tralac’s Daily News Selection
Underway at the WTO: WAEMU’s Trade Policy Review (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo)
Global Investment Competitiveness Report 2017-2018 (World Bank)
The report explores how FDI creates growth opportunities for local firms, assesses the power of tax holidays and other fiscal incentives to attract FDI, analyzes characteristics of FDI originating in developing countries, and examines the experience of foreign investors in countries affected by conflict and fragility. Combining first-hand investor perspectives with extensive research and data analysis, the report highlights the importance of a conducive and low-risk investment climate for multinational as well as local companies. It recommends specific reforms that can help countries attract foreign investment and maximize its benefits for development. “The Global Investment Competitiveness Report (pdf) goes beyond an examination of broad trends in foreign investment. It explores key drivers of FDI in depth,” said IFC Chief Economist Ted H. Chu. “It also offers practical and actionable recommendations to help developing countries ensure they get the most out of international investment.”
WTO Committee on Agriculture: preparing the ground for success at MC11
Report by Amb. Stephen Ndũn’gũ Karau, Chair of the Agriculture negotiations, to the meeting of the Committee on Agriculture in special session, 19 October: With that in mind, what do we need? Let me spell out seven elements which I consider as critical for our success. The first element is realism and pragmatism: The time has passed for Members to indicate their “wish list” for Buenos Aires. Our focus should be on what we think can realistically be achieved, while respecting our own “red lines” as well as those of other Members’. The second element which directly derives from the first one is prioritization and focus: As mentioned by the DG at the Informal Heads of Delegations a month ago and again at Marrakech, we need to prioritize the issues and agree on the types of outcomes that can realistically be envisaged at MC11. We do not have the luxury of time to discuss possible outcomes that remain elusive. We must concentrate our discussions on outcomes that can realistically be achieved.
WTO Sub-Committee on Least-Developed Countries: market access for products and services of export interest to LDCs
The LDCs continued to record a sizable trade deficit, which reached $92.9bn in 2016, representing a nine-fold increase compared to the trade deficit in 2005. On the positive side, the sharp reduction of prices of primary commodities in 2015 had almost come to a halt in 2016, with the exception of energy prices. The stable prices of food and beverages have helped agricultural exporters to somehow arrest negative export growth. In 2016, the top merchandise exporter within the LDCs was Bangladesh (share of 24%), followed by Angola (17%) and Myanmar (8%). While the top ten exporters represented almost 80% of LDCs’ exports in 2005, this share went down to around 76% in 2016 – indicating a slight decrease in terms of country concentration among the LDCs. The share of primary products in total exports of LDCs continued to decrease in 2016 – from 73% in 2005 down to 49% in 2016. This was mostly due to the lower value of exports of petroleum products (HS 27.09, 27.11 and 27.10), which constituted more than half of all LDC exports in 2005, but accounted for only about a quarter (26%) of LDC exports in 2016. In contrast, the share of manufactured products in LDC exports increased from 21% in 2005 to 40% in 2016. This was mainly due to a higher share of clothing products in LDC merchandise exports, which increased from 13% in 2005 to 29% in 2016.
US Trade Representative Robert Lighthizer has announced a new effort to ensure beneficiary countries are meeting the eligibility criteria of the Generalized System of Preferences trade preference program. This new effort includes a heightened focus on concluding outstanding GSP cases and a new interagency process to assess beneficiary country eligibility. The first assessment period will focus on GSP beneficiary countries in Asia. The Trump Administration will assess GSP beneficiary countries in other parts of the world in the second and third years of this process.
The ocean economy in Mauritius: making it happen, making it last (World Bank)
The book aims at assessing the overall potential of the Ocean Economy (OE) to contribute to Mauritius’ development, at identifying key sectoral and cross-cutting challenges to be overcome in order to seize that potential; and at evaluating ways to ensure the OE’s longer-term sustainability, addressing in particular environmental and climate change concerns. While the book discusses specific projects in selected sectors, this is intended only to illustrate opportunities and challenges (including in terms of resource mobilization); an appraisal of the technical and financial feasibility of individual projects would go beyond the scope of this work and would have to be conducted as part of separate follow-on activities. This book reflects data and information available as of March 31, 2017. Extracts (pdf): Doubling Mauritius’ ocean economy is possible and worthwhile, but it will take time. Based on a macroeconomic modeling of the country developed in partnership with the Government of Mauritius, the book finds that doubling the GDP share of the OE (the “O2” strategy) is possible; but achieving such a target is likely to take to at least 15 years. Attempts to pursue the O2 target over a shorter period may well result in undesirable economic outcomes, such as diseconomies of scale, price increases, excessive use of natural resources, and fiscal imbalances. The required investments are large but achievable. Over the next 10 years, with investments on the order of $580m per year, the O2 strategy can yield considerable growth results, including an increase in the OE GDP of 62% in absolute terms and 38% in terms of its share of the national total (rising from 12.6% to 17.5%).
