Trade for Peace through WTO Accessions

Introduction

The Second Regional Dialogue on WTO Accessions for the Greater Horn of Africa took place in Djibouti from 3 to 6 December 2018. The event was organized by the WTO Secretariat in partnership with the Government of Djibouti and the International Trade Centre (ITC). The Dialogue was opened by H.E. Mr. Abdoulkader Kamil Mohamed, Prime Minister of Djibouti; H.E. Mr. Hassan Houmed Ibrahim, Minister for Trade, SMEs, Crafts, Tourism and Formalization (Djibouti); Ambassador Alan Wm. Wolff, WTO Deputy Director-General; and Mr. Rajesh Aggarwal, Chief, Trade Facilitation and Policy for Business, ITC.

The opening statements acknowledged the timely nature of the Dialogue’s ‘Trade for Peace’ theme at a time when the Greater Horn of Africa is experiencing positive social, political and economic developments. Additionally, the opening remarks highlighted the significance of the Greater Horn of Africa as the region with the largest concentration of Acceding Governments in Africa and in the world, with Comoros (located south to the region), Ethiopia, Somalia, South Sudan and Sudan engaged in the process of WTO accession.

Participants and speakers from the Acceding Governments expressed their appreciation for the new ‘Trade for Peace’ initiative. They emphasized that the WTO accession process was an important component of the post-conflict recovery plans of fragile states, since the WTO Accession process enabled states to establish credible economic and trade policy frameworks, and to promote transparency and good governance as part of accession related reforms. The participants also expressed their appreciation for the continuous efforts of the Government of Djibouti towards peacebuilding and stability in the Greater Horn of Africa, highlighted through hosting the Second Regional Dialogue.

Participants engaged in a rich, informative and interactive dialogue over several sessions that spanned four days. The engagements were based on presentations made by representatives of the major stakeholders, followed by open discussions.

Recent Developments in the Greater Horn of Africa

Session 1 was moderated by Ambassador Kadra Ahmed Hassan, Permanent Representative of Djibouti to the WTO. The session provided a platform to discuss recent developments in the Greater Horn of Africa with a presentation by Mr. Joseph Rwanshote, Program Manager Trade, Industry and Tourism, IGAD, and reports by the representatives of the five Acceding Governments on recent developments in their respective accession processes.

Mr. Rwanshote’s presentation highlighted that the region was one of the fastest growing in Africa, experiencing large inflows of Foreign Direct Investment (FDI). The region also witnessed significant infrastructural developments that have strengthened deeper regional integration, such as the establishment of the Djibouti Free Trade Zone and the liberalisation of the services sectors in Ethiopia. He further emphasized that regional integration complemented domestic reforms by fostering synergies in trade relations. Recalling the correlation between trade and peace, he noted that this significantly reduced the likelihood of inter-state armed conflicts.

Ambassador Assoumani Youssouf Mondoha, Permanent Representative of the Union of the Comoros to the African Union, conveyed Comoros’ objective to conclude its accession negotiations in 2019. Since the last Regional Dialogue in Nairobi, Kenya, Comoros had held a Working Party meeting in March 2018. Regionally, Comoros signed the African Continental Free Trade Agreement (AfCFTA), in March 2018 and officially joined the Southern African Development Community (SADC) in August 2018.

Mr. Geremew Ayalew Haile, Minister Counsellor at the Permanent Mission of Ethiopia to the WTO, stated that although the Working Party on the accession of Ethiopia had not met since 2012, the Government had been implementing significant reforms aimed at aligning its domestic practices and policies with WTO requirements. Further, he revealed that Mr. Mamo Mihretu had been appointed as the Chief Negotiator for Ethiopia’s accession and that the National Steering Committee had been re-organized with the specific objective of resuming the accession process as soon as possible.

H.E. Mr. Dahir Adan Abdullahi, State Minister for Commerce and Industry of Somalia, expressed the Government’s strong commitment to its accession process. He stated that since the establishment of its accession Working Party in 2016, Somalia had appointed a Chief Negotiator and was finalizing its Memorandum on the Foreign Trade Regime (MFTR). He further added that Somalia had been undertaking reforms focused on the extraction of natural resources with a view to increasing state revenues; and had been enacting laws on trade licensing, intellectual property rights, investment, and government procurement. Regionally, Somalia had joined the Common Market for Eastern and Southern Africa (COMESA) in July 2018 and was acceding to the East African Community (EAC).

H.E. Mr. Agak Achuil Lual Manok, Undersecretary of Trade of South Sudan, noted that the Working Party on the accession of South Sudan had been established in Buenos Aires as a direct outcome of the first Regional Dialogue. Since then, the Government has signed the AfCFTA in March 2018, and a revitalized peace agreement in September 2018. He added that South Sudan was in the process of implementing its EAC obligations, which complements the requisite reforms being undertaken for the WTO accession process. South Sudan was finalizing its MFTR, and had commenced the process of forming a national steering committee and appointing a Chief Negotiator.

