Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: FAO | Carl de Souza

Profiled tweet, @jattamensah: In Addis on 9/8/17, @_AfricanUnion finance ministers agreed to meet financing targets set in 2015 by 2020

Finance Ministers of the AU Member States: communiqué (AU)

We have put forward a set of proposals that should inform the forthcoming revision of the Scale of Assessment in line with the principles of equitable burden sharing, ability to pay, solidarity, equity, ownership and sustainability. We proposed that a new and more robust sanctions and incentives regime be adopted by the forthcoming January 2018 AU Assembly of Heads of State and Government in order to encourage Member States to effectively comply and pay their contributions on time. We welcomed the F10’s recommendation that after funding the budget of the African Union and the Peace Fund, any balance of the proceeds from the 0.2% levy on eligible imports be retained by Member States for their own development projects. We propose that the number of F10+ members, to be expanded to 15, and the AU Commission, through its Reform Implementation Unit, to take forward these outcomes and keep us regularly briefed on a bi-annual basis and this prior to Ordinary sessions of the AU Assembly. [Note: the statement is also available in French]

Dr Francis Mangeni: CFTA negotiations – the end game (tralac)

It is possible to have tariff schedules for the CFTA by December 2017, at least from a critical and sufficient number of countries, especially those that have embedded trade liberalisation and export strategies in their national development programs, if the tariff negotiations are done in plenary meetings in terms of every country presenting its tariff schedule for comment, requests for improvement, and finalisation as an initial package or outcome from this first round of negotiations, subject to subsequent regular rounds in future. However, if tariff negotiations are conducted on a bilateral basis, it will definitely be impossible to complete the tariff negotiations by December 2017 or even December 2018. The permutations or groups of bilateral negotiations to be conducted among close to 55 countries or customs territories will be multifarious and overwhelming.

Actual intra-Africa trade happens on only a few tariff lines. The idea here is to focus on these tariff lines and get a commercially meaningful CFTA. Less attention for the time being need be given to idle tariff lines, many of which due to geographical or cultural or economic conditions might never have products traded among African countries in the foreseeable future.

In addition, tariff lines with applied MFN rates currently at zero percent could be harvested fairly quickly if agreed upfront as a principle, on the understanding that applied tariff rates are the starting point for elimination and reduction in FTAs, according to some WTO rules. If in the next two or three rounds of negotiations, good progress is made in these three areas along the lines suggested above, then the CFTA can be launched this year 2017. The three areas are: the text for the Agreement including a regime on non-tariff barriers, rules of origin, and tariff schedules for opening Africa’s market. Then provision can be made for transition arrangements and a built-in agenda to take care of outstanding work. [The author is Director of Trade, Customs and Monetary Affairs at COMESA]

SADC Summit updates:

SADC Finance Committee meets ahead of Council of Ministers meeting (15-16 August); 37th SADC Summit: Harnessing public-private partnerships

Briefing by Bentry Chaura (Acting Director of FANR): Mr Chaura announced the launch of the SADC Regional Aquatic Animal Health Strategy (2016-2026) and the SADC Regional Aquaculture Strategy and Action Plan (2016-2026) which aim to improve national and regional aquatic biosecurity and aquatic animal health, and facilitate aquatic development and promote increase in aquaculture production and investment.

Briefing by Dr Lomkhosi Mkhonta-Gama (Acting Director of Industrial Development and Trade) and Mr Sadwick Mtonakutha (Acting Director of Finance, Investment and Customs)

$4.8bn trade volume between Egypt and African markets (Daily News)

Commercial relations between Egypt and African countries witnessed a noticeable increase in 2016, the trade volume amounted to around $4.8bn against $4.5bn in 2015, said Minister of Industry and Trade Tarek Kabil on Saturday. Kabil added that the increase in Egyptian exports was the main catalyst for the increase in the volume of trade exchange. Egyptian exports to African countries in 2016 accounted for about $3.4bn, while the value of imports reached $1.3bn. Moreover, the upcoming African tour of President Al-Sisi to the countries of Tanzania, Rwanda, Chad, and Gabon will represent an important step toward the strengthening of strategic relations between Egypt and the African countries, on both political and economic levels, according to the press statement. [Egyptian president to visit Rwanda this week]

Namibia: Statement by Ministry of Finance in response to Moody’s downgrade decision (pdf)

