Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: AusAID

Featured infographic: Visualizing trade flows among G20 nations

Starting tomorrow, in Geneva: Sixth Global Review of Aid for Trade

Lily Sommer, Heini Suominen, David Luke: Aid for Trade in Africa – what are the strategic priorities? (Bridges Africa)

Many characteristics of AfT flows to Africa have remained relatively unchanged over the last decade. The current picture of AfT in Africa is presented, before recommending three key strategic priorities: (i) refocusing AfT for enhanced intra-African trade, (ii) making AfT work for all, and (iii) strengthening human and institutional capacities for effective AfT. These proposals are not exhaustive, but they can go a long way towards ensuring that, through AfT, trade is more effectively used as a tool to transform African economies and achieve the 2030 Agenda in Africa. [Aid for Trade: A springboard for sustainable development? Volume 6, Number 5, 10 July 2017], [ICTSD at Aid for Trade Global Review 2017]

Public hearing concerning out-of-cycle review of Rwanda, Tanzania, and Uganda’s eligibility for benefits under AGOA: comments received. The AGOA Subcommittee of the TPSC will (Thursday) consider written comments, written testimony, and oral testimony in response to this notice to develop recommendations for the President as to whether the Republic of Rwanda, United Republic of Tanzania, and Republic of Uganda are meeting the AGOA eligibility criteria. Profiled submissions:

SMART (pdf): SMART is aware of news reports that Kenya has recently announced that it will impose “minimum tariffs” on containers of “used goods.” Depending on how the Kenyan government interprets the term “used goods” this action threatens to negate Kenya’s announced roll back of its tariffs on imported used clothing. For this reason, SMART requests that Kenya also be included in this out-of-cycle review.

Kenneth Bagamuhunda, EAC (pdf): Development of the local textile industry will 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 volumes to the U.S. EAC countries import a range of goods from U.S. including capital goods, plant and machinery, agro chemicals, aircrafts and parts, petroleum equipment, and these products do not attract duty. The EAC has for a long time been registering trade deficits in its trade with USA. There is a thriving business of importation of new garments and apparel into East Africa from U.S. by business women.

Amelia Kyambadde, Uganda’s Ministry of Trade, Industry and Cooperatives (pdf): As we implement the infrastructure development and industrialization programme for Uganda, we will create more jobs for the USA and the countries in the north through the purchase of services, capital goods, IT equipment, earth moving equipment, oil and gas extraction equipment, etc. With this in mind, there is no justifiable reason for the out-of-cycle review. The eligibility of the Republic of Uganda for AGOA should not be in question. The USA and Uganda should collectively look ahead to more harmonious trade and investment partnerships to exploit the opportunities in Uganda, in the great lakes region and in the USA.

Bonny Musefano, Embassy of Rwanda (pdf): Looking at the figures, Rwanda has not yet reaped much from AGOA arrangement. In response to such a situation, Rwanda with the support of USAID East Africa Trade and Investment Hub finalized her AGOA strategy in April 2016 and the strategy focuses on three key sectors: textiles and apparel, specialty foods and home décor and fashion by which its implementation would require the support of the USA government and other stakeholders. Any decision to challenge the eligibility of Rwanda to AGOA market access preferences will compromise the current momentum and discourage the ongoing dialogue to enhance trade and investment partnership between the USA and Rwanda.

Adolf F Mkenda, PS, Ministry of Industry, Trade and Investment, Tanzania (pdf): The EAC Decision is yet to be implemented. Therefore, there is no scientific proof that changes in the trade pattern and other macroeconomic variable [jobs, trade patterns, shipping, etc] were caused by the EAC decision to phase out importation of second hand clothing and leather as pointed out in the petition and therefore the claim cannot be justified. In Tanzania, the question of increase or decrease tax, duties, fees is a fiscal decision which has been implemented as part of annual fiscal measure during budget submission and it is a sovereign legitimate budget decision.

