News Archive September 2018

tralac’s Daily News Selection

South Africa’s August 2018 merchandise trade statistics show a R8.79 billion surplus from an upwardly revised R5.29 billion deficit in July and above market expectations. “We expect the deficit to have narrowed to R3.5bn, from R4.7bn in July. Bloomberg consensus expectations foresee a trade deficit of R1.8bn,” Standard Bank had said.

WTO downgrades outlook for global trade as risks accumulate (WTO)

Trade will continue to expand but at a more moderate pace than previously forecast. The WTO anticipates growth in merchandise trade volume of 3.9% in 2018, with trade expansion slowing further to 3.7% in 2019. The new forecast for 2018 is below the WTO’s 12 April estimate of 4.4% but falls within the 3.1% to 5.5% growth range indicated at that time. Trade growth in 2018 is now most likely to fall within a range from 3.4% to 4.4%. The updated trade forecast is based on expectations of world real GDP growth at market exchange rates of 3.1% in 2018 and 2.9% in 2019. This implies a ratio of trade growth to GDP growth of 1.3 in both years.

All geographical regions recorded positive year-on-year trade growth in both exports and imports in the first half of 2018, but some regions performed better than others. North America saw the fastest export growth during this period at 4.8%, followed by Asia at 4.2% and Europe at 2.8%. Exports of Other regions (comprising Africa, the Middle East and the Commonwealth of Independent States including associate and former member States) increased by 2.7% while those of South America were up 1.1%. Asia had the fastest import growth (6.1%) followed by South America (5.5%), North America (4.8%), Europe (2.9%) and Other regions (0.5%).

WTO agriculture talks: Members evaluate negotiating submissions, eyeing 2020 Ministerial (ICTSD)

The WTO’s agriculture negotiations resumed last week after the organisation’s annual August hiatus. While the discussions were mainly limited to reviewing negotiating submissions, analysis, and data, some sources indicated that the level of engagement seemed noticeably improved from recent meetings, with more planned to help refine the direction of the talks further. Ambassador John “Deep” Ford of Guyana, the chair of the WTO’s Committee on Agriculture “special session” tasked with negotiating new farm trade rules, convened delegates for informal meetings on 21 September, at which Australia and Canada both made presentations based on recent negotiating submissions.

Canada presented analysis on domestic support by the Cairns Group of agricultural exporters, drawing on figures presented in a submission that the group tabled in July. The paper reviews domestic support from 2001 to 2014 for select WTO members that are significant exporters, importers, or producers, drawing on data that the countries themselves have reported to the global trade club. Members also discussed a separate paper from Australia, which also looked at domestic support trends. In addition, the chair reported on his consultations on cotton, where the US has also tabled an informal paper. Sources said this could be followed by submissions from other members soon.

Pew Research Center: Americans, like many in other advanced economies, not convinced of trade’s benefits

Americans and publics in advanced economies are especially skeptical of trade’s role in boosting wages – only about three-in-ten in the United States and across the other advanced economies surveyed subscribe to this view. Slightly more Americans think trade lowers prices and generates new jobs (37% and 36%, respectively). Among the other advanced economies polled, a median of 47% link trade to job creation, while 28% say prices decrease thanks to trade. People in emerging markets are even more dubious of trade’s impact on prices – a median of just 18% in these countries say it drives prices lower. But publics across the nine emerging markets surveyed are enthusiastic about trade’s other economic benefits: A median of 56% think trade leads to more jobs and 47% say it improves wages.

These are among the key findings from a Pew Research Center survey conducted among 30,133 respondents in 27 countries from 14 May to 12 August. Among the 27 nations surveyed, attitudes toward trade are closely associated with education and income levels. In 18 countries, those with higher levels of education are more likely than those with less education to think trade creates jobs. In 17 countries, those with an income higher than the national median are more likely than those with an income below that line to believe trade generates employment. [Note: Emerging and developing countries included in the survey are Brazil, India, Indonesia, Kenya, Mexico, Nigeria, Philippines, South Africa, Tunisia]

IFC’s Sub-Saharan Africa project financing portfolio (IFC)

In FY18, our long-term investments in sub-Saharan Africa totaled $6.2bn, including $4.6bn, mobilized from other investors. Our clients supported more than 278,000 jobs, created opportunities for more than 1 million farmers, and treated more than 1.4 million patients. Largest country exposures: Nigeria, South Africa, Ghana. IFC’s global results can be accessed here.

