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tralac’s Daily News Selection

tralac’s Daily News Selection
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22 Nov 2018

WTO updates:

(i) G20 economies: WTO report shows sharp rise in trade-restrictive measures

A total of 40 new trade-restrictive measures were applied by G20 economies during the review period, including tariff increases, import bans and export duties. This represents an average of eight restrictive measures per month, which is higher than the almost six measures recorded during the previous review period (mid-October 2017 to mid-May 2018). G20 economies also implemented 33 new measures aimed at facilitating trade during the review period, including eliminating or reducing import tariffs and export duties. G20 economies continued to initiate a higher number of new trade remedy investigations compared to the number of trade remedy actions they terminated. However, the gap between the number of initiations and the number of terminations narrowed compared to previous years. The main sectors affected by trade remedy initiations during the review period were iron and steel and products of iron and steel followed by furniture, bedding, mattresses and electrical machinery and parts thereof. [Various downloads available] [Reuters: EU sees global trade tensions dominating G20 summit]

(ii) India, 44 WTO members object to penalty plan for not notifying sops (Economic Times)

India, South Africa, and 43 countries of the African Group, have raised concerns at a proposal by the US, EU and Japan that requires member countries to increase their funding to the WTO if they introduce or increase subsidies for domestic industry without reporting to the organisation. The proposal also prohibits defaulters from presiding over WTO bodies and allows other countries to not answer questions posed by them. The US, which introduced the proposal at the meeting of the WTO Council for Trade in Goods last week, said there ought to be consequences for members failing to meet transparency obligations as a lack of notifications on trade-related policies hinders the functioning of the organisation. While Costa Rica and Argentina have sponsored the proposal, it found interest from 37 other countries, some of which highlighted the need to consider capacity constraints of developing and least-developing countries.

(iii) WTO to convene multiple panels to rule on various US steel tariffs (Japan News)

The WTO’s Dispute Settlement Body agreed to establish panels to review U.S. President Donald Trump’s decision to hit a long line of countries with tariffs of 25% on steel and 10% on aluminum. The DSB will create separate panels for the complaints by the European Union, China, Canada, Mexico, Norway, Russia and Turkey, after the US said it would not agree to a single panel to hear all of them. The DSB agreed Wednesday to Washington’s request for three panels to rule on the legality of retaliatory tariffs imposed by Canada, China, Mexico and the European Union. It also agreed to a US call for a panel to be created to review “certain Chinese measures pertaining to the protection of intellectual property rights.”

(iv) WTO members review regional trade agreements covering EU, Ghana and EAEU

WTO members reviewed the interim Economic Partnership Agreement between the European Union and Ghana at the 19 November meeting of the Committee on Regional Trade Agreements. Members also considered the Eurasian Economic Union (EAEU) treaty and EAEU accessions of Armenia and the Kyrgyz Republic. Parties to the EU-Ghana interim Economic Partnership Agreement (EPA) spoke of the growth in trade since the Agreement, which liberalizes trade in goods, entered into force on 15 December 2016. The EU eliminated almost all tariffs immediately upon entry into force of the Agreement, while Ghana will eliminate 78% of its tariff lines by 2022.

EIB Africa Day 2018

Banking in Africa: Delivering on financial inclusion, supporting financial stability

In its fourth edition, this report focuses on recent developments in Africa’s banking sectors and the policy options for all stakeholders. Three thematic chapters address challenges and opportunities for financing investment in Africa: crowding out of private sector lending by public debt issuance; the state of bank recovery and resolution laws in Africa; policy options on how to finance infrastructure development. 

Extracts: Even within regions, recent economic performance has reflected the diversity in economic structures and the differing dependence on oil and mineral exports. In West Africa, Nigeria exited recession in 2017 thanks mainly to rising oil prices, growing by 0.8%, whereas Ghana registered a significant pickup in real GDP growth (to 8.4%) after the slowdown experienced two years before. In the CEMAC, all countries except Equatorial Guinea are projected to enjoy positive growth in 2018 but projected growth ranges from 4.0% in Cameroon to a meagre 0.7% in the Republic of Congo. In East Africa, Kenya (4.8%) and Uganda (4.5%) will underperform their regional peers both in 2018 and 2019, albeit less than in 2017. In Southern Africa, only Madagascar (4.1%) and Mauritius (3.9%) recorded higher growth in recent years than during 2010-14.

Indeed, banks’ capacity to support private sector activity is crucial for a sustainable recovery. In Africa, bank credit to the private sector peaked around 2009 when it reached some 37% of GDP. The subsequent decline was modest in North Africa and has been more than offset by recent credit growth. In SSA, however, the drop in bank lending to the private sector was more pronounced. Notwithstanding some recent improvement during 2014-16, it remains about a quarter below its 2009 level. In both regions, the volume of bank loans to the private sector is smaller than in Latin America and the Caribbean and in South Asia, where it stands at 45% of GDP. [Download pdf EIB Study on Banking in Africa: Delivering on Financial Inclusion, Supporting Financial Stability (2.80 MB) ]

Country updates:

Nigeria Economic Update: Investing in human capital for Nigeria’s future (World Bank). The risks to the outlook are tilted to the downside and exacerbated by the upcoming elections. Current monetary and external policy solutions remain fragile to external and domestic shocks. As oil remains a crucial driver for growth, any negative shocks to oil production or price could affect the fiscal revenues, external balance, and banking sector stability. Resulting exchange rate instability could translate into capital flight, which could further be amplified by any political uncertainty surrounding the election period. Given the clearly challenging economic backdrop, certain key policy reforms would be important to support macroeconomic resilience for Nigeria. The special focus topic for this report (pdf) is on human capital development in Nigeria. Studies show that between 10 and 30% of the differences in per capita income between countries can be attributed to human capital. The economic burden of malaria alone in Nigeria, accounting for direct and indirect costs excluding mortality, is estimated at 13.5% of GDP. However, in the quest for sustainable growth, Nigeria, like many other countries, has underinvested in human capital. While physical capital remains critical, it does not fully account for improvements in growth.