EAC Secretariat (pdf): As earlier indicated, the EAC finds it imperative to provide a submission clarifying on the issues raised in the petition. This stems from the fact that EAC as an integrated regional body pursues and implements harmonized trade regimes under the Customs Union which is being consolidated into a Single Customs Territory. Secondly, EAC has been galvanizing its industrialization development agenda through common programs and strategies to promote our industrial sector, export promotion and value chain development. [Additional downloads are available]

Related: Kenya: Mitumba imports cross Sh3bn mark in first 3 months (Business Daily). Kenya spent its hard currency worth Sh4.41 billion on importing second-hand clothes and footwear between January and March alone, official data shows. The import bill for second-hand clothes, also called mitumba, reached a staggering Sh3.28 billion, a 13% growth on the Sh2.85 billon spent in the first quarter of last year, data produced by the Kenya National Bureau of Statistics shows. The KNBS data shows first quarter import of footwear also soared to Sh1.13 billion or a 16.5 per cent increase on the Sh970 million orders of similar period last year. [Tanzania: Trade ministry calls for increased investment in textile sector]

TFTA updates

(i) Dr Francis Mangeni: The Tripartite Free Trade Area – a breakthrough in July 2017 as South Africa signs the Tripartite Agreement. The ministerial meeting of 7 July 2017 in Kampala injected fresh momentum into the tripartite negotiations to create a free trade area covering half of Africa. South Africa signed the Tripartite Agreement bringing the total of countries that had signed to 19, out of 26. Madagascar will sign on 13 July 2017 while Botswana is expected to follow suit. South Africa signed the Tripartite Agreement the very hour that the remaining three Annexes to the Tripartite Agreement were adopted by the Ministers, at a public ceremony covered by the media following the conclusion of the ministerial meeting. The meeting finalised and adopted the three remaining Annexes (on rules of origin, trade remedies and dispute settlement), thus producing the full Tripartite Agreement. The adoption of the three remaining Annexes, therefore, represented a milestone in the Tripartite negotiations, as it finally removed the last obstacle to signing and ratifying the Agreement. Uganda said it would complete its ratification process by end of August 2017, as the matter is before Cabinet. Egypt already ratified the Agreement. A total of 14 ratifications is required for the Agreement to enter force.

(ii) Andrew Mold, Rodgers Mukwaya: Modelling the economic impact of the Tripartite Free Trade Area: its implications for the economic geography of Southern, Eastern and Northern Africa (Journal of African Trade). The study uses the Global Trade Analysis Project computable general equilibrium model and the latest GTAP 9 database to simulate the effects of the establishment of the TFTA. The results indicate a significant 29% increase in intra-regional trade as a result of tariff elimination between member states. Particularly encouraging is the fact that the sectors benefiting most are manufacturing ones, such as light and heavy manufacturing, and processed foods. The results reveal an aggregate welfare gain of $2.4bn for the TFTA region. Concerns have been raised that industrial production of the TFTA could concentrate in the countries with highest productivity levels namely, Egypt and South Africa. However, our simulation results suggest that these fears are exaggerated, with little evidence of the concentration of industries in the larger countries.

Axel Addy, Ratnakar Adhikari: Four ways Africa can achieve a manufacturing renaissance (WEF)

It is not a new argument that these four pillars of institutions, infrastructure, human capital and technology, will drive manufacturing-led growth in Africa. On the contrary, these elements have been included by the World Economic Forum in its competitiveness analyses and are well embedded in the Agenda 2063 – which was carefully drafted, adopted and owned by the Heads of States of the African Union as a blueprint for accelerated development and technological progress of Africa. The only missing piece of the puzzle to realise these aspirations is the political will to deliver. [Addy is Minister for Commerce and Industry, Liberia; Adhikari is ED of the Enhanced Integrated Framework Executive Secretariat, WTO]

Central Africa: ECA webinar on the need for efficient industries

The webinar, which drew panelists from government, academia and the private sector, is part of activities leading up to the 33rd meeting of the Intergovernmental Committee of Experts (ICE2017) scheduled for 26-29 September in Douala. The theme for ICE 2017: Made in Central Africa: from the vicious to the virtuous circle. This event came two days after another ECA webinar: Industrial policies in Central Africa: current state, future prospects.