From Nigeria

Updates from the Manufacturers Association of Nigeria AGM: Mainstreaming industrial policies to catalyse industrial renaissance

(i) President Addo Akufo-Addo: Nigeria, Ghana urged to lead industrial revolution in Africa. Speaking through his Senior Minister, Samuel Yaw Osafo-Maafo, who represented him as a guest lecturer at the annual lecture during the 46th AGM of the Manufacturers Association of Nigeria in Lagos: “We need to stop this needless drive for importation and direct our attention to protecting local businesses. We must tailor our procurement laws to favour local production. For every cheap item we buy from outside Nigeria, Ghana or the continent as a whole, we shall bear in mind that we are providing employment to other people outside our borders and denying our people the jobs to make a living and create wealth in dignity. Africa must procure prudently to protect itself and provide labour to its youth.”

The Ghanaian leader explained that Africa could create the champions of entrepreneurs and business giants who could stand shoulder to shoulder with foreign businesses. “We have many examples of our own to celebrate like the Dangotes. What we must never stop to do is to effectively ensure that both the private and public sectors continuously engage in productive dialogues and consultations to define what is good for our industrial sustainability and I believe this meeting will deepen that process.”

(ii) Nigerian, Ghanaian manufacturers sign MoU on trade relations. The Manufacturers Association of Nigeria and the Association of Ghanaian Industry, on Thursday, signed a MoU to facilitate exchanges and joint actions for a conducive atmosphere for the operation of manufacturing business in both countries. Dr Frank Jacobs, outgoing President of MAN, and Dr Yau Agyei Gyamfi, President Association of Ghanaian Industry, signed the MoU at the 46th Annual General Meeting of the manufacturers Association of Nigeria in Lagos. The MoU serves to form the nucleus of a coalition of manufacturers across West Africa.

(iii) Manufacturers’ inventory up 255% in one year. Dr Frank Jacobs, outgoing MAN president noted that the inventory of unsold products, inadequate electricity supply, frequent increase in electricity tariff and abnormally high interest rates were some of the problems bedeviling the sector. “Inventory of unsold finished goods increased to N161.53bn in the second half of 2017 from N35.42bn recorded in the corresponding period of 2016. Inventory of unsold manufactured goods amounted to N321.12bn in 2017 against the N90.43bn recorded in 2016, indicating a 255.19% increase over the period.”

(iv) Related: NEPC plans to review Nigeria’s export regulations. The Nigerian Export Promotion Council has announced plans to review Nigeria’s export regulations to drive the nation’s non-oil export. The Executive Director and Chief Executive Officer, NEPC, Olusegun Awolowo, said the move was to ensure export regulations in Nigeria are simple, clear, and more importantly not unreasonably costly to exporters. Awolowo stated this during NACCIMA/NAWORG export promotion conference in Lagos. “We are in complete agreement that our nation’s economic growth must be export driven through export oriented manufacturing and industry. Indeed NACCIMA has been a strategic partner in the formulation of Nigeria’s Zero Oil Plan. The Zero Oil Plan identifies 22 sectors where Nigeria has both comparative and competitive advantage in world trade and the specific international markets to penetrate.”

Launch of New Africa Dialogue: remarks by President Paul Kagame (CSIS)

Let me say that the main lines of US policy toward Africa have hardly changed since the end of the Cold War. To be very frank, if I could remember how many times I have had discussions with distinguished leaders in the United States and across Africa, talking about how we could relate to each other. There have been so many meetings over so many years, and we always keep coming back more or less to the same thing. We keep asking what is it that we could do, and yet we end up not doing much about that. But Africa has changed tremendously, and so has America and the rest of the world. It is therefore very important to rethink how Africa and the United States relate to one another.

