textile sectors, has grown not by member organizing but largely through deals cut directly with employers.

The union’s publications make it clear that it supports the monarchy and will not cause problems for employers.

Regardless of your determination of AGOA benefits, we urge the U.S. government to continue engagement with Swaziland through monitoring and assistance as it has yet to demonstrate compliance with the rights to freedom of association and collective bargaining in practice.


Public Hearing to review the Republic of Rwanda’s, United Republic of Tanzania’s, and Republic of Uganda’s eligibility to receive the benefits of the AGOA

Introduction by Ms. Constance Hamilton, Assistant U.S. Trade Representative for African Affairs and Chair of the AGOA Implementation Subcommittee

On March 21, 2017, the Secondary Materials and Recycled Textiles Association, SMART, submitted a petition to USTR requesting an out-of-cycle review to determine whether Kenya, Rwanda, Tanzania, and Uganda are meeting the AGOA eligibility criteria.

The SMART petition asserts that a March 12, 2016 decision by the East African Community which includes these countries to phase in a ban on imports of used clothing and footwear is imposing significant economic hardship on the U.S. used clothing industry and is in violation of the AGOA eligibility criteria of making progress to establishing a market-based economy and eliminating barriers to U.S. trade and investment.

In response to the SMART petition, USTR determined that an out-of-cycle review of Kenya’s AGOA eligibility is not warranted at this time due to recent actions Kenya has taken, which include reversing tariff increases effective July 1, 2017, and committing not to ban imports of used clothing.

We will continue to closely monitor Kenya’s actions to ensure that Kenya follows through on its commitments.

With respect to Rwanda, Tanzania, and Uganda, USTR determined that there are exceptional circumstances warranting an out-of-cycle review of these countries’ AGOA eligibility, which is the subject of today’s hearing. Notably, despite robust engagement to address concerns related to the decision to phase in a ban on imports of used clothing since it was first proposed in 2015 and memorialized in 2016, Rwanda, Tanzania, and Uganda continue to implement the ban, which, as I have noted, SMART contends is having a negative impact on U.S. trade and investment.

In today’s testimony we will hear that the partner states of the East African Community are committed to the U.S.-EAC Trade and Investment Partnership, where matters such as those subject to today’s hearing should be discussed and resolved.

We agree. We note that these matters have been discussed at length within the context of the Trade and Investment Partnership and have not been resolved, which is why SMART filed its petition and why we are holding this hearing today.

This is the first petition received requesting an AGOA out-of-cycle review. This hearing is being held to gather information regarding the issues raised in the petition.

Oral testimony by Hon. Amelia Kyambadde, Minister of Trade, Industry and Cooperatives of Uganda and Chair of the Council of Ministers in EAC

As you are all aware, East African Community attaches great importance to the trade and investment relations with the U.S. as reflected in the Trade and Investment Framework Agreement and AGOA that we have been negotiating for some time.

The Trade and Investment Framework has been negotiated between U.S. and East Africa for some time, and we are in the final stages. And we are committed. We are pledged to continue nurturing these initiatives, including adhering to the objectives stipulated under those schemes which would lead to mutually beneficial, sustainable development outcomes for our country and also for U.S.

EAC is a regional economic community of 169 million people currently operating a common market with a harmonized trade regime. I would like to state our response to this petition.

The Community as a key holder wishes to state that industrialization is a strategic pillar of EAC integration. And that is why the heads of state decided that textiles and footwear manufacturing is a priority. The decision did not slap a ban on the importation of textiles but is an initiative to promote the textile and footwear industry while progressively phasing out used textiles on a gradual basis.

The common external tariff is compliant with the WTO requirements in regard to tariff binding, and the two trade policy reviews undertaken by the WTO in 2006 and 2012 fully endorsed the EAC trade regime as satisfactory and compatible with the World Trade Organization. The rate on used clothing was thereafter revised downwards to 35 percent or 0.20 dollars after realizing that the rise of the rate would negatively impact on the garment sector in the region.

It should be noted that the adoption of specific rate alternative, the ad valorem rate, was to address the challenges of valuation of used clothing. The review of the specific duty threshold from $0.20 to 0.40 per kilogram while maintaining the 35 percent was not a tariff increment but a realignment made after 11 years to reflect the realistic landing price of used clothing to be compatible with the ad valorem rate of 35 percent.

The review also covered chicken and rice. It is not only used clothing. Chicken and rice where the rates were revised from 100 percent to $200 per metric ton, to 100 percent or $450 per metric ton, and from 75 percent or 200 per metric ton, to 75 percent or $335 per metric ton respectively because we wanted to promote our industry. Other items such as cement, prime coats, and matchboxes were dropped from the sensitive list.

So it does not only apply to secondhand clothes. The sensitive rate on worn clothing is not discriminatory to imports from USA but applies to all imports of used clothing from all countries globally, globally. EAC is desirous of job creation that will arise from revamping its textile footwear manufacturing value chain and income growth of the people involved in cotton growing, ginning, weaving, garment manufacturing, leather tanning, shoemaking, and retail business. That’s the value chain. And all these are jobs. The fear of environmental impact caused by the discarding of used clothing in U.S. is equally concern of EAC since eventually the used clothes will also be discarded after use in the East African Community.

