tralac’s Daily News Selection
Diarise: The 7th Annual East Africa International Arbitration Conference 2019 takes place on 29-30 August in Nairobi
Featured African trade policy tweets:
@AfricaMediaHub: Assistant @USTradeRep for Africa Constance Hamilton: AGOA is scheduled to expire in six years – in 2025. Our ultimate objective is to have a network of agreements to serve as building blocks to an eventual true Africa-US trade partnership for the 21st century.
- @SymerreGrey: China has over 1million patent applications annually. South Africa has 9000, which is more than entire Africa combined. PIDA-2 has to prioritize Intellectual Property (IP) development and spur innovation and smart infrastructure projects.
This paper is intended to be a reference document on the provisions contained in the six agreements and highlight some key areas for consideration when moving forward with the continental integration agenda. The paper is structured as follows: the introduction outlines the status of the economic partnership agreement process and the justification and objective of the work. Section II provides notes on the methodology used. Some key findings from the comparison exercise are highlighted in section III. Section IV provides legal analysis on selected themes. Section V highlights recommendations and additional strategic considerations. The similarities and differences between the agreements are provided in table form, subject-by-subject, as covered in the text of the agreements in the annex. Extract: Going forward in the negotiation and implementation of the economic partnership agreements, it will be important to consider how the agreements will interact with the African Continental Free Trade Area negotiations and implementation, the wider integration agenda and Africa’s relationships with other trading partners. For example:
(a) How will the negotiations of the African Continental Free Trade Area and economic partnership agreement services components interact? In particular, should the agreement services negotiations be halted, or will the services negotiations provide traction for services under the African Continental Free Trade Area?
(b) Although the economic partnership agreements appear to allow enough space for African Continental Free Trade Area implementation, going forward the prospect of an African continental customs union as envisioned in the Treaty establishing the African Economic Community will require harmonization of the agreements, in particular on rules of origin, exclusion lists and trade remedies. What will be the African strategy in that regard? As it currently stands, once the agreements are in force, revision clauses could be used for that purpose. Currently, however, only one African agreement is in force. While some African States have expressed wishes to renegotiate, the European Union position has been that the opening of negotiations is not possible.
Cheikh Ahmed Bamba Diagne: Why abandoning the CFA Franc would be a risky operation (The Conversation)
Why should we, in the short to long term, resist a single currency for the Economic Community of West African States countries? These eight countries – Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo – are worth a collective 58.966bn CFA Francs, that is, $102.2bn (the equivalent of 22% of Nigeria’s GDP). Côte d’Ivoire, which represents 35.2% of the economy of the zone, has never shared governance of the Central Bank. As a result, the zone’s monetary policy responds more to the needs of Cote d’Ivoire than to that of the member states. What then would be the effect of the planned Economic Community of West African States currency, called the ECO, given that Nigeria alone represents 73.1% of the zone’s wealth, against just 26.9% for the other 14 countries? Clearly, there is a strong chance that satisfying the needs of Nigeria would be the chief preoccupation of monetary policy within the region. [The author is Directeur scientifique du Laboratoire de recherche économique et monétaire (LAREM), Université Cheikh Anta Diop de Dakar]
Measuring progress 2019: Financial inclusion in SADC (FinMark Trust)
The SADC Financial Inclusion Strategy has regional M&E indicators which have been integrated into MAP country work in 2018 and into 2019. This regional approach has paid dividends over the last year with a number of regional initiatives being implemented and providing downward pressure for implementation at country level. In turn, country priorities have been escalated into regional-wide programmes. In the SADC region, financial inclusion strives to accomplish three inter-linked goals, namely, improve livelihoods, drive economic growth and drive industrialisation. Extract (pdf): The increase in the cost of using mobile money raises the question of the potential ‘mission drift’ of mobile money operator’s in serving low income customers and thus, the need for appropriate regulation to ensure these costs are kept low. Cross border remittances have seen more competition in terms of the number of products and models across the five countries (Botswana, Eswatini, Lesotho, Malawi, Zimbabwe). This has led to a reduction in the cost of cross border remittances. Different business models are emerging across the countries. For instance, the retailer model is the cheapest in Lesotho while the Money transfer operator model is the cheapest in Botswana. Consistently, this report highlights the need for more primary data on the lower end of the market to deepen customer understanding in order to ensure more robust interventions in order to build sustainable market systems.