US refuses visa for Kenyan delegation to UN meeting (The East African)

The United States refused to issue visas to more than half of the Kenyans who were seeking to travel to New York for the United Nations General Assembly week. “A delegation of 60 people from Kenya applied for visas. Only 27 of the 60 got them,” said James Mureu, vice chairman of the Kenya National Chamber of Commerce and Industry. Mr Mureu made the disclosure on Tuesday in a talk at a New York trade show of African products.

Côte d’Ivoire: Country Strategy Paper (2018-2022) and 2018 Country Portfolio Performance Review (AfDB)

Regional Integration and Trade (extract, pdf): Regional integration, one of the five pillars of PND 2016-2020, is one of the Government’s top priorities despite some challenges. The Integration Strategic Plan for 2017-2020, which Côte d’Ivoire has adopted, seeks to achieve its dual ambition as economic hub in the region and as a major continental player. With a GDP 36% close to that of WAEMU, Côte d’Ivoire is a key actor at regional level. At the African level, the country seeks to be among the most prosperous economies, by continuing to increase its overall trade balance which remains positive with the various regional and continental blocks (see Graph 5). The main integration challenges are related to weak infrastructure in the transport and energy sectors. The other challenges are commercial, and concern the economic impacts of tariff disarmament which could stem from the implementation of the agreement on the continental free trade area as well as the unilateral conclusion of agreements with the EU under the regional Economic Partnership Agreement.

Ghana: IMF completes Seventh ECF Review visit

Growth prospects remain strong, supported by robust oil and cocoa production. Inflation has remained in single-digits. S&P upgraded Ghana’s ratings from B- to B with a stable outlook in September 2018. The government continues to step up efforts to address financial sector vulnerabilities, with the recent purchase and assumption of five banks. However, Ghana has been affected by the volatile environment for emerging and frontiers markets, which has exerted pressure on the currency resulting in cedi depreciation. Program performance has been affected by external and domestic factors. Available fiscal data through end-July point to much expenditure front-loading on goods and services and lower-than-programmed revenue, especially VAT and import duty. On this basis, achieving end-December fiscal targets hinges on strengthening both expenditure discipline and tax compliance, beyond measures adopted in the mid-year budget review. The authorities remain strongly committed to the program targets. The 2019 budget would need to address persistent revenue shortfalls and start tackling decisively the issue of exemptions.

US capital goods orders, trade data temper third-quarter growth forecasts (Reuters)

New orders for key US-made capital goods fell in August after four straight months of strong gains and the goods trade deficit widened sharply, prompting some economists to significantly lower their economic growth estimates for the third quarter. Still, growth projections for the quarter remained at lofty levels, with other data on Thursday showing increased investment in wholesale and retail inventories last month. The Federal Reserve raised interest rates on Wednesday for the third time this year, and Chairman Jerome Powell told reporters that this was “a particularly bright moment” for the economy.

US August 2018 trade data (USG)

The US Census Bureau announced the following international trade, wholesale inventories, and retail inventories advance statistics for August 2018: The international trade deficit was $75.8bn in August, up $3.8bn from $72.0bn in July. Exports of goods for August were $137.9bn, $2.3bn less than July exports. Imports of goods for August were $213.7bn, $1.5bn more than July imports.

