tralac’s Daily News Selection
Selected trade events now underway:
Today in Nairobi: EABC-ITC-TMEA Regional consultative workshop on AfCFTA Tariff Offers and engagement on trade in services
Tomorrow, in Johannesburg: UAE-South Africa Business Forum. The UAE’s Minister of Economy, Sultan bin Saeed Al Mansoori, will preside over the Forum which will review investment opportunities in both countries.
The G20 Summit takes place later this week: a commentary by East Asia Forum’s editorial board
Events to diarise:
5th Tony Elumelu Foundation Entrepreneurship Forum (26-27 July, Abuja): Presidential Dialogue participants
Kenya will host this year’s Africa Caribbean Pacific Heads of State meeting (between 26 November and second week of December)
On the hosting of the AfCFTA Secretariat: Nairobi steps up bid for trade bloc headquarters
Industry and Trade Cabinet Secretary, Peter Munya, says Kenya has upped its campaign to mobilise support from across Africa ahead of a vote by African Union’s Council of Ministers. “We have requested support from our peers within the EAC and we continue lobbying other countries. We also have experience because we host other global bodies like the UN here.” [CNBC interview: The AU’s Albert Muchanga on the role of digital trade in Africa’s growth]
The US plans to pursue its first free trade agreement with a country in sub-Saharan Africa as soon as it decides on the most suitable candidate, according to the US Assistant Secretary of State for Africa. “I am passionate about having one with a sub-Saharan African country,” the State Department’s Tibor Nagy said at the University of the Witwatersrand’s Business School in Johannesburg. “We have a number of candidates and now we have to talk to them.” “We want to evolve the trade partnership to something that’s more sophisticated, as African markets become more sophisticated and economies change toward services,” Nagy said on Friday. [Kimberly Ann Elliott: pdf Developing a more inclusive US trade policy at home and abroad (588 KB) (CGD Policy Paper)]
Mauritius-China: Signing of grant agreement, protocol for partial annulation of debt, FTA update (GoM)
Mauritius and China last week signed two agreements, namely, a grant to the tune of 100 million RMB (Rs 513 million) and a protocol relating to the partial annulation of a sum amounting to 78 million RMB (Rs 400 million) of the debt of Mauritius. The signatories were the Financial Secretary of the Ministry of Finance and Economic Development, Mr Dev Manraj, and the Ambassador of the People’s Republic of China to Mauritius, Mr Sun Gongyi. Prime Minister, Mr Pravind Jugnauth also spoke of the free trade agreement which the two countries will soon sign, the first that the Chinese Government will sign with an African country.
Third AU-EU agricultural ministerial conference: pdf Political Declaration and Action Agenda (264 KB) (EU)
The Political Declaration is a strong signal reflecting the shift in Africa-Europe relations based on promoting policy dialogue and cooperation as a development tool, bringing the two continents closer at all levels: people to people, business to business and government to government. These different levels are also reflected in the action agenda, endorsed by all Member States. It includes concrete actions involving cooperation between the two continents in different areas, such as: Farmers’ organisations: launch of a multiannual cooperation programme with African continental, regional and national farmer organisations. The programme will focus on farmers’ integration into value chains while strengthening capacities of farmer organisations to influence policies and business environments. Food safety: The aim is to strengthen food safety governance in Africa and establishing adequate governance structures. This is being implemented mainly through discussions on the support to the implementation and operationalisation of the AfCFTA for Sanitary and Phytosanitary Measures. Research and innovation: Three new contracts will be signed today to boost research and innovation under the Development Smart Innovation through Research in Agriculture (DeSIRA) Initiative:
At a closed-door retreat of trade envoys hosted by China on 19 June, India issued a concept paper to galvanize developing countries for advancing “developmental dimension” in global trade so as to counter the “one-sided” agenda being imposed by major industrialized countries. “From New Delhi to Geneva, we have established a platform for developing countries to discuss reforms of the WTO from a developmental perspective,” said China’s trade envoy Ambassador Zhang Xiangchen, suggesting Indian paper has laid out what ought to be immediate priorities. The six-page concept paper says after the immediate priorities are addressed, developing countries must ensure other development concerns, “in particular the outstanding development issues of the DDA (Doha Development Agenda), as well as address the asymmetries in WTO agreements such as those in agriculture and other areas.” [Related: Government’s transport assistance for farm produce exports under attack at WTO; As G20 gets underway this week, Delhi may attempt a tightrope walk; Biswajit Dhar: Trump’s trade war expands to India]
The call is clear: following elections in May 2019, the next five years provide a generational opportunity to break the cycle of crisis and vulnerability and put the country on a path of inclusive growth and job creation for the growing population. To that end, this report recommends policy directions in four interrelated focus areas: the establishment of stronger economic and institutional foundations; the transformation of the economy; building human capital; and resilience. Extracts:
Malawi needs to improve transparency and reduce uncertainty to improve its business environment. A non-transparent and uncertain business environment favors companies with long-established networks, with policy biased in favor of larger firms. This is partly due to the enduring legacy of heavy state intervention, which exacerbates barriers to the entry and success of new companies that could play a role in diversifying exports and the economy. Regulatory deficiencies favor established firms with broad networks that enable them to mitigate various risks. Greater efforts will be needed to make regulation—especially tax and licensing requirements—simpler, more accessible, and easier to comply with. It is also essential that sector regulatory frameworks support a level playing field and encourage longer term investment.