The African Development Bank re-affirmed its intention to boost economic and regional development on the African continent when its Board of Directors approved a $300m support facility for the Eastern and Southern African Trade & Development Bank (TDB) on 17 July. The COMESA regional trade and project finance package consists of a composite funded trade finance and project finance facility, and an unfunded trade finance risk participation agreement. The facility’s trade finance component will enhance the TDB’s confirmation capacity, support its rapidly expanding forfeiture business, and help it become a globally acceptable confirming bank. The project finance component will facilitate the delivery of export-oriented infrastructure, which will promote regional trade within the COMESA region
Commissioner for Social Affairs and Gender, Dr Siga Fatima Jagne, urged the ministers to adopt the text of recommendations being presented to enable the ECOWAS Commission “put in place regional mechanisms that facilitate and enhance the social integration of our citizens in our community space and create conditions for a job decent and regulated at Member State level without xenophobia and other forms of discrimination”. The ministerial meeting was preceded by the brainstorming sessions of the labour experts and General Assembly of the SDF, being a natural follow up to the discussions and review of ongoing activities, including a stock taking of past activities meant to work out appropriate mechanisms for better coordination and implementation of desired programmes and initiatives. It is expected that the documents deliberated upon will be the key frameworks that ECOWAS and Member States can apply in order to achieve the ILO Centenary Declaration for the future of work adopted at its 108th conference held in June 2019.
Facilitating trade in safe foods: standards or regulations? This is the second post in the Feed the Future Enabling Environment for Food Security project’s blog series exploring food safety and cross-border trade. The first post discussed the importance of regulatory cooperation for ensuring food safety in intra-African trade in light of advancements towards Africa’s Continental Free Trade Area. This second installment discusses how different types of standards and regulations work in practice and the complementary roles they each play in mitigating food safety threats.
Illicit trade poses a threat to the achievement of the global goals and requires concerted global action, experts said at a forum organized by UNCTAD and the Transnational Alliance to Combat Illicit Trade (TRACIT) on 18 July. “A dark side of globalization and the expansion of trade has been the alarming emergence of illicit trade,” said Teresa Moreira, UNCTAD’s head of competition and consumer policies. She said economic leakages from illicit trade create an estimated annual drain of US$2.2 trillion to the global economy, nearly 3% of world economy. “If illicit trade were an economy, it would be the eighth largest in the world.” TRACIT’s director-general Jeffrey Hardy highlighted the impacts of illicit trade in various countries – from illegal fishing affecting marine resources in Costa Rica to counterfeiting draining €83bn ($93bn) from the EU’s GDP as well as 790,000 jobs. The statistics are indicative of the problem. Illicit trade in pharmaceuticals is valued at between $75bn and $200bn annually, while wildlife crimes are worth $23 billion, according to TRACIT. [Note: This study maps the 17 UN SDGs against the following sectors: agri-foods, alcohol, fisheries, forestry, petroleum, pharmaceuticals, precious metals and gemstones, pesticides, tobacco, wildlife and all forms of counterfeiting and piracy. Trafficking in persons is also examined as a particularly abhorrent phenomenon affecting supply chains and basic human rights as well as contributing to illicit trade practices.] [ pdf Mapping the impact of Illicit Trade on the Sustainable Development Goals (1.03 MB) ]
Trade flows hit by new restrictions implemented by WTO members continued at a historically high level between mid-October 2018 and mid-May 2019, according to the Director-General’s latest mid-year report on trade-related developments presented to members on 22 July. The report, which was reviewed at a meeting of the WTO’s Trade Policy Review Body, notes that the trade coverage of import-restrictive measures implemented during the review period is estimated at $339.5bn, the second-highest figure on record after the $588.3bn reported in the previous period. Together, these two periods represent a dramatic spike in the trade coverage of import-restrictive measures. [Informal Trade Policy Review Body meeting: remarks by Roberto Azevêdo]
