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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: EIF Benin

16 Oct 2019

African trade policy events to diarise:

  1. The first meeting of the AfCFTA Council of Ministers responsible for trade takes place next week in Addis Ababa (24-25 October). It will be preceded by a meeting of senior technical officials (21-23 October).

  2. Rwanda National Trade Facilitation Committee meeting (29-31 October, Kigali)

WTO’s Sub-Committee on Least Developed Countries: Market access for products and services of export interest to LDCs (pdf, WTO)

This Note, which is prepared by the Secretariat on an annual basis, provides an update on the trends in the least developed countries’ trade and market access conditions. Between 2011 and 2018, exports of goods and services of the 47 LDCs increased at an average annual rate of 1.4%, less than the growth of exports of other developing economies during this period (2.0% per year). Low energy prices had an adverse impact on LDC exports of goods during 2014 to 2016, while LDC exports of services showed a more stable development during this period. In 2018, LDC exports of goods and commercial services grew by 12% compared to 2017, reaching a nominal value of $235.4bn. The share of LDCs in world exports of goods and commercial services increased slightly, from 0.92% in 2017 to 0.94% in 2018.

LDCs’ overall trade deficit deteriorated from $94.0bn in 2017 to $98.2bn in 2018, which was more than twice the deficit in 2011, when the trade balance of goods was equalized. Close to two thirds of the LDCs’ trade deficit in 2018 can be attributed to their deficit in goods trade ($64.4bn), while about one third was due to their deficit in commercial services trade ($33.8bn).

Merchandise exports of LDCs have grown at an average annual rate of 0.3% since 2011, slower than world merchandise exports (0.8%). In 2018, LDC exports increased by 12.7% compared with 10.0% at the world level. As a result, the LDCs’ share of world merchandise exports reached 1.02%. The LDCs’ share in merchandise imports remained at 1.4% in 2018.

Exports of LDCs continue to be concentrated in primary products. In 2018, primary products accounted for 58% of LDC merchandise exports, which is however significantly lower than in 2011 (73%). The share of manufactured products in LDC merchandise exports increased from 22% in 2011 to 37% in 2018, mainly reflecting an increase in the share of clothing products from 13% in 2011 to 27% in 2018. The share of agricultural products (agricultural raw materials and food) in LDC exports increased from 8% in 2011 to 13% in 2018.

The EU was the top destination for LDC merchandise exports in 2018 (28.5%), closely followed by China (27.8%), which had been the top destination in 2017, and the US (9.3%) . The top ten importers accounted for 87.5% of LDC merchandise exports in 2018, a slight increase compared to 85.4% in 2011.

In 2018, the LDCs recorded the most rapid export growth in services since 2012 (over 16%) reaching $39.8bn. Services exports grew faster than in developed economies (7%) and in other developing economies (9%). As a result, the LDCs’ share in global services exports increased to 0.69%. However, participation remained concentrated within a few economies, in particular in Asia, with most LDCs struggling to participate in services exports.

Travel exports, which cover foreign tourists’ expenditure on goods and services, remains the leading service export sector for LDCs (49.8% of total commercial services), with a share in world exports of 1.4%. However, transport exports rose by 22% to $10.1bn and, for the first time, the LDCs’ contribution to global transport exports reached 1.0%. Despite a 12% rise, LDCs’ contribution to world exports of other commercial services was negligible at 0.27%.

WTO General Council meeting: DG Azevêdo says “People recognize things are happening here; they expect concrete outcomes”

At a meeting of the full WTO membership on 14 October, Director-General Roberto Azevêdo observed that members had barely two months left to solve the Appellate Body impasse and meet a negotiating deadline on fisheries subsidies. Looking ahead, he said that in order to lay the groundwork for meaningful outcomes at the Ministerial Conference in Kazakhstan next June, members would need to bridge substantial differences in a short time frame. DG Azevêdo urged members to swiftly reach consensus on a new chair for the Negotiating Group on Rules. Failing to do so would endanger their prospects for meeting the end-of-year deadline for a fisheries subsidies agreement, he warned.

Related:

  1. Informal process on matters related to the functioning of the Appellate Body: report by the Facilitator, Dr David Walker (pdf)

  2. US statement at the WTO General Council meeting

  3. Allow self assessment of developing country status, 45 nations insist

  4. WTO General Council documentation can be accessed here

COMESA’s Policy Dialogue on Simplified Trade Regime Implementation: outcomes

The range of goods traded under the COMESA Simplified Trade Regime (STR) is set to expand following policy recommendations made last week by trade experts. Meeting in Kenya during a Policy Dialogue on STR Implementation (8- 9 October), the experts proposed that imports from countries participating in the COMESA Free Trade Area, should be accorded preferential tariff treatment in bilateral STR arrangements. “As long as the goods qualify under the COMESA Rules of Origin, they should be granted preferential treatment in the bilateral STR,” the experts said in their report. The goods from third party countries should however be listed in the bilateral Common List agreed upon by two neighbouring countries. The experts proposed reforms targeted at border posts implementing the STR to harmonize the operations across the region. Specifically, they cited inspections for Sanitary and Phytosanitary Standards and the speed of clearance by Customs as key impediments that require changes to facilitate trade. They also agreed on the need for Member States to increase the frequency of updating their STR Common Lists on an annual basis through bilateral consultations. Further, they agreed on the need to develop a sustainability and reporting framework for Trade Information Desk Officers, who facilitate small-scale traders at border points. In this regard, COMESA Secretariat will conduct studies to develop the framework after which it will be validated by all stakeholders in the member states.