After having considered the statement the Namibian Government holds the strong view that a substantive rating change should have been preceded by an in depth assessment and engagement of the Namibian authorities instead of a desk review of developments in the corridors of international financial head quarters. This recent rating acting by Moody’s relied merely on an exchange of emails on a single item, that of outstanding invoices and how Government is planning to settle them. This is highly regrettable. A thorough assessment taking all factors into consideration would have been the proper way in dealing with reviewing Namibia’s sovereign credit rating. Government would like to use this opportunity to put a number of key factors into proper perspective. [Namibia: Finance Ministry Strategic Plan 2017/18 - 2021/22, pdf]

Namibia: Trump’s advisor keen to invest (New Era)

US President Donald Trump’s Advisor on North Africa and the Sahel region, Christopher ‘Chris’ Cox, visited President Hage Geingob yesterday at State House, where he expressed interest in bringing investors to Namibia in the areas of manufacturing, energy and agriculture. Cox, who was in Namibia for a one-day visit, said he came in his personal capacity and therefore had no message from Trump. Although Cox and Geingob had a closed-door meeting, the U.S. investor said he came to Namibia because of its stable political system and conducive environment for economic development.

Southern African countries receive support in testing products to facilitate market access (UNIDO)

The meeting (2 August, Pretoria) was organized by UNIDO, in cooperation with SADC’s Regional Laboratory Association, with funding from the Ministry of Foreign Affairs of Finland. Representatives of 11 Southern African National Laboratory Associations were in attendance. The participants worked on establishing a way forward for the efficient implementation of the project. Among others, two trainings will be held in the next eight months to help NLAs run their association in a sustainable manner and to bolster the capacity of food and water-testing laboratories in method validation and method uncertainty for both microbiological and chemical test methods – the latter being of particular relevance to the region as the main export is food.

AGOA ForumIntroductory remarks by Dr Okechukwu Enelamah, as African Co-Chair - Plenary 1

I am aware that there is wide scope for our exchange of views. We know that one size will never fit all. This is why, as Co-Chair, I would encourage frankness, openness and objectivity. This would be the best way to go about our exchange at this Panel. This said, several recurring points, preparatory to this 16th US/Sub-Saharan Africa Trade and Economic Cooperation Forum, merit our frank exchange, as we work to strengthen US-Sub-Saharan Africa trade relationship on the strategic foundation of AGOA. Several of these points include, but are not limited to the following: (i) explicit AGOA support for the regional integration process in Africa, in the context of the on-going Negotiations for the CFTA in Africa, that Nigeria has the honour to lead; and is committed to an end-of-year conclusion; (ii) an explicit AGOA Module to support the implementation of the WTO Trade Facilitation Agreement, which is critical to reduction of trade costs in Africa; (iii) how the value of US./Sub-Saharan African Trade, including under AGOA, which has been in decline, can and should be scaled-up, with targets, including through elimination of barriers in non-tariff forms;

AfDB policy briefs: from the ‘How They Did It’ series

(i) Ethiopia: lessons from an experiment. In this chapter, we will review industrial policy in Ethiopia with the aim of extracting lessons from the comparative review of labor–intensive export-oriented sectors, such as leather and leather products; capital-intensive, import–substitution industries, such as the cement industry; and high productivity modern agriculture, such as floriculture. These three sectors have different industrial structures and can collectively illustrate the practice of industrial policy and uneven outcomes in Ethiopia. [The author: Arkebe Oqubay]

(ii) Financing industrial development in Korea and implications for Africa. It is not surprising that many countries in Africa at low-income stages have had trade deficits for many years. That is basically due to weak export capabilities, compared with ever-strong demand for imported goods in African economies. Korea also went through the three decades of trade deficits, until it recorded its first trade surplus in 1986; since then, it has maintained a trade surplus. Korea, in the early 1960s, had a 1 to 9 ratio of exports to imports, which is much worse than a typical country in Africa. Thus, Korea had a huge savings gap with the domestic savings only at 9% of GDP and gross investment at 15% of GDP, thus relying on foreign borrowing to fill the gap. This illustrates why exports are so important and are the critical binding constraints for growth for an economy at lower or middle-income stages. Given that getting out of a trade deficit may take several decades, a country at a lower-income stage may find it necessary to take transitory measures to manage the balance of payments. In looking for specific policy tools, the past experience in Korea could be useful. [The author: Keun Lee]