East African Community has export promotion schemes where tax incentives are accorded to manufacturers for export, particularly apparel and garments for AGOA. Development of the local textile industry do not undermine the market-based economy stipulated under AGOA as it will boost more production for export and local market that will see EAC countries enhance its export values to U.S.

East African Community countries import a range of goods from U.S., including capital goods, plants and machinery, agrochemicals, aircrafts and parts, petroleum equipment, and these products do not attract duty. It is a thriving business of the importation of new garments and apparel into East Africa from U.S. and businesswomen and other business communities. All EAC countries have established open market-based economies as provided in the treaty. The prohibition of importation of used undergarments in the EAC is for hygienic purposes, and we do not allow it. We have to ban those underwear.

A review is being undertaken of the tariff structure and rates to align it to the economic environment. This review would cover all products, including used clothing. Stakeholders are being consulted, including those involved in the trade of used clothing. The review will be completed in September 2017. But I must state that EAC is committed, fully committed to the ongoing trade and investment partnership where such matters should be discussed and resolved.

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Interim Economic Partnership Agreement between the EU and the Eastern and Southern African (ESA) States: Report by the WTO Secretariat

Trade Environment

The Interim Agreement establishing a Framework for an Economic Partnership Agreement between the EU and the Eastern and Southern African (ESA) States (Madagascar, Mauritius, Seychelles and Zimbabwe) is the EU’s 25th RTA notified to the WTO. Among the ESA States for whom the Agreement is in force, for Madagascar it is the 2nd RTA notified, for Mauritius the 3rd RTA, the first for the Seychelles and the 4th for Zimbabwe; the other ESA States the Comoros and Zambia, did not sign the Agreement although discussions with the Comoros on signature are continuing.

The EU is the world’s second largest merchandise trader (excluding intra-EU trade) both in exports and imports with exports valued at 2,415 billion euros and imports at 2,188 billion euros in 2013. Among the ESA States the largest trader is Mauritius, ranked 97th in the world in terms of global exports and 99th in imports, followed by Zimbabwe, ranked 98th in world exports and 108th in imports. Madagascar is ranked as the world’s 107th exporter and 117th importer of merchandise, while the Seychelles was the world’s 138th and 140th exporter and importer respectively.

Trade with the European Union is important for the economies of the ESA States. In 2014 the European Union was the largest destination for merchandise exports from three of the four ESA States (Mauritius, 49.1% of its exports, Madagascar, 49.8% and the Seychelles, 59.3%). It is the third largest export destination for Zimbabwe (5% of its exports). In 2014 the EU was the largest source of merchandise imports for the Seychelles (33.6% of its imports), second largest for Mauritius (20.8%) and Madagascar (15.6%) and third largest for Zimbabwe (albeit representing only 8.6% of its imports). For the EU Mauritius is the 75th largest source of imports, followed by Madagascar at 78th, Zimbabwe at 91 and Seychelles at 109th large source of imports. In terms of EU exports, Mauritius is its 91st largest merchandise export market, followed by Madagascar (112), Seychelles (136) and Zimbabwe (139).

In terms of structure, while the European Union’s exports and imports are dominated by manufactured goods, with the exception of Mauritius whose exports of manufactures account for over 68% of total merchandise exports in 2015 and to some extent Madagascar (29% of exports), agriculture and fuels and mining form a more important share of total exports for the ESA States. Agriculture accounts for 29% of total merchandise exports for Madagascar, 43% for Zimbabwe and as much as 61% for the Seychelles, while fuels and mining exports are important for Madagascar (35%). Imports by the ESA States are dominated by manufactured products, at around 55% of total imports.

Global and bilateral merchandise trade between the EU and the ESA States between 2002 and 2014: The EU has, for much of the period, had a trade deficit in its global exports, which widened steadily between 2004 and 2008. Since 2009 trade has been more balanced. With regards to its ESA partners, however, with the exception of the Seychelles, the EU has maintained a deficit in its trade; the deficit with the Seychelles declined between 2002 and 2006 before moving into surplus until 2013 since when it has been in deficit again. All the ESA parties have also maintained deficits in their global trade during the period; Zimbabwe’s trade in particular has been volatile.

Commodity structure of trade among the Parties and imports and exports to the world in the period 2009-11, on the basis of Harmonized System (HS) sections: Over this period, the EU’s four largest export product categories – machinery, chemicals, vehicles and base metals – made up 73% of its total exports and accounted for 61% of Madagascar’s imports from the EU; 46% of Mauritius’s imports from the EU; 65% of Seychelles’ and Zimbabwe’s imports from the EU. Other key imports by the ESA States from the EU include textiles by Madagascar (12% of total imports), live animal products by Mauritius (17%), while base metals were not a significant import by Zimbabwe. Over the same period, the five largest export product categories from Madagascar – textiles, vegetable products, minerals, animal products, and prepared foods – made up 74% of its total exports and accounted for 89% of the EU’s imports from Madagascar. The two largest export categories from Mauritius – textiles and prepared foods – made up 72% of its total exports and accounted for 81% of the EU’s imports from Mauritius. However, the structure of exports for the Seychelles and Zimbabwe is different globally and with regard to the EU. While the two largest export categories from the Seychelles – textiles and live animals – made up 81% of its total exports, 90% of the EU’s imports from the Seychelles were in prepared foods (fish and fisheries products), while of the four largest export categories from Zimbabwe which made up 70% of its total exports, only textiles and base metals (67%) were key EU imports.


