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tralac’s Daily News Selection

tralac’s Daily News Selection
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11 Jun 2018

AfCFTA Ratification Barometer: Niger becomes the fourth state to deposit its instrument of ratification with the African Union

Starting today, in Cape Town: COMESA-EAC-SADC Tripartite meeting on TFTA issues. The trade ministers meet on 18 June. A preview by Dr Francis Mangeni:

The Tripartite as the tipping point for the recent high momentum in continental integration is not adequately recognised in some circles. What is more, is that negotiating the Tripartite for three years and a half imbued a large number of the very same negotiators with practical experience and insight on issues that came up for ACFTA. Most of the ACFTA instruments, especially the annexes, were in fact derived from the Tripartite versions; the similarities are there for everyone to see. This backdrop means that the COMESA-EAC-SADC Tripartite Ministers might wish to envisage the Tripartite as a fast-track for the ACFTA. The Tripartite has started formulating tools and instruments for trading under the FTA and continues to use existing mechanisms on addressing NTBs. The Tripartite RECs have already negotiated four priority services sectors, namely, transport, communication, finance and tourism, which could be early harvest for the AFTA. And the robust technical committees and trade facilitation instruments of the Tripartite RECs could provide institutional frameworks for implementing AFTA at the regional levels.

South Africa’s ratification of the TFTA moves a step closer this week. The National Assembly’s Portfolio Committee on Trade and Industry meets on Wednesday to consider the Tripartite Free Trade Agreement

AfCTA: Towards the finalization of modalities on goods – toolkit (ATPC/UNECA)

African Union member States have agreed to remove 90% of their tariffs on goods over a period of between 5 and 15 years, depending on whether a country is classified as developing or least developed, with special and differentiated treatment for the group of seven countries, which are, as mentioned previously, Djibouti, Ethiopia, Madagascar, Malawi, the Sudan, Zambia and Zimbabwe. It has not yet been determined, however, whether the 90% of tariffs (also referred to as non-sensitive) that is to be completely liberalized relates to the percentage of total product lines or to the share in the country’s total value of imported products. Moreover, there are uncertainties regarding how the remaining 10% of tariffs will be treated. According to the modalities agreed at the AU Ministers of Trade meeting in Niamey in June 2017, the remaining 10% is to be split between sensitive and excluded products. Sensitive tariffs are to be accorded a longer time frame for liberalization while excluded tariffs are not subject to liberalization. However, the exact share of tariffs accorded to either group has not yet been determined. Against that background, the present toolkit aims to provide guidance for African policymakers and negotiators on how they could possibly resolve the above mentioned issues that remain to be addressed under the AfCFTA negotiations in relation to the modalities on goods, with a view to bringing that aspect of the negotiations to a successful conclusion.

Conclusion and recommendations: extract (pdf): The findings, as illustrated by the case of ECCAS for a model tariff offers, clearly indicate that a double qualification approach is more aggressive than an approach relying only on tariff lines, as far as tariff cuts are concerned. It should be noted that although there are pronounced differences across countries and regions (due to different tariffs and import structures), the main messages coming out from the example of ECCAS can be generalized to all other African countries and regional groupings. In other words, a tariff line approach (scenario 1) — even if extremely ambitious (for example, up to 99 per cent of tariff lines liberalized) — will result in relatively limited liberalization of imports for most countries and regional groupings as compared to a double qualification approach (scenario 2). This suggests that a tariff line approach for liberalization of goods under the AfCFTA agreement could lead to at least four potential issues:

Underway in Lilongwe: The Southern Africa Regional Integration Stakeholder Forum. The theme: The private sector and regional integration in Southern Africa - accelerating opportunities for investment and growth. Extracts from the background paper:

Furthermore, it is worth mentioning that the generally high degree of de jure openness of SADC’s services trade policies may not always imply de facto openness as most countries still retain a significant degree of regulatory and policy discretion. For instance, from retail to banking and insurance, the allocation of new licenses remains opaque and discretionary in a number of countries. In the same vein, there are instances in which sectors appear de jure entirely open, yet the license fees are prohibitively high.

