tralac’s Daily News Selection
The African Group at the WTO has circulated a statement on the Appellate Body impasse:
An extract: “In the last year, we note with alarming concern the systemic risks facing the WTO’s Appellate Body. The WTO derives its credibility from its mandated function to enforce the commitments entered into by its Members. With the looming paralysis of the Appellate Body come 10 December 2019, there will be no credible enforcement mechanism of the rules-based multilateral trading system. Existing rules will be unenforceable and discussions or negotiations on new rules will be redundant. The African Group is acutely aware that an urgent solution is required to ensure the effective functioning of the WTO’s Appellate Body as a legitimate forum where all Members can exercise equal opportunity in enforcing their rights. It is critical that all Members contribute to the strengthening of the dispute settlement system in order to enhance predictability in the functioning of the Appellate Body.
UNCTAD’s flagship publication, Economic Development in Africa Report 2019, has been released. The theme: Made in Africa – Rules of Origin for enhanced intra-African trade
Rules of origin – the criteria needed to determine the nationality of a product – could make or break the AfCFTA that entered into force in May, says a new UNCTAD report. The Economic Development in Africa Report 2019 (pdf) notes that rules of origin could be a game changer for the continent as long as they are simple, transparent, business friendly and predictable. The report warns that if rules of origin are made too costly or complex to comply with, firms may instead forego these preferences and choose to trade with partners outside the AfCFTA. Equally, the status quo may prove more appealing; for example, they may stick to trading only within existing regional economic communities, with few incremental gains arising from consolidating the regional market. While rules of origin should be context specific, UNCTAD recommends that they are kept simple, transparent, business friendly and predictable. Also, the rules should take into account the level of productive capacities and structural asymmetries across the broad set of countries, including the Least Developed Countries, which face challenges in making use of preferential tariffs, let alone implement demanding origin requirements. The report shows that some African LDCs and non-LDCs are largely unable to make use of preferential treatment for their exports to external partners. These countries include Benin (preference utilization rate of 4.6%), Burkina Faso (0%), the Central African Republic (0%), Djibouti (3.5%), Equatorial Guinea (6.8%), Guinea (0%) and Guinea-Bissau (0%). Others are Liberia (0%), Libya (0%), Mali (0.4%), Seychelles (0%), Sierra Leone (0%), Somalia (1.1%), Togo (0%) and Tanzania (6%).
An African Arguments commentary by Archie Matheson: The AfCFTA is laudable, but its imminent benefits are overstated. “Highlighting these uncertainties is not a criticism of the admirable goals of AfCFTA, which in the long-term is still likely to have a markedly positive impact on the intra-African trade of goods and services. Rather, it is recognition that in the next few years, and perhaps further into the 2020s, its impact will likely not be as pronounced as suggested by some of its proponents. It is vital that expectations of governments and businesses are managed, and that signatories have the patience to deliver a project over what will be a long time period.”
Commentaries on Prosper Africa:
Witney Schneidman, Jay Ireland: Can the US and Africa prosper together? It will be more challenging for the Trump administration to have success on the trade front. For one, the level of two-way trade was $61.8bn last year. This was 57% less than its 10-year high of $142bn in 2008 (Figure 1). Several factors explain the dramatic decrease. First, with the emergence of US energy self-sufficiency, our historically high need for African oil is now zero. On the other hand, the long-term competitive issue for US trade in Africa is the proliferation of the EU’s Economic Partnership Agreements. These agreements provide EU goods, services, and companies with tariff advantages with more than 40 African countries. As the USTR noted in its March 2019 National Trade Competitiveness report, the EPAs have “eroded” US trade competitiveness with South Africa and the countries of the Southern African Development Community. This erosion will only intensify across the continent as the EPAs come into force, and as Africa implements the new Continental Free Trade Agreement. US-African commercial relations were energized by the US-Africa Trade and Investment Summit in Maputo, but the administration needs to keep that momentum going. The AGOA Forum in Côte d’Ivoire in August will be another opportunity for US officials to show their commitment to the African continent and Prosper Africa. The Trump administration should also consider convening a third high-level US-Africa Business Forum on the margins of the UN General Assembly in September. The previous forums, in 2014 and again in 2016, proved to be major catalysts to US business success in Africa.