Characteristic Elements of the Agreement

The Agreement was signed by the Parties on 29 August 2009 and provisionally applied since 14 May 2012. It was notified to the WTO on 27 July 2012 under Article XXIV:7 of the GATT 1994 and its Understanding.3 The Agreement aims to contribute to the reduction and eventual eradication of poverty through a strengthened and strategic trade and development partnership consistent with the objective of sustainable development, the Millennium Development Goals and the Cotonou Agreement. Other goals of the Agreement include: to promote regional integration, economic cooperation and good governance in the ESA region and its gradual integration into the world economy; structural adjustment of the ESA economies and diversification; and improved trade policy and trade related capacity (Article 2). Article 3 aims to establish an agreement consistent with GATT Article XXIV and to establish the framework, scope and principles for further negotiations on the basis of proposals already submitted and for potential negotiations on other issues as identified in the Cotonou Agreement and of interest to the Parties.

Article 4 of the Agreement permits ESA LDCs that have not yet submitted tariff reduction offers to do so after signature of the Interim Agreement on the same or flexible conditions and to benefit fully from its provisions. In addition to Zambia and the Comoros, who have made offers (as in Annex II) but have not yet signed the Agreement, the ESA LDCs are Ethiopia, Djibouti, Eritrea, Sudan and Malawi, none of whom have submitted a market access offer yet. All ESA States are eligible to accede to the Agreement (Article 66). Furthermore, the Agreement permits the ESA States to maintain regional preferences among themselves and other African countries and regions with no obligations to extend them to the EU.

The Agreement contains six Chapters and four annexes and two protocols all of which form an integral part of the Agreement.

Chapter V of the Interim Agreement contains a rendez-vous clause to build on the Cotonou Agreement and continue negotiations to conclude a full and comprehensive EPA covering the following areas: customs and trade facilitation; outstanding trade and market access issues, including rules of origin and other related issues and trade defence measures, including outermost regions; technical barriers to trade and sanitary and phytosanitary measures; trade in services; trade related issues (competition policy; investment and private sector development; trade, environment and sustainable development; intellectual property rights; and transparency in public procurement); agriculture; current payments and capital payments; development issues; cooperation and dialogue on good governance in the tax and judicial area; an elaborated dispute settlement mechanism, institutional arrangements; and any other areas that the Parties find necessary, including consultations under Article 12 of the Cotonou Agreement.

Provisions on Trade in Goods

Import duties and charges, and quantitative restrictions

Chapter II of the Agreement covers trade in goods. The Agreement aims to provide full duty free6 and quota free market access into the EU for goods originating in the ESA States on a secure, long term and predictable basis (Article 5). It also aims to promote trade between the parties and export led growth to enable the integration of the ESA economies into the global economy; to progressively and gradually liberalize the ESA goods market as established by the Agreement; and to preserve and improve market access conditions to ensure that all ESA States are better and not worse off.

The commitment to liberalize trade in goods only applies to the signatory ESA States listed in Annex II to the Agreement and to the EU market vis a vis these States. If a signatory ESA State not mentioned in Annex II wishes to join Chapter II, it shall notify its intention to the EPA Committee which has the competence to amend Annex II and may decide on any transitional measures or amendments necessary to facilitate the inclusion of the State under Annex II.

Tariff reductions are to be applied successively on the basic customs duty indicated in the Parties’ tariff schedules to the Agreement. The EU implemented its commitments upon entry into force of the Agreement (2012), while the ESA States will eliminate tariffs in stages by 2022. Fees and charges under Article 10 shall be limited to the approximate cost of services rendered and shall not represent an indirect protection for domestic products or a taxation of imports for fiscal purposes; they will be based on specific rates. Under Annex III the Seychelles had maintained price controls on imports as an exception for 10 years on national treatment on internal taxation and regulation; Seychelles has however indicated that with the promulgation of the Customs Management (Tariff and Classification of Goods) Regulations 2013, it has abolished the price control regime.

The Parties also agree not to increase their applied customs duties on products imported from the other Party (Article 14). Article 16, furthermore, commits the European Union to accord to signatory ESA States any more favourable treatment applied as a result of its free trade agreements with third parties after the signature of the Agreement. With regard to the subjects covered by the Agreement, the signatory ESA States will accord to the EU any more favourable treatment applied as a result of any new free trade agreement with any major trading economy after signing the Agreement. However, the Chapter does not oblige the Parties to extend reciprocally any preferential treatment provided by any Party to third parties through a free trade agreement on the date of signature of the Agreement. The commitments to provide favourable treatment to the EU will also not apply in respect of trade agreements they have with other African countries and regions.