In summary, while the overall picture of services trade liberalization in the regional economies seems reasonable when compared to established policies outside the region and the continent, it is clear that there is potential for improvements, especially in countries such as Zimbabwe and DRC. It is generally recognized that liberalizing trade in services is not an easy task and involves addressing complex technical issues related to regulations and standards. However, the benefits to be derived are immense. Considering the complexity of the process, it might be relatively easier and less challenging to deepen and strengthen integration of services markets at the regional level, while smoothly integrating to the global markets. Evidently, to the extent feasible, policies should not systematically discriminate against services providers outside the region. It is also important to emphasize that the regional integration of services markets is closely linked to the aspired integration of goods markets, especially with regard to services providing connectivity such as transportation and telecommunications.

Deeper regional integration would inject greater competition in the markets and create many investment opportunities for the private sector. This is true not only for backbone services such as telecommunications, banking and transport, but also possibly to a larger extent, for business services, including professional services, where the issue of labour mobility within the region becomes particularly relevant. As the restrictiveness index in professional services (Figure A5) shows, the sector is highly protected in most of the countries and substantial gains can be expected to be derived from greater integration given the underdevelopment of this sector in the region.

The transition from Least Developed Country status (Development Matters)

Looking ahead, an unprecedented number of LDCs will graduate by 2021, with four countries recommended for graduation and two more scheduled for graduation in 2020 and 2021. However, forthcoming LDC graduates will do so mainly because of their country income status as opposed to substantial progress on the reduction of economic vulnerabilities. This raises obvious concerns regarding sustaining their development momentum as well as advancing on the broader 2030 Agenda and the Sustainable Development Goals. Thus, what can be done?

In view of this, we have pioneered an approach, for example, to assess the attractiveness of a country for infrastructure financing, which we piloted in Mozambique in partnership with the City of London. Major findings suggest the potential for leveraging the principles embodied within the Commonwealth Charter for Infrastructure Development. Given this, the Commonwealth Secretariat produced evidence-based research that we disseminated to transitioning member states via a toolkit. This assessment framework is an adaptation of a tool called InfraCompass developed by the Global Infrastructure Hub. The InfraCompass tool assesses six categories: Governance, Regulatory, Permits, Plans, Procure and Delivery. However, given the challenges LDCs face and based on the findings from the application of the GIH to Mozambique during March 2017, the InfraCompass assessment framework had to be modified. This entailed removing unnecessary evaluation criteria as well as creating two additional categories. [The authors: Dr Jodie Keane (Economic Adviser), Dr Howard Haughton (Quantitative Analyst), Commonwealth Secretariat]

Botswana: IMF completes 2018 Article IV visit

Notwithstanding the envisaged short-term economic recovery, the diamond and government-led development model has been showing limitations with lower average GDP growth and slow job creation in recent years. The authorities recognize this and, as noted in the 11th National Development Plan, an approach focused on private sector development and enabling growth in selected sectors is needed to lower unemployment and diversify exports. The diversification and job creation efforts requires focus on prompt and bold market friendly reforms that can reduce the costs of doing business, improve skills in the labour force, make the public sector more efficient, privatize key enterprises, and enable competition and entry of firms in sectors with latent comparative advantage. In this regard, the staff team welcomes the authorities’ recent announcements of their intention to liberalize visa and work permits’ policies, reduce bureaucratic requirements, and privatize inefficient enterprises. Ultimately, however, the success of these reforms will depend on the speed and determination with which they are implemented (including an accelerated passage of supporting legislation), together with accountability among government entities and enhanced monitoring and evaluation of results.

Nigeria’s bilateral trade relations: a suite of updates

(i) Morocco, Nigeria agree on next steps for offshore/onshore gas pipeline. Morocco and Nigeria on Sunday signed a joint declaration in Rabat laying out the next steps for the completion of a gas pipeline deal that will be built onshore and offshore, Moroccan state news agency MAP said. The two countries agreed to the pipeline in December 2016 and launched feasibility studies ending with a plan to build the pipeline onshore and offshore, it said. “For economic, political, legal and security reasons, the choice was made on a combined onshore and offshore route,” Morocco’s National Office of Hydrocarbons and Mines and the Nigerian National Petroleum Corporation, the two authorities supervising the project said in the joint declaration. “The pipeline will be 5,660 kilometres (3,516.96 miles) long and its CAPEX has been defined,” the declaration said, adding that construction will be in phases covering 25 years.

