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tralac’s Daily News Selection

tralac’s Daily News Selection

07 Oct 2019

Diarise: The next meeting of the joint initiative on e-commerce at the WTO will be held on 22-25 October. The meeting will address data flow, privacy and facilitation of digital commerce.

Highlights from today's inaugural World Cotton Day in Geneva 

(i) Today's event, hosted by the WTO, responds to a draft resolution submitted by Benin, Burkina Faso, Chad and Mali (the "Cotton-4" countries) to the UN General Assembly for recognition of a World Cotton Day, reflecting the importance of cotton as a global commodity.  Through its technical cooperation work, UNCTAD has assisted cotton-producing countries, mainly in Africa, to improve their yields, meet international standards and attract investments in value-added industries.” “More can be done to realise the development potential of cotton, especially in Africa,” Dr. Kituyi said. “Trade negotiations must foster regional integration and provide equitable trading opportunities for producing countries, big and small.”

Approximately 26 million farmers grow cotton, in 75 countries. Growing cotton and processing it into, for example, textiles and apparel, provides jobs and incomes to approximately 100 million families worldwide. Cotton is a drought-resistant crop, providing reliable income to farmers in areas where agriculture is under serious threat from climate change and/or recurrent drought. Cotton occupies just 2.1% of the world’s arable land, yet it meets 27% of the world’s textile needs. It is also one of the most important traded commodities, with an annual traded value of approximately $8bn.

(ii) World Cotton Day side events covered:Trade, Value addition, Sustainability, Technology and innovation, Market outlook

(iii) Twitter updates: #WorldCottonday  

(iv)  Unlocking the hidden value of cotton by-products in African Least Developed Countries (EIF)

Cotton is a predominant cash crop for many African LDCs, providing income to over 3.5 million farmers and their families, and 17% of those lead farmers are women. Sub-Saharan African countries export more than 90% of the raw cotton lint they produce, earning approximately $15.5bn in 2018 for over 1.5 million metric tonnes of lint. Africa's lint exports are important for the livelihoods of millions of people, but this also underlines the commodity dependence of producing countries. Despite many efforts to enhance local value addition, integrated cotton-to-textile value chains in Africa are currently inactive or absent. As a result, of the 1,272 million metric tonnes of lint produced in French-speaking Africa in 2018, only 19,000 tonnes, or 1.5%, was consumed (i.e. processed) locally, for example.

According to the International Cotton Advisory Committee June 2019 workshop, "cottonseed by-products have growing markets and are potentially an important complementary source of revenue for the cotton sector in Africa." Ginning seed cotton yields roughly 55% cottonseed and 40% lint. By crushing and processing cottonseed, an edible oil is obtained. Cottonseed oil is the most valuable cotton by-product in price-to-weight terms, hence it has the greatest commercial and income potential. Cottonseed oil represents approximately 5.2% of world edible oil production. According to the International Trade Centre at the 2019 workshop: "The co-product of lint, cottonseed and the other cotton by-products are underutilized, or even neglected, in Africa, despite their numerous and diverse potential uses." Indeed, Africa produces about 2.5 million tonnes of cottonseed, which is 5.8% of global production. Only 75% of the seed is crushed for oil and seed-meal, and that means that 25% of cottonseed produced in Africa goes unused. The estimated value of that unused seed is about $237m, most of which is in West Africa. Mali is an exception in the region, processing all of its cottonseed, as shown in the graph below, presented by the ICAC at the cotton by-products workshop. [Downloads from the workshop on cotton by-productscan be accessed here;  Promoting cotton by-products in Eastern and Southern Africa: lessons from an UNCTAD technical assistance project]

Report of the EALA’s Committee on Communication, Trade and Investment on the status of ratification of the amended article 24(2)(a) of the Protocol on the Establishment of the East African Customs Union to provide for the establishment of the Trade Remedies Committee (pdf)

The delayed ratification of the amended Article 24(2) of the Protocol and establishment of the EAC Trade Remedies Committee makes it impossible to effectively implement the EAC Elimination of Non-Tariff Barriers Act, 2017 especially Section 12(2), (3) and (4) which allows the Council of Ministers to refer matters on elimination of NTBs to the EAC Committee on Trade Remedies.

The non-existence of the Committee on Trade Remedies makes it impossible for the Council of Ministers to refer matters of elimination of NTBs to the EAC Committee on Trade Remedies as provided for in the Act. This implies that any person aggrieved by a directive, decision, or recommendation of the Council may refer such matter to the East African Court of Justice. Such litigation would be exorbitantly expensive and time-consuming for most traders and businesses. 

Further delay implies that all the issues/challenges arising out of trade related aspects such as Rules of Origin, Anti-Dumping Measures/Regulations; Safeguard Measures; Safeguard Measures, Dispute Settlement Mechanism Regulations cannot be effectively addressed because the Committee dedicated to handle these regulations has not been established and operationalized.

Further delay implies handling disputes such as Rules of Origin, NTBs, Other Charges of Equivalent Effect, and Discriminatory Tax Practices prohibitively becomes more expensive for traders as it may involve litigation or negotiation among EAC Partner States after an alleged violation of trade measures has occurred. Currently, the time frame for resolving trade disputes or elimination of identified NTBs is too long and depends on winding EAC processes such as bilaterals between the Partner States.