Article 17 prohibits quantitative prohibitions and restrictions on imports between the Parties, other than customs duties, taxes, fees and other charges under Article 7, whether through quotas, import licences or other measures. These shall be eliminated upon the entry into force of the Agreement and no new measures shall be introduced. National treatment shall also be provided for imported products originating in the other Party, which shall not be subject either directly or indirectly to internal taxes or other internal charges of any kind in excess of those applied, directly, or indirectly, to like national products. The Parties will also not apply internal taxes or other internal charges that afford protection to national production (Article 18). Imported products originating in the other Party will be accorded treatment no less favourable than that accorded to like national products in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. No Party may establish or maintain any internal quantitative regulation for the mixture, processing or use of products in specified amounts or proportions which requires, directly or indirectly, that any specified amount or proportion of any products which is the subject of the regulation must be supplied from domestic sources. No internal quantitative regulations may be applied so as to afford protection to national production. Article 18, however, does not prevent the payment of subsidies exclusively to national producers, including payments derived from the proceeds of internal taxes or charges applied consistently with the provisions of the Article and subsidies effected through government purchases of national products. The EPA Committee may also authorize a signatory ESA State to depart from the provisions of Article 18 to promote the establishment of domestic production and protect infant industries. In this respect the development needs of signatory ESA States and especially the needs and concerns of ESA LDCs will be taken into account. Annex III lists provisional derogations which are granted to the interested signatory ESA States for the periods of time indicated in the Annex.

Liberalization of trade and tariff lines

Annex I to the Agreement states that the EU will eliminate tariffs on all products of HS Chapters 1-97 except Chapter 93 (arms and ammunition), originating in an ESA State, upon entry into force of the Agreement. Chapter 93 will remain subject to the MFN rate of duty. The EU eliminated duties on products under HS 1006 from 1 January 2010 with the exception of HS 10061010, for which duties were eliminated upon entry into force of the Agreement. Sugar imports from the ESA were subject to the provisions of Protocol 3 of the Cotonou Agreement until 30 September 2009.

In 2012, since when the Agreement has been applied, around a quarter (24.6%) of the EU’s tariff was duty free on an MFN basis.9 This corresponded to an average of 17.2% of its imports from Madagascar, 8.5% from Mauritius, 5.3% from the Seychelles and 24.5% from Zimbabwe for the period immediately preceding entry into force (2009-2011). As of 2012, a further 7,058 lines were liberalized by the EU for imports from these ESA Parties, with 18 lines (0.2% of the tariff) remaining dutiable. As a result of the liberalization, 100% of EU imports from the ESA States during 2009-11 are covered and entered the EU market free of duty.

According to Annex II to the Agreement, tariff elimination by the ESA Parties began in 2013 and is expected to be completed by 2022.

6% (391 lines) of Madagascar’s tariff was duty free for imports on an MFN basis in 2014, corresponding to 10.5% of its imports from the EU during 2011-2013.10 In 2014 Madagascar liberalized 1,331 lines (20.5% of the tariff) for imports from the EU, corresponding to 26.7% of its EU imports during 2011-2013. The remainder of its tariff liberalization is to take place in 2022 with 3,972 lines expected to be liberalized in that year; these correspond to 52.4% of Madagascar’s imports during 2011-2013 from the EU. At the end of implementation, Madagascar will maintain tariffs on 812 lines (12.5% of the tariff) for imports from the EU, corresponding to 10.4% of its imports from the EU during 2011-2013.

88.6% of Mauritius’s MFN applied tariff was duty free for imports from all sources, corresponding to 93.7% of its total average annual imports from the EU during 2009-11. Under the Agreement in 2013 Mauritius liberalized tariffs on an additional 35 lines for imports from the EU, corresponding to 0.6% of its imports from the EU during 2009-11. Further liberalization took place in 2017 (45 lines, corresponding to 0.5% of imports from the EU during 2009-11) and scheduled for 2022 (526 lines which accounted for 3% of Mauritius’ imports from the EU during 2009-11). Once the Agreement is fully implemented, Mauritius will maintain tariffs on 110 tariff lines (1.8% of the tariff), corresponding to 2.2% of its imports from the EU during 2009-11.

Seychelles started to implement its commitments under the Agreement in February 2013. In 2013 around 84.3% of its tariff (4,686 lines) were already duty free on an MFN basis and corresponded to 93.7% of Seychelles imports from the EU during 2010-2012. In 2013 tariffs on a further 180 lines were eliminated for imports from the EU, corresponding to 0.9% of imports from the EU during 2010-2012. Further liberalization took place in 2017 (88 lines), and is scheduled for 2022 (345 lines). At the end of implementation, Seychelles will maintain tariffs on 257 lines (4.63%) of the tariff, corresponding to 3.2% of its imports in 2010-2012 from the EU.

In 2012 Zimbabwe provided duty free access for 663 lines (10.8% of the tariff) on an MFN basis. This corresponded to 33.2% of its total average annual imports from the EU during 2014-2016. Under the Agreement Zimbabwe liberalized a further 37.7% of the tariff (2,307 lines) for the EU in 2012, corresponding to 20.5% of its imports from the EU during 2014-16. A further 2,284 tariff lines are due to be liberalized in 2022, following ten years of implementation, and corresponding to 30.1% of Zimbabwe’s imports from the EU during 2014-16. Once the Agreement is fully implemented, Zimbabwe will maintain duties on 14.2% of its tariffs (868 lines) for imports from the EU; these correspond to 16.2% of its imports from the EU in 2014-16.

