tralac’s Daily News Selection
Ottawa Ministerial on WTO reform: joint communiqué (GoC)
We note growing trade tensions are linked to major shifts in the global trading landscape. We also note the difficulties to achieve outcomes under the negotiating pillar. We share a common resolve for rapid and concerted action to address these unprecedented challenges and to restore confidence. In this regard, we have identified three areas requiring urgent consideration. First, we underscore the dispute settlement system as a central pillar of the WTO. Second, we must reinvigorate the negotiating function of the WTO. Third, we should strengthen the monitoring and transparency of members’ trade policies which play a central role in ensuring WTO members understand the policy actions taken by their partners in a timely manner. The current situation at the WTO is no longer sustainable. Our resolve for change must be matched with action: we will continue to fight protectionism; and we are committed politically to moving forward urgently on transparency, dispute settlement and developing 21st century trade rules at the WTO. We look forward to reviewing our progress when we meet again in January 2019.
‘Superstars’: The dynamics of firms, sectors, and cities leading the global economy (McKinsey)
We assess the extent to which a superstar effect can be observed in the global economy in three arenas - firms, sectors, and cities - and inspect the dynamics, including churn and changing characteristics, in each of these arenas. Emerging-market superstar cities have increased their contribution to global GDP by 30 to 40% in the past decade, while advanced-economy superstar cities have increased their share of global GDP by 20 to 30%. Over the past decade, we find a 25% churn rate among superstar cities as some advanced-economy cities, such as Rome, San Diego, and Vienna, have been displaced by emerging-market cities, such as Jakarta, Kuala Lumpur, and New Delhi, with stronger income and population growth relative to peers in the same region and income group. The growth of superstar cities is fueled by gains in labor income and wealth from real-estate and investor income, yet many show higher rates of income inequality within the cities than peers do. Superstar cities share some characteristics in addition to their economic size and incomes. Of the 50 superstar cities, 31 are ranked among the most globally integrated cities, 27 among the world’s 50 most innovative cities, 26 among the world’s top 50 financial centers, and 23 among the world’s 50 “digitally smartest” cities. Additionally, 22 of the superstar cities are national and regional capitals, and 22 are among the world’s largest container ports.
Figure 10 highlights three further issues. First, in 2016, South Africa was the fifth largest investor in Africa, accounting for 3% of investment into the continent, measured by FDI stock. Second, South Africa’s share of investment into Africa (along with that of a number of other major investors in the continent) fell significantly between 2011 and 2016. This is partly due to the significant rise in investment by China. In the space of five years, China more than doubled its FDI stock in Africa, from $23bn in 2011 to $53bn in 2016, while (in dollar terms) South Africa’s FDI stock in Africa grew by only $1bn in that period. China’s growing prominence as an investor in Africa is highlighted in Box 3.
Figure 14 summarises the operational and investment footprint of South Africa’s largest publicly listed companies in Africa. SACU is a distinct focus market for South African firms, while the broader SADC is also a key market. Namibia had the highest number of target companies operating in the country, with more than half having an operational presence there. This was followed by Zambia and Botswana. While there was also a significant operational presence by South African companies in key West and East African markets (in terms of the number of companies present), it is clear from Figure 14 that company operations were concentrated in Southern and Central Africa, with the overall operational presence far more sparse north of the equator. Overall, there was evidence of an operational presence of at least one company across all 54 African countries, except for Eritrea and Libya.
South Africa Investment Conference: updates
Investment Conference bags R290 billion for SA (SAnews.gov.za)
The inaugural South Africa Investment Conference has secured nearly R290 billion worth of investment announcements for the country. “This R290 billion is what we have now in our hands and these are in addition to the R400 billion which were received during the investment drive by the special envoys and from various countries during state visits which we still need to button down,” said President Cyril Ramaphosa as he thanked investors. [Conference sees R134.1bn in new investments in SA (Business Day)]
Opening address by President Cyril Ramaphosa (The Presidency)
AU woos Nigeria over free trade. The Chairman of AU, Mr Moussa Faki, is currently in Nigeria to visit and convince all the relevant authorities, including President Muhammadu Buhari, to see reasons. “One the reasons for the visit are to discuss with the president on the African free trade that is yet to be signed.We have to realise that Nigeria is one the important countries in Africa and Nigeria is committed to the development of the continent. He said that Nigeria needed to be involved in pushing the AfCTA agenda for the benefit of the whole continent.