In view of the foregoing, the Committee recommends as follows: The Council of Ministers should operationalise the East African Committee on Trade Remedies by 30th April 2020.

The Council of Ministers recommends to the Summit of Heads of State sanctions against any Partner State that will not have ratified Article 24(2)(a) of the Protocol on the Establishment of the East African Customs Union Customs Union and deposited instruments of ratification with the Secretary General by 28th February 2020. 

Related EALA updates:  Amendment to EAC Customs Management Act in the offing;  EALA calls for embrace of Single Tourism VisaEALA says EAC's financial status worrying

Cyril Ramaphosa: South Africa’s future lies in Africa (The Presidency) 

President Buhari and I had an opportunity also to discuss the various difficulties that South African and Nigerian businesses encounter when trying to invest and operate in each other’s countries. There was a clear message from the business forum that was held on the sidelines of the state visit that there is a great deal of business interest in both South Africa and Nigeria, and that we need to work harder to clear the blockages. We have therefore set up a Joint Ministerial Advisory Council on Industry, Trade and Investment that will meet regularly to facilitate bilateral business and, where necessary, sort out problems. In just a few months, South Africa will be taking over chairship of the African Union. In that role, we will have a great responsibility to guide the implementation of the agreement on the Continental Free Trade Area. We will need to work to turn aspirations into action. As the countries of Africa, we will need to put in place all the rules, regulations and mechanisms needed to make such a free trade area work. But we will also need to invest in the infrastructure that we need to move goods from one African country to another, and that we need to produce such goods in the first place.

Car exports are racing to a record in South Africa (Moneyweb)

Vehicle exports from South Africa, the continent’s largest automaker, could reach a record R140bn in 2019, partially offsetting a drop in domestic sales. The value of car shipments was R127.5bn in 2018 when the industry exported just over 351 000 vehicles. The country is expected to ship around 388 000 units this year as assemblers including Ford Motor ramp up production, according to Renai Moothilal, executive director of the Automotive Industry Export Council and chairman of the National Association of Automotive Component and Allied Manufacturers. Almost 19% more vehicles were exported in the nine months through September, compared with the previous year, data from the National Association of Automobile Manufacturers of South Africa show. Vehicles, ranging from passenger cars to trucks and buses were shipped to 155 countries in 2018, up from 149 in the previous year. Daimler’s Mercedes-Benz C Class set the pace for passenger car and light commercial vehicle shipments, with more than 90% of locally produced models destined for export, said Mike Mabasa, chief executive officer of Naamsa.

African Space Strategy: towards social, political and economic integration (AU) 

Professor Sarah Anyang Agbor (Commissioner for Human Resources Science and Technology):  This strategy has been developed to advance an indigenous space sector and provides direction for a formal African space programme. The strategy is aligned to Africa’s aspirations and is premised upon the following core principles:

Development of the services and products required to respond effectively to the socio-economic needs of the continent; 

Development of indigenous capacity to operate and maintain core space capabilities; 

Development of an industrial capability that is able to translate innovative ideas from research and development into the public and commercial sectors; 

Coordination of space activities across member states and regions to minimize duplication, but maintaining sufficient critical mass; 

Fostering international cooperation within Africa and with the rest of the world as a means of realizing the full value proposition of the space sector.

The implementation of this strategy (pdf) is important if we are to transform Africa’s resource-based economies into the knowledge-based economies to which we aspire. The space sector is not only a high-end technology sector, but also provides the tools required for effective decision making in the management of our natural resources and providing essential communications links, especially to our rural communities. We are therefore at an important juncture, where decisions pertaining to formalizing an African space programme will have long-term sustainable benefits, which will help this great continent realize its social and economic potential across public and private sectors. [Related AU publication:  Global Monitoring for Environment and Security and Africa Training Strategy (pdf)]

IBSA: Joint statement on the reform of the multilateral system (GoB)

The reform of the international economic governance architecture, including the WTO and the international financial institutions, should also be a priority. IBSA countries have contributed meaningfully in making the international economic governance architecture more representative and democratic, and will continue to work together to advance an agenda that promotes sustainable development and inclusive growth.  The process of WTO reform must keep development at its core, promote inclusiveness and non-discrimination, build trust and address the inequalities and asymmetries in existing agreements. It should take into account the diversity of interests and concerns of the whole Membership, including developing Members, in particular LDCs. IBSA countries recognise the central role played by the WTO in promoting the interests of developing countries on issues such as agriculture.

Strengthening the global financial safety net, with a strong, quota‐based, and adequately resourced International Monetary Fund at its centre, is essential. We must work towards concluding the 15th General Review of Quotas, including a new quota formula at the Annual Meetings of 2019. [Note:  This statement was issued 26 September] 

Today’s Quick Links:

Towards the AfDB's West Africa Regional Integration Strategy Paper 2020 – 2025

The World Bank Annual Report 2019: Ending Poverty, Investing in Opportunity

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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