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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: MediaClub South Africa

13 Mar 2019

Trade policy pointers:

  1. Cameroon will host an AfCFTA national sensitization, information forum in mid-April 2019: further details, here and here

  2. Togo’s AfCFTA forum: @komitsowou tweets: This week @ECA_OFFICIAL and @ATPC2 join the government of Togo to organize a national AfCFTA Forum in Lomé and Kara. Sensitizing private sector, CSOs, academia, govt officials and journalists is very important to make the AfCFTA work. “Domestication of the AfCFTA at all levels is essential to maximise its gains”: M. Adedze, Trade and Industry Minister of Togo, during the national sensitization forum.

  3. Rwanda and the AfCFTA: Thursday’s tralac digest will carry highlights of the EPRN Rwanda Annual Economic Research Conference, convened yesterday

  4. The US Department of Commerce is seeking applications for membership on the 2019-2021 term of the President’s Advisory Council on Doing Business in Africa

  5. African Cotton, Textiles & Apparel Monitor (#6/2019): articles and commentary on Ethiopia, Rwanda, Mauritius, Nigeria, South Africa

The 16 presentations and keynote speeches from the recent Organic, Fair and Ethical Trade Event (organized by the EU, and co-hosted with AFASA, 19 February, Cape Town) are now available for download. Extracts from the Discussion Paper: pdf Opportunities for South African emerging farmers in the European sustainable agricultural market (755 KB)

The EU is South Africa’s main trading partner, accounting for 26% of all South Africa’s trade. The EU is also the country’s most stable post-apartheid partner, with exports to the EU systematically above 19% of South Africa’s exports. South Africa’s exports to the EU are also far more diverse than to other partners, with raw materials accounting for less than half of the total. Machinery and vehicles alone account for 36% of South Africa’s exports to the EU, followed by agriculture at 13%. The deficit in favour of the EU has also been shrinking. It is now at R76bn (down from R88bn in 2016), though this is subject to yearly fluctuations. In agriculture, South Africa has a surplus balance with the EU of almost €1bn. South Africa ranks 11th in the EU’s top agricultural importing partners.

The South African market for organic products outstrips local supply and imports from the region. South Africa is one of the “leading consumers of certified organic produce in Africa but is a small player in production”. The high domestic demand provides the potential for this market. The limiting factor currently is the supply of organic produce on a regular basis. Organic foods already exist on market shelves in South Africa, but supply is erratic and does not meet demand. This means that producers of many organic products targeting the European market have a fall-back option of supplying the South African market if not successful abroad. In South Africa there are two organic standards: the South African Bureau of Standards and the South African Organic Sector Organisation. However, no organic regulation has been promulgated due to issues with the Agricultural Products Standards Act, 1990. The lack of legislation defining an “organic product” raises concerns about claims associated with the “organic” label in South Africa. Nonetheless, many emerging organic markets are operating effectively without government intervention, through third party verification, but this is costly. Since the EU is one of the major importers of South African organic products, the quality of such products must meet international – or at the very least, EU – standards.

Zimbabwe, South Africa Bi-National Commission

Joint communiqué (The Presidency): The two sides emphasized the importance of expanding trade and investment to drive the strategic engagement forward. In this regard, the Heads of State directed their Finance and Trade Ministers to work together to achieve these goals. Zimbabwe highlighted the key initiatives taken by Government to improve the ease of doing business in the country and further informed on the country’s efforts to simplify and rationalize investment rules with the view to attract foreign direct investment. The relevant Ministries agreed to consider options for expanding the standing Facility arrangement between the respective Central Banks. Other Financing Options beyond this are also being explored (for example a facility from South African private banks to the Zimbabwe private sector and guaranteed by the South African Government, with an appropriate counter-guarantee from the Zimbabwe Government). They also agreed to work together on re-engagement with the International Co-operating Partners in support of Zimbabwe’s economic reform and Debt Arrears Clearance Agenda.

Opening remarks by President Cyril Ramaphosa: I am encouraged by the participation of South African business in various sectors of the Zimbabwean economy, such as in engineering, construction, banking, retail, hospitality, mining exploration and services, among others. There are undoubtedly good prospects for both of our countries, but there is a need to ensure ease of doing business and elimination of trade barriers. This should include the urgent conclusion of all outstanding work on the Beit Bridge One Stop Border Post for facilitation of free movement of persons, goods and services.

SA raises concern over Zimbabwean trade restrictions The South African government has raised concerns over more than 100 tariff lines in Zimbabwe’s laws which act as barriers to trade between the two countries. In an interview on the sidelines of the SA-Zimbabwe bi-national commission in Harare, trade and industry minister Rob Davies told Business Day the issue was one of the areas of disagreement in the talks: “Statutory Instrument 64 was lifted but we are still concerned about the current laws which continue to restrict imports from SA. Obviously this is against SADC protocols on trade.” According to minutes of the summit, seen by Business Day, Harare has asked for a waiver on the regional protocols. “In their laws, there are still 112 tariff lines where we have issues that make it difficult to get products from SA into Zimbabwe. We discussed some of these issues and we were able to strike a deal to do away with some of the issues, 29 to be exact,” Davies said. “But the majority of our concerns still remain.” Davies said during closed meetings SA had complained that Zimbabwe was restricting some products that it did not have the capacity to produce.

