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tralac’s Daily News Selection

tralac’s Daily News Selection

24 Jan 2020

10th meeting of African Ministers of Trade (14 December 2019, Accra) pdf Declaration on WTO issues (75 KB)

The following communication (dated 21 January 2020) is being circulated to delegations at the request of the Delegation of Botswana. Selected extracts:

Pledge support to African countries in the process of WTO accession and urge Members to desist from making unreasonable requests on African acceding countries to extend any commitments made as a result of their membership to the AfCFTA or that are inconsistent with their levels of development;

Reaffirm that any debate on the reform of the WTO must include the views and interests of the African Group, and address the long-standing issues of interest to developing countries as entailed in the Doha Development Agenda as well as preserve WTO principles and pertinent instruments that promote development and inclusion.

Stress that the overriding objective of Africa’s trade policy is a Free Trade Area capable of building an African common market for goods and services, and we must ensure that the outcomes of the negotiations in the WTO do not undermine these objectives;

Direct the African Group at the WTO in Geneva to continue to ensure the necessary synergies with the relevant organs of the African Union, with a view to ensure WTO Agreements support African integration, in particular the Agreement Establishing the African Continental Free Trade Area with the WTO Agreements, in the different sectors and stages. Call upon the African Group to the WTO to implement effectively the outcomes of their Retreat held in Geneva on 23 November 2019.

Take note of the progress report given by the Commission regarding the internal AU process in the endorsement of the African candidate for the position of the Director-General of the WTO and express the legitimate aspiration that the next WTO Director General be from Africa and;

Welcome the renewal of application by the AUC, to the Chair of the General Council of the WTO and the Director-General of the WTO, requesting the granting of Permanent Observer Status to the African Union in all WTO bodies and Call upon all WTO members to support the African Union’s efforts to secure Observer Status in the WTO.


41st Cairns Group Ministerial (23 January 2020): outcomes


Nigeria’s border closure: a road block or a speed bump on the road to a successful AfCFTA? (World Bank)

Let’s zoom in on the rice issue. In 2018, Benin, a country of 11 million people, was the sixth largest importer of rice in the world and the largest rice importer from Thailand. More recently, Benin’s rice imports have been steadily rising while Nigeria’s have been falling at a similar pace, suggesting large re-exports of rice from Benin to Nigeria (Figure 1). Why might that be the case? Because import tariffs in the two countries are widely different. In 2013, Nigeria’s tariff on rice imports was set at 70%. In 2014, Benin reduced its tariff on rice imports from 35% to 7%. This makes the practice of re-exporting extremely attractive to both formal and informal operators. They can import rice to Benin at a low cost and smuggle it into Nigeria to sell at a much higher profit margin. One of the most straightforward ways to combat this behavior would be to agree on a common external tariff, which could help make re-exporting less profitable. But this incident between Nigeria and Benin highlights some of the other non-tariff trade barriers that could still provide incentives for re-exporting. Below, we focus on three of the major technical challenges that need serious consideration as governments negotiate the terms of their participation in the AfCFTA.

Tension between national industrial policies and AfCFTA ambitions: The AfCFTA will only succeed if member countries make the regional strategy part of their national policy and proactively address the tensions that arise between the two. Countries should find the sweet spot that reinforces national economic goals and ensures maximum gains from increased integration, looking beyond a static assessment of their priorities. In addition, countries need to make the case to their people as to why integration is useful in the long term – this is particularly important in the larger countries, which may have greater influence on regional decisions.

Lack of capacity to monitor and safeguard against illicit practices, including smuggling, dumping, and violation of the rules of origin: Given the African Union’s ambitious industrialization agenda, we expect to see even more of these types of disputes on rules, particularly the rules of origin, once trade under AfCFTA becomes more widespread. With this on the horizon, countries need to think through how to address origin fraud, setting clear and simple rules that are monitored and enforced at the national and regional levels.