Forthcoming IORA Workshops: Regional strategy to address the sustainable management and development of fisheries resources in the Indian Ocean Rim region (30-31 October, Zanzibar); Marine spatial planning: towards sustainable use of the Indian Ocean (22-23 November, Mauritus)
South Africa and IORA: New links to Indian Ocean Rim can bolster Africa’s blue economy; IORA Council of Ministers: Durban communiqué (18 October)
ECOWAS Currency Programme: updates from 4th meeting of the Presidential Task Force
(i) West African leaders plan shared currency by 2020. A group of four West African presidents said on Tuesday they planned steps to accelerate the creation of a shared currency for the 15-country ECOWAS bloc by 2020, according to a joint statement. The future currency, whose name is yet to be determined, would replace the dominant CFA Franc introduced by former colonial power France in 1945, and whose treasury still backs it. “Our region needs this unifying instrument, symbol of our shared destiny, to consolidate our customs union,” ECOWAS chairman and Togolese President Faure Gnassingbe said on Twitter. The statement was from the presidents of Togo, Ghana, Niger and Ivory Coast who form part of a task force on the envisaged currency. A committee is planned to lead the efforts, it said. But the president of the biggest economy in the region, Nigeria, urged caution, citing difficulties in the euro zone.
(ii) Nigeria wants single currency for ECOWAS slowed down. The president said domestic issues in ECOWAS member countries relating to their constitutions and dependence on aid continue to affect the framework for implementing the single currency in the sub-region. He said “although the ECOWAS Commission has anchored its pursuit of the new impetus to monetary integration on “the information presented to the Heads of State which were the basis for their recommendations”, we are concerned that we have not properly articulated and analysed a comprehensive picture of the state of preparedness of individual countries for monetary integration in ECOWAS by 2020. “In previous meetings, we had specifically raised observations on the state of preparedness of the member states, the credibility of the union if anchored on watered down criteria, and the continuing disparities between macroeconomic conditions in ECOWAS countries, amongst others. And I would like to reiterate this concerns.” The president told the Heads of State that the conditions that pushed Nigeria into withdrawing from the process in the past had not changed. [Note: The Presidential Task Force will hold their next meeting in Accra, in February 2018]
Botswana: International merchandise trade statistics, July 2017 (pdf, Statistics Botswana)
Botswana recorded a trade deficit of P1, 006.0 million in July 2017. The deficit was influenced by the decrease in diamonds exports. During July 2017, total exports were valued at P4, 791.7 million, showing a decrease of 15% from the June 2017 value of P5, 635.0 million. This decrease was mainly due to the decrease of 19.8% in diamond exports, from P5, 187.3 million in June 2017 to P4, 160.2 million in July 2017. During July 2017, total imports were valued at P5, 797.7 million showing an increase of 29.2% from the June 2017 value of P4, 489.0 million. This increase was mainly attributed to the increase in imports of commodities such as fuel, machinery and electrical equipment and chemicals and rubber products to mention but a few. SACU was the major source of imports into Botswana, accounting for 71% of total imports during July 2017. South Africa was the main source of imports within the Union, with a contribution of 70% to total imports during the month under review.
Yash Ramkolowan: What is fair SACU customs compensation to the BLNS? (DNA Economics)
So, what does this all mean for SACU? Considering the current deadlock in SACU negotiations (particularly around the revenue sharing arrangement and the creation of a regional tariff board), it does need to be acknowledged that the BLNS have been more than fairly compensated for the externalisation of their tariff policy. Acceding to this point may finally ensure that the BLNS are able to play a greater role in determining SACU’s trade and industrial policy. The analysis also suggests that the transparency and clarity of revenue distribution for “compensation” and “development” purposes can be improved. This could finally move SACU beyond a short-term and narrow focus on fiscal compensation, and toward a regional agenda that is more substantively concerned with the common and long-term development needs of all SACU member states.
Beyond the government policy sphere, technological innovations (e.g., in fintech) and new market practices (e.g., in green banking and regarding disclosures of climate-related risks) are generating opportunities and expanding demand for green FDI. These developments present promise for a sustainable economy, but raise new governance challenges that will need to be addressed. In summary, there is reason to be hopeful about the potential contributions of green FDI; but real progress requires a more accurate and robust definition of “green FDI”, and stronger commitments across different layers of government and by private sector actors to ensure FDI helps address modern environmental challenges. This paper attempts to aid the effort by taking stock of where we are and highlighting potential ways forward.
The ‘new’ digital economy and development (pdf, UNCTAD)
This technical note adopts the term NDE to frame a set of technologies and processes that most prominently include: 1) advanced production equipment, robotics and factory automation, 2) new sources of data from mobile and ubiquitous Internet connectivity, 3) cloud computing, 4) big data analytics, and 5) artificial intelligence. These technologies and processes are mainly based, in one way or another, on advanced information and communications technology (ICT). They seem poised to dramatically reduce demand for routine tasks and transform the location, organization, and content of knowledge work. Broad policy questions include:
International Debt Statistics 2018 (World Bank)
IDS 2018 presents statistics and analysis on the external debt and financial flows (debt and equity) of the world’s economies for 2016. It provides more than 200 time series indicators from 1970 to 2016 for most reporting countries. The new IDS format includes aggregate tables detailing the debtor and creditor composition, maturity structure, and debt burden, in relation to GNI; export earnings for each country and relevant regional and income groups; and a user guide. Extracts: A doubling of bilateral lending, driven by BRICs, notably China: New loan commitments from bilateral creditors to low- and middle-income more than doubled in 2016 to $84 billion. This rise was driven by financing from other low- and middle-income countries, primarily the BRICs, and notably China with its “One Belt One Road” initiative to build an integrated international economic corridor encompassing more than 60 countries in various regions. Foreign direct investment fell to its lowest level in 8 years: Traditionally, FDI has been the largest and least volatile component of external financial flows to low- and middle-income countries but 2016 showed that it is not immune to adverse developments in the global economy. FDI inflows fell 10% to $481bn - a level not seen since 2009.
Today’s Quick Links:
EAC Development Partners Forum: update
Exporting to South Africa: USDA Exporter Guide