Sector-Specific Provisions of the Agreement

Sugar

Under EU policy its customs duties on imports from the ESA States of products under HS 1701 were eliminated on 1 October 2009. Until that time and in addition to the tariff rate quota (TRQ) under the Sugar Protocol, a TRQ at zero duty of 75,000 metric tonnes was provided for the marketing year20 2008/09 for products under HS 1701, white sugar equivalent, from the ESA States. Import licences were to be granted for the additional TRQ only if the importer agreed to purchase the products at a price at least equal to the guaranteed prices fixed for sugar imported into the EU under the Sugar Protocol.

Under paragraph 5 of the Annex, the EU could during the period 1 October 2009-30 September 2015, raise import duties to the MFN rate for sugar imported in excess of a certain quantity from the ESA States which were deemed to cause a disturbance in the EU sugar market. The EU confirms it has never taken such a measure. UN recognized least developed countries will not be subject to these provisions but imports from these countries will nevertheless be subject to the safeguard clause under the Agreement. Any measure taken pursuant to paragraph 5 shall be notified and subject to periodic consultations in the EPA Committee. The EU indicates that the procedure ended on 30 September 2015. For the period from 1 October 2015, in applying the safeguard measures under Article 21 of the Agreement for products under HS 1701, disturbances in the market were deemed to arise if the EU market price of white sugar fell during two consecutive months below 80% of the EU market price during the previous marketing year. The EU indicates that such measures have never been applied.

Imports of products under HS 17049099, 18061030, 18061090, 21069059 and 21069098 from the ESA States were subject to a special surveillance mechanism from 1 January 2008 to 30 September 2015 to ensure that the arrangements described above were not circumvented. A cumulative increase in imports from the ESA States by over 20% in volume during 12 consecutive months compared to the average annual imports over the three previous 12 months, will be analysed by the EU and if it considers that there is circumvention, it could suspend preferential treatment and impose the MFN tariff. The EU indicates this has never happened. The conditions for granting an import licence for products under HS 1701 between 1 October 2009 and 30 September 2012 were that the importer had to purchase the products at a price not lower than 90% of the reference price set by the EU for the relevant marketing year. The reference price has been replaced by a reference “threshold” and is currently €404 per tonne.

Fisheries

Chapter III recognizes that fisheries constitute a key economic resource for the ESA region, make a significant contribution to the economies of the ESA States and have great potential for future regional economic development and poverty reduction. Fisheries are also an important source of food and foreign exchange. The Parties agree to cooperate for the sustainable development and management of the fisheries sector in their mutual interest, taking into account the economic, environmental and social impacts. They also agree that the appropriate strategy to promote economic growth is through increasing value added activities in the sector.

The objectives of economic cooperation, which covers marine and inland fisheries and aquaculture, are to promote sustainable development and management of fisheries; promote and develop regional and international trade based on best practices; create an enabling environment, including infrastructure and capacity building for the ESA States to cope with stringent market requirements for industrial and small scale fisheries; support national and regional policies aimed at increasing the sector’s productivity and competitiveness; and build links with other economic sectors.

Marine Fisheries

Economic cooperation aims to ensure the sustainable exploitation and management of fisheries resources as a strong basis for regional integration, given that fish species are shared among the ESA States and no individual State has the capacity to ensure sustainability of the resource; ensure more equitable benefit sharing from the sector; ensure effective monitoring control and surveillance (MCS) necessary for combating illegal, unreported and unregulated (IUU) fishing; and promote effective exploitation, conservation and management of living marine resources in the exclusive economic zone (EEZ) and waters in which the ESA States have jurisdiction under international instruments, for the mutual social and economic benefit of all the Parties. Cooperation will include fisheries management and conservation issues, vessel management and post-harvest arrangements and financial and trade measures and development of fisheries and fishery products and marine aquaculture. The EU will contribute to mobilizing resources for these areas of cooperation, including support for regional capacity building as well as areas identified in the section on financial and trade measures and infrastructure for fisheries and marine aquaculture.

Inland fisheries and aquaculture development

Cooperation aims to promote sustainable exploitation of sustainable exploitation of inland fisheries resources, enhance aquaculture production, remove supply side constraints, improve fish and fish product quality to meet SPS standards in the EU, improve market access to the EU, address intra-regional trade barriers, attract capital inflows and investment, build capacity and enhance access to financial support for private investors. The EU will contribute to capacity building and export market development; infrastructure and technology development; legal and regulatory support; investment and financial support; and socio-economic and poverty alleviation measures.

