tralac’s Daily News Selection
Today, by video conference: 3rd meeting of the CFTA TWGs, dedicated session on Annex A – Trade in Goods
tralac Discussion: The final Trade Remedy arrangement of the Tripartite Free Trade Area
The final legal arrangement for Trade Remedies (TRs) in the Tripartite Free Trade Area has just been concluded. The TR Annex and the Guidelines on TRs were still outstanding when the Agreement was signed. They are now available. We take a look at what is provided for, how the arrangement will function, and to what degree “flexibilities” have been incorporated. The negotiations for the Continental Free Trade Area are also under way. Provisions on the same disciplines must be adopted. What lessons can be learned from the TFTA? [The author: Gerhard Erasmus] [Note: tralac welcomes comments from readers]
Uganda: Cabinet approves ratification of the TFTA (The Independent)
Cabinet has approved the ratification of the EAC-COMESA-SADC FTA, paving way for the implementation of the Agreement. With Cabinet approval, Government has started the process of drafting the legal instrument that will form the basis of Uganda’s implementation of the TFTA Agreement. “Now that South Africa has signed the agreement and is in the process of ratifying it, we see no reason not to ratify” said Trade Minister Amelia Kyambadde. Kyambadde says Uganda stands to benefit greatly from the TFTA given the fact that Uganda’s biggest export market is in the region, which accounts for about 56.1%, and is instrumental in the country’s drive for product and market diversification. She allayed fears from the Ministry of Finance that by Uganda opening up her borders in a Free Trade Area arrangement it would affect the revenue collection by Government, now that imports from the three regional economic blocs will be entering Uganda duty free. “The focus in regional integration should not be on revenue losses, but on how to maximize the benefits that accrue from bigger market access”, explained Kyambadde.
(i) Report of the African Ministerial Consultative Group (pdf). The AUC Trade and Industry Commissioner mentioned that in order to tackle the under-utilisation issue, the AUC in collaboration with UNECA, has offered to host a workshop on ways and means to maximise AGOA utilisation during the African Economic Platform scheduled for March 2018 in Mauritius. He concluded saying that we need to work on the post-2025 arrangement where we could have a US-Africa agreement rather than bilateral agreements between individual African countries and the US.
(ii) USTR Robert Lighthizer: closing statement. “Africa is better positioned than ever before to sell to and buy from the United States. Since AGOA came into effect, regional real GDP has more than doubled and robust economic growth has helped reduce poverty and raise living standards across the continent. Bilateral trade that benefit both US and African exporters and service providers lies at the core of our Africa trade policy. I encourage our AGOA partners to promote fair trade, foster an improved business environment, and create economic opportunity that lays the groundwork for the next stage in the US-Africa trade relationship.”
Related, from tralac: Trade in second-hand clothes – the bigger picture. This brief examines the pattern of trade in second-hand clothes using International Trade Centre Trademap, at the highly disaggregated level of HS8. This brief examines trade in this commodity at continental level, reviewing a few country-specific examples, and then concludes by considering some implications of bans on the trade in second-hand clothes. [The author: Brian Mureverwi]
(i) The Standing Committee of Senior Officials began their meetings yesterday in Pretoria. This is the first meeting in a series of proceedings leading to the 37th Ordinary SADC Summit of Heads of State and Government scheduled to take place on 19–20 August in Pretoria under the theme: Partnering with the private sector in developing industry and value chains. The Standing Committee of Senior Officials is a technical advisory committee to the SADC Council of Ministers, and meets twice a year. It consists of one Permanent/Principal Secretary, or an official of equivalent rank from each Member State of SADC, preferably from a ministry responsible for economic planning or finance. [Media programme, pdf]
(ii) Zimbabwe and the SADC trade protocol. Addressing journalists yesterday Dr Bimha said Zimbabwe will attend the meeting with the aim to push for the amendment of clauses enshrined in the trade protocol as the country benefits less from it. “We would like to see an amendment in the clauses of the protocol which will then enable us to submit our own position as per requirement of the protocol on trade. The protocol itself has certain clauses we are not happy with, for example, they say consideration can only be taken when you want to apply for derogation only when you are talking of nothing more than five products. This is not practical because we have more than five products.”
(iii) Seychelles cabinet approves a Citizens’ Engagement Platform to undertake a national stakeholders consultation in preparation for reporting to SADC on the Regional Initiative Strategic Development Plan.
(iv) DBSA to fund SADC infrastructure. Mr Mohan Vivekanandan, a DBSA group strategy executive: “DBSA aims to deliver R100bn for infrastructure development by the 2019 to 2020 period. We are targeting to invest at least 2% out of this amount into SADC infrastructure every year in the medium to long term.”
“The Bugesera International Airport is an important part for Rwanda’s strategy for socio-economic transformation, it is key to our ambitions to grow tourism and trade, aviation, finance and ICT sector,” President Kagame said. Beyond its local impact, Kagame said that the proposed facility will also an important component in boosting intra-Africa trade which currently stands at around 15 per cent, as well as strengthen economic integration in the EAC region. Mota Engil Africa has a majority stake in Bugesera Airport Company with 75% while the government has 25% stake. Bugesera Airport Company will build, own and operate the facility for 25 years before transferring it to the government.
