tralac’s Daily News Selection
Regional integration is the key to Malawi’s trade success, according to a new ITC report (pdf) that uncovers the country’s greatest untapped export potential in agro-processing. This report is a roadmap for Malawian exporters and policymakers to identify higher value-added products and markets with growth potential, as well as giving guidance to realize these opportunities and overcoming production challenges. These are the key findings:
(i) The future of Malawi’s trade performance hinges on its effective integration within the region. SADC is the natural market for Malawian exporters where 39% of the country’s untapped export potential ($154.4m) lies. Realizing these opportunities should help create a solid export basis for the country while also enabling to acquire the experience needed to reach more distant markets.
(ii) Untapped export opportunities in the SADC region comprise a mix of Malawi’s traditional and novel export sectors. Among traditional exports, raw cane sugar, black fermented tea, groundnuts, maize seeds for sowing, dried peas, and wood-related products offer room for export growth, ranging from $30.6m to $3.7m. Among non-traditional exports, Malawi recently increased its exports of chicken eggs to Mozambique dramatically (353% annual growth between 2011 and 2015), a performance that opens the door to further regional opportunities valued at $29.7m for chicken eggs. Plastic products also have an unrealized potential for intraregional trade, amounting to $8.9m.
(iii) Regional markets will be at the heart of future competitiveness. Malawian exporters remain generally competitive vis-à-vis other suppliers in the regional market. Other SADC countries offer a natural testing ground for diversification opportunities, in particular for processed products based on raw materials currently exported. The development of an oil processing industry seems to be the most natural path for the country’s industrial development.
Malawi’s export potential is concentrated in eight sectors (see Figure 5: traditional ones like sugar, tea, oilseeds, wood and vegetable products, pulses and other cereals, and non-traditional ones like animal products and plastics). These sectors represent 91.7% of the country’s total export potential and 91.9% of its total unrealized potential. Two traditional products – raw cane sugar and black tea in bulk –, together account for 49.4% of Malawi’s total export potential, and enjoy high demand worldwide. The country has not yet managed to develop any significant export potential in other products within the sugar or tea sector. The remaining six sectors account for 42.3% of total export potential. [Malawi 2017 external debt rises to record $2.06bn]
CHOGM week: selected trade policy, trade facilitation updates
Theresa May’s speech at the Commonwealth Business Forum: Greater use of these international standards across the Commonwealth will reduce the costs of trade between members, as well as with partners beyond the Commonwealth, for greater global benefit. That is why the UK will be funding an all-new Commonwealth Standards Network, which will support developing countries in particular to better meet existing international standards. The network will provide a significant opportunity for national standards experts to collaborate and share best practice.
Cyril Ramaphosa’s speech at Commonwealth Business Forum Banquet: The establishment of the free trade area in Africa will revolutionise economic activity on the continent, enabling the transfer of goods, services, skills and technology, and access to a market of over a billion people. However, the creation of a free trade area alone it is not enough. It needs to be accompanied by the development of the infrastructure that is going to carry these goods and generate the power that is going to enable their production. It needs to be accompanied by investments in universities, schools, hospitals and clinics, communication technology and water reticulation. For South Africa, continental integration is fundamental to the advancement of our national agenda. It is only through greater investment and trade between African countries that we will be able to address our own challenges of poverty, inequality and unemployment.
Uhuru Kenyatta’s speech at Chatham House: London is the global centre of banking and investment; it is a city that urgently seeks out more investment opportunity and higher yields. Kenya and East Africa is full of energetic and ambitious young people who can build goods and services for a rapidly growing middle class and population. We need to do more to lower the cultural, bureaucratic and communication barriers to that investment. You can do more to support British investors making bets on big opportunities in Kenya. You can make it easier for Kenyan businesspeople to travel to the UK. You can be ambitious in crafting a trade deal with Kenya that will be a shining example to the rest of the Commonwealth and the world. We will walk with you each step of the way. On our part, as Kenya, we can do much more to lower the barriers to investment at scale. You will have noted that we made aggressive reforms in the ease of doing business during my first term. We will do even more. Our infrastructure will be ready for investors and sharply increased trade.
Muhammadu Buhari’s speech at Commonwealth Business Forum: If there is a collective Commonwealth commitment to the ease of doing business, we shall spur growth, multiply wealth and expand employment opportunities. These objectives will be accelerated by trade and investment facilitation.
