Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: World Bank

The Ministerial Session of the 2019 AGOA Forum began to today in Abidjan: selected updates

  1. The theme of this year’s Forum is AGOA and the Future: Developing a new trade paradigm to guide US-Africa trade and investment. The US State Department says the 2019 Forum will explore new tools that both the U.S. and African governments have developed over the past year and how to use them most effectively. It will also highlight the important role played by women, youth, civil society, and the private sector in promoting trade, expanding economic growth, and generating prosperity. [For twitter updates: #AGOA2019]

  2. Extract from the important pdf joint declaration issued today by the African Union and Mr CJ Mahoney (Deputy US Trade Representative) (1.20 MB) : “The United States and the African Union intend to jointly identify subject areas related to the ongoing negotiation and implementation of the AfCFTA as subjects for cooperation and possible technical assistance and capacity building. The United States and the African Union intend to work together to develop activities that support these priority objectives. The United States and the African Union share a mutual desire to pursue deeper trade and investment ties beyond AGOA, which is scheduled to expire in 2025, eventually leading to a continental trade partnership between the US and Africa that support regional integration.”

  3. US favors bilateral trade deals with Africa, Nagy says. The US favors bilateral trade agreements and will use its first such deal with a country in sub-Saharan Africa as a model for others when the African Growth and Opportunity Act expires in 2025. “Right now, of course with six years away, it may seem like a long time, but it’s not really a long time for this type of activity,” Tibor Nagy, US assistant secretary of state for African affairs, said in an interview at the AGOA Forum in Abidjan, the commercial capital of Ivory Coast. “All options are on the table” for trade pacts after 2025. The mechanics of the continent-wide trade deal will be negotiated in phases and should be fully in operation only by 2030. While these talks are happening and AGOA is still valid, the two accords can complement each other through the requirements of rules of origin, which govern how much of a product needs to be made in a region. “If there’s trade done within the continent-wide free-trade agreement and it meets the rules of origin, then hopefully the African countries can benefit from that, from sourcing their material from within the continent instead of having it come from other places,” Nagy said.

  4. South Africa’s trade and industry minister Ebrahim Patel: “We have an opportunity in these proceeding to align AGOA to goals of the CFTA to enable us to speak with one voice. The US is the world’s largest economy and access to the US market and to American investment in our economy are important ways of addressing job creation and the elimination of poverty. We look forward to a constructive and positive discussion with the US trade representative.”

  5. Minister Patel chairs African trade ministers meeting. “It (the AfCFTA) is our ‘made in Africa’ initiative and we have the opportunity in these proceedings to align AGOA and all our external initiatives to the goals of the ACFTA to enable us to speak with one voice and to build African Union institutions.” He bemoaned the fact that out of 1,835 tariff lines under AGOA, sub-Saharan Africa was only using 748, or 40%. “Indeed we only use 13% of the tariff lines under the bigger Generalised System of Preferences,” he said. “We are here to discuss how to turn that around, to identify challenges and to take steps to increase utilisation of AGOA preferences as well as to deepen trade and investment relationships Africa and US.”

  6. @USMadagascar: Apparel and textiles have benefited the most from four years of renewed AGOA eligibility, and AGOA-related exports are likely to represent close to 1% of GDP for 2019. Madagascar ranks third as a main supplier of apparel among sub-Saharan countries eligible for AGOA 2019.

pdf Decisions of the First Mid-Year Coordination Meeting between the AU, RECs and the Regional Mechanisms (226 KB) (8 July, Niamey)

Note the need to improve the level of integration within the RECs as well as at the continental level and call upon the Member States, RECs and the Commission to strengthen their collaboration in the implementation of the African Integration Agenda; Request the Commission to prioritize support to the promotion of inter-REC co-operation with a view to scaling up the African integration agenda and CALL UPON Member States to allocate adequate domestic resources that contribute to the implementation of the integration agenda;

Mandate the Commission, in collaboration with the Member States, RECs, AU organs, regional mechanisms to operationalize the framework on an effective division of labour, upon its adoption by the Assembly, including through detailed plans of action; Urge all RECs to align their programs and action plans with the continental agenda for Integration, which includes the Abuja Treaty, Agenda 2063 and its ten-year implementation plan;

Also urge Member States to consider the importance of RECs participation in relevant AU statutory meetings to coordinate and harmonize the policies between the Union and RECs for the gradual attainment of the integration agenda of the Union; and clarify the legal status of the RECs in the architecture of African integration; Request Member States, RECs, Commission, AUDA-NEPAD and all other stakeholders to mobilize sufficient and sustainable resources to strengthening the regional integration including through utilizing the AU Partnerships towards the attainment of the continental integration Agenda. [Note: The decisions are also available for download in Arabic, French and Portuguese]

