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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Fintrac Inc | USAID

05 Feb 2019

African Group statement submitted to the informal WTO Ministerial held during WEF 2019 (WTO)

This statement is circulated by H.E. Minister Rob Davies to the informal WTO Ministerial gathering in Davos on behalf of Benin, as the Coordinator of the African Group: The two most serious and immediate risks to the relevance of the multilateral trading system (MTS): First, the unprecedented challenges of unilateral trade measures that violate WTO rules and principles and that have provoked retaliation. Self-judging national security justification takes us into uncharted areas and may proliferate, creating new sources of instability and uncertainty. Second, the continuing impasse in the Appellate Body selection process threatens the DSM that is the foundation of a functioning MTS. Without a solution here by December, the DSM will be rendered obsolete and all our other work and efforts would be redundant.

Many developing countries, including in Africa, have long reasoned that the system has prejudiced our trade and development interests and that the system needs to be rebalanced for equity and fairness, and in a manner and at a pace appropriate to national circumstances. This is the content of the WTO Reform we need. It beggars belief that those who designed the system and who have been its main beneficiaries now suggest the system is unfair and needs reform. Most of the ideas in the proposals recently submitted in the name of reform do not address the real imbalances in the MTS.

The sanctions element of the proposal on Transparency is one example. The proposals for graduation and differentiation are another. These are divisive and unlikely to yield results. Trying to change the principle of self-declaration is also impractical. A more productive approach would acknowledge that S&DT principles are sufficiently flexible to address differences in the actual negotiating process and to not worsen imbalances. For all their shortcomings, the agricultural and NAMA texts under the Doha agenda were replete with examples of differentiation and flexibility to accommodate real differences in the actual circumstances of Members. Notably, in the fisheries subsidies negotiations, flexibility and S&DT is required to address our capacity constraints and to build our fishing industry capabilities in the future. The African Group will not agree to any proposals disadvantaging any of its Members through a change to the negotiating mandate or by using irrelevant criteria.

We see an unfair contradiction in the call to narrow flexibility on S&DT but demand more flexibility by selectively undermining WTO consensus decision making as a way to advance plurilateral outcomes that will themselves fragment and undermine the MTS. The challenges facing the WTO will not be addressed if plurilateral work is prioritized over multilateral processes or cherry-picking some rules to be preserved and others reformed.

Intra-African Agriculture Trade Improvement Scorecards

The regional trade scorecard compiles publicly available and regularly updated data related to four key trade determinants that are actionable at the national level: production capacity, the cost of trade, institutional efficiency, and trade policies. The indicators align with determinants identified in the Regional Strategic Analysis and Knowledge Support System’s (ReSAKSS) 2018 Africa Agriculture Trade Monitor report and are described in the Intra-African Agriculture Trade Improvement Scorecards Indicator Summary. Regional scorecards: pdf East Africa (353 KB) ; pdf Southern Africa (391 KB) ; pdf West Africa (356 KB) . Country scorecards, for Ethiopia, Uganda, Senegal, Nigeria, Niger, Mali, Kenya, and Ghana, can be downloaded here.

Botswana: pdf 2019/2020 budget speech, proposals (772 KB)  (GoB)

Total revenue and grants are estimated at P60.20 billion. Mineral revenue remains the highest contributor at P21.09 billion or 35.62% of total revenue and grants, while customs and excise revenue is estimated at P14.02 billion. Non-mineral income tax is estimated at P11.55 billion, while VAT is expected at P9.12 billion. However, there are downside risks to these revenue estimates, arising mainly from the continued high volatility of the mineral and customs and excise revenues. Total expenditure and net lending for the financial year 2019/2020, on the other hand, is estimated at P67.54 billion, resulting in a budget deficit of P7.34 billion, or minus 3.5% of GDP.

It would be remiss of me to conclude this Budget Speech without highlighting the fiscal constraints facing this country. As indicated under the budget review and proposals sections, the projected deficits for 2018/2019 and 2019/2020 of 3.5% of GDP for each year, are close to the set limit of 4.0% of GDP. These deficits exclude any additional expenditures that may arise from Government decisions during the course of the year, or emergency spending occasioned by natural disasters such as drought and outbreak of animal diseases. I must indicate that the budget deficits experienced in the first three years of NDP 11, were a deliberate effort by this Government to respond to the national needs of: increasing economic activity to create employment opportunities; eradicating extreme poverty and equitable income distribution. The Government is otherwise committed to maintaining fiscal sustainability by achieving moderate surpluses in the last three years of NDP 11. In line with this commitment, I therefore urge for continued prudent management of expenditure by all Ministries and Departments, while scaling-up resource mobilisation efforts through enhanced collections of taxes and user charges, as well as improving on productivity at all levels. [Presented by Finance Minister O.K. Matambo, 4 February]

