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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: EIF

20 Feb 2019

The continued relevance of S&DT in favour of Developing Members to promote development and ensure inclusiveness: a communication from China, India, South Africa and Venezuela circulating at the WTO

The current Special and Differential Treatment (S&DT) provisions in the WTO agreements were established through negotiations and compromises and were not gifts granted by developed Members. Nevertheless, most of the current S&DT provisions are “best endeavour” clauses, lack precision, effectiveness, operationality and enforceability. Their actual benefits to developing Members have fallen far short of expectation. In contrast, it is developed Members that have reaped substantial benefits by seeking and obtaining flexibilities in areas of interest to them; a form of “reversed” S&DT. The WTO rules-based system has helped in the growth of trade but has not made it equitable.

Since 1995, more developing Members have acceded to the WTO pursuant to Article XII of the Marrakesh Agreement. Their accession processes, in which they made tremendous efforts, significantly contributed to upholding the core values of the WTO including free trade, openness and non-discrimination; supporting the rules-based multilateral trading system; and maintaining a transparent, stable and predictable global trade environment. The dichotomy of developed and developing Members is frequently used by almost all International Organizations to describe the structure of today’s global economy. Various indices and classification methodologies may be adopted to determine the constraints and thresholds that divide developed and developing Members but the underlying rationale throughout is twofold: (1) that there are structural features behind the UN classification that distinguish countries in terms of their development challenges; (2) that these features form the basis on which countries classify themselves and are adapted to the various mandates, functions and statistical work of the IOs. For the WTO, the status of developed and developing Members are reflected in the bargaining process, and incorporated into the final rules themselves. The self-declaration approach has proven to be the most appropriate to the WTO, which best serves the WTO objectives.

Are trade preferences a panacea?  pdf The African Growth and Opportunity Act and African exports (2.10 MB)  (World Bank)

Does “infant industry” preferential access durably boost export performance? This paper exploits significant trade policy changes in the United States around the turn of the 21st century to address this question. The expansion of Generalized System of Preferences products for less developed countries in 1997 and the implementation of the African Growth and Opportunity Act in 2001 is used to assess whether preferential access boosts exports of eligible products in general and apparel specifically. The phase-out of the Multi-Fiber Arrangement in 2005 is used to assess whether any expansion in apparel exports survived the erosion of preferences. To find a causal impact of these changes on exports to the United States from a given beneficiary country, the analysis uses a triple-differences regression and 26 years of newly constructed trade and tariff data at the country-product-year level (1992-2017).

The analysis finds that the AGOA boosted African apparel exports, and the expansion of the GSP increased African exports of other eligible products. While the marginal impacts on African apparel exports grew sharply in the first years of AGOA, the impacts leveled off after 2005, when the end of the MFA quotas unleashed competition from Asian countries. The illusion of sustained African apparel exports is created by three late-bloomers in East Africa offsetting the boom-bust pattern in Southern Africa and the never-significant response in Central and Western Africa. Firm-level customs data for selected countries reveal that even in East Africa, the recent export growth was driven by new entrants rather than by incumbent firms whose competitiveness might have been nurtured by the big preference margins during the early AGOA period. Understanding the heterogeneous response to trade preferences remains a challenge. However, preliminary evidence suggests that preferential access per se was not sufficient but needed to be complemented by specific domestic reforms: tariff liberalization, reduced regulatory burden, enhanced connectivity, and competitive exchange rates. [African Cotton, Textiles & Apparel Monitor: newsletter #3 2019]

Payment systems in sub-Saharan Africa (cenfri)

This two-part note series explores the state of national and regional payment systems in sub-Saharan Africa. Note 1 (pdf) explores themes and imperatives for national and regional payment systems that enable remittances. It provides an overview of the regulatory frameworks in SSA and the principles to be considered to mitigate risks within a payment system. Note 2 (pdf) explores that state and regional payment systems market development through four case studies of regional payment systems as well as five case studies of national payment systems in SSA. [Related: How are African digital platforms shaping the economic development conversation?]

EU and Southern African Development Community hold their first joint council under Economic Partnership Agreement (European Commission)

The first meeting of the Joint Council under the Economic Partnership Agreement between the EU and the Southern African Development Community took place yesterday in Cape Town. EU Commissioner for Trade Cecilia Malmström, who co-chaired the meeting, said: “Trade is a powerful tool for development and I am very pleased to see this development-oriented agreement bearing its first fruit. We need to focus now on putting into practice all remaining aspects of the agreement so that citizens and businesses on both sides can benefit fully from the opportunities provided by our partnership.” The meeting also focussed on the important role that non-state actors could play in the monitoring and evaluation of the impact of the agreement.

SADC trade with EU remains imbalanced, says Rob Davies (Business Day)

The economic partnership agreement six southern African states have with the EU, while beneficial, remains structurally imbalanced, trade and industry minister Rob Davies said on Monday. Exports from the southern African states continued to be dominated by raw materials such as mineral commodities, the minister said in an interview ahead of the first meeting of the joint council of the EU-SADC economic partnership. Davies said the EU had a trade surplus with SA but this had been reducing.

