Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Simon Dawson | Bloomberg

BRICS Industry and Trade ministers meet this week in South Africa (4 and 5 July, respectively, pdf)

Diarise: Launch of the AUC’s inaugural African Development Dynamics Report (11 July, Addis): “By analysing the economic development of Africa using an African analytic grid, it will contribute to the definition and implementation of innovative policies that are adapted to the specific characteristics of each economy and that further the AU’s priorities”

31st Summit of the African Union: updates

(i) Address by President Paul Kagame (pdf): These positive developments remind us that partnership is the common thread in this Summit’s deliberations. Partnership amongst ourselves, first of all. Thanks to the outstanding work of the Committee of 15 Finance Ministers, together with the Executive Council, the African Union has applied the “golden rules” and adopted the most credible and transparent budget in our history. Through this process, the 2019 budget presented to the Assembly for consideration has even been reduced by 12%, compared to 2018. At the same time, contributions to the Peace Fund have never been higher. As a direct result of the growing confidence in our finances, the AU is in a position to work toward a long-term partnership with the UN Security Council for stable funding for peacekeeping operations in Africa.

Several more Member States are expected to sign the AfCFTA at this Summit and six countries have already ratified. We congratulate those who have done so. The agreement is well on its way to entering into force. From that point forward, Africa will necessarily engage with partners as a bloc. The renewal of Africa’s relationship with the EU intervenes in this context. The AU’s position reflects the need to modernise and expand the terms of the partnership to the full range of issues facing our two continents. It is also a good time to deepen the African Union’s relationship with our “Sixth Region” brothers and sisters in the Caribbean. Our partners are receptive to Africa’s viewpoint, but it is essential that we speak with one voice. Respect for AU decisions makes us more formidable and protects individual countries from pressure and manipulation.

(ii) AfCFTA ratification update from the African Union: South Africa, Sierra Leone, Lesotho, Burundi, and Namibia signed the agreement establishing the AfCFTA at the 31st AU Summit. Eswatini and Chad deposited their instruments of ratification of the AfCFTA in Nouakchott.

SACU Heads of State or Government Summit: communiqué

The Summit further noted that the implementation of the Work Programme entails extensive national consultations to ensure an inclusive and comprehensive engagement with the relevant stakeholders. In this regard, the Council has agreed on the need to extend the completion date, by an additional 12 months from December 2018. The Summit emphasised the importance of expediting the conclusion of the work, to ensure that the outcomes of the Work Programme are translated into tangible and concrete results for the economic development of the SACU economies. The Summit noted the developments and progress on the SACU Trade Agenda, covering the on-going trade negotiations in which SACU is involved. Furthermore, the Summit reaffirmed the strategic importance of the TFTA and the AfCFTA to promote inter-Africa trade and development, in line with the Abuja Treaty. The Summit supports the bid by the Kingdom of Eswatini to host the Secretariat of the AfCFTA. [EAC-SACU: No TFTA agreement yet on dairy, vehicle taxes]

Ahead of next week’s AGOA Forum in Washington: The USTR posts its 2018 Biennial Report on the Implementation of the African Growth and Opportunity Act

(i) From Chapter V: The Administration also encourages the region to take full advantage of AGOA over the coming years by developing AGOA utilization plans. Given that AGOA was not designed to be the permanent mechanism by which the United States engages its sub-Saharan African trading partners, the Administration also encourages beneficiaries to consider a more stable, permanent, and mutually beneficial engagement on trade and investment. Many African countries and regional groups – some of them among the fastest growing economies in the world, with a rapidly growing population and rising middle class – are moving away from preferences and toward more advanced trade arrangements, both with African and non-African trading partners. US exporters to Africa, particularly small and medium-sized companies, will increasingly find themselves at a disadvantage vis-à-vis foreign competitors as the reciprocal agreements that African countries sign with other trade partners take effect. In this context, it will become increasingly important that the United States and its sub-Saharan trading partners move toward more advanced trade arrangements.

(ii) AGOA success stories (pp13-14):

Apparel: Kenya, Lesotho, Madagascar, and Mauritius have been the leading exporters of apparel under AGOA, accounting for almost 90% of AGOA apparel exports in 2017. Increased apparel exports under AGOA have also led to improved productivity and employment opportunities. For instance, in Kenya, UAL Apparel Factory is a leading exporter that supplies many large retail chains, including Levi Strauss and H&M. Since the extension of AGOA in 2015, UAL has added thousands of jobs, and currently employs nearly 10,000 Kenyans. Overall, 40,000 Kenyans are employed in the apparel export industry.

South Africa: South Africa is the largest nonoil beneficiary of AGOA by value. The country accounts for 68% of non-oil AGOA exports to the US South African exports to the US under AGOA have increased three-fold since its enactment in 2000, primarily from industry and agricultural sectors. Transportation equipment increased from $76m in 2001 to $1.3bn in 2017, adding over 30,000 jobs. South African exports of agricultural products increased nearly sevenfold since 2001 to $278m in 2017.

Kenya: Kenyan exports of macadamia nuts to the United States under AGOA totalled $72,000 in 2000, and then rose quickly to $8m by 2004 and to $52m in 2017. Exports of these products support over 100,000 farmers with an average of six to twelve trees per grower, typically as part of a diversified agricultural smaller-holder operation.

Ethiopia: In 2018, Ethiopia’s shoe exports continue to grow rapidly compared to the 2017 totals (up 58%), making the country the first substantial AGOA footwear supplier to the United States.