UN High-level Political Forum: Fairer trade can strike a blow against rising inequality
While the value of trade has increased fivefold and its volume fourfold for the past 30 years, the bottom 50% of the population has captured only 12% of the total economic growth, whereas the top 1% captured 27% of it. In 1990, world trade was about $5 trillion, whereas in 2018 its volume reached $25 trillion. “Trade has contributed to make the pie bigger, but its shares have not been divided equally,” Ms. Durant said. She noted that some developing countries have benefitted from global trade, especially those in east Asia. Many countries in Africa and Latin America, and small island developing states, have not been so well served. In many of these countries, economic growth has been lower than expected, with most gains from trade being captured by a small segment of the population. But rising inequality within countries has not been limited to developing countries. “In many developed economies too, globalization has benefited some more than others, rendering their middle class fragile,” Ms Durant observed. Globalization has therefore led to the marginalization of some regions, some firms and some workers.
ILO’s Labour Income Share and Distribution dataset: “In Sub-Saharan Africa, the bottom 50% of workers earn only 3.3% of labour income, compared to the European Union, where the same group receives 22.9% of the total income paid to workers.”
William Easterly: “There’s the paradox that globalisation is actually working better – in Africa and Latin America especially; and at the same time there’s an intellectual backlash against it.”
The coverage of pension systems in the Africa region is limited to the small segment of the population in the formal sector. Coverage is thin partly because traditional contributory pension schemes are not responding to the needs of the informal sector. As a result, a large share of the region’s adult population has no access to contributory pension schemes during their working lives. This means they will not be eligible for a pension. It also means the elderly coverage gap will persist in most countries. Expanding coverage to a larger group of workers is especially important because the elderly is now often cared for by their children. As the children move to cities, their ties to the elderly and home villages weaken. As a result, the elderly may be left behind with fewer resources. Extract (pdf):
Typically, in countries with relatively higher incomes, such as Mauritius and the Seychelles, a higher share of the population contributes to pension schemes, while, in most countries in the region, pension schemes receive contributions from only a small share of the working-age population. In more than half the countries on which data are available, less than 6% of the working-age population contribute to a formal pension scheme. In Ethiopia, Guinea-Bissau, and Tanzania, participation in the contributory pension schemes accounts for less than 2% of the working-age population. The low average coverage of the working-age population in most countries in the region means that few elderly will be eligible for a contributory pension benefit in the future.
Africa is a young continent, but the share of the elderly in the population will rise. Figure 8, which illustrates population projections for the region, shows that Africa will age. Almost 9% of the population is expected to be age 60 or above by 2050. In all countries other than Niger (4%), the share of the elderly is expected to grow appreciably. The share is anticipated to nearly triple in Botswana, Cabo Verde, and Kenya. In Mauritius, the share is expected to reach 30%. However, viewing the elderly as a percentage of the population understates the growth in the number of elderly because, across Africa, the population is also expanding. Even in Niger, where the share of the elderly will remain unchanged, the population itself will more than triple by 2050, suggesting a substantial increase in the number of elderly.
Today’s Quick Links:
Africa CDC, WHO statement on Ebola virus disease outbreak in DRC
‘Buhari’s stance on regional cooperation, integration transforming DTCA‘
Agriculture stakeholders task Nigerian govt on AfCFTA
Anita Kundy, Aimée Dushime: Will the diversification of exports deliver a great economic deal for African countries?
Mastercard Africa boss outlines opportunities for engagement and partnerships in Rwanda
How digital technologies can help Africa’s smallholder farmers
Britain’s trade department to use part of aid budget