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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: UN

07 May 2019

New commentaries on the AfCFTA:

  1. tralac’s Gerhard Erasmus: The institutional design of the AfCFTA. Why do international trade arrangements have their own institutions? What do these institutions do and how important are they for delivering the intended outcomes? This paper discusses these questions with respect to the AfCFTA. The aim is to broaden the scope of the discussion about the potential impact of the AfCFTA. Will the AfCFTA add a unique dimension to Africa’s developmental strategies and abilities, or will it be a case of more of the same? The relevant provisions in the legal instruments of the AfCFTA are studied for indications as to what can be expected.

  2. COMESA’s Francis Mangeni: AfCFTA success and the lessons from regional economic blocs. Rather than theoretical constructs, the actual entry points for African economic integration have been the current existential issues the regions faced: drought and desertification for IGAD, peace and security for ECOWAS, infrastructure and industrialisation for SADC, trade and financial facilitation for COMESA; and nostalgia over a beloved economic community that collapsed in 1977 in EAC. African economic integration still takes place in a global political and economic order. However, African must secure its financial autonomy and progressively eliminate over-dependence on some partners. ECOWAS has been able to mobilise $630m annually from its community levy system. The African Union levy of 0.2% on imports has so far raised $800m for the Peace Fund to support peace and security operations. Donor funding in the meantime continues to fill in existing gaps in other regional bodies. The EAC has mobilised $500m in project financing mainly for trade facilitation. Long term, the sustainable building of capabilities is a critical success factor. The capabilities are entrepreneurial, leadership, intellectual, diplomatic and negotiational, mobilizational, proposal and drafting and textual preparation and explanation, and managerial.

São Tomé and Príncipe and the AfCFTA: Capitalize on the Blue Economy, UNECA urges

The UNECA has reiterated its “availability and commitment” to work with the Republic of Sao Tome and Principe on taking advantage of its Blue Economy endowments to capitalize on the AfCFTA. Antonio Pedro, Director of the Subregional Office for Central Africa, gave the assurances during a recent AfCFTA roadshow held in Sao Tome to inform and sensitize major actors of the island on the opportunities offered by the AfCFTA when it becomes operational in July, and the steps Sao Tome should take to make the most of it. The authorities in Sao Tome also requested the Subregional Office for Central Africa and the ECCAS Secretariat to conduct a study on high-potential service sectors to inform the formulation of the national AfCFTA strategy.

The 38th meeting of the EAC Council of Ministers is underway in Arusha: the Ministerial Session will take place on Friday. The meeting of the EAC’s policy-making organ will consider various policy and institutional matters geared towards deepening and widening the regional integration agenda.

New ACP-EU Partnership: chief negotiators conclude regional consultations, culminating with African leaders’ meeting in Eswatini. As with other regional consultations held in the Pacific and the Caribbean regions, the objective was to discuss specific needs and priorities of the region, while exploring how to best address them in the future ACP-EU agreement. It is expected that today’s discussion will fuel and enrich the tailor-made Africa pillar to be created within the future ACP-EU agreement, also known as the “post-Cotonou” agreement. [Elizabeth Morgan: Strengthening Caribbean-EU relations]

African trade diplomats briefed on ITC trade and market intelligence tools (ITC)

ITC experts briefed trade attachés from Botswana, the Comoros, Eritrea, Rwanda, Uganda and Zambia on how to use ITC’s suite of free online tools: Trade Map, Market Access Map, the Rules of Origin Facilitator, the Export Potential Map and the Market Price Information portal. The feedback from the participants was highly positive. “The event deepened ITC’s relationship with the Geneva-based diplomatic missions of its partner countries,’ said Ramin Granfar, a country manager in ITC’s Office for Africa. Future briefings are planned on topics including ITC’s e-learning platform, the SME Trade Academy, and SheTrades, ITC’s flagship initiative on women’s economic empowerment.

Third AU-UN Annual Conference: joint communiqué (UNECA)

On 6 May, UN Secretary-General António Guterres and AU Commission Chairperson Moussa Faki Mahamat convened the Third AU-UN Annual Conference in New York. Continued collaboration for the implementation of the AfCFTA and other related instruments, including the Free Movement Protocol and the Single African Air Transport Market, was discussed, notably in view of their significant potential to boost regional integration, strengthen inclusive economic growth, generate jobs for young Africans, alleviate poverty and lead to more stable and peaceful societies. The Conference urged greater efforts to harness Africa’s youth dividend, notably with investments in health, education, data and in science and technology. The urgent need to ensure investments for development of robust data ecosystem at the country and regional levels, enabling evidence-based policy-making, as well as tracking progress of the two agendas, were underscored. They acknowledged the important role of technology and digital identity as a transformative force for African economies and achieving sustainable development and underpinned by the smooth implementation of the AfCFTA.

COMESA countries maintain high sugar production: update from the Africa Sugar Conference

Eight countries in the COMESA region have maintained their grip in sugar production with most of the raw produce being exported to the EU, USA and China. The top producer of sugar is Eswatini, having produced over 650, 000 metric tonnes (MT) followed by Egypt at 595, 000 MT, then Zambia with 450, 000 MT. Ethiopia produced 450, 000 MT, Zimbabwe 391, 000 MT, Kenya is at 376, 000 MT, while Mauritius and Malawi produced over 355, 000 and 239, 000 MT respectively.