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tralac’s Daily News Selection

International trade statistics: Continued, albeit slower, G20 merchandise trade growth in Q2 2017 (OECD)

G20 international merchandise trade (seasonally adjusted and expressed in current US dollars), increased for the fifth consecutive quarter in the second quarter of 2017, though at a slower pace than over the previous three months. G20 export growth slowed to 1.4% in the second quarter of 2017, compared with 3.4% in the first quarter of 2017 while imports increased by 1.7%, down from last quarter’s 4.2%. G20 merchandise trade remains around 10% lower than recent highs in 2014. There were, however, significant divergences across regions.

Simon Freemantle: BRICS 2017 – poised for new relevance (Standard Bank)

For Africa, the rampant post-2000 momentum of trade growth with the BRICS has certainly ebbed. In 2016 total BRICS-Africa trade amounted to USD248bn, down from a peak of USD366bn in 2014. Notably, Africa’s exports to China have declined from a 2013 peak of USD113bn to USD55bn in 2016; while Brazil’s recent economic recession has precipitated a 70% decline in the value of its imports from Africa since 2013. However, though the BRICS heads of state will meet with these challenges in mind, there remains clear and growing space for the BRICS to continue to nurture the enthusiasm and developing world emphasis that their formation arose to represent.

First, the BRICS economies have likely reached a cyclical bottom in their respective economic cycles, with average growth of 3.2% expected this year. And the proportionate global relevance of the BRICS has continued to rise: between 2009 and 2016 the BRICS collective share of global GDP increased from16% to 22%. Over the past decade the BRICS have accounted for nearly 50% of the world’s GDP growth. Second, though trade values have declined, the BRICS are still a collectively profound trading partner for developing economies in general and Africa in particular. Recent declines in BRICS-Africa trade must be seen within the context of a far more profound drop-off in, for instance, US-Africa trade since 2012. [BRICS Think Tank Council: Realising the BRICS long-term goals – road-maps and pathways]

India-Tanzania Joint Trade Committee: highlights from the just-concluded Fourth Session (Ministry of Commerce, India)

It was mentioned that Tanzania is one of the most important countries in Africa in so far as India’s bilateral co-operation in various sectors is concerned. With an investment of $2.2bn, Tanzania is among the top 5 investment destinations for India. The Indian side conveyed to the Tanzanian side that the potential areas for Tanzania in India include light oils and petroleum or bituminous minerals, motor cars and vehicles, medicaments etc. Similarly, metals and minerals, dried cashew nuts in shells from Tanzania are required in India. During the discussions, it was mentioned that long-term (at least one year visas) for reputed business companies with multi-entry facility will be helpful to promote investments and business collaboration between the two countries.

41st World Tourism Conference: Do not ignore African tourists, they are the future – UNCTAD’s Mukhisa Kituyi (New Times)

“The fastest growing tourism is intra-African tourism. Movement of tourists from one African country to another. There are very many positive components about Intra-African tourism, one is that it is not seasonal. It is 12 months a year, conference tourism, medical tourism, educational tourism and business visit. This sustains the industry better than the occasional seasonal tourism,” he said. According to statistics from UNCTAD, tourists from the continent make up a total of 44% of the total visitors received in the continent and this is expected to grow to 50 per cent in coming years. “Intra-African tourism grew from 34% to 44% of the total number of tourists in Africa. The projections are that it will be above 50% in the next 10 years,” Dr Kituyi said. [President Paul Kagame’s speech, COMESA to launch a regional tourism handbook]

Malawi: Stakeholders take stock of Malawi’s economic performance (IMF)

The IMF and the Government of Malawi co-sponsored a high-level international stakeholders conference (28-30 August, Lilongwe) aimed at taking stock of the objectives and performance under the recently completed Extended Credit Facility, and the lessons for future engagement with the IMF. Participants agreed that the ECF program broadly achieved its macroeconomic policy stabilization objectives, including reducing inflation and increasing international reserves, but fell short on achieving sustained and inclusive growth.

US AGOA poultry exporters struggle with SA’s empowerment provisos (Business Day)

US poultry producers nearly reached their full 65,000 ton quota of exports to SA under the Africa Growth and Opportunity Act in the year to end-March. However the start to the current year had been slow, the president of the USA Poultry and Egg Export Council, James Sumner, said on Tuesday on the sidelines of the biggest bi-annual conference in Brazil for the poultry and pork industries. Sumner said the start to the 2017-18 year had been slow due to the delay and confusion in issuing import quotas. [Outgoing economic counsellor sees big ‘untapped’ US-SA economic potential]

Zimbabwe-SA trade deficit widens by 15% (NewsDay)

Data gathered from the Zimbabwe Statistical Agency shows that Zimbabwe exported goods worth $1,1bn to South Africa between January and July against imports of $1,3bn, giving a trade deficit of $131m. Last year in the same period, trade deficit between two countries stood at $114m, with imports standing at $1,1bn against exports of $1,03bn. In total, Zimbabwe’s trade deficit narrowed by 21% to $1,2bn in the period under review, after imports amounted to $3,1bn while exports trailed at $1,9bn. Some of Zimbabwe’s major export markets in the period under review were Mozambique ($226m), United Arab Emirates ($85m), Zambia ($40m), Kenya ($16m) and Belgium ($13m). The country’s major import markets in the period under review were Singapore ($706m), China ($306m), Mozambique ($75m), Japan ($70m), India ($60m) and Mauritius ($59m).