Increasing regional integration and exports could support economic diversification and more inclusive growth. However, to reap this opportunity, Malawi needs to implement policy reforms to address a range of structural and institutional constraints to reduce trade costs. With Malawi currently relying on low-value agricultural exports with margins too small to overcome high-cost transactions, this is particularly critical. The authorities also need to address nontariff barriers, particularly export bans.
Peter Munya, cabinet secretary in the Ministry of Industry, Trade and Cooperatives told journalists in Nairobi that the regulations for the commodity exchange have already been developed to guide the operations of the platform. “Our target is for the first agricultural produce to begin trading at the Commodity Exchange in the next nine months. Thereafter we hope to incorporate all major cash crops as well as minerals in the commodity exchange.” He said funds to implement the commodity exchange will be put in the national budget of the next financial year that begins in July.
Trade policy and gender
Mrs Omolola Ajani is the Chairperson of the Abuja Branch of NECA’s Network of Entrepreneurial Women, NNEW, a platform established under the aegis of Nigeria Employers’ Consultative Assembly. In this interview with our team in Abuja, she outlines efforts of her organization in building sustainable businesses among Nigerian women. She notes that women businesses are yet to feel the impact of the federal government Ease of Doing Business initiative, while outlining the agenda for tomorrow’s training programme with the theme “Instituting Corporate Governance in Our Businesses.”
Levelling the playing field: Dissecting the gender gap in the funding of start-ups (pdf, OECD Science Technology and Industry Policy Paper)
This report investigates the gender gap in the funding of innovative start-ups across OECD and BRICS countries using a detailed micro-dataset on start-ups and their founders. Results from empirical analysis show that start-ups with at least one woman in the team of founders are less likely to receive funding by 5-10%. When such start-ups do receive funding, they receive an amount lower by a third compared to start-ups created by male founders.
Lauren Kyger: Should women have their own provisions in free trade agreements? (Global Trade)
2019 SITA Innovation Forum: remarks by IATA’s Alexandre de Juniac
A few weeks ago, IATA’s 290-member airlines gathered in Seoul for our 75th Annual General Meeting and World Air Transport Summit, where we presented our economic outlook. Overall, we expect the industry will generate a profit of $28 billion this year, marking 10 years of being in the black. At the same time, our customers will enjoy fares that are 40% lower than a decade ago. And we will reward shareholders for a fifth consecutive year by generating a return on invested capital that exceeds the cost of capital. Nevertheless, we have also run into strong headwinds this year; and profits are being squeezed compared to 2018. Passenger demand is rising, but the air cargo market is shrinking. Furthermore, costs are increasing, including fuel, labor and infrastructure. Long-term, we are of course optimistic. We project a doubling of demand over the next two decades. This year we forecast 4.6 billion travelers. In 2037 we see 8.2 billion. China and India will account for 45% of that growth. Even more than today, the travelers of the future will come from all walks of life and economic means.
SWIFT’s new paper: Payments – looking to the future
Innovations in domestic retail payments have multiplied at a gravity-defying pace in recent years, driving unimaginable improvements. Entire domestic markets have completely transformed the way they shift value. With goods and services moving more quickly and across greater distances than ever before, value needs to shift further, faster. Value transfers must be friction-free. They must also be safe, secure and compliant. While banks sit at the centre of this, the core architecture is key. It must be open and trusted, innovative and resilient; its reach must be ubiquitous and its operations robust. It must enable smart, embedded, instant payments, 24/7 from every account to every account, everywhere. It must support banks in this journey. Extract: More than 55% of SWIFT cross-border payments are already being made via gpi, moving more than 40 trillion US dollars’ worth of payments across borders faster than ever before. Half of them are reaching end beneficiary customers within minutes, and practically all within 24 hours. Within two years, every cross-border payment will be a gpi payment. The velocity at which gpi payment transactions can be effected will speed up further as more and more banks move away from batch to real-time processing. Because customers are demanding ever-faster payments and more and more markets are moving to real-time, banks will have no choice but to start processing their payments this way. [How digitalisation will cause the next financial crisis]