Friday’s Quick Links:

Governments urged to ‘do the hard work’ to better manage global migration

Tanzania: Magufuli sacks deputy Foreign and EAC minister

Australia is keen on boosting free and open trade with East Africa

President Buhari urges ECOWAS to harmonise for consensus candidates at AU, UN

Akufo-Addo assures Buhari of safety of Nigerians in Ghana

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tralac’s Daily News Selection

28 Sep 2018
South Africa’s August 2018 merchandise trade statistics show a R8.79 billion surplus from an upwardly revised R5.29 billion deficit in July and above market expectations. “We expect the deficit to have narrowed to R3.5bn, from...
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South Africa Merchandise Trade Statistics for August 2018

South African trade balance swings to surplus in August

South Africa’s trade balance shifted to a R8.79 billion surplus in August of 2018 from an upwardly revised R5.29 billion deficit in July and above market expectations of a R5 billion surplus. Considering the January to August period, the country posted a R2.66 billion surplus.

Exports increased 9.4 percent month-over-month to R116.88 billion in August 2018, driven by higher sales of vehicles and transport equipment (32 percent); mineral products (10 percent); precious metals and stones (7percent); chemicals (12 percent) and base metals (5 percent). The most important export partners were: China (9.0 percent of total exports), Germany (7.9 percent); the US (5.8 percent), the UK (5.3 percent) and India (5.0 percent).

Imports dropped 3.6 percent month-over-month to R112.15 billion, mainly due to lower purchases of mineral products (-37 percent) and vegetables (-33 percent). On the other hand, higher purchases were recorded for precious machinery and electronics (6 percent); metals and stones (28 percent) and original equipment components (8 percent). Main import partners were: China (19 percent of total imports), Germany (11.7 percent), the US (6.3 percent), India (4.7 percent) and the UK (3.7 percent).

Excluding trade with neighboring Botswana, Lesotho, Namibia and Eswatini (formerly Swaziland), the country recorded a trade surplus of R0.05 billion in August.


The South African Revenue Service (SARS) has released trade statistics for August 2018 recording a trade surplus of R8.79 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN).

The year-to-date (01 January to 31 August 2018) trade surplus of R2.66 billion is a deterioration on the surplus for the comparable period in 2017 of R39.93 billion. Exports year-to-date increased by 5.0% whilst imports for the same period showed an increase of 10.4%.

Including trade data with Botswana, Eswatini, Lesotho and Namibia (BELN)

The R8.79 billion trade surplus for August 2018 is attributable to exports of R116.88 billion and imports of R108.09 billion. Exports Increased from July 2018 to August 2018 by R10.03 billion (9.4%) and imports decreased from July 2018 to August 2018 by R4.06 billion (3.6%).

On a year-on-year basis, the R8.79 billion trade surplus for August 2018 is an improvement from the surplus recorded in August 2017 of R 6.80 billion. Exports are 12.2% more than the exports recorded in August 2017 of R104.16 billion. Imports are 11.0% more than the imports recorded in August 2017 of R97.37 billion.

Exports for the year-to-date (01 January to 31 August) increased by 5.0% from R757.56 billion in 2017 to R795.10 billion in 2018. Imports for the year-to-date of R792.45 billion are 10.4% more than the imports recorded in January to August 2017 of R717.63 billion, leaving a cumulative trade surplus of R2.66 billion for 2018.

July 2018’s trade deficit was revised downwards by R0.64 billion from the previous month’s preliminary deficit of R4.65 billion to a revised deficit of R5.29 billion as a result of ongoing Vouchers of Correction (VOC’s).

Trade highlights by category

The main month-on-month export movements: R’ million
Section:
Including BELN:
Vehicles & Transport Equipment
+R3 986
+ 32%
Mineral Products
+R2 269
+ 10%
Precious Metals & Stones
+R1 250
+ 7%
Chemical Products
+R 727
+ 12%
Base Metals
+R 627
+ 5%
Total
+R8 859
88%
Total Movement
+R10 032
100%
 