Zimbabwe: 2017 Article IV Consultation documentation (IMF)

Box 4. Experience with the dollarized regime (pdf): Dollarization brought benefits to the economy at a critical moment. (i) It halted hyperinflation. Inflation declined from 79.6 billion percent at end-2008 to 3.2% by end-2010. (ii) It helped restore business confidence. Real GDP had declined by 15% in 2008 and grew by 15.4% in 2010. (iii) It supported re-monetization of the economy and eliminated the exchange rate risk involved in investment decisions. However, the basic conditions for the system to function smoothly were not in place. [Statement]

Seychelles: Systematic Country Diagnostic (World Bank)

Overall business environment: (i) Seychelles fares worse in global competitiveness rankings than would be expected based on its income level. (ii) Some slippage in recent years: from 76th rank in WEF Global Competitiveness Index when first included in 2012/13, to 97th/140 in 2015/16. (iii) Aside from small market size, Seychelles’ competitiveness is hampered by shortfalls in its “efficiency enhancers”, especially finance and skills. [Note: The report (pdf) includes 6 Topical Notes - tourism, blue economy, SOEs, social protection, welfare, labour market]

Profiled G20 Summit outcome: Africa Partnership (pdf)

The G20 expressed its strong commitment to provide a political platform for the initiative and to ensure continuity. Individual G20 members and other countries and institutions announced voluntary contributions to country-specific Compacts. The AU and NEPAD as well as partner institutions like the OECD are welcome to support the implementation and monitoring process of the initiative. All partners are committed to striving for high-quality and sustainable measures to support the Compacts in an effective way. The goal is to provide credibility, visibility, and scale to the initiative, further strengthen the G20 Compact with Africa and attract African and international private investors and entrepreneurs. We welcome complementary measures by the forthcoming EU External Investment Plan, the Forum of China Africa Cooperation, the Tokyo International Conference on African Development as well as others. [G20 Summit Declaration and other documents, ICC’s response to G20 Hamburg Summit]

Africa defeats world’s biggest mobile carriers (Bloomberg)

Back when African countries were auctioning off mobile licenses by the boatload to serve the region’s young, tech-savvy population, investing in the continent’s fast-growing economies seemed like a no-brainer. Some of the world’s biggest wireless carriers rushed in. Now they’re wondering if they made a mistake. Increasing government and regulatory scrutiny, as well as a lack of expansion opportunities in sub-Saharan Africa, are making it harder for operators such as Vodafone Group Plc, Orange SA and Bharti Airtel Ltd. to grow. Their choice: Pull back or double down.

SADC and Germany agree on areas of cooperation (SADC)

SADC and BMZ also agreed to re-focus their Cooperation from the current six to four programmes by 2019, which will include (i) Regional Economic Integration (covering also Peace, Security and Good Governance); (ii) Transboundary Water Management; (iii) Transboundary Natural Resource Management and Resilience to Climate Change; and (iv) Strengthening National-Regional Linkages.

ICC Open Markets Index

The report – commissioned by the International Chamber of Commerce – shows that G20 nations rank below the global standard in terms of openness to trade, with only Canada placing among the world’s top 20 open markets. Singapore, Luxembourg and Hong Kong SAR head the 2017 rankings for the fourth successive edition of the report, far outstripping major economies such as the United States in terms of trade openness. The Index scores 75 countries on a scale of one to six on four key factors: observed trade openness, trade policy, openness to foreign direct investment and trade-enabling infrastructure. In doing so, the Index also monitors government follow through on longstanding G20 commitments to boost global trade flows.

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