Nigeria, too big, diverse to blindly sign agreements without understanding – Buhari. President Muhammadu Buhari says Nigeria is `too big and too diverse to blindly sign agreements’ without understanding the consequences of such actions. The president made the declaration when he received representatives of the Lagos Chamber of Commerce and Industry led by its President, Babatunde Ruwase, at the Presidential Villa, Abuja, on Friday. Buhari used the occasion of his audience with members of the LCCI to explain his decision to inaugurate a Presidential Committee to assess the potential costs and impact of the agreement establishing the African Continental Free Trade Area for Nigeria. According to him, Nigeria is still assessing the impact of this agreement on its backward integration and import substitution policies. He said: “Specifically, the provisions on rules of origin and transhipment were matters of concern to us. Already, some of the treaties we are party to have been significantly abused resulting in massive smuggling which has crippled many of our local industries and destroyed millions of jobs. To avoid these past mistakes, we conducted vast consultations across the country in which the LCCI participated. The responses have been mixed.’’
Africa Chamber Leaders Forum: Nairobi Declaration
Extracts: African leaders proposed the KNCCI patron, President Uhuru Kenyatta, become a Goodwill Ambassador of African Chambers of Commerce to spearhead the agenda of the Chambers; African Chambers to actively participate in the on-going negotiations on trade agreements and policies and lobby their respective governments to ratify the AfCFTA; The Chambers should take control of weight stations at Border points to manage harassment
The African Development Fund, the concessional arm of the AfDB, extended loans of $107m to Kenya and $88m to Tanzania to build a modern and more efficient “One Stop Border Post”. The financing also covered the construction of a 240-km road from Arusha through Namanga to Athi River, near Nairobi. Co-financed by the Japan Bank for International Cooperation, the infrastructure project also facilitates traffic between Zambia, Tanzania, Kenya, Uganda and Sudan. The 240-km road particularly is of strategic importance to the East African region and forms part of the priority Corridor No.5 of the EAC Regional Roads Network, which spans from Tunduma in southern Tanzania to Moyale in northern Kenya, and onward to Addis Ababa. The Arusha region is the hub of tourism in Tanzania attracting more than 80 percent of all tourist visitors. About 41% and 20% of Kenya exports and imports to and from Tanzania respectively go through the project road.
This paper aims to: (i) Give a broad picture of current UK trade with EAC countries, in its context of the EU’s EPA with the region and the EU’s Generalised System of Preferences. We also give a brief overview of the current UK-EAC aid and investment relationship. (ii) Analyse the possible impact of Brexit on UK-EAC trade, suggesting, where necessary, ways of avoiding potential damage to current trade flows. The paper includes case studies of the two most significant EAC exports to the UK: tea and cut flowers. (iii) Suggest ways that UK-EAC trade can be improved after Brexit, in terms of increasing the volume of trade and contributing to the economic development of the EAC countries. (iv) Give a broader set of recommendations on post-Brexit UK trade policy vis-à-vis Africa and the developing world, based on observations drawn from the East African example.
Brexit was not and never has been about the UK turning in to ourselves – it is about facing out to the world. Non-EU trade has become more and more important to the UK. A decade ago, most of our exports were to the European Union. Now it’s the other way around. And we now want to increase our trade across the world. So what does that mean in practice? It certainly does not mean changing things for the sake of it. We support a lot of what the EU does, and that’s especially true in the immediate term - we understand that business needs continuity. Instead it means building on what we already do, as a member of the EU. I think there are 4 specific areas to mention. [Note: The author, Minister George Hollingbery - Minister of State for Trade Policy at the Department for International Trade - delivered this speech to representatives from the ACP group of states]
International investment obligations and industrial policy: evolution in treaty practice (ICTSD)
As industrial policies become more widespread and controversial, the relationship between international investment agreements and industrial policy measures has taken on particular importance. This paper addresses this relationship in light of two competing and strengthening influences: heightened scrutiny of industrial policy measures and heightened expectations for sustainable development.
Productivity revisited: Shifting paradigms in analysis and policy (World Bank)
Differences in productivity account for half the differences in GDP per capita across countries, so boosting productivity is critical to alleviating poverty and fulfilling the rising aspirations of global citizens. A new report launched today by the World Bank presents a range of new diagnostic and analytical tools for studying productivity – while challenging many established approaches and policy recommendations in the areas of trade, human capital, and innovation. The report, Productivity revisited: Shifting paradigms in analysis and policy, finds that policies designed to drive private-sector growth need to ensure that resources get to the most productive firms, but also improve the productivity, quality, and the demand base of existing firms and cultivate new and dynamic startups. Policies also need to focus on improving the business environment as well as a range of types of human capital:
Are banks engines of export? Financial structures and export dynamics (World Bank)
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