Uganda Economic Update: Developing the agri-food system for inclusive economic growth (World Bank). The growth outlook for the economy remains positive at 6%, driven by an anticipated increase in investments, especially to support developments in the oil sector. To sustain this growth, the report notes that it will require more effective government spending, enhancing domestic revenue mobilization, investing in critical sectors that have the potential to drive growth, increase productivity, and provide jobs. Agriculture is one of these critical sectors. The agriculture sector provides more than half of all exports and about one-quarter of GDP. It also employs 70% of Uganda’s predominantly young population. However, the report points out that agricultural output has grown at about 2% annually over the last five years, which is well below the population growth rate and below the 3-5% growth rate in other East African countries.

ExtractMerchandise exports continued to perform well, supported by strong growth in tea and renewed exports of food crops, particularly maize and beans. Merchandise exports grew by 9.4% in FY17/18, following the 18.3% acceleration in FY16/17. Export growth during FY16/17 was driven largely by coffee exports, which increased 39%, as prices and volumes rose around 18% during that period. With prices falling by about 5%, the value of coffee exports has stagnated in FY17/18. The exports of other traditional cash crops picked up significantly, such as tea exports, which grew 35%. The performance of some non-traditional exports was also strong, with beans and maize increasing by 114 and 41%, respectively. In fact, in FY17/18 the share of exports of these two food crops far exceeded the share in exports of the traditional cash crops such as cotton, tea and tobacco. Unfortunately, Uganda’s main export markets continued to narrow in FY17/18 (Figure 9), with only five countries (Kenya, DRC, Rwanda, United Arab Emirates (UAE) and South Sudan) accounting for about 65% of all exports. [Download pdf Uganda Economic Update, November 2018 (2.33 MB) ]

Mozambique: IMF statement after staff visit. The mission advised the authorities to maintain fiscal prudence in the run-up to next year’s elections by keeping the primary fiscal deficit at, or below, 1.5% of GDP in 2019 (the same level projected for 2018). It stressed the importance for the Government to rely on external grant financing and highly concessional loans, while ensuring that issuance of debt guarantees strictly follows the approval procedures established in December 2017. The mission welcomed the ongoing efforts to clear domestic payments arrears to suppliers and adopt reforms in public financial management to avoid further accumulation of arrears.

REC updates:

ECOWAS Single Currency: Presidential Task Force to meet in December (The Eagle). The ECOWAS Presidential Task Force on single currency would meet in December to achieve the 2020 target for a monetary union, the commission’s President, Jean-Claude Brou, has said. Brou said this while presenting the Community Work Programme at the ongoing Second Ordinary Session of the ECOWAS Parliament on Wednesday in Abuja. The commission’s president recalled that the Heads of State had set aside 2020 for West African countries to achieve the single currency which would promote economic integration. ”They also reaffirmed the decision that was taken earlier that countries that were ready will start the process in 2020 and those who were not ready will be given time to join. There is a technical meeting that will be held early next month, specifically the Task Force meeting. It will discuss progress on the roadmap for the single currency but specifically focus on the issue of the monetary policy framework harmonisation. They will also discuss the issues of the next regional central bank, the main logo for the single currency; these are very important issues that they will discuss early next month.” [Related: ECOWAS to hold Sahel Region donor confab in 2019, ECOWAS Commission President pledges greater cooperation with Community parliament]

IGAD Council of Ministers: communiqué on Somalia, South Sudan, organizational structure of IGAD (pdf). On the implementation of the Revitalized Agreement on the Resolution of the Conflict in South Sudan (R-ARCSS): Notes with appreciation the progress made in the implementation of the R-ARCSSsince its signing two months ago and the establishment of the implementation institutions and mechanisms and calls upon the IGAD Secretariat and the IGAD Special Envoy for South Sudan to ensure that all the remaining implementation mechanisms and institutions are set up as soon as possible within the prescribed timelines under the Agreement; Appreciates continuing support of the AU, UN, EU, China, Japan, the Troika (USA, UK, Norway) and all regional and international partners to the South Sudan peace process and appeals to them for their technical and financial support necessary for the implementation of the R-ARCSS; Organizational structure: Decides to deliberate on the matter at an Ordinary Session to be held in Djibouti during the month of December 2018 and directs the IGAD Secretariat to make all the necessary arrangements for the session.

IGAD statement: The C5 countries (Algeria, Chad, Nigeria, Rwanda, South Africa) have signed the Revitalized Agreement on the resolution of the conflict in South Sudan, as members of the AU High Level Ad Hoc Committee at the African Union Commission.

COMESA PSs meet to address challenges facing the organization. Permanent Secretaries and their representatives from the 21 COMESA Member States began a one-day retreat to consider some of the urgent challenges that impede the effectiveness and timely delivery of the mandate of the Secretariat’s and semi-autonomous institutions. Among these are: the current financing model, the implementation of the approved organizational structure; the need to enhance the new external audit framework, the modalities of building and establishing a New COMESA Headquarters and the implementation of the proposed resource mobilization framework, strategy and plans. In her opening statement, Secretary General Chileshe Mpundu Kapwepwe observed that the current funding model needed review to make it fully responsive to the challenges faced by the Secretariat such as enhancing timely payments of contributions by member States and innovative methods of resource mobilization. “The COMESA Secretariat has over time experienced increased dependency on Cooperating Partners resulting in the current scenario where funding from Co-operating Partners constitutes approximately 70% of the COMESA total Annual budget.

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