Madagascar Economic Update: managing fuel pricing (World Bank)

The economy has continued to perform well, with growth in 2018 estimated at 5.2%, above regional and global averages. External demand for Malagasy goods and services remains strong, with exports such as cash crops, metals and business process outsourcing performing well. A small but dynamic private sector is responding to this increased economic activity with banking, logistics and services to support companies all under expansion. The central challenge remains of how this growth can benefit a wider population, so that Madagascar can make inroads in reducing poverty. Increasing access to reliable, sustainable and affordable energy supply is critical in this regard. Improving the reliability of energy supply would support firm’s competitiveness, which is crucial for helping industries to grow and creating job opportunities. At the household level, only an estimated 13% of the population has access to electricity. Extract on Madagascar’s Real Sector:

The performance of the manufacturing sector was mixed, particularly for goods produced in export processing zones. Overall, the growth of the secondary sector decelerated from 9% in 2017 to 5.4% in 2018. Garments feature among Madagascar’s top three exports and realized mixed performance. The value of garment exports to France and Germany fell by 25%, which is significant as an estimated 50% of garment production in export processing zones is destined to these two markets. However, this lackluster performance of exports to European markets was to some extent compensated by an increase in the value of garment exports to the US by 25.5%. Given global growth prospects, demand for Malagasy garments is expected to pick up over the medium term, which should be reinforced by plans to strengthen capacity of the Toamasina Port. Demand for other Malagasy goods remained strong. The price of vanilla continues to remain high, but is likely to fall over the medium term as more suppliers enter the market. The price of nickel has been on a upward trend although was a slump in prices at the end of quarter 1, 2019, whilst cobalt prices continue to rise.

South Africa: Pakistan cement producers challenge SA import duties (Business Day)

Pakistan cement exporters are putting pressure on their government to convince SA to overturn the existing anti-dumping duty on imported cement from that country. Mohammad Rafiq Memon, chairman of the Pakistan-SA Business Forum, has called for the intervention of the Pakistan authorities. “Before the antidumping duty, annual cement exports to South Africa were worth $700m, but has subsequently dropped to $100m,” he says. Memon says SA should revisit the decision to impose the anti-dumping duties in the interest of fair trade. Since the imposition of the duties on Pakistan cement, Vietnam has taken over as the largest exporter to SA, with 30,000 to 50,000 tons imported into the country each month, according to construction market intelligence firm Industry Insight.

Ethiopia reaps rewards of tax policy reform (AfDB)

These findings were revealed at a workshop in Addis Ababa hosted by the AfDB and a high-level delegation from the Ethiopian government. An AfDB study found that the introduction of electronic cash registers increased value added tax collections and payments by about 32%, with variations by sectors of activity, size of firms and locations. This increase can be considered large. However, given the low tax base, there is significant scope to mobilize domestic resources by accelerating reforms, notably on the use of third-party information on taxpayers, promoting electronic tax filing and payment systems, and enhancing analytical capacity using comprehensive national databases. The workshop formed part of the Bank’s commitment to helping the government fund its ambitious development plans. In this regard, the Bank conducted original research to evaluate the impact of major tax policy reforms in Ethiopia, in collaboration with the Ethiopian Development Research Institute and the Ministry of Revenue and the Ethiopian Customs Commission (formerly Ethiopian Revenue and Customs Authority).

Consumer groups express support for multilateral trade, stress priorities for e-commerce (WTO)

The meeting at the WTO, held at the request of Consumers International, was the first event to be organized solely for consumer organizations as part of the WTO’s Trade Dialogues initiative. It brought together 15 representatives of consumer organizations from around the world and a number of private sector representatives. Extract from the summary of the issues raised at the meeting (pdf): Consumer groups voiced their interest in seizing the window of opportunity posed by ongoing discussions on e-commerce at the WTO. There will be more than 2 billion consumers online by 2021 and it is crucial to ensure policies will be in place that make the world fair, safe and sustainable for them. Transparency in the negotiations is important and consumer groups would like to be informed about the proposals and be included in consultations with their respective governments to ensure their interests are being represented. In addition to reducing prices and enhancing choice, consumer groups would also like the ecommerce negotiations to address: [A commentary by Seema Bathla, Abhishek Jha: Talking fair trade in Delhi (13-14 May, New Delhi)]

Christine Lagarde: How to ensure the effective and sustainable financing of international development (IMF)

Strengthening debt management will also be crucial. This can be quite tricky. As debt instruments get more complicated, debt management capacity needs to become more sophisticated. Yet today, only 40% of countries meet basic standards for debt recording, while just a third meet standards for reporting and monitoring of guarantees. Technical assistance will be critical here. Let me now talk about the role of creditors, who have a vital role to play in encouraging greater transparency. As we have seen in Mozambique, private lenders can effectively facilitate hidden debt. Even for official creditors, non-disclosure agreements or complicated financing modalities can work against transparency. I therefore welcome the work being done by the Institute of International Finance on Principles for Debt Transparency of private creditors. I also welcome the G-20’s self-assessment relative to its operational guidelines for sustainable financing. I encourage all G-20 members to participate. Also, most importantly, the Paris Club can play an important role in coordinating debt resolution because it incorporates best practices and has a wide membership - recently expanded to include Korea and Brazil. Wider membership of the Paris Club, including new official and plurilateral creditors, could help secure more rapid and coordinated debt resolutions.

China: Debt cancellation (pdf, Development Re-imagined)

Selected pointers: Over the period 2000 to 2018, China has written off c$9.8bn of debt to other countries; this has been highly variable year-on-year. The geographical distribution of Chinese debt cancellation shows a significant skew towards African countries. The vast majority of Chinese debt cancellation has been to APAC and Africa, within which Eastern Africa has received the largest amount (c.$1bn). In value terms, medium HDI ranked countries are the largest proportion (c.56%); in volume terms, low HDI countries makes up the greatest share of cancellations.

Today’s Quick Links:

Pan African Parliament swears in 8 new members

West African regional anti-corruption network recommends modalities for corruption risk assessment training

Asoko Insight: Tanzania’s leading fintech providers

Nigeria: Judge rules MTN met deadline to respond to tax demand

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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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