Zimbabwe: Trade in Services (foreign affiliates statistics) report 2015 (pdf, ZimStat)

The Zimbabwe National Statistics Agency conducted the second Trade in Services (Foreign Affiliates Statistics) Survey in Zimbabwe in 2016. The survey collected data for the year 2015. The statistics on foreign affiliates largely could be used to monitor globalization and its impact on the national economy. The purpose and main objective of the survey was to establish the supply of services into Zimbabwe by foreign affiliates as well as to assess the economic effects of the operations of these affiliates. The statistical units covered in the survey were enterprises in Zimbabwe under foreign control. Selected findings: (i) The total turnover recorded by foreign affiliates in 2015 was $3.5bn. Foreign affiliates trading in services recorded a total turnover of $1.7bn in 2015. (ii) Gross output of foreign affiliates in the year 2015 amounted to $3.8bn. The gross output of foreign affiliates trading in services in 2015 was $2.1bn. (iii) Total value added from foreign affiliates amounted to $2.9bn in 2015. Total value added from foreign affiliates trading in services amounted to $1.7bn in 2015. [Companion report: Foreign private capital survey report 2015]

DRC temporarily bans import of key consumer goods (News24)

Authorities have banned imports of several popular consumer products in the west of the DRC for six months to fight smuggling, Trade Minister Jean-Lucien Busa said on Monday. “We have decided on the temporary restriction of imports in the western part of the country for six months of grey cement, sugar, beer and fizzy drinks in order to put an end to fraud and contraband,” Busa told AFP. The measure was also aimed at “protecting local industry in a crucial period of growth that risks being undermined by those who practice prices below production costs”, the minister said, stressing that he had not “turned to protectionism”.

Mozambican government should be transparent before creating sovereign fund – economist (Club of Mozambique)

Mozambican economist Tomas Selemane says that the Mozambican government must ensure transparency and accountability in its management of public resources before creating a sovereign fund with natural resource revenues. “I support the idea of creating a sovereign fund, but I would like to draw attention to the fundamental problems that need to be solved first: corruption, lack of transparency and the lack of reliable mechanisms for accounting for national assets in terms of mineral resources,” Selemane said. According to Selemane, a sovereign fund would be useless in a context where state resources are managed in an opaque manner and with impunity for the perpetrators of corruption.

Botswana: Government moots one-stop-shop for transport projects (Mmegi)

The Ministry of Transport and Communications is in the process of developing an integrated national transport policy that will unify all transport-related projects in the country. Director of Transport Planning and Policy, Orapeleng Mosigi said the policy is expected to be launched some time next year.

Modal choice between rail and road transportation: evidence from Tanzania (World Bank)

With firm-level data, this paper examines shippers’ modal choice in Tanzania. The paper shows that rail prices and shipping distance and volume are important determinants of firms’ mode choice. The analysis also finds that the firms’ modal choice depends on the type of transactions. Rail transport is more often used for international trading purposes. Exporters and importers are key customers for restoring rail freight operations. Rail operating speed does not seem to have an unambiguous effect on firms’ modal selection. [Companion paper: Rail transport and firm productivity: evidence from Tanzania (pdf)]

Concession model in question as RVR hands back assets (Business Daily)

A number of pressing questions still linger as Kenya joins the list of African states whose train concessions deals have failed after a complete take-back of its assets from the Rift Valley Railways tomorrow. Key to these is the probity of loans borrowed from international financial institutions, which include the World Bank and the AfDB. But first, the story of RVR’s sojourn in Kenya. [Kenya: New railway line expected to boost business and tourism in four counties]

Western, Central Africa regions move ahead on digital customs, e-commerce (WCO)

36 representatives from 20 Customs administrations of the region, Regional Intelligence Liaison Offices of Western Africa (Senegal) and Central Africa (Cameroon), African Alliance for E-Commerce, Express Industry and IT providers participated in the workshop. There was a clear emphasis towards moving to a paperless Single Window environment and eventually having an interconnectivity/interoperability of Customs IT systems/Single Windows for an efficient exchange of information (e.g., e-certificate of origin and e-phytosanitary certificate). The capture and use of new data sources from all economic operators in the E-Commerce supply chain for integrated risk management as a whole government approach was equally explored as a potential way forward. Being the first of its kind in the Region, the Workshop was very well received by participants and raised a lot of interest and robust discussions.

Today’s Quick Links:

Maputo International Trade Fair: (i) Botswana looks to boost exports to Mozambique; (ii) Portugal highlights importance of security in Mozambique business environment

Conference alerts: African Green Revolution Forum (4-8 September, Abidjan), Brazil-Africa Forum (23-24 November, Sao Paulo)

Ethiopian Airlines to fly to Sao Paulo nonstop

WTO chief says Brazil actively trying to lift restrictions on meat trade

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tralac’s Daily News Selection

30 Aug 2017
International trade statistics: Continued, albeit slower, G20 merchandise trade growth in Q2 2017 (OECD) G20 international merchandise trade (seasonally adjusted and expressed in current US dollars), increased for the fifth...
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Sustainable tourism – A tool for development and poverty eradication

Today, tourism generates 10% of the world’s GDP, one in every 10 jobs, and 30% of world trade in services. It is key to many countries’ economies and livelihoods.