Judd Devermont: Prosper Africa’s partial answer to promoting US trade and investment. Prosper Africa was designed to solve a persistent problem for US companies: how to navigate the US bureaucracy and benefit from its various programs and services. As indicated by the President’s Advisory Council on Doing Business in Africa in 2017, it is difficult to compete with foreign competitors because the United States does not offer a whole-of-government approach. A US firm seeking assistance has to go on a frustrating scavenger hunt, knocking on individual department and agency doors to secure US support. Prosper Africa seeks to remove this hurdle to trade and investment. It is essentially a “back-of-the-house” fix, which many US firms say is welcomed and long overdue. Prosper Africa has real potential, and it is not too late to refine its framework to increase US trade and investment in sub-Saharan Africa. At the minimum, it requires greater focus and more attention to dismantling barriers to US investments. Below are some recommendations to ensure a better rate of return on this initiative.
Stephany Zoo: What Africa can learn from China about data privacy (WEF)
After taking a group of 15 entrepreneurs from Nigeria, Kenya, South Africa, and other African countries on a learning journey to China’s tech powerhouses, the one thing they were all unequivocally amazed by was the country’s data usage prowess. Across Africa, where the cost of development is high and efficiency is low to begin with, leveraging the power of big data should be a priority. This knowledge and technology transfer can be immediately implemented between China and more developed African countries, such as Nigeria, Ghana and Kenya. It is imperative that, rather than pushing foreign data privacy policies on Africa, governments are able to customize according to a country’s growth stage, enforcement resources and cultural context. The argument for gradual data privacy legislation in Africa is clear: that the costs threaten not only to stifle Africa’s innovation, but unquestioningly adopting another continent’s standards might put it at an even greater disadvantage. [Underway in Accra: Africa regional data protection and privacy conference; Conference www]
UAE’s ECI partners with South Africa’s Export Credit Agency (Trade Arabia)
Etihad Credit Insurance, the UAE Federal Credit Insurance Company, has partnered with Export Credit Insurance Corporation, the South African export credit agency to enhance bilateral trade relations between the two countries. The MoU was signed by Massimo Falcioni (CEO of ECI) and Kutoane Kutoane (CEO of ECIC) during the UAE-South Africa Business Forum organised by the UAE Ministry of Economy and held at Africa trade week in Johannesburg in the presence of senior officials from both the organisations. Under this MoU, both institutions will form a cooperative task force to explore trade, technical and economic collaborations that are based on the defined areas of interest. These include SME programmes; investment and globalisation; market intelligence and business practices; insurance, co-insurance collections; and trade shows, events, and forums.
Women join fight against illegal trade at Kenya-Uganda border (Daily Nation)
Authorities along the Kenya-Uganda border are roping in business groups run by women in a campaign meant to make official border points attractive to traders and dissuade them from using illegal crossings. This, they hope, will tame smuggling of banned or fake goods and raise avenues to collect more tax from traders using the revamped Busia OSBP, the Malaba crossing and other border points under renovation. During the cross-border women traders’ conference facilitated by Trademark East Africa in collaboration with State department for Gender held in Busia, Wednesday, it was revealed that women, who are among key stakeholders in cross-border trade, have been avoiding regular borders out of fear of harassment. In the process, they deny the two countries the much sought after revenue.
Kenya: EPZ companies push for power, labour cost cuts (Daily Nation)
Export Processing Zones companies have asked the State to lower labour and electricity costs while also slashing work permit fees for expatriates to boost Kenya’s earnings from the Africans Growth and Opportunity Act. Kenya Export Manufacture Association vice chairman, Thomas Puthoor, says the EPZ has great potential but is held back by inability to attract more investors who prefer neighbouring countries. “EPZs in the country are not willing to expand due to existing costs despite having available labour. Our competitors such as Ethiopia and Madagascar have attracted more investors after lowering electricity cost and expatriate permit fees,” he said. Kema has also complained of high wages in Kenya that he rated at an average minimum of Sh22,000 compared to Ethiopia and Madagascar at Sh6,000 and Sh8,000 respectively. [Central Corridor stakeholders call on Dar port to cut charges]
Today’s Quick Links:
Ghana Economic Transformation Project: $100m to boost Ghana’s Industrial Parks
Wandile Sihlobo: SA horticulture is blooming, but there’s still room for growth
Reuters: Nigerian court case between MTN, attorney general over $2bn tax dispute adjourned to 29 October
South Africa-Nigeria Investment Conference: Brand South Africa statement
Mauritius Revenue Authority training workshop on money laundering and financing of terrorism
Making secure land tenure count for global development goals and national policy: evidence from Zambia
Malawi, Mozambique, Zambia: Global mitigation policies and developing country economies