(iii) Building effective clusters and industrial parks. An essential element of the fiscal decentralization in China is that career competition between regional officials at the same level is based on fiscal performance, which effectively mitigates the problem of incentive misalignment. However, the incentive design used in China may not apply to other countries. Due to differences in institutions, the forms of incentive mechanisms are likely to vary across countries and over time. In a country with strong state capacity like China, it is not an issue to earmark a certain area as an industrial park and provide it with favorable policies and infrastructure. But in some democratic countries, it may not be legitimate to offer special treatment to certain locations. The industrial park concept does not necessarily transmit well to all developing countries. It is necessary to bear in mind the limitations that apply to using the creation of industrial parks as a policy instrument to foster industrial development. [The author: Xiaobo Zhang]

India’s lacklustre approach towards international trade is hurting its foreign and economic interests (The Wire)

A strategically crafted foreign policy can not only benefit from trade and other domestic policies but can also provide critical inputs for them. For instance, India has been trying to regain its diminishing space as a supporter of developing and least developed countries at the multilateral trading system, which is primarily based on our trade and investment relations with Africa. Currently, mineral fuels, pharmaceutical products, non-railway related vehicles, boilers and related products are our key exports to Africa, and collectively comprise close to half of our exports to this region. A decline of around 11% was registered in the last fiscal. An in-depth diagnostic of reasons with a clear action agenda for boosting exports is needed. Without significant trade interests, we might not be in a position to forge a strong partnership with African countries, denying us an opportunity to act assertively in multilateral negotiations. Therefore, the political establishment will need to realise that trade policy is not just about trade. It should recognise linkages between domestic policy, trade policy and foreign policy, and ensure that the policies reinforce other. [Pradeep S. Mehta is Secretary General, CUTS International; Bipul Chatterjee and Amol Kulkarni of CUTS also contributed to this article.] [Deepak Nayyar: A strong rupee hurts the Indian economy]

Asean: The next 50 years (Manila Times)

As the new anxiety over globalization and multilateralism takes hold, the impact on the region can’t be ignored. Free trade will be curtailed, foreign investment will shrink, and most of Asean’s traditional markets will look inwards and turn away from foreign imports. The region will have to rely on itself. This is why expanded regional economic integration with larger nearby economies is crucial to our success and survival. The Regional Comprehensive Economic Partnership with six trading partners: China, Japan, South Korea, India, Australia and New Zealand must be concluded urgently. We are talking about turning existing bilateral trade agreements with these countries into one trading bloc. As protectionist tendencies grow in distant markets, it is only prudent to consolidate an economic community closer to home. There is no room for delay or procrastination, it is a matter of survival for the entire region. There is also an urgent need for solidarity in Asean’s dealing with external partners. Whether in strategic and security matters, trade negotiations or global issues, Asean needs a common and solid front more than ever. [The auhor Surin Pitsuwan is a former Secretary-General of Asean]

Emeka Anyaoku: Re-establishing Nigeria’s leadership position in the world (ThisDay)

Nigeria should also endeavour to reclaim its place and influence in the West Africa sub-region. ECOWAS is critical to Nigeria for economic and security reasons, and also because it is the country’s primary sphere of influence. And Nigeria must work to ensure that ECOWAS dwells more actively on inter-state infrastructural development, especially in the areas of transport and power in order to promote greater cohesion and integration of the sub-region. So also should Nigeria similarly, for security and economic reasons, pay greater attention to promoting cooperation in its other sub-regional associations namely, the Gulf of Guinea Commission and the River Niger and Lake Chad Basin Commissions. [The author was Commonwealth Secretary-General, 1990-2000]

Intra-regional fish trade in Africa: AU-IBAR communiqué

The objective of the meeting (2-4 August, Abuja) was to present the research, development findings and outputs by studies under the Fisheries Governance and Fish Trade Projects and to identify policy entry points that will enhance intra-regional trade of fish and fish products for improved and significant contributions to the Malabo goals of tripling regional trade by 2025. The workshop achieved the following outcomes: (i) Lessons and best practices shared for strengthening inter and intra-regional fish trade in Africa; (ii) Priority actions identified for strengthening inter and intra-regional fish trade in the continent; (iii) Priority entry points for harmonization of intra-regional fish trade policies identified. Participants adopted the following recommendations:

Today’s Quick Links:

South Africa: Draft Intellectual Property Policy released

DR Congo reinstates VAT on imports for mining companies (Reuters)

USTR: Initiation of the 2017 Annual Generalized System of Preferences Product and Country Practices Review

Non-oil trade at Dubai’s Jebel Ali Free Zone hits $80.2bn in 2016

Emir of Kano in China, seeks co-strategic investment plan with CPAFFC

Djibouti gives Rwanda more land for trade


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