The main month-on-month import movements: R’ million
Section:
Including BELN:
Mineral Products
-R8 687
- 37%
Vegetable Products
-R 896
- 33%
Works of Art
+R 27
+ 43%
Wood & Articles thereof
+R 36
+ 8%
Wood Pulp & Paper
+R 47
+ 2%
Live Animals
+R 129
+ 7%
Optical Photographic Products
+R 131
+ 5%
Misc Manufactured Articles
+R 149
+ 8%
Textiles
+R 189
+ 5%
Vehicles & Transport Equipment
+R 232
+ 2%
Plastics & Rubber
+R 287
+ 6%
Base Metals
+R 293
+ 6%
Footwear & Accessories
+R 350
+ 28%
Chemical Products
+R 467
+ 4%
Prepared Foodstuff
+R 494
+ 16%
Precious Metals & Stones
+R 586
+ 28%
Original Equipment Components
+R 762
+ 8%
Machinery & Electronics
+R1 370
+ 6%
Total
-R4 034
99%

Total Movement

-R4 057

100%

Trade highlights by world zone

The world zone results from July 2018 (revised) to August 2018 are given below.

Africa:

Exports: R30 349 million – this is an increase of R2 499 million from July 2018.
Imports: R11 476 million – this is a decrease of R3 375 million from July 2018.

Trade surplus: R18 873 million – this is an improvement of R5 874 million in comparison to the R12 998 million surplus recorded in July 2018.

America:

Exports: R9 019 million – this is a decrease of R 870 million from July 2018.
Imports: R11 223 million – this is an increase of R 980 million from July 2018.

Trade deficit: R2 204 million – this is a deterioration of R1 850 million in comparison to the R 353 million deficit recorded in July 2018.

Asia:

Exports: R35 920 million – this is an increase of R 494 million from July 2018.
Imports: R47 453 million – this is a decrease of R2 736 million from July 2018.

Trade deficit: R11 533 million – this is an improvement of R3 230 million in comparison to the R14 764 million deficit recorded in July 2018.

Europe:

Exports: R31 495 million – this is an increase of R6 342 million from July 2018.
Imports: R35 744 million – this is an increase of R721 million from July 2018.

Trade deficit: R4 249 million – this is an improvement of R5 621 million in comparison to the R9 869 million deficit recorded in July 2018.

Oceania:

Exports: R1 792 million – this is an increase of R 548 million from July 2018.
Imports: R1 783 million – this is an increase of R 191 million from July 2018.

Trade surplus: R9 million – this is an improvement of R 357 million in comparison to the R 348 million deficit recorded in July 2018.


Excluding trade data with Botswana, Eswatini, Lesotho and Namibia (BELN)

The trade data excluding BELN for August 2018 recorded a trade surplus of R0.05 billion. This was a result of exports of R104.37 billion and imports of R104.32 billion.

Exports increased from July 2018 to August 2018 by R8.25 billion (8.6%) and imports decreased from July 2018 to August 2018 by R3.95 billion (3.6%).

The cumulative deficit for 2018 is R56.45 billion compared to R20.50 billion deficit in 2017.

Trade highlights by category

The main month-on-month export movements: R’ million
Section:
Excluding BELN:
Vehicles & Transport Equipment
+R3 986
+35%
Mineral Products
+R1 993
+ 9%
Chemical Products
+R 636
+12%
Base Metals
+R 606
+ 5%
Wood Pulp & Paper
+R 564
+37%
Total
+R7 785
94%
Total Movement
+R8 252
100%
 
The main month-on-month import movements: R’ million
Section:
Excluding BELN:
Mineral Products
-R8 667
-37%
Vegetable Products
-R 910
-34%
Works of Art
+R 24
+39%
Wood Pulp & Paper
+R 36
+ 1%
Wood & Articles thereof
+R 38
+13%
Optical Photographic Products
+R 133
+ 5%
Misc Manufactured Articles
+R 145
+ 8%
Live Animals
+R 153
+11%
Textiles
+R 216
+ 6%
Plastics & Rubber
+R 279
+ 6%
Base Metals
+R 294
+ 6%
Footwear & Accessories
+R 348
+28%
Chemical Products
+R 377
+ 3%
Prepared Foodstuff
+R 407
+16%
Vehicles & Transport Equipment
+R 574
+ 6%
Precious Metals & Stones
+R 587
+42%
Original Equipment Components
+R 762
+ 8%
Machinery and Electronics
+R1 273
+ 6%
Total
-R3 931
99%

Total Movement

-R3 949

100%

Trade highlights by world zone

The world zone results for Africa excluding BELN from July 2018 (Revised) to August 2018 are given below.