H.E. Mr. Musa Mohamed Karama, Minister of Industry and Trade of Sudan, stated that trade played a key role in fostering peace and stability, and that, in particular, the accession to the rule-based multilateral trading system was considered as a catalyst for the Government’s efforts to undertake the necessary economic reform and to promote the rule of law and good governance. He added that Sudan was establishing a National Committee to ensure that all domestic laws and regulations in the country were WTO-compliant.

Peace-building through WTO accession and regional integration

Session 2, entitled “From Fragility to Resilience: WTO Accession as a Pathway to Peace”, was moderated by Ambassador Alan Wm. Wolff, WTO Deputy Director-General. The session began with presentations by Mr. Michael Ferrantino (World Bank) and Mr. Caiphas Chekwoti (TRAPCA) that provided empirical evidence on the relationship between trade and peace. This was followed by a discussion regarding the impact of WTO membership on peace-building. The discussion was led by Ambassador Mohammad Qurban Haqjo (Afghanistan); Ambassador Zorica Marić-Djordjević (Montenegro); Mr. Nagib Hamim (Yemen); and Ms. Emilia Malavoloneque (Grupo Neosol).

The panellists acknowledged that mutual economic interdependence could be a mechanism for peace. A trade-dependent state was less likely to go to war with a trade partner because of the larger opportunity cost associated with the loss of trade. Internally, changes in real incomes affected incentives to participate in conflict. Empirical evidence shows that the likelihood of conflict tends to be reduced when prices of exportable goods go up and/or prices of consumer goods go down. However, the same theory does not apply to point source resources such as oil and minerals. Increases in the prices of exported oil and minerals substantially raise the risk of conflict.

Additionally, the panellists recognized that while trade and economic integration played a crucial role in fostering peace, this possibility was only enhanced when the pre-requisites for peace were in place. These include (i) good infrastructure that facilitates trade; (ii) good governance underpinned by the involvement of all stakeholders in decision making and effective enforcement of laws and regulations; and (iii) mechanisms that integrate the informal sector into the formal economy. Other accompanying policies that can support the role of trade in fostering peace included: (i) promoting labor-intensive exports; (ii) promoting transparency about the revenues from pointsource commodities; (iii) protecting the incomes of the poorest from changes in trade flows; and (iv) paying special attention to trade with neighbors and addressing the underlying sources of conflict, i.e. ethnic conflicts, religious conflicts. etc.

Lastly, the panellists provided their perspectives on the linkages between trade, WTO membership and conflicts. They emphasised that while WTO accession provided an important vehicle to drive domestic reforms, reform efforts did not end with WTO membership. Continuous reforms would need to be made in the post-accession phase to realize the benefits of WTO membership. It was noted that although the WTO had traditionally not been a player in peace-building, serious consideration ought to be given to greater engagement of the Organisation in peace-building. The “Trade for Peace” Initiative was cited as a way in which the WTO could contribute to on-going peacebuilding efforts in the Greater Horn of Africa.

WTO accession and the AfCFTA

Session 3, entitled “WTO Accession and the African Continental Free Trade Area (AfCFTA)”, was moderated by Mr. Micheal Ferrantino (World Bank). The panellists included Ambassador Chiedu Osakwe, former Chairperson of the Negotiating Forum of the AfCFTA; Dr. Mag-Teerey (Djibouti); Ms. Maika Oshikawa (WTO); and Ms. Mariam Soumaré (WTO). They provided insights on the current architecture, challenges and benefits of the AfCFTA. For the nine African Acceding Governments,6 the panellists recognized that synergies could be built around their respective regional, continental and multilateral interests.

The panellists recognized that the AfCFTA was an agreement which could modernize African economies through its unique institutional framework which had been adapted to accommodate African realities. At the same time, the AfCFTA contained several provisions that mirrored WTO provisions. The WTO accession process, through its rigorous reform processes could support the Acceding African Governments in creating the enabling environment to effectively implement provisions under the AfCFTA in relation to core trade issues like: customs co-operation, technical barriers to trade (TBT), sanitary and phytosanitary (SPS) measures, trade facilitation etc. The binding commitments undertaken by the Acceding Governments during their accession processes, for which they bear accountability at the multilateral level – through Trade Policy Reviews, the Dispute Settlement System and transparency mechanisms – are also fundamental in creating the enabling environment for implementing the AfCFTA provisions.

While the WTO accession process could complement the reforms envisaged for AfCFTA purposes, African Acceding Governments were advised to pay special attention to the sequencing of their respective regional and multilateral negotiations. It was acknowledged that the Regional Economic Communities (RECs) played an important role in the AfCFTA and the WTO accession process since they could act as benchmarks or building-blocks towards further trade liberalization.

Finally, Mr. Rajesh Aggarwal (ITC) provided insights into the business implications of the AfCFTA, highlighting the need for private sector involvement in the negotiations by: (i) using existing national and regional business organizational structures to engage with national trade negotiators; (ii) collaborating with other stakeholders involved on trade and integration issues; (iii) fostering business level consensus by sharing data on challenges and successes of implementation. Commentators of this session included private sector representatives from Comoros, Ethiopia, Somalia, South Sudan and Sudan.

Conclusions and recommendations

Participants welcomed the Djibouti Regional Dialogue and its focus on the contributions of trade and WTO Accessions to peace-building in the Greater Horn of Africa, as well as the exchange of experiences, views and perspectives. Various aspects of the WTO accession process were discussed, including its interface with the AfCFTA, emerging best-practices in the preparatory and the negotiating phases of the process, the role of the Accession Chief Negotiator, and the participation of the private sector and other stakeholders.

Participants appreciated experience sharing as one of the most effective ways to build accession knowledge and negotiating capacity. In this regard, they welcomed the continuation of the Regional Dialogue until all accessions in the Greater Horn of Africa are completed. It was also suggested that Eritrea may consider joining its neighbors’ efforts to pursue WTO accession, as this would support the region’s on-going efforts for deeper economic integration and would help consolidate the recent peace initiatives.

In this regard, the WTO was invited to explore greater co-operation and engagement with the peace community, building on the recent “Trade for Peace” Initiative, and to define its role in how trade and the WTO could contribute to on-going peace-building efforts around the world. There was a clear recognition that economic and trade aspects should be given a greater role in peacebuilding.

Participants welcomed the recent progress registered in the accessions of Comoros, Ethiopia, Somalia, South Sudan and Sudan. In particular, they pledged their collective support for the conclusion of the accession of Comoros in 2019, the resumption of the work of the Working Parties for the accessions of Ethiopia and Sudan in early 2019, and the holding of the first Working Party meetings of the accessions of Somalia and South Sudan in 2019 following the submission of their respective MFTRs.

Dialogue participants reiterated strong appreciation to Djibouti, as the only WTO Member in the Horn of Africa, for supporting the accession efforts of its neighboring countries, and requested Djibouti to use its position to actively participate in the work of the WTO to promote the interests of the Region.

Acknowledging the importance of stakeholder inclusiveness in the accession process, participants expressed appreciation to the ITC for ensuring the participation of private sector representatives in the Second Regional Dialogue, and requested their continuing participation in future Dialogues. They also acknowledged the importance of gender considerations in both capacity-building and the composition of the accession negotiation team.

Participants acknowledged the ongoing support provided by development partners for technical assistance, training, capacity building, and trade infrastructure, in order to enable African countries realize the full benefits of the AfCFTA and the WTO. They also agreed on the urgent need to enhance trade policy knowledge and capacity, including for analysis, strategies and negotiations, covering both the legal and economic aspects, especially for countries which are emerging from conflicts. In this regard, they appealed to development partners, especially AfDB, IGAD, IMF, ITC, TRAPCA, UNECA, WBG and the WTO, to increase support for the accession process and subsequent implementation.

Participants recommended that consideration be given to the establishment of the Office of Trade Negotiations by each African country, in order to promote coherence and effectiveness in policy making and strategic planning in trade, at the national, regional and multilateral levels.

Participants also pledged their strong support for the fundamental values and principles of the Multilateral Trading System and expressed their concerns about recent protectionism and unilateralism. In this context, they acknowledged the ongoing discussions on WTO reform, which provided an opportunity for the WTO to update its rules and modernize its function, in order to respond to the requirements of the 21st Century.

Participants expressed their appreciation to the Government of Djibouti for hosting the Second Regional Dialogue and the warm hospitality provided to the participants, as well as the invitation to participate in the Second International Trade Fair of Djibouti, opened by H.E. Ismaïl Omar Guelleh, President of the Republic of Djibouti. They also expressed their appreciation to the WTO Secretariat and the ITC for the excellent arrangements.

Dialogue participants requested Djibouti to report on the outcome of the Second Regional Dialogue to the WTO membership at the upcoming General Council meeting on 12 December, and to the AU Trade Ministers at the upcoming meeting on 12 to 13 December in Cairo, Egypt. The Participants also requested that this Report of the Djibouti Dialogue be circulated as a WTO document of the Sub-Committee for Least Developed Countries and the General Council.