African Medicines Agency Treaty: update

African experts and policymakers have urged continental efforts towards the ratification of the African Medicines Agency Treaty so as to ensure the harmonization of medical products in Africa. They made the urgent call during a meeting of African ministerial meeting, which was held over the weekend as part of the AU’s Specialized Technical Committee Meeting on Health, Population and Drug Control. Amira Elfadil, AU Commissioner for Social Affairs, noted the AU’s commitment to the swift ratification and implementation of the continental AMA treaty. Elfadil also reaffirmed the AU’s leadership role in terms of advocating an “increased domestic funding, partnerships for health care and alignment of donor policies with national priorities - in line with the Agenda 2063.” Elfadil, who applauded the four AU member countries that have already signed the AMA treaty documents, also stressed the continental treaty’s potential in transforming Africa’s pharmaceutical sector. The continental treaty, which was so far signed by three AU member countries that are Algeria, Rwanda and Saharawi, also added Madagascar as its fourth signatory country on Friday. The treaty is expected to enter into force once ratified by 15 AU member countries, the minimum threshold required for it to take effect. [Madagascar becomes fourth AU member state to sign the treaty for the establishment of the African Medicine Agency]

East African Community Monetary Affairs Committee: communiqué (30 July, Kigali)

The meeting reviewed the status of implementation of previously agreed actions towards the operationalization of the East Africa Monetary Union protocol, with a focus on the decisions of the 22nd Ordinary MAC meeting held in Kampala, Uganda, in August 2018. The Governors reflected on the progress in attaining the convergence criteria and highlighted the areas that are lagging behind. Governors noted that Partner States’ Central Banks have made significant strides in the harmonization of monetary policy frameworks, exchange rate policies, rules and practices governing bank supervision, financial accounting principles, as well as payment systems. A number of national laws are also being harmonised. In addition, significant progress has been made towards the establishment of EAMU institutions as required by the Protocol.

Notwithstanding the above, Governors noted that there have been delays in realising targets set out in the EAMU roadmap and that there are several challenges that could further impede the timely implementation of EAMU protocol. Therefore, the Governors pledged to collaborate with stakeholders in the EAC integration process to fast-track pending activities of the EAMU roadmap. The Governors reiterated the need to remain vigilant in fighting the risks arising from recent financial sector innovations especially to ensure that Central Banks in the region can effectively deal with Anti-Money Laundering and Counter Financing of Terrorism. The Governors also noted the need to continue building resilience to shocks in the financial sectors of the EAC Partner States. In this regard, they underscored their commitment to enhance coordination of activities that will support resilience of the financial sector and to follow-up on the progress towards the realization of EAMU.

West Africa Internet Governance Forum: update

The two-day forum with the theme “Shared responsibilities of stakeholders for a robust internet governance ecosystem” was convened in collaboration and support from the Government of The Gambia and partners (25-26 July). The West Africa School on Internet Governance (WASIG) preceded the forum. The communique from the forum will be presented to the ECOWAS Ministers in charge of Telecommunication/ICT and is expected to be adopted during their meeting scheduled for October 2019.

Zambia and the IMF:

  1. Executive Board concludes 2019 Article IV Consultation. Executive Directors agreed with the thrust of the staff appraisal. They noted the deterioration in macroeconomic outcomes in Zambia and heightened vulnerabilities due to the ongoing drought and recent policy slippages. They expressed concern that public debt and debt service have increased rapidly due to heavy reliance on non‑concessional debt to finance large infrastructure investment, while growth has lagged, thus putting Zambia at high risk of external and public debt distress. Against this background, Directors emphasized the urgency of reforms and of a firm commitment to implement them. Directors noted that under current policies public debt is on an unsustainable path, and ongoing financing constraints have started to force the inevitable fiscal adjustment to occur in a disorderly way, with mounting expenditure arrears. They cautioned that there is a narrow window for tackling fiscal challenges in an orderly and planned manner. This would require a large front‑loaded and sustained fiscal adjustment centered on stronger control and prioritization of public investment projects and postponing the contracting of new non‑concessional debt, accompanied by enhanced revenue mobilization and the scaling back of exemptions and tax expenditures, while reducing domestic expenditure arrears. Directors stressed that the adjustment strategy should aim to minimize drag on growth and contain the impact on priority social spending. Some Directors also urged the authorities to carefully consider the benefits and disadvantages of shifting from a value‑added tax to a sales tax.

  2. pdf 2019 Article IV Consultation report (2.46 MB) . External imbalances are projected to widen, adding to pressure on reserves. The current account deficit is expected to widen in 2019 on lower copper exports (with lower prices and production) and the higher imports and interest payments associated with public investment. FDI and other financial account inflows are expected to remain subdued. International reserves under the baseline are projected to decline to 1.6 months of imports by end-2019 and to around 1 month of imports by 2021, leaving little buffer to cushion external shocks or for redemption of the 2022 Eurobond. Additional risks are posed by foreign holdings of local-currency debt (currently at about $0.7 billion, or half of FX reserves). [Note: See Figure 3: Zambia’s external sector]

Today’s Quick Links:

The Rwanda Private Sector Federation will, Friday, host The Golden Forum, on the theme Unlocking intra-African trade with the world

Financial reports, audited financial statements of the African Union for the year ended 31 December 2018


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