Zimbabwe’s trade deficit narrows (The Herald)

Zimbabwe’s trade deficit narrowed to $57,5m after the country recorded a 24,9% growth in its exports to $299,5m for the month of July 2019 up from exports of $239,8m in June 2019. In June, the trade deficit was $218,8m. According to the Reserve Bank of Zimbabwe’s latest report for the month of July 2019, the increase in exports was attributable to a rise in export earnings from gold, nickel ore and concentrate; and ferrochrome. Exports for gold were up by 40,8%; nickel ore and concentrates up by 27,8%; and ferrochrome up by 28,1%. The country’s major export destinations included South Africa, which absorbed 32,8% of total exports, followed by Singapore (28,9%), China (9,7%) India (2,7%) and UK (2,6%). Meanwhile, merchandise imports registered a decline of 22,2%, from $458,6m in June to $357m in July 2019. The decline was largely underpinned by lower imports of fuel, notably diesel and petrol according to the RBZ.

India’s Federation of Indian Export Organisations: Nairobi, Addis Ababa engagements  

A high level 37 member FIEO business delegation led by Israr Ahmed, regional chairman, FIEO southern region will be visiting Nairobi and Addis Ababa (17-22 November) to explore business opportunities in agriculture, machinery and food processing sector. The programme is organised with the support of International Trade Centre in Geneva. FIEO is taking the delegation in the background of building on the momentum of the newly ratified AfCFTA. The product profile of FIEO delegation comprises agricultural including fruits, vegetables, meat, cereals, dairy, tea, coffee, spices as well as agri-processing technologiesNSE 1.51 %, machinery and packaging solutions.

World Bank court orders Tanzania pay $185m to Standard Chartered (Reuters)

Tanzania has been ordered by a World Bank arbitration court to pay $185m to the Hong Kong subsidiary of Standard Chartered for breaching an energy contract. The court’s ruling, which was released on Tuesday, adds to pressure on the East African nation, which faces at least two other multi-million claims from international investors. The case stems from a legal battle between the Tanzanian government and privately-owned independent power producer IPTL, which led to the dismissal of several cabinet ministers in 2014. The award by the World Bank’s International Centre for Settlement of Investment Disputes is less than the $352.5m sought by Standard Chartered Bank Hong Kong, which was not immediately available for comment. The government of Tanzania denied any responsibility and said it was not planning to pay the damages.

The IMF’s latest World Economic Outlook is posted: Global manufacturing downturn, rising trade barriers

In sub-Saharan Africa, growth is expected at 3.2% in 2019 and 3.6% in 2020, slightly lower for both years than in the April 2019 WEO. Higher, albeit volatile, oil prices earlier in the year have supported the subdued outlook for Nigeria and some other oil-exporting countries in the region, but Angola’s economy - because of a decline in oil production - is expected to contract this year and recover only mildly next year. In South Africa, despite a moderate rebound in the second quarter, growth is expected to be weaker in 2019 than projected in the April 2019 WEO following a very weak first quarter, reflecting a larger-than-anticipated impact of labor strikes and energy supply issues in mining, together with weak agricultural production. While the three largest economies of the region are projected to continue their lackluster performance, many other economies - typically more diversified ones - are experiencing solid growth. About 20 economies in the region, accounting for about 45% of the sub-Saharan African population and 34% of the region’s GDP (1% of global GDP), are estimated to be growing faster than 5% this year while growth in a somewhat larger set of countries, in per capita terms, is faster than in advanced economies. Prospects vary across sub-Saharan Africa, but growth for the region as a whole is projected to increase from 3.6% in 2020 to 4.2% in 2024 (although for close to two-fifths of economies, the average growth rate over the medium term is projected to exceed 5%).

The FAO’s latest State of Food and Agriculture 2019 report is posted: Moving forward on food loss and waste reduction

According to the State of Food and Agriculture 2019, globally around 14% of the world’s food is lost after harvesting and before reaching the retail level, including through on-farm activities, storage and transportation. However, the food losses vary considerably from one region to another within the same commodity groups and supply chain stages. The report highlights the need, and offers a new methodology, to measure carefully losses at each stage in the food supply chain. The report urges countries to step up efforts to tackle the root causes of food loss and waste at all stages and provides guidance on policy and interventions to reduce food loss and waste. Reducing food loss and waste generally entails costs, and farmers, suppliers and consumers will only take necessary measures if their costs are outweighed by the benefits. Thus, changing incentives for various stakeholders in the supply chain will involve identifying options that either increase the net benefits or provide better information on the existing net benefits, the report states. Extract (pdf):

The meta-analysis finds a wide range of values for percentage losses even within the same region or commodity group, or at the same point on the supply chain. For example, in sub-Saharan Africa the observations on fruits and vegetables report on-farm losses ranging from 0 to 50 percent, a very broad range. An intervention to reduce these losses needs to target the upper end of this range to have maximum impact. Another example concerns losses of cereals and pulses in the processing and packaging phase in sub-Saharan Africa, which would appear to be low on average (the median loss is less than 5 percent), but where one quarter of the observations report between 10 and 20 percent losses. Looking only at average losses may not give an accurate picture regarding whether an intervention for a specific commodity would make sense, nor would it indicate where a potential intervention should take place.

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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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