(ii) Strengthening bilateral trade relations between Nigeria, China. According to Xu Tian, executive secretary, China Chamber of Commerce in Nigeria, there are currently ‘over 100 member companies in CCCN’ in Nigeria. She said these companies cover diverse fields such as infrastructure, manufacturing, culture, science and technology, oil and gas, agriculture, mining, investment and other businesses and projects in Nigeria. “Currently there are more than 50 Chinese engineering companies and over 30 Chinese investment enterprises in Nigeria.”

(iii) NACC vows to increase Nigeria’s non-oil export through AGOA. The Nigerian-American Chamber of Commerce says it hopes to expand Nigeria’s non-oil export to the United States through the African Growth and Opportunity Act. The chamber, which stated this during its 57th annual general meeting held last Thursday in Lagos, said it would fully immerse itself in policy implementation, compliance and growth for Nigeria. Toyin Akomolafe, newly elected president of NACC, said the chamber would now establish itself as the ‘go to’ organisation on all trade related issues for AGOA. According to Akomolafe, as part of the first thrust of re-branding the chamber, his leadership would re-engage with the American official community to rebuild bridges and trust.

(iv) Nigerian-British chamber eyes bigger trade volumes through trade mission. The Nigerian-British Chamber of Commerce is targeting increased trade volumes between Nigeria and the United Kingdom through its trade mission. The five-day mission will feature a series of B2B meetings with prospective partners from various British chambers of commerce, key policy influencers and Nigerians in the diaspora, Olawore said at a press conference in Lagos. “Delegates will also have the opportunity to participate at the International Business Festival in Liverpool and the London Technology Week. A working conference themed ‘The Ease of Doing Business in Nigeria – A Sound Check’ is scheduled for the 11th of June at the Institute of Directors Pall Mall, London.”

(v) New excise duty rates not targeted at local manufacturers says the FG. The new excise regime (which came into effect on 4 June) seeks to achieve a dual benefit of raising the government’s revenues to support the nation’s growth and reducing the health hazards associated with tobacco-related diseases and alcohol abuse. The government said contrary to claims that the rates were selectively imposed on local manufacturers, there is currently a 60% duty rate imposed on imported alcoholic beverages and tobacco as part of measures to encourage local production and protect local manufacturing industry.

‘Ethiopia will not do anything to harm Egypt’s share of the Nile water,’ Ethiopian PM Ahmed tells President Sisi (Ahram)

Ethiopian PM Abiy Ahmed pledged on Sunday in a joint press conference with Egyptian President Abdel-Fattah El-Sisi in Cairo that Ethiopia will not do anything to harm Egypt’s share of Nile water. During the press conference, President El-Sisi welcomed Ahmed and described the relationship between Egypt and Ethiopia as special. El-Sisi also said that he discussed with Ahmed the increasing number of Egyptian private sector companies investing in Ethiopia, promising more incentives for mutual investment and the establishment of an Egyptian development zone in Ethiopia. The Egyptian president also stressed the importance of the agreed upon joint investment fund between Egypt, Sudan and Ethiopia to facilitate infrastructure development in the three countries. The fund will hold its next meeting in Cairo on 3-4 July.

Today’s Quick Links:

A raft of EAC policy workshops take place this week: a listing

Kenya: Development spend falls to 15% on rise in wage bill, debt pay

Africa accounts for 29% of Kenya’s international arrivals

Kenya Airways launches four direct weekly flights to Mauritius

Mauritius to sign MoU with South Africa in fisheries sector

Afreximbank has, post-1994, approved $17bn in financing for Nigeria

Imu-Ahia: The apprenticeship system building wealth in Eastern Nigeria

India objects to US review of its zero duty exports

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