The United Nations General Assembly has designated 2017 as the International Year of Sustainable Tourism for Development, underscoring its power to help eradicate poverty.

Tourism is also singled out in three of the 17 Sustainable Development Goals – part of an ambitious global plan adopted by the international community in 2015 that is setting the tone for development through to 2030. Specifically, tourism is tied to the goals on sustainable economic growth and decent employment, sustainable production and consumption, as well as the conservation and sustainable use of oceans.

The issue of how to link tourism and sustainable development is in focus this week at the 41st Annual World Tourism Summit. Hosted by Rwanda, one of East Africa’s premier tourism destinations, the international meeting runs from Monday to Thursday at the Kigali Conference Centre.

Organised by the Corporate Council on Africa and Africa Travel Association in collaboration with the Rwanda Development Board, the summit brings together African leaders, international investors and travel professionals from across the world to explore how tourism can spur economic growth and job creation across the continent.

The high-level conference will focus on innovative business models, new technologies and strategic partnerships in Africa and globally. It will also provide a platform to network and explore new tourism markets and products, including the promotion and preservation of Africa’s rich cultural heritage and wildlife.

“This is a great opportunity to present and review tourism on the continent. The sector’s growth presents enormous economic opportunities that spread throughout societies,” said UNCTAD Secretary General Mukhisa Kituyi.

“Africa’s tourism industry continues to flourish and supports more than 21 million jobs and, for the developing countries, tourism is a enormous tool for sustainable development,” added Dr. Kituyi.

UNCTAD’s Economic Development in Africa Report 2017: Tourism for Transformative and Inclusive Growth, examined the role that tourism can play in Africa’s development process. The report, released last month, concluded that tourism can be an engine for inclusive growth and a complement to development strategies aimed at fostering economic diversification and structural transformation within an appropriate policy context.


African tourists emerge as powerhouse for tourism on the continent, says UNCTAD report


“Tourism’s impact on the economic and social development of African countries can be huge. We must manage tourism properly in order to enjoy its fruits without leaving anyone behind,” said Dr. Kituyi. “To succeed, we must put in place adequate policies, forge public-private partnerships, ensure free movement as well as peace and security”.

Rwanda remains one of the world’s fastest-growing tourist destinations, second only to Southeast Asia, and recorded tourism revenue of more than US$400 million in 2016, up from US$370 million in 2015.

“Sustainable tourism must ensure viable, long-term economic operations, providing benefits that are distributed fairly among all stakeholders,” said Dr. Kituyi

On the sidelines of the summit, organisers in partnership with Facebook and Dignify Africa will be delivering training sessions to small and medium enterprises on how to leverage digital tools to grow their businesses.


Address by President Paul Kagame at the 41st World Tourism Conference

I would like to thank the Corporate Council on Africa, through the Africa Travel Association, together with the Rwanda Development Board, for organising this 41st World Tourism Conference.

Rwanda, like other countries on our continent, is keen to convert our favourable demographics into economic growth and prosperity.

The services sector, in particular tourism, provides some of the best employment opportunities for our citizens, and attractive careers for young people.

Already, this sector is Rwanda’s biggest foreign exchange earner, Clare gave the figures, but we can and need to do better. Harnessing the full potential of the tourism industry will require continued focus and investment on several fronts.

First, the efforts we are making in strengthening good governance and mobilising our population, enables us to properly manage both the environment that supports tourist attractions, as well as the revenue they generate.

Rwandans, especially those living around national parks and other attractions, have become indispensable to conservation.

This is because they understand the value of our natural resources, and benefit directly from higher incomes and community projects financed by park revenues.

The responsibility of government, and other players in the industry, is to continuously provide quality education and training, so that Rwandans can fully participate as professionals in tourism and associated sectors.

Second, we are investing heavily in services and infrastructure to support the development of the sector.

Our national carrier RwandAir continues to expand to destinations within Africa and beyond, and will soon have a more modern, efficient base when the new airport in Bugesera is completed.

We are also working to improve the road network and attract investments in conference and hotel facilities, such as this convention centre we are in today.

Third, we must take full advantage of new technology, particularly innovative digital platforms, to attract more visitors, offer new experiences, and provide better services.

I am happy to learn that several technology companies are represented here today. We look forward to partnering with you to take the industry to the next level.

As we work with the private sector to develop the tourism industry in Rwanda, we also want to strengthen collaboration within our region and across the continent.

The single tourist visa and passport-free travel between Kenya, Rwanda and Uganda, is already a reality. So is visa on arrival in Rwanda for all African nationals. We heard your concerns, Dr Kituyi, and here in Rwanda we have no such problems.

But we need even more cooperation on the continent, in order to increase the numbers of visitors, as well as facilitate trade and investment. Implementing existing agreements on open skies, and easing visa restrictions, are steps in the right direction.

I trust that you will discuss these and other pertinent issues during this conference. We look forward to working with you on solutions to advance tourism in Africa and beyond.

Source: Paul Kagame

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