Mauritius-Madagascar: MoUs to enhance cooperation in political, economic and cultural fields (GoM)

Prior to the signing ceremony, Prime Minister Jugnauth and President Andry Nirina Rajoelina had a Tête-à-Tête followed by a working session whereby various issues of mutual interest were discussed namely: agricultural development; fisheries; air connectivity; maritime corridor and cabotage; visa facilitation; commerce; and bilateral agreements as regards employment. Speaking about agricultural development, the Prime Minister highlighted that the Indian Ocean Commission is presently financing feasibility studies to finalise a model of development for maize and soybean, in collaboration with the private sector of Mauritius. Both countries, he pointed out, are determined to provide assistance to their respective private sectors for the implementation of the project, which lies in the context of the regional programme for food security and nutrition of the IOC. As regards air connectivity, the Mauritian Prime Minister highlighted that discussions focused on the agreement for an additional weekly flight of Air Mauritius on Antananarivo. Currently six flights are operated. To facilitate a vibrant Mauritius-Madagascar commercial flux, the Prime Minister expressed his commitment to facilitate trade between the two countries through the establishment of administrative procedures aimed at enhancing the business climate, in particular by offering a modern and efficient custom service.

The illicit tobacco trade in Zimbabwe and South Africa

The study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It identifies “good-faith actors,” primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practical solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry. [The author: Simone Haysom] [RelatedTobacco in Africa: production and trade (Ron Sandrey)]

Uganda: Chinese supermarkets shun local goods – traders (Observer)

When Dorothy Kimuli started her company Kims Natural Chilli Sauce some years back, her dream was to capture the local market. Her first target was supermarkets whose shelves were full of imported chilli. Kimuli explained that her goods were first rejected by supermarkets because they were not certified by Uganda National Bureau of Standards and, therefore, did not meet standards. “Actually at first, I did not have any certification but I worked with Uganda Small-Scale Industries Association, and UNBS, and I was certified. Some supermarkets later accepted and put my goods on their shelves. The demand has been good but the Chinese have completely refused to take on most local products. Those who pretend to buy just buy a dozen or two which they put on their shelves; they will pay you when all the stock is completely finished, this becomes costly to small-scale traders and I think it’s a way of putting local goods at bay.” Her complaints came up during ‘Make BUBU work for the growth and competitiveness of Uganda’s small and growing businesses‘ (pdf) conference organised by SEATINI, USSIA and Federation of SMEs–Uganda. Veronica Namwanje, the executive secretary, USSIA, said although the BUBU policy provides an important regulatory foundation for the support of production, purchase, supply and consumption of locally made goods and services; it is non-binding.

Trump’s proposed budget slashes funding to Kenya

President Donald Trump’s proposed budget issued on Monday calls for deep cuts in aid to Kenya as part of an overall rollback in US funding for many Africa-focused programmes. Support for development initiatives in Kenya will fall from the $102m provided in 2018 to $43.5m in accordance with Mr Trump’s spending plan for the 2020 US fiscal year that begins next October. A similar reduction of more than 50% is sought in US economic and development assistance for sub-Saharan Africa as a whole. It will plummet from $1.5bn approved by Congress for 2018 to $665m in 2020. In its State Department budget proposal, the White House justifies these cuts as ways of “reducing dependency on US assistance and increasing self-sufficiency” on the part of African nations.

Testimony by USTR Robert Lighthizer to the US Senate Committee on Finance: Approaching 25 – the road ahead for the WTO

First, the negotiating process at the WTO has largely broken down. Under the old GATT system, from 1947 to 1994, there were eight negotiating rounds – each of which led to lower tariffs and fewer trade barriers among all GATT members. To this day, the basic rules that govern global trade were negotiated under the GATT. But in the 24 years since the WTO began operation, there has been no new significant multilateral market access agreement. Second, much work remains to be done in terms of lowering tariffs – primarily in countries that consider themselves developing. Numerous WTO members continue to have very high “bound” tariff rates that allow them to maintain tariffs significantly above the bound rates that apply to the United States. For example, the average bound tariff rate for all goods in the United States is 3.4%. In Brazil, it is 31.4%. In India, it is 48.5%. In Indonesia, it is 37.1%. Third, too many WTO members are not living up to current obligations. For example, members take on significant commitments to provide regular notifications of subsidy programs and other information critical to trading conditions around the world. Despite the clear obligation to make such notifications, many of our trading partners – including significant economies like China and India – have a very poor track record of providing this critical information.

Today’s Quick Links:

AfDB Governors, Alternate Governors, as at 28 February 2019 (pdf)

AfDB, APRM EOI: The size and sectoral distribution of state-owned enterprises in Africa (pdf)

South Africa: TIPS Real Economy Bulletin Q4 2018 (pdf)

OECD’s Working Party on Measurement and Analysis of the Digital Economy: Determinance and impact of automation (pdf)

World Bank Chief Economist, Pinelopi Goldberg: Why we need a research department

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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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