Africa:

Exports: R17 838 million – this is an increase of R 719 million from July 2018.
Imports: R7 710 million – this is a decrease of R3 267 million from July 2018.

Trade surplus: R10 128 million – this is an improvement of R3 986 million in comparison to the R6 142 million surplus recorded in July 2018.


Botswana, Eswatini, Lesotho and Namibia (Only)

Trade statistics with the BELN for August 2018 recorded a trade surplus of R8.74 billion. This was a result of exports of R12.51 billion and imports of R3.77 billion.

Exports increased from July 2018 to August 2018 by R1.78 billion (16.6%) and imports decreased from July 2018 to August 2018 by R0.10 billion (2.8%).

The cumulative surplus for 2018 is R59.10 billion compared to R60.43 billion in 2017.

Trade Highlights by Category

The main month-on-month export movements: R’ million
Section:
BELN:
Precious Metals & Stones
+R 824
+1779%
Mineral Products
+R 276
+ 15%
Prepared Foodstuff
+R 219
+ 19%
Machinery and Electronics
+R 98
+ 6%
Chemical Products
+R 91
+ 9%
Total
+R1 508
85%
Total Movement
+R1 780
100%
 
The main month-on-month import movements: R’ million
Section:
BELN:
Vehicles & Transport Equipment
-R 343
- 92%
Textiles
-R 28
- 5%
Prepared Foodstuff
+R 86
+18%
Chemical Products
+R 89
+ 19%
Machinery and Electronics
+R 96
+ 28%
Total
-R 100
93%
Total Movement
-R 108
100%
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South Africa Merchandise Trade Statistics for August 2018

28 Sep 2018
South African trade balance swings to surplus in August South Africa’s trade balance shifted to a R8.79 billion surplus in August of 2018 from an upwardly revised R5.29 billion deficit in July and above market expectations of a...
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President Kagame attends ‘New Africa Dialogue’ on AfCFTA Potential

President Kagame attended the ‘New Africa Dialogue’ on 27 September 2018, organized by the Centre for Strategic and International Studies (CSIS), on the potential of the African Continental Free Trade Area (AfCFTA).

The Centre is a bipartisan, nonprofit policy research organization dedicated to providing strategic insights and policy solutions to help decision makers chart a course toward a better world.

Attended by Ghanaian President Nana Akufo-Addo and former US Secretary of State Dr. Henry Kissinger, the Dialogue convened a broad range of seasoned diplomats, researchers, and policymakers.

In his address, President Kagame highlighted that the AfCFTA signed in March this year is a historic step meant to transform trade within the African continent while requiring the world to relate to Africa as a single bloc for trade purposes.

“But this agreement should be understood in a wider context. The CFTA heralds a new political reality in Africa. We also signed an agreement on the free movement of people within Africa,” President Kagame said.

The Head of State also spoke about the financing and functioning reforms underway within the African Union.

The President pointed out that the confusion served to highlight the need for improved dialogue about how Africa and the United States can better collaborate to enhance each other’s prosperity, and hailed the ‘New Africa Dialogue’ as an effective platform for such efforts.


Launch of New Africa Dialogue: Remarks by President Paul Kagame

I just want to state how happy I am to be invited to CSIS for this very useful discussion.

Let me say that the main lines of U.S. policy toward Africa have hardly changed since the end of the Cold War. To be very frank, if I could remember how many times I have had discussions with distinguished leaders in the United States and across Africa, talking about how we could relate to each other. There have been so many meetings over so many years, and we always keep coming back more or less to the same thing. We keep asking what is it that we could do, and yet we end up not doing much about that.

But Africa has changed tremendously, and so has America and the rest of the world. It is therefore very important to rethink how Africa and the United States relate to one another.

