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tralac’s Daily News Selection
Concluding today, in Addis: AU Specialized Technical Committee on Transport, Trans-Regional and Interregional Infrastructure, Energy and Tourism
Next week, in Shanghai: BRICS trade ministers meeting
WTO’s negotiating Committee on Agriculture holds special session: highlights (WTO)
The EU, Brazil, and three other Latin American countries have tabled a new proposal on farm subsidy reform for negotiation ahead of the WTO’s eleventh ministerial conference in Buenos Aires, Argentina, this December. Colombia, Peru, and Uruguay also co-sponsored the proposal, which was submitted ahead of a 19 July meeting of the WTO’s negotiating committee on agriculture. Those countries are all agricultural exporters that favour faster liberalisation of global farm trade. The proposal coincided with three other submissions charting alternative approaches, and a new proposal from Singapore on transparency in agricultural export prohibitions or restrictions. Extract from report: Ambassador Stephen Ndung’u Karau (Kenya), Chair of the Agriculture Committee (pdf): The question we must ask ourselves now is how do we organize our work going forward? This issue is now becoming absolutely critical, given the tight timeframe we are operating within. At best, we have 12 working weeks between the “Jeûne genevois” holiday period and MC11. First, it seems to me we need to prioritize our discussions, based on the level of priority given by Members to the various topics, and allocate our time accordingly. Second, it is clear that we have not yet moved so far into what I would call a real intensive negotiation mode. We have had useful suggestions, discussions and exchanges but no real negotiation. While this preparatory phase is very important to prepare the ground for a successful negotiation, we also need to be realistic and pragmatic. [Various downloads available]
Rich nations have cornered 90% of farm subsidy entitlements: India-China study (BusinessLine)
Seeking to expose the double-standards of developed countries at the WTO, a joint paper by India and China has revealed that rich nations, including the US, the EU and Canada, have been consistently giving trade-distorting subsidies to their farmers at levels much higher than the ceiling applied on developing countries. Together, the developed world has cornered 90% of total entitlements, amounting to a whopping $160 billion annually. Calling for the elimination of such subsidies, the joint paper, a copy of which is with BusinessLine, draws a list of the most heavily and frequently subsidised items for the US, the EU and Canada over the past two decades. The numbers reveal that subsidies for many items given by the developed world are over 50 per cent of the production value, while developing countries are forced to contain it within 10 per cent or face penalties. [India’s agriculture trade policy has a pro-consumer bias: study; ICRIER/World Bank: Price distortions in Indian agriculture, pdf]
Global Infrastructure Outlook: infrastructure investment needs across 50 countries, 7 sectors to 2040 (GI Hub)
The findings are compelling. For instance, Asia has the largest overall need, requiring just over 50% of global investment in infrastructure, however the region is forecast to have a relatively small investment gap. The picture is very different in other regions where investment gaps are more prominent. The Americas and Africa, by contrast, are forecast to have proportionally much larger infrastructure investment gaps. In these regions investment gap is 32% and 28% respectively of investment need. Africa’s investment gap is forecast to widen further to 43%, if investment need includes SDGs. Quantifying country-level needs is a powerful and positive step. These insights will help governments identify and respond to infrastructure needs, and guide opportunities for private sector investors. The findings are the result of a major data collection and econometric analysis exercise, drawing on information from 50 or so separate datasets, alongside the development of bespoke models to produce estimates for countries and sectors where no data could be identified.
Chapter 5: Regional infrastructure needs: Africa (pages 55-63):
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Under our current trends scenario, the total infrastructure investment forecast for Africa to 2040 is projected to be $4.3 trillion, or $174bn per year. If African economies were able to raise their performance to match that of their best performing peers the total investment need would be $6.0 trillion, or $240 billion per year—a difference of almost 40%.
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The flip side of a strong focus on utilities infrastructure is that Africa dedicates a below average proportion of investment to the transport sector: this accounted for 27% of the total between 2007 and 2015, compared to the world average of 45. The difference is particularly striking for rail, which receives just three percent of infrastructure investment in Africa, compared to the world average of 12%.
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Our analysis suggests that Morocco and Kenya are performing relatively strongly amongst the African economies in our study: the investment need forecast is no more than 21% higher than the current trends forecast for each of these countries. In contrast, the gap is much greater for Egypt, South Africa and Tanzania, where the investment need forecast is just over 50% higher than the current trends forecast. For Angola, Ethiopia, Nigeria and Senegal the investment need is around one-third greater than would be delivered under current trends. [Various downloads available]
Kenya Economic Report 2017: sustaining economic development by deepening and expanding economic integration in the region (KIPPRA)
This report discusses the prospects of enhancing Kenya’s economic growth and development by boosting trade and enhancing industrial development, taking an integrated approach to infrastructure development, improving labour productivity and opportunities, and strengthening institutions by deepening participation in regional integration. These, together, complement domestic efforts in addressing the challenges of poverty, unemployment and inequality in the realization of Vision 2030. The report is organized as follows: Chapter 2 reviews developments in key macroeconomic indicators, demographic factors and labour market issues. Chapter 3 analyses the medium term prospects of the economy for the period 2017-2020. Chapters 4 to 10 review sectoral issues of regional economic integration, namely trade, tourism, agriculture and food security, industrial development, infrastructure, labour and governance. Dynamics in other partnerships and emerging global issues are discussed in chapter eleven. Chapter 12 presents conclusions and policy recommendations.