Botswana: Article IV Consultation (IMF)
In 2015, the authorities adopted a roadmap for reforming Botswana’s business environment, but progress now needs to be accelerated. For instance, important reforms such as the one government principle, reducing the excessive number of licenses and permits (which are already approved), and establishing creditors databases, still need to be implemented. Insufficient progress with these reforms has highlighted the importance of strengthening capacity, ownership, and accountability of the entities responsible for implementation. In addition, regular updates on the implementation of the reforms could be submitted to Cabinet to increase accountability. Proceeding with pending reforms and investments on the above areas will lower costs and foster private investment and employment. In particular, the following actions will be important in the period ahead:
Mozambique: Public-private pacts in poultry and cotton for economic transformation (IGC)
The two agribusiness value chains that we focused on in Mozambique – poultry and cotton – have demonstrable potential for significant expansion on a competitive basis without artificial barriers. The Mozambican poultry and cotton sectors differ in many important ways – poultry is an import-substitution sector, while cotton is export-oriented, and they have very different capacity utilisation rates. The formal slaughterhouses producing frozen chicken are operating at, or even beyond, their installed capacity. The cotton gins, on the other hand, have been operating at less than 40% capacity utilisation for lack of raw material, which increases their unit cost. Farmers achieve very low yields and are simply not producing enough cotton at the prices that can be paid by the ginning companies, considering international market conditions. The pacts, therefore, would take very different forms and reflect the nature of the specific constraints identified in each sector. [The author: Jorrit Oppewal]
Zimbabwe: Companies dodge standards certification (The Herald)
A majority of Zimbabwean firms’ products and systems are not certified to national or global quality standards, with only 140 out of a possible 5 000 having taken certification standards, according to the country’s national standards body. Standards Association of Zimbabwe executive director Eve Gadzikwa: “We are still a long way out. My appeal is that we do have a very competent, world class standards body, however, the uptake is very slow. We did our research in terms of companies that can take up standards and we realised that there are very few companies that are doing it relative to those with the potential,” Dr Gadzikwa said. Factors cited for reluctance or the slow uptake of standards by Zimbabwean companies include capacity to go through the rigorous certification process and to sustain the standards.
“Zimbabwe stands to lose business running into millions of dollars if it doesn’t quickly move to speed up the completion of the Beitbridge-Chirundu highway,” said one industrialist. “Shipping and forwarding agents are now relocating to Botswana as cargo movement along the route is building up slowly and steadily. It’s competition at play and a healthy one for that matter. Truckers are moving cargo from South Africa to Zambia and DRC in less than four days despite the use of ferries across the Zambezi River. To move cargo across Zimbabwe to DRC for instance may take a week or more. Roadblocks, potholes and the poor state of the highway make Beitbridge-Chirundu trunk road unattractive.” More than 6 000 trucks are cleared at the Beitbridge Border Post every month raking in more than $816 000 monthly to the fiscus, according to the Shipping and Forwarding Agents’ Association of Zimbabwe.
In a deal being arranged by SBM Group, a leader in the financial sector in Mauritius, Afreximbank is launching a $300m equity offering, using Depositary Receipts backed by its Class “D” shares. This represents the first time a supranational bank is issuing Depositary Receipts through an African stock exchange. For Afreximbank, the rationale for the Depositary Receipts issuance is the need to enhance its capitalization in order to significantly narrow the trade financing gap in Africa, currently estimated at $120bn annually, and to meet its strategic objective of growing intra-African trade in all regions of the continent, including island economies.
The workshop (30 July - 3 August) brought together nearly 45 managers and executives from different functional areas of customs and related agencies. The main objective of the workshop was to enhance the internal capacity of all stakeholders concerned with import-export from all government agencies, private sector, logistics operators etc. in Sudan so that they can conduct a TRS in the country on their own and prepare a strategically targeted TRS communications product to build consensus for the much-needed coordinated border management reforms.
Ghana: Government to remove all internal customs barriers (GhanaWeb)
“From 1 September, we are also removing all domestic internal customs barriers so that goods can move freely,” Dr Bawumia said when members of the ECOWAS Parliament paid a courtesy call on him on Wednesday. He said the slow nature of integration is as a result of the lack of political will on the part of respective governments over the years and that is hampering trade within the sub-region. Dr Bawumia explained that the move to remove custom barriers will ensure that goods being carted from one location to another within Ghana “can move freely through the country to each of the borders without being stopped at any town for Customs checks”. [Ghana-Togo border open 24 hours]
For countries just emerging from conflict or disaster, the IMF’s technical assistance focuses on ensuring that basic tax revenues are collected, based on easy-to-collect taxes at the border, as well as a few high-yielding excise taxes, and introducing simple organizational structures and basic processes for tax and customs administration. For expenditures, the emphasis is on gaining control over the budget, including preparing and executing the annual budget and consolidating cash resources so the government can meet its immediate payment obligations. Once countries become more stable, the emphasis shifts to medium-term goals, such as improving the design of the major taxes or introducing a value-added tax, establishing large and medium-size taxpayer offices, and introducing medium-term budgeting and IT systems to support public financial management. Experience has taught us a few key lessons for countries and development partnership: [The authors: Katherine Baer, Sanjeev Gupta, Mario Pessoa]