Dr Kissinger, your presence signals the weight and promise of this initiative. The conclusions of your analysis of the “Central Issues of American Foreign Policy” in 1968 are as fresh and relevant today, as 50 years ago. I wish to highlight three of them this morning.

First, in all advanced countries, political stability was a precondition for industrialisation rather than an outcome. Technical and economic factors alone cannot offer a sufficient moral foundation for good politics.

Business and trade should rightly constitute the day-to-day subject matter of enhanced relations between Africa and the United States. But it would be a mistake to avoid frank exchanges about values.

Second, the core challenge in developing countries is the consolidation of political legitimacy. Even two generations ago, the futility of a strategy based on transferring or imposing American institutions on others was clear. And I was glad the other day to hear President Trump say something about it: imposing on people is not going to be very helpful.

Too often, political structures in Africa are evaluated against abstract notions of process, almost on auto-pilot. This is done without reference either to the objective outcomes, or to the views of the citizens directly concerned and affected. When innovative forms of democratic stability are undermined, nobody’s interest is served. The tendency to elevate abstractions about democratic process into a precondition for engagement, rather than a basis for discussion, is counterproductive.

Third, America succeeds whenever it is able to generate willing cooperation, based on a sense of shared purpose. This brings me to recent developments in Africa, particularly the Continental Free Trade Area that Dr Kissinger referred to earlier, which was signed in March in Kigali. We view this is a historic step. It will transform trade within our continent, while requiring the world to relate to the fastest-growing continent as a single bloc for trade purposes. In fact, this again consolidates the efforts that have already been underway for continental integration.

But this agreement should be understood in a wider context. The AfCFTA heralds a new political reality in Africa. We also signed an agreement on the free movement of people within Africa, for example, as part of that. Africa is currently undertaking coordinated action in the United Nations Security Council to use U.N. assessed contributions to fund necessary African Union-mandated peace support operations that the United Nations cannot conduct on its own.

In addition, we have made major reforms to the financing and institutional functioning of the African Union. The United States initially responded to this obviously positive development by a discussion as to whether this new financial levy violated or contravened World Trade Organisation provisions. We had discussions back and forth, and I think most of the misunderstandings have been found to be inaccurate and therefore done away with.

But the confusion served to highlight the need for improved dialogue about how Africa and the United States can better collaborate – because this is the main objective – to enhance each other’s prosperity.

The New Africa Dialogue can be an effective platform for these efforts, and I look forward to working with you on this matter. Once again, thank you very much for inviting me and for listening.

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WTO agriculture talks: Members evaluate negotiating submissions, eyeing 2020 Ministerial

The WTO’s agriculture negotiations resumed last week after the organisation’s annual August hiatus. While the discussions were mainly limited to reviewing negotiating submissions, analysis, and data, some sources indicated that the level of engagement seemed noticeably improved from recent meetings, with more planned to help refine the direction of the talks further. 

Ambassador John “Deep” Ford of Guyana, the chair of the WTO’s Committee on Agriculture “special session” tasked with negotiating new farm trade rules, convened delegates for informal meetings on Friday 21 September, at which Australia and Canada both made presentations based on recent negotiating submissions. 

The talks covered agricultural domestic support and the separate, though related, topic of public stockholding for food security purposes. Various low- and middle-income countries have argued that the WTO’s current domestic support rules do not provide enough flexibility for them to buy food at subsidised prices as part of their public stockholding programmes. 

Canada presented analysis on domestic support by the Cairns Group of agricultural exporters, drawing on figures presented in a submission that the group tabled in July. The paper reviews domestic support from 2001 to 2014 for select WTO members that are significant exporters, importers, or producers, drawing on data that the countries themselves have reported to the global trade club. 

Members also discussed a separate paper from Australia, which also looked at domestic support trends. In addition, the chair reported on his consultations on cotton, where the US has also tabled an informal paper. Sources said this could be followed by submissions from other members soon. 

