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tralac’s Daily News Selection

tralac’s Daily News Selection

28 Nov 2019

Diarise: 

(i) The COMESA Council of Ministers meets tomorrow in Lusaka

(ii) ACP Heads of State and Government Summit (6-10 December, Nairobi). The theme: A transformed ACP committed to multilateralism. Prior to the Summit, the Council of Ministers will discuss important aspects for the future of the Group. Among the items tabled for debate are the appointment of the new Secretary General for the period 2020 to 2025 and the revision of the ACP Group’s constitutive act, the Georgetown Agreement. The candidacy for the post of the Secretary General is done on a rotating basis among the six ACP regions. The new secretary general will be selected from the Southern African region which was charged with the implementation of a vetting process to shortlist suitable candidates for the post. The three candidates submitted for consideration by the Bureau of the Council as a result of this process are Ambassador Georges Rebelo Pinto Chikoti (Angola); Ambassador Dr Brave Rona Ndisale (Malawi) and Ambassador Tadeous T. Chifamba (Zimbabwe).  

30 years of the Trade Policy Review Mechanism: speech by WTO's Roberto Azevêdo

The TPR has become one of the main channels members use to promote accountability, predictability and transparency in the multilateral trading system. To be clear, TPRs are not about evaluating members' compliance with specific rules or commitments of the organisation, or about imposing new obligations on them. These can result only from negotiations between members. What the TPR does is shed light on trade practices and policies. This helps clarify trade concerns, defuse potential frictions, and promote good practices. If you look at the figures, they tell quite the story. The past 30 years have seen: more than 500 TPR reports; about 390 meetings of the Trade Policy Review Body; 157 WTO members have been reviewed thus far, most of them multiple times. All members, at all different levels of development, participate.

We need to ensure that the mechanism can respond to changes in the global economy. Today, trade is far more multi-faceted than it was a generation ago. Global value chains bring together flows of goods, services, investments and people. Nearly two-thirds of traded goods are made with components from at least two different countries. Advances in technology, such as e-commerce or artificial intelligence, are revolutionizing the way we trade. These changes pose new questions both for the broader trading system and for how the TPR mechanism should evolve. I hope this conference can spark conversationson this front, helping members define paths forward that would enable the TPRM to be as effective for the next thirty years as it has for the past. This debate is very important, especially in the current circumstances.

Jayant Menon: The proliferation of free trade disagreements (East Asia Forum)

Free trade agreements (FTAs) are being replaced by the proliferation of free trade disagreements (FTDs). Unlike FTAs, FTDs are not easy to measure or define - they cover a wide range of actions and inactions. They may be difficult to quantify, but they are real. FTDs arise when free or freer trade leads to outcomes that are perceived as being unfair by at least one party. When the benefits (or costs) of freeing up trade are viewed by participants as being disproportionately distributed, tensions can lead to FTDs. FTDs also arise when there are significant shifts in the distribution of global economic power. As the economic size of rivals catch up to the prevailing hegemon, the risk of conflict also rises sharply. 

With Japan in the past and China more recently, the response appears to be triggered when their share of the GDP of the United States surpasses the 60% mark. And when new major economic powers emerge, they generally do so by increasing their commercial relations with existing ones, resulting in greater interdependence. Although greater interdependence theoretically reduces the risk of conflict - as the costs are higher with more at stake - this is rarely observed in practice. This results in a sense of inevitability toward such conflicts and all that can be done is to contain them and manage their consequences. So far, there has been a rather poor job of both. Why should policymakers be concerned about the proliferation of FTDs? [The author is the lead economist (trade and regional cooperation) in the Office of the Chief Economist at the ADB]  

Informal Working Group on MSMEs: Draft ministerial recommendation on promoting MSMES inclusion in rulemaking in the area of trade (pdf, WTO)

The following communication, dated 26 November 2019, is being circulated at the request of the delegations of the Russian Federation and Uruguay:  We recommend that WTO Members enhance MSMEs inclusion in domestic rulemaking in the area of trade by paying special attention to the needs of MSMEs. For this purpose, WTO Members within their respective jurisdictions establish regulatory procedures in consistency with their implementation capacities that would include:

Consultation with MSMEs in the process of developing new regulations related to issues covered by the WTO agreements;

Publication of drafts of such regulations before their adoption, or of consultation documents that provide sufficient details about a possible new regulatory measure related to issues covered by the WTO agreements, preferably at an early stage of their development;

Provision of a reasonable period of time for all the interested parties to comment on such drafts; and

Assessment of impact of such drafts on MSMEs.

