WTO lowers trade forecast as tensions unsettle global economy

Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020. World merchandise trade volumes are now expected to rise by only 1.2% in 2019, substantially slower than the 2.6% growth forecast in April. The projected increase in 2020 is now 2.7%, down from 3.0% previously. The economists caution that downside risks remain high and that the 2020 projection depends on a return to more normal trade relations. 

All geographical regions recorded positive year-on-year export growth in the first half of 2019 despite a substantial weakening of global demand. North America had the fastest export growth of any region at 1.4%, followed by South America at 1.3%, Europe at 0.7%, Asia at 0.7%, and Other regions (comprising Africa, the Middle East and the Commonwealth of Independent States, including associate and former member States) at 0.1%. North America recorded the fastest import growth of any single region at 1.8%, followed by Europe at 0.2%. Two regions registered declines (South America at -0.7% and Asia at -0.4%). Collectively, the imports of Other regions grew faster than those of North America, at 2.4%. Import demand has been particularly weak in Asia, weighing heavily on exporters of manufactured goods (e.g. Japan, Korea, and Germany). Exporters of natural resources have also seen demand for their products weaken, as evidenced by the 12% year-on-year decline in commodity prices in August.

East Africa bloc mulls regional tax treaty framework to boost integration  (Xinhua)

The EAC plans to develop a regional tax treaty framework to boost regional integration, an official said on Tuesday.  Doris Akol, commissioner general, Uganda Revenue Authority told Xinhua in Nairobi that once the treaty is in place the trading bloc will negotiate double taxation agreements jointly with other non-EAC countries. “Currently each of the partner states negotiates with other countries on a bilateral basis. The regional taxation framework will help to reduce the harmful effects of tax competition in the EAC as each country seeks to attract foreign investors,” said Akol on the sidelines of the 7th Pan Africa Conference on illicit financial flows and taxation. Akol said that so far a draft EAC treaty has been developed which will receive inputs from all relevant stakeholders.  

Underway, in Nairobi:  The 7th Pan African Conference on Illicit Financial Flows and Tax

(i) Updates:  @TaxJusticeAfric,  #PACIFF2019  

(ii) Presentations available for download (pdf): Lyla A Latif: Do digital economies facilitate illicit financial flows?; Varsha Singh: Tax challenges arising from the digitalisation of the economy; Alick M Mutandiro: Trade facilitation under customs and excise efficiency gains and effectiveness of tax administrations in the era of technological advancements

Observatory to be set up at SME Mauritius for data collection (GoM)

An Observatory serving as the main repository of qualitative and quantitative small and medium enterprise data, will be soon set up at the SME Mauritius in line with the recommendations of the 10-Year Master Plan for the sector. The key objectives of the SME Observatory include building data collection capabilities and mechanisms for SMEs and entrepreneurship information, including developing a National Entrepreneurship Index; identify markets in emerging industries with growth potential and network for its effective realisation; and assess regulatory and legal frameworks and propose improvements based on good governance principles and international best practices. [World Bank in Mauritius: briefing note] 

SSA renewables: South Africa, Kenya outperforming region (Fitch Solutions)

We expect that non-hydropower renewables capacity will grow from a low base of just over 6GW at almost 7% y-o-y, making up just over 8% of the region's total power generating capacity by 2027. While South Africa will remain SSA's biggest renewables market, the sector will play a relatively small role in the country's power mix due to its large thermal power sector. Due to the continued investments into its non-intermittent geothermal capacity, Kenya will source over 50% of total generation from renewables. We forecast that South Africa will be the region's biggest non-hydropower renewables market with a renewables capacity of over 8GW by 2027 and just under 14 terawatt hours (TWh) of generation. Kenya is second with 1.8GW of capacity and 7.8TWh of generation. Kenya's higher level of output relative to its capacity is due to the non-intermittent nature of geothermal electricity. [Note: The report can be downloaded after registration] 

Trade policies for combating inequality: equal opportunities to firms, workers and countries (UNCTAD)

Chapter 3 summarizes what has been learnt over the last two decades about the relationship between trade and income inequality. Firstly, trade has indeed led to sizeable increases in income inequality in many countries, but it is far from being the main driver of it. Secondly, to reduce within country inequality what is needed is not necessarily less but more trade, in order to give a larger number of workers access to the benefits offered by global markets. Third, inequality can be better addressed if trade reforms are accompanied by non-trade adjustment and redistributive measures that address the unintended, negative consequences of greater integration into world markets.   Chapter 4 examines the impact that different trade policy instruments and institutions have had on between- and within-country income inequality. The discussion covers tariffs and non-tariff measures as well as private standards. A key message from this chapter is that non-tariff measures, even if set in a non-discriminating manner, tend to discriminate against countries, especially developing countries with weaker production and trade capacities. Non-tariff measures also act as formidable barriers for small firms to enter global markets, which in turn tends to increase within-country income inequality. Extract (pdf):

The fifth avenue for equal opportunities for firms is to foster competition in national and regional markets. This requires effective competition law enforcement. National and regional competition authorities may investigate and sanction anti-competitive conduct by dominant firms. Considering the challenges faced by competition agencies of developing countries and LDCs in competition law enforcement, there is a need for promoting international and regional cooperation in competition law enforcement. For example, COMESA Competition Commission is the regional entity in the COMESA region, which has the authority to review mergers having an effect within the common market.