Anzetse Were: What do political party manifestos say on industrialisation in Kenya?
To be clear, access to EAC for manufactured goods is riddled with problems. Total exports from Kenya the EAC registered a 4% decline in 2016 to KES 121.7 billion, with exports to Uganda and Rwanda falling by 9.3% and 2.5% respectively. Further, opportunities offered by the EAC’s integrated market has institutional and regulatory barriers to trade such as such as customs clearance, standards and certification, rules of origin, licences and permits, truck inspections and language barriers. None of the manifestos address these issues. Further, the entry of China and India into the regional market has eroded Kenya’s EAC market share from 9 percent in 2009 to just 7 percent by 2013. The World Bank claims that Kenya’s trade performance is declining quickly due to an influx of goods from China into Uganda and Tanzania, which are major export destinations for Kenya. In the manifestos it is not clear how EAC market access issues will be addressed.
Zambia to engage SA on soya cake market (Daily Mail)
Ministry of Agriculture permanent secretary Julius Shawa says Government will soon engage South Africa on how farmers can access the $1bn soya cake market following demand in that country. Mr Shawa said Zambia which has this year produced about 390,000 metric tonnes of soya beans from 340,000 tonnes last year, could tap into that market and increase its trade levels with that country. He said at the just-ended Zambia-South Africa Trade and Investment forum that the demand by South Africa could boost production levels among Zambian farmers, thus contribute to accelerating trade volumes between the two countries.
Mozambique: Proposed local content law goes to the Council of Ministers
The document, now being developed, has already been reviewed by the Economic Council, which produced some of the recommendations. Speaking in Maputo during a meeting of the Conference on Local Content in the Oil and Gas Sector, which ended on Friday, Vasco Nhabinde said the aim was to stimulate domestic production and generate employment and income. He emphasized that the idea was to ensure that there is an effective technology transfer “because without technology transfer, local content will be worthless”.
Zimbabwe: ‘150% duty for second-hand vehicles’ (NewsDay)
Speaker of the National Assembly Jacob Mudenda wants the Zimbabwe Revenue Authority to charge 150% in customs duty on second-hand vehicles, claiming Zimbabwe has become Japan’s largest warehouse of used cars. Speaking at a Zimra and parliamentarians workshop in Harare yesterday, Mudenda said the tax collector had the muscle to charge that kind of tax, since car importers were siphoning the much needed foreign currency. Zimra is currently charging up to 96% duty for used car imports.
China: Imports from BRICS countries grow 33.6% in first quarter (Global Times)
China’s imports from BRICS countries increased 33.6% year-on-year to 473.70 billion yuan ($70.16bn) in the first quarter of 2017, accounting for 8.1% of the country’s total imports, official data showed Monday. China will further increase imports from other BRICS countries, with the figure expected to reach $8 trillion in the next five years, Wang Shouwen, deputy minister of the Ministry of Commerce, told a press briefing.
India-Africa ties: economics and multilateralism (Mint)
The third point relates to the implicit assumptions behind private sector investments—that they will automatically generate more trade. Unfortunately, intra-Africa trade accounts for only 14% of Africa’s total trade. It is true that poor infrastructure slows down intra-Africa trade traffic, and therefore higher investments in road and rail infrastructure will surely help. The problem lies elsewhere- the lack of a trade facilitation culture and customs capacity which hinders cargo movement. India and Itec can definitely help here. More importantly, there are other opportunities for India. Data from the African Development Bank shows only 31% of Africa’s trade is backed by bank-intermediated trade finance. This is clearly an opportunity for Indian banks. India’s banking presence in Africa seems to have lost its relevance over time: The geographical footprint is built around traditional Indian diaspora habitats in east and south Africa, and operations are tailored around ethnic banking services. Late in entering Africa, Chinese banks have already acquired stakes in leading banks. If India is serious about its Africa initiative, a lot will depend on how it marshals its banking and financial sector there.
Global compact for migration: consultations update (UN)
Although the net benefits of migration far outweigh its costs, the public perception is often the opposite, a senior United Nations official pointed out, as the latest round of consultations on a global compact for migration began in New York. The consultation is the fourth in a series of six thematic consultations that will take place this year and feed into the drafting of the Global Compact for Safe, Orderly and Regular Migration, expected to be adopted by UN Member States in 2018.