Kimberley Process: Consensus eludes new definition for ‘blood diamonds’ (Tribune India)

An attempt for a new, expanded definition of conflict diamonds eluded consensus during a meeting of the Kimberley Process countries in New Delhi. India is the current chair of the Kimberley Process, a multi-nation effort to prevent the sale of rough diamonds in Africa to sustain conflicts against governments. The new definition quarterbacked by the US was to include violence by a broader set of actors, including state security forces in the definition. Many countries at the meeting held here felt that the current definition’s limited focus on rebel groups does not sufficiently protect the legitimacy of the rough diamond supply chain. But other countries did not agree with the proposal, suspecting it to be an attempt to tie down governments. 

Related KP plenary updates: Final communiqué; World Diamond Council statement; Civil Society Coalition statement;Russia assumes KP Chairmanship, deputised by Botswana

A golden web: How India became one of the world's largest gold smuggling hubs (IMPACT)

In its latest report, IMPACT uncovers how India imports approximately 1,000 tons of gold per year—a quarter more than official figures indicate. Some enters as legal imports thanks to falsified paperwork. The report identifies three primary factors (pdf) which allow a problem of this magnitude:

Tax breaks: To boost India’s refinery sector, the government introduced tax breaks in 2013 for gold doré –also known as unrefined gold. This has led to traders covering up questionable provenance claims by falsifying documentation of gold doré to take advantage of lower taxes. Gold doré imports shot from 23 tons in 2012 to over 229 tons in 2015 as a result of these tax breaks.

Falsified origin documents: Gold doré imports have spiked, with the majority coming from producing countries that lack strong internal controls or are linked to supply chains with weak evidence of due diligence. Analysis of trade data reveals more declared gold imports to India than some countries are capable of producing, such as in the Dominican Republic and Tanzania, as well as instances of paperwork fraud like in Ghana. In the case of the Dominican Republic, as much as 100.63 tons of gold doré imported to India between 2014 and 2017 cannot be accounted for in the country’s gold production.

Complicit allies: Refined gold is being smuggled into India primarily from the United Arab Emirates, while key traders and refiners in Africa’s Great Lakes region with links to India have been identified as being part of the illicit gold trade.

The “Borderline” project: Dar es Salaam regional workshop (4-5 December)

The "Borderline" project equips women with information on cross-border trade procedures, helping them reduce business costs and expand opportunities. The first workshop took place at the Nakonde/Tunduma border between Zambia and Tanzania on 11 November, followed by additional training sessions in Kyela, Tanzania; Karonga, Malawi; and Chipata, Zambia. As Malawi, Tanzania and Zambia belong to different regional economic communities, women traders often feel lost and unable to identify specific trade rules regulating their transactions. Experiences from the border training sessions will be reviewed at a regional workshop in the Tanzanian capital, Dar es Salaam, on 4 and 5 December, the final activity under the “Borderline” project.  UNCTAD will share with policymakers from the three target countries the findings of the project and present a set of policy recommendations aimed at making cross-border trade a more profitable activity, especially for women, and a tool for overall economic growth and regional integration.