Another way of promoting competition is by introducing clauses, which may facilitate cooperation and exchange of information for law enforcement between relevant authorities, in competition chapters of bilateral and regional trade agreements. National competition authorities may not have the right incentives to restrict the abusive behaviour of their large exporters or importers in international markets. Moreover, many low-income countries do not have well-functioning competition authorities. Technical assistance and cooperation among trading partners can help internalize these types of externalities in order to ensure that large firms from high-income countries are not the only ones benefiting from international trade. 

Is 3D printing a threat to global trade? The trade effects you didn't hear about  (World Bank)

In the mid-2000s, the production of hearing aids shifted almost entirely to 3D printing. Using difference-in-differences and synthetic control methods, this paper examines the effects of this shift on trade flows. The analysis finds that trade increased roughly 60% following the introduction of 3D printing. Revealed comparative advantage was reinforced, with exports growing most rapidly for middle- and high-income countries. The analysis also finds that developing countries increased their imports of hearing aids as a result of the innovation, benefitting consumers. As a robustness check, the paper examines 35 products that are partially 3D printed and finds positive and significant effects on trade. The results counter widespread views that 3D printing will shorten supply chains and reduce trade. [The authors: Caroline Freund, Alen Mulabdic, Michele Ruta]

Structural transformation in Sub-Saharan Africa (World Bank)

Table 1 compares modeled estimates from the ILO with estimates computed from the SSAPOV, a set of harmonized indicators curated from nationally representative household surveys in Sub-Saharan Africa. The ILO estimates mainly rely on GDP growth to project changes in sectoral employment patterns since the most recent survey. SSAPOV, in contrast, is based solely on surveys and is rigorously updated because it is the source of the World Bank’s official poverty estimates for SSA countries. For all countries, we compare ILO estimates in the change of agricultural employment with household-level survey estimates from SSAPOV in the same years. We restrict attention to countries with more than 15 million people, for which there are two separate SSAPOV surveys that ask about the sector of primary employment over the previous seven days, the same recall period on which the ILO estimates are based. The interval between surveys ranges from 2 to 7 years. [Note: This report was prepared by the Sub-Saharan Africa Team for Statistical Development Poverty and Equity Global Practice]

Companion analysis: Stocktaking Note for Data Harmonization - Sub-Saharan Africa Team for Statistical Development FY 2019

From the period of October 2018 to May 2019, the SSATSD harmonized and improved the quality of 30 surveys. For 13 of these surveys, the team obtained data from the country teams and fully harmonized and checked all four modules from scratch. For 13 other surveys, the team upgraded the surveys to the revised dictionary, which is described below. Finally, the remaining four surveys were labor force surveys for which team harmonized the labor module. Of the 30 surveys that were harmonized, 6 were included for the first time in Povcalnet in the Spring 2019 poverty update. This note presents a list of surveys harmonized during this period, and discusses challenges faced, factors of success, as well as areas of improvement for future. [World Bank: A socioeconomic disaggregation of the World Bank Human Capital Index] 

Activities undertaken by UNCTAD in support of Africa: report by the Secretary-General of UNCTAD (pdf)

This report covers the activities undertaken by UNCTAD in support of Africa from May 2018 to April 2019. The report documents the impact of the work of UNCTAD on development in Africa in the following areas: transforming economies, tackling vulnerabilities and building resilience, improving competitiveness, enriching multilateralism, and empowering people and investing in their future.  Extract (pdf):  With regard to the financial resources earmarked for Africa in 2018, it is estimated that total expenditure on national, regional and interregional projects in support of Africa was $17,505,936, representing 40 per cent of total expenditure. [Note: Prepared for the Trade and Development Board, 68th executive session, now underway in Geneva]

UNIDO’s recent UNGA side event: Promoting innovation and infrastructure development within the Third Industrial Development Decade for Africa (IDDA III)

SA’s UNSC October Presidency: work programme. Peace and security in Africa, as well as ongoing situations of concern elsewhere, will top the agenda of the Security Council in October, Jerry Matthews Matjila (South Africa), Council President for the month, told correspondents at a press conference yesterday. “Africa is the core of the Council’s work every week this month,” he noted. Between 22 and 25 October, a Council visiting mission is planned for the annual consultative meeting with the African Union Peace and Security Council in Addis Ababa. The visit will include a one‑day trip to South Sudan and will be the subject of a briefing in the Council Chamber scheduled for 30 October.  Priorities in talks with the African Union include the situations in the Central African Republic and the Sahel.  He also anticipated an intense discussion on Libya towards a coordinated policy, he said in response to a question, because the African Union feels sidelined on the issue.

Diarise: 

(i) Abidjan will host the West Africa Securities Regulators Association conference (28-29 October). Sessions include: sessions on financing infrastructure deficit in the region through the capital market, sustainable financing, Capital Market Integration and Fintech, Investor Protection in an Era of Integration and the Contribution of Investment Funds to Financing the Regions needs. 

(ii) Cape Town is set to host a record-breaking 29 global ministers at the 26th Africa Oil Week summit (4-8 November). The event will act as a platform for governments to lay-out national strategies, issue licences, finalise tenders and find new partners