Liam Fox’s speech at the Commonwealth Business Forum: Both the UK and India have benefited greatly from the Joint Trade Review process and agreed at the Joint Economic and Trade Committee in January 2018 that we should seek to share the experience with other Commonwealth countries. To that end, the Review guide will be posted on the Commonwealth Secretariat website and Commonwealth members can - if they wish - use the same methodology to improve trade with other member states. We want the trade elements of this CHOGM to become a process and not an event.
Bangladesh Prime Minister Sheikh Hasina: 7-point proposal to promote intra-Commonwealth trade
Cyril Ramaphosa tells the Financial Times: “I’m approaching it with a private-sector lens”
Rob Davies, Liam Fox statement: UK and South Africa welcome progress on trade relationship
New Delhi pitches for trilateral trade between India, UK, Africa
Jitesh Gadhia, Tom Tugendhat: Delhi and London can leverage this forum to unleash an agenda of trade and prosperity
The UK and India: bilateral trade relationship
Mutharika tells Commonwealth Business Forum: Malawi guarantees security for investors
Russian investors express difficulties accessing African markets (Business Post)
Russian business lobbying groups together with about 40 business and industry heads have shown interest in exporting Russian products to African markets but said they were faced with difficulties in accessing market facilitation procedures with a number of African countries. Deputy Director of the Department of Asia, Africa and Latin America of the Ministry of Economic Development of the Russian Federation, Alexander Dianov, spoke about the non-financial support measures for Russian companies operating within the department, informed that “currently, there are 10 intergovernmental commissions between the Russian Federation and African countries.” At the same time, he said that “there are trade missions only in four African countries, and if you take sub-Saharan Africa countries, the trade mission operates effectively only in South Africa. It is obvious that there is something to work on in terms of developing the infrastructure to support Russian business. If there is a serious request from the business community, we are ready to expand the geography of our presence.”
The next stop is the AU as the body’s commission for trade is convening the “largest-ever gathering of community innovation hubs” on the continent next month in Kigali in partnership with i4Policy. To ensure widespread representation, i4Policy is calling for applications from hub representatives across the continent and hopes to have at least 75 startup and innovation hubs represented. Leading hubs including Nigeria’s Co-Creation Hub, Ghana’s Kumasi Hive and Rwanda’s Impact Hub have already confirmed participation. Policy recommendations will be passed on to the AU’s Head of States Summit.
Over the past few weeks, a host of submissions have been put forward by WTO members as part of exploratory work to support future talks among interested parties on the trade-related aspects of e-commerce. The submissions show indications of potential overlapping interest in exploring several specific areas, including market access commitments, trade facilitation, consumer protection, and data flows. The coalition working on the next steps for the joint statement will reconvene next month and again in June, followed by a stocktaking exercise in July, sources said.
Globalisation has brought the most advanced trading networks the world has seen, with the biggest, fastest vessels, robot-operated ports and vast computer databases tracking cargoes. But it all still relies on millions and millions of paper documents. That last throwback to 19th century trade is about to fall. AP Moeller-Maersk and other container shipping lines have teamed up with technology companies to upgrade the world’s most complex logistics network. The prize is a revolution in world trade on a scale not seen since the move to standard containers in the 1960s — a change that ushered in the age of globalisation. But the undertaking is as big as the potential upheaval it will cause. To make it work, dozens of shipping lines and thousands of related businesses around the world — including manufacturers, banks, insurers, brokers and port authorities — will have to work out a protocol that can integrate all the new systems onto one vast platform.
Global economy sprinting ahead but trade war could end the race: Reuters poll
The global economy will race further ahead this year, expanding at its fastest pace since 2010, but trade protectionism has the potential to quickly tire it out, the latest Reuters polls of over 500 economists worldwide suggest. Just three months ago, most economists said threats to the global economy from protectionist policies, particularly President Donald Trump’s “America First” trade policy, was slowly fading. That changed after Trump imposed import tariffs on certain commodities and China retaliated. The dispute is going to damage economies across the world from the Americas, to Europe and across Asia, according to nearly 90% of 230 economists who answered a separate question on the regional impact from the ongoing trade spat.
Today’s Quick Links:
IMF’s Tao Zhang on Angola: ”We have received a letter from the Angolan authorities for IMF staff to initiate discussions on an economic program that could be supported by the Policy Coordination Instrument.”
Financial Times: Reputation for stability lures new foreign investors to Senegal
Afreximbank Research: Trade Update March 2018 (pdf)
Working group on measuring e-commerce and the digital economy: note by the UNCTAD secretariat (pdf)