(iii) Table of contents: Chapter I: The trade and investment relationship between the United States and Sub-Saharan Africa; Chapter II: AGOA eligibility review and country reports; Chapter III: Status of trade capacity building assistance to Sub-Saharan Africa; Chapter IV. Status of regional integration; Chapter V. Strengthening bilateral relations moving forward.

Angola eyes cleaner, greener economic growth: coffee, honey, timber (UNCTAD)

These are three of a handful of products for which government officials and industry representatives believe Angola could be competitive. The list, which includes fish, salt and bananas, was compiled during a two-week workshop in Luanda (11-22 June) as part of a 4-year project financed by the EU to help Angola strengthen and diversify its economy. Angola currently produces 90 tons of honey each year. But analysis done during the workshop showed production could more than double to 200 tons if new technologies were used. Likewise, the economic potential of the country’s 53 million hectares of forest remains untapped. Coffee also holds the promise of a better future, especially for the 50,000 or so registered producers, almost all of which are family-run small farms. Though Angola only produced around 8,000 tons of coffee in 2017, the country used to be a top producer – reaching almost 230,000 tons per year in the 1970s. With better production methods and quality control, the participants said, Angola could once again be a major player.

Africa must lead e-commerce before ‘outsiders’ take over (UNCTAD)

Young African digital entrepreneurs must lead the development of e-commerce in Africa before commercial interests from elsewhere become established, UNCTAD Secretary-General Mukhisa Kituyi has said. Dr Kituyi was speaking to nearly 30 young entrepreneurs from 11 countries in Africa who completed the third eFounders Fellowship course run by UNCTAD and Alibaba at the Alibaba Business School in Hangzhou, China. The eFounders Fellows were selected through a rigorous application process. All are founders or co-founders of platform-based ventures in the ecommerce, logistics, fintech, big data or tourism industries in Africa.

WTO DG Azevêdo: “Our efforts in the WTO must translate into real trade gains for LDCs” (WTO)

The Negotiating Group on Rules remains a notable bright spot. The group is proceeding with a real sense of urgency and is proceeding with its programme of work to advance discussions on fisheries subsidies. I understand that an outcome on fisheries subsidies is of great interest to many LDCs as significant sections of your population depends on the earnings from this sector. With this in mind, I must say that if we are to meet the 2019 deadline that was set in Buenos Aires, we will have to shift gears. It won’t be enough for members to simply continue restating (i) how important this issue is for them; or (ii) what their sensitivities are – we need new ideas that could lead to convergence. So far I don’t detect any real attempts or efforts to change positions. So, in all of my interactions with ministers I have been urging them to get engaged and to begin making much needed political calls. We also need to find ways of advancing in other areas as well. Agriculture and development are two of the most critical areas. But they are also the more difficult ones before us: [Note: an extract from a speech delivered to a meeting of the LDCs Group, 28 June]

The unseen impact of non-tariff measures: insights from a new database (pdf, updated preliminary draft report, UNCTAD/World Bank)

Together with the World Bank, UNCTAD has been able to mine the TRAINS database, which was launched in 2016, for insights that prove useful not only to researchers but governments and companies in both developed and developing countries. “The depth of understanding of the trade effects of NTMs, which have expanded in recent years, remains shallow,” said Mr Peters who presented findings from the database to World Bank and UNCTAD colleagues on 28 June. Among the findings Mr Peters reports are: Developed countries regulate a larger share of products and imports than developing countries; Agricultural products are more regulated than manufactured goods and natural resources; TBTs are the most frequent form of NTM; The cost of NTMs is about 5 to 7% of imports on a simple average basis, and 2 to 3.5% considering import weighted averages (this is to be expected because the presence of NTMs itself tends to restrict trade); The average cost of NTMs tends to be higher for exporters in countries with a lower per capita GDP; For agricultural products, NTMs represent a cost to trade of about $75 billion; For manufacturing the cost is about $25bn, given that the international trade in goods in manufactured goods is much larger than that of agriculture

ITC-WCO Rules of Origin Facilitator to benefit MSMEs (ITC)

A new initiative that will enable micro, small and medium-sized enterprises to benefit from international trade opportunities was unveiled last week by the ITC and the WCO. Available online the ITC-WCO Rules of Origin Facilitator contains information on trade agreements and applicable tariff rates at the detailed product level. The database includes the product-specific rules of origin as well as provisions on origin certification. Necessary documentation, such as certificates of origin, is also provided. Currently, the initiative covers the destination markets of 85 countries including most of the developed economies. The online tool is comprehensive in its coverage providing information on all tradable goods, ranging from raw agricultural commodities to sophisticated machinery and electronics.

Monday’s Quick Links:

South Africa: Merchandise trade statistics for May 2018 show a surplus of R3.52bn

IATA’s June 2018 State of the region report: Africa and Middle East (pdf)

COMESA Authority extends SG’s mandate pending successor’s appointment

EABC appoints Mr Nicholas Nesbitt as new chairperson

SADC to develop regional tourism programme

Ethiopia embraces the IGAD protocol on transhumance

AU Commissioner for Infrastructure, Energy and Tourism: “Tourism supports 21 million jobs in Africa”

ICTSD: WTO members intensify debate over resolving appellate body impasse

UN launches plan to promote peace, inclusive growth in Africa’s Sahel: download the UN support plan – Sahel, land of opportunities

The security and migration situation in Africa: communique of the 782nd PSC meeting

Kunio Mikuriya re-elected as WCO Secretary General


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