Export potential of Mauritian products in the SADC region discussed (GoM)

The export potential of Mauritian products in the SADC region, and the development of an E-commerce platform for the manufacturing sector, were the focus of a workshop held, yesterday, at Le Sirius, Le Labourdonnais Waterfront Hotel, in Port-Louis. The one-day event was organised in the context of the SADC Trade Related Facility by the Ministry of Foreign Affairs, Regional Integration and International Trade in collaboration with the Economic Development Board and the Mauritius Export Association. It provided a platform for Mauritian businesses to take stock of the findings of a market intelligence analysis undertaken in seven SADC Member States in collaboration with the EDB. [Mauritius Economic Development Board: Africa strategy]

ECOWAS: Committee of Governors and the Convergence Council meeting (Front Page Africa)

The 34th Joint Ordinary meeting of the Economic and Monetary Affairs Committee and the Operations and Administration Committee of the West African Monetary Agency opened on Monday in Dakar. The Joint Meeting was in preparation for the meeting of the Committee of Governors and the Convergence Council scheduled for 21-22 February. The key focus of the 34th Joint Meeting is to review progress on the ECOWAS Single Currency programme, scheduled for 2020 as part of the ECOWAS Monetary Cooperation. In an overview of the macroeconomic situation in ECOWAS member states, the Director General of the Agency, Mr Momodou Bamba Saho, disclosed that the economic activity in the ECOWAS continued to strengthen as real GDP was projected at 3.1% in 2018 compared to 2.3% in 2017.

This performance, the best since 2015, he noted, mainly reflected the outcome of interventions and investment in agriculture, construction and sustained performance in services in most countries as well as increased production of oil and gas in Ghana and Nigeria. The report further showed that Liberia and Gambia also contributed to the growth performance of the region for the period under review. In the area of macroeconomic convergence, the WAMA Director General noted that performance improved in the first half of 2018, in the areas of budget deficit, central bank financing of the budget deficit and gross external reserves. However, he noted that the outturn remained unchanged in terms of the number of countries meeting the criterion on average inflation.

AfDB pledges to support $985m EAC 5th development strategy (New Times)

EAC Secretary General Amb. Liberat Mfumukeko specifically sought support in the areas of Agriculture and Industry, but especially agri-industrialisation. During the meeting, Adesina noted that it was critical to link infrastructure projects with agriculture development and industrial development for the benefits to reach the common citizenry in EAC. Dr Adesina also agreed to support establishment of an AfDB coordination and capacity building unit at the EAC HQs noting that the AfDB portfolio has grown and therefore need for more coordination, strategic and analytical capacity. He said the bank is committed to present EAC bankable projects to the AfDB coordinated African Investment Forum in November 2019 in South Africa. A joint team of EAC and AfDB will work on preparing bankable projects for presentation to that effect.

Why SA blocked Lesotho’s wool in transit to China (MNN Centre for Investigative Journalism)

Lesotho Wool Centre’s failure to secure a veterinary transit (export) permit has caused its 1248 bales of wool worth M21 million and destined for China to be barred from passing through South Africa. The wool, ferried in 12 trucks from Thaba-Bosiu in the Maseru outskirts but was dramatically barred entry into South Africa at the Maseru border on 16 February, may remain blocked from transit for weeks until the required permit is secured. Maseru Dawning Trading (Pty) Limited, a Chinese owned broker that has controversially secured a government deal to auction and export the product under the umbrella of the Lesotho Wool Centre, has previously succeeded to evade mandatory procedures and transited the wool unlawfully through South Africa to China. The MNN Centre for Investigative Journalism has learnt from Dr Luana Schoeman, a Deputy Director: Import Export Policy Unit of Animal Health in the South African Department of Agriculture, Forestry and Fisheries, that the general procedure of the World Organisation for Animal Health is that for any animal product in transit “countries may require some documentation.” ”In South Africa, in-transit or imports are treated the same way. Anyone who wants to export must apply for a transit permit which takes about five days without hiccups.”

More problems for MTN Uganda as authorities query sales figures (Business Daily)

Uganda accused the country’s biggest telecoms operator, MTN Uganda, on Tuesday of underdeclaring its sales and causing public revenue losses, in a further souring of relations with the South African-owned company. The company is a unit of South African telecoms giant MTN Group, which has also had problems in Nigeria where the central bank last year accused it of repatriating $8bn without the correct paperwork. The row was later resolved after the company paid a token settlement. Ugandan government spokesman, Ofwono Opondo, said scrutiny of MTN came after the government acquired the capacity to monitor telecom firms’ transactions for tax compliance and reporting purposes. “It is as a result of that technical capacity that MTN and its officials have run afoul. They have been found that in some instances they have not been making full declarations of transactions which constitutes undermining Uganda’s economy.”

Spanish citrus sector takes stock (Fruitnet )

The Andalusian Minister of Agriculture, Livestock, Fisheries and Sustainable development, Carmen Crespo, has announced plans to draw up a global strategy for the citrus sector to shore up its stability in the market. On Tuesday, the Spanish Congress was due to debate a motion called by Valencian party Compromís to demand that the EU activate a safeguard clause in its trade deal with the Eastern and Southern African states to halt citrus imports. However, South African growers insist that Spain’s woes are due to a combination of factors including poor organisation among producers, weak demand, climatic issues and smaller fruit sizes. Justin Chadwick of the Citrus Growers’ Association pointed out that the volume of Valencia oranges shipped to Europe from South Africa in the last ten weeks of the export campaign decreased significantly last year, falling to 1.5m cartons compared with 2.5m cartons in 2017. Chadwick insisted that collaboration, not confrontation, was the way to improve the market situation.
 

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