One Geneva-based trade official said that the talks were characterised by “frank discussion of details,” and a greater willingness of negotiators to engage more openly with one another, with another noting that the level of engagement seemed significantly improved from last year. 

The reports of relatively improved optimism come just months after WTO members sparred over how to approach a possible work programme for the negotiations, in the wake of last December’s ministerial conference in Buenos Aires, Argentina, that led to no substantive outcomes on agriculture.

What remains unclear at this stage, however, is what issues farm trade negotiators may prioritise in the months to come, as they work to determine what may serve as possible deliverables for the next WTO ministerial conference, which is planned for June 2020 in Astana, Kazakhstan. 

Though many WTO members have repeatedly stated that reforming the organisation’s rules on the subsidies that governments can grant their farmers is a priority, political differences as well as disagreements over how to approach the issue on a more substantive level remain. The question of whether and how to tackle other topics, such as liberalising agricultural market access, has seen less engagement. Members have also shown diverging views on whether to negotiate more stringent disciplines on agricultural export restrictions. 

At a negotiating meeting in May, Ford identified seven outstanding areas which members had told him they saw as priorities for the negotiations. In addition to domestic support, market access, export restrictions, and public stockholding, these included a “special safeguard mechanism” for developing countries to use in the event of sudden import surges or price depressions; export competition, covering measures seen as similar to export subsidies; and cotton.

Ford is expected to convene further talks on other outstanding issues in the negotiations in the weeks and months ahead. Meetings are already scheduled on market access and a special safeguard mechanism, with the chair convening delegates for informal talks on 22 and 23 October. 

However, Ford also emphasised the need for greater urgency in the negotiations if these are to deliver an outcome ahead of the next ministerial conference in June 2020. 

Global trade climate looms over WTO negotiations

According to a Geneva trade official, tensions among major economic powers over trade were referred to repeatedly in the negotiating meeting last week. Drawing particular scrutiny was a planned domestic support package that the US Department of Agriculture announced in late July, which is due to take effect this month and could amount to US$12 billion. 

This support is meant to help offset the costs that some US farmers are facing due to higher tariffs that other countries have imposed on their products, which are in response to tariffs that Washington itself has placed on various trading partners. The farm aid would be provided by the Commodity Credit Corporation (CCC) Charter Act, a law from 1948 that changed the CCC into a federal corporation. The original CCC dates back to 1933. 

“The CCC Charter Act, as amended, aids producers through loans, purchases, payments, and other operations, and makes available materials and facilities required in the production and marketing of agricultural commodities,” according to a USDA description of some of the law’s capabilities. 

The US farm support package prompted numerous questions from trading partners at meetings of the WTO’s regular committee on agriculture this week, having already led to some questions at last Friday’s negotiating session. 

Australia, Canada, the EU, India, Japan, and New Zealand were among those asking for more details of the planned support package. 

Trading partners asked how the US would ensure that the support provided would not distort markets; whether measures were in place to prevent support from exceeding limits that Washington has agreed at the WTO; how the payments would be made; and when details of the support would be formally notified to the global trade body. 

At the meeting, Australia also asked how the US could prevent payments being made in excess of the value of the actual tariffs imposed, according to a copy of the questions submitted prior to the meeting and seen by Bridges. 

New Zealand also said it was concerned that the new support “risks taking the United States close to its AMS limit of US$19.1 billion” – a reference to current WTO limits on the aggregate measure of support (AMS). These are dubbed “amber box” subsidies by negotiators, within the Agreement on Agriculture’s overall taxonomy for different farm support types. Amber box subsidies are considered highly trade-distorting under the organisation’s rules. 

Aside from questioning the US over the planned aid package, countries also questioned India over its policies on sugar, pulses, and skimmed milk; Canada over its dairy and wine programmes; and Indonesia over its soybean and dairy policies. India also reiterated a question about how trade preferences for developing countries would be affected by the UK’s withdrawal from the European Union, which is due to take effect from the end of March next year. 

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