Trade dispute settlement mechanisms: One of the key challenges to the AfCFTA we identify in our forthcoming book, is the need for an effective dispute resolution mechanism with the authority and institutional capacity to mediate and enforce decisions within and across countries in Africa and with parties outside the continent. This body should be complementary to the traditional diplomatic/political approach to resolve disputes. [The authors: Woubet Kassa, Albert Zeufack; tradebarriers.africa: Despite closed borders, Nigerian manufacturers begin online registration for AfCFTA]

Uganda’s National Export Week: Exports grow despite regional trade wars (Daily Monitor)

Despite border disputes and export blockades imposed on some of Uganda’s goods, exports grew in 2019, according to data from Uganda Export Promotions Board. Data indicates that exports grew to Shs13.8 trillion, at least by Shs400b, as of November 2019 compared to Shs13.4 trillion in the same period in 2018. Speaking during the 4th annual exporters conference in Kampala, Mr Elly Kamugisha Twineyo the UEPB executive director, said contrary to public belief, the closure of some borders such as Rwanda and blockade on some goods from Uganda by EAC member states, export volumes grew in 2019 as Ugandan manufacturers opened new trading frontiers such as DR Congo.

Kenya sends back 19 milk trucks, Uganda plans retaliation (The East African)

At least 19 trucks carrying powdered and UHT milk have been returned to Uganda or diverted by Kenyan authorities, according to an internal memo by the Uganda Revenue Authority. The milk truck loads worth more than Ush1.1 billion, URA details show, were directed to return on varying dates or let in and the goods later seized by Kenya. This, together with the sealing off of the Pearl Dairies depot in Kisumu, western Kenya, is expected to spark a trade war with far-reaching implications. Uganda has already demanded that Kenya stops hostilities on its exports or face reciprocal measures. According to the memo seen by Daily Monitor, Uganda is already targeting a number of goods, key among them juices, assorted household items and roofing materials. URA sources that requested anonymity said that although Ugandan goods, specifically milk, are cleared by the Kenya Revenue Authority, Kenya Bureau of Standards and Kenya Plant Health Inspectorate Service, they are later seized by Kenya’s inland police once in the country. “Police are removing milk from the market and stopping new supplies. No one is providing an explanation,” the source said.

On Wednesday, Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said that whereas he was not aware of the milk diversions, there was a breakdown in communication between Ugandan and Kenyan authorities. “We see a breakdown in the communication to the relevant technical authorities and this could be the reason why all this is happening,” he said while expressing his disappointment over how Kenya has treated Uganda yet it is one of the country’s major trade partners.

  • Related: According to Uganda’s Trade Minister Amelia Kyambadde, through the Foreign Affairs Ministry, they have written to the Kenyan government to give an update and response within 14 days. “Kenya exports more goods to Uganda than we export to Kenya. The trade balance is still in favour of Kenya. We don’t want to retaliate by banning Kenyan products on to the Ugandan market because of the East African Community spirit but we have written to them through the ministry of Foreign Affairs expecting a response/explanation within 14 days,” said Kyambadde in Kampala. Kyambadde said as the Minister of Trade, she tried to contact her counterpart in Kenya, but because of the reshuffles that went on in Kenya recently, she couldn’t get in touch with the new Kenya Cabinet Minister for Trade.

  • Related: But that’s not the whole story. Investments in agriculture, especially large-scale operations and in value-chain agro-processing, have led to an increase in output in Uganda and brought into sharp focus comparative advantages. The installation of milk coolers in south- western Uganda and the building of milk processing plants increased demand for milk and encouraged more investment in the dairy sector. The surplus has flooded the Kenyan market not because satisfied Ugandans are pushing away gourds of milk with their feet but because of higher purchasing power across the border. In the case of the eggs, it reflects capital hunting for higher returns by bringing machinery closer to the source of key raw materials (maize), relatively cheaper land in central Uganda, near the urban areas, and cheap labour. It is classic capitalism.


Lawyers’ body sue EAC Council of Ministers for ‘breaching’ Treaty (New Times)

The umbrella association of national law societies in the EAC on Thursday filed a case at the six-member bloc’s court in Arusha, against the bloc’s Council of Ministers for persistently violating the EAC Treaty. Comprising Ministers/Cabinet Secretaries from the partner states whose dockets are responsible for regional co-operation, the Council is the central decision-making and governing organ of the six-nation bloc. The East Africa Law Society filed the case at the East