Botswana: IMF staff completes 2019 Article IV Mission

After a relatively good performance in 2018, the economy is facing headwinds in 2019 related to weaknesses in the diamond market, a severe drought, and slower growth in neighboring countries. Growth is expected to slow to about 3½ percent in 2019, while inflation will remain low. The current account is projected to move to negative territory, contributing to a decline in reserves. The fiscal deficit is expected to reach 5¾ percent of GDP due to lower-than-expected revenue, higher-than-expected increase in public wages and other recurrent spending. Despite these challenges, the banking sector remains well capitalized and liquidity has improved. Under staff’s baseline scenario, growth is expected to recover to 4.2% in 2020, as the diamond market normalizes and copper production comes into stream, and hover around 4% thereafter - a level too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants into the labor market. Inflation will accelerate amid accommodative monetary policy but remain in the bottom half of the Bank of Botswana target band. Fiscal consolidation will gradually reduce the deficit and would contribute to a gradual rebuilding of buffers over the medium term. The outlook is subject to significant downside risks, including a global rise in protectionism, a faster-than-anticipated slowdown in China and in the euro area, and continued slow growth in South Africa. 

WCO updates from Zambia, Ethiopia: 

Zambia: A national single window workshop was held in Lusaka (4-8 November). It emphasized the paramount role of all agencies in achieving a sound Single Window operating environment, while underscoring crucial activities that should be conducted to ensure the success of the initiative, such as a legal gap analysis, a business process analysis and reengineering, data harmonization and an attentive service design. The workshop succeeded a WCO field mission on implementation of the WTO Trade Facilitation Agreement  in Zambia which highlighted a recommendation to reinforce efforts to prepare other border agencies for digitalization and the adoption of Zambia Electronic Single Window, coupled with an outreach programme to raise awareness and build inclusive consultations and communication amongst all border agencies.

Ethiopia: Under the sponsorship of the EU-WCO HS Programme for Africa, a national workshop on the HS 2017 amendments for the Ethiopian Customs Commission was held in Addis Ababa (11-15 November).  The overarching goal of the workshop was to assist the ECC, which has just completed the migration to the HS 2017 version, to understand the scope of the amendments and align its classification work on the new version of the national tariff.

Mauritius Standards Bureau to develop National Standardisation Strategy (GoM)

The Minister of Industrial Development, SMEs and Cooperatives, Mr Soomilduth Bholah, launched the event, organised by ISO in collaboration with the Mauritius Standards Bureau. Delegates from various countries (Denmark, Spain, Belgium, Ethiopia, Eswatini, Gambia, Serbia, Bosnia and Herzegovina, Nigeria, Senegal, Germany, Switzerland, Iceland, Mauritius) are participating in the workshop. The Minister announced that his Ministry is in the process of reviewing the National Export Strategy with the main objective of establishing the building blocks and engines of growth of the future. The strategy outlines the roadmap for the development of key sectors having high export potential. 

Mauritius Jin Fei zone to further consolidate ties between Mauritius and China (GoM)

The Mauritius Jin Fei Economic Trade and Cooperation Zone is yet another step in further consolidating the friendship between Mauritius and China and is one of the economic zones being established in Africa to strengthen China-Africa economic and trade cooperation, said the Minister of Tourism, Mr Georges Pierre Lesjongard, on Friday 22 November 2019. The Minister was speaking at the Ground-Breaking ceremony of the Jinfei-Maritim Five-Star Business Apartment Hotel project, held in Riche Terre, Terre Rouge. The apartment hotel, to the tune of some Rs 2,6 billion, will be operational in 2022. The structure will comprise two towers of 16 floors each, with a mix of rooms and apartments. The hotel will also consist of two restaurants, five conference halls, and a helipad.  The collaboration of Jinfei as a partner is further expected to attract some 75,000 Chinese visitors by 2020. [New impetus to Sino-Mauritian collaboration to further consolidate the SME sector]


Today's Quick Links:

Egypt: Africans doing business

Harmonised Consumer Price Indices, September 2019:  SADCCOMESA  

Mauritius: SADC Regional Agricultural Policy sensitisation workshop

US cuts funds for WTO Appellate Body drastically

Wang Huiyao: Why China should lead the mission to save the ailing WTO and revive multilateralism

Istanbul Competition Forum: Keeping markets fair in digital era requires stronger cooperation

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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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