Businesses smuggling goods through Liberia’s unmanned borders with Guinea and Sierra Leone (Front Page Africa)

High import duties and hefty fees and tariffs including a recently introduced US$175 per container agreement appear to be forcing more and more Liberian businesses and individuals to bypass the Liberia Revenue Authority and the National Port Authority by using poorly-manned borders between Liberia and next-door neighbors Guinea and Sierra Leone to bring goods into the country. Liberia has 176 entry points with neighboring countries. According to the Liberia Immigration Service, only 46 of these entries are guarded.

Trade wars: The pain and the gain (UNCTAD)

A new study by UNCTAD looks at the repercussions of existing US and Chinese tariff hikes, as well as the effects of the increase scheduled for 1 March. “Because of the size of their economies, the tariffs imposed by US and China will inevitably have significant repercussions on international trade,” said Pamela Coke-Hamilton, who heads UNCTAD’s international trade division, as she launched the Key Statistics and Trends in Trade Policy 2018. The study underlines that bilateral tariffs would do little to help domestic firms in their respective markets. “Our analysis shows that while bilateral tariffs are not very effective in protecting domestic firms, they are very valid instruments to limit trade from the targeted country”, Ms. Coke-Hamilton said. “The effect of US-China tariffs would be mainly distortionary. US-China bilateral trade will decline and replaced by trade originating in other countries.”

The study estimates that of the $250bn in Chinese exports subject to US tariffs, about 82% will be captured by firms in other countries, about 12% will be retained by Chinese firms, and only about 6% will be captured by US firms. Similarly, of the approximately $85bn in US exports subject to China’s tariffs, about 85% will be captured by firms in other countries, US firms will retain less than 10%, while Chinese firms will capture only about 5%. The results are consistent across different sectors, from machinery to wood products, and furniture, communication equipment, chemicals to precision instruments. Countries that are expected to benefit the most from US-China tensions are those which are more competitive and have the economic capacity to replace US and Chinese firms. The study indicates that EU exports are those likely to increase the most, capturing about $70bn of US-China bilateral trade ($50bn of Chinese exports to the US, and $20bn of US exports to China). Japan, Mexico and Canada will each capture more than $20bn. Although these figures don’t represent a large slice of global trade – which was worth about $17 trillion in 2017 – for many countries they make up a substantial share of exports. For example, the approximately $27bn of US-China trade that would be captured by Mexico represents a non-negligible share of Mexico’s total exports (about 6%). Substantial effects relative to the size of their exports are also expected for Australia, Brazil, India, Philippines, Pakistan and Viet Nam (see Chart 4: Trade diversion). [Download: Key statistics and trends in trade policy 2018 – trade tensions, implications for developing countries]

Trump’s Africa Surprise (Atlantic Council)

In December, US National Security Advisor John Bolton unveiled a formal strategy for Africa. The document was originally slated for public release but has subsequently been classified, meaning that many details of the strategy will remain hidden from public view. Nevertheless, Bolton’s comments provide some welcome insight into the Trump administration’s philosophy on Africa and establish several benchmarks against which the administration’s practices can be assessed.

When Trump was elected, many predicted that US-Africa policy would suffer, assuming that the continent would recede even further from the attention of US policymakers. The Trump administration has surely surprised these critics by articulating a strategy for Africa so very early on. But the strategy is also, clearly, a shot across the bow, signaling the administration’s intention to challenge long-standing norms in the areas of peacekeeping, humanitarian relief, and development. So far, Trump’s focus on great power competition appears to have raised Africa’s profile and yielded a more business-friendly approach, particularly in the passage of the BUILD Act. In the end, Trump might just surprise us on Africa. [The author: Jonathan Gass]

Today’s Quick Links:

Ex-Uhuru adviser says debt may affect growth in Kenya

Plans to ramp up Chinese tourism to South Africa

Mauritius-Mozambique Business Forum to reinforce economic partnerships

Regional research project on migration launched in Dakar

World must do more to tackle ‘shadowy’ mercenary activities undermining stability in Africa, says UN chief

Export competitiveness – fuel price nexus in developing countries: real or false concern?

Note: Tomorrow’s tralac daily news selection will carry a comprehensive set of reports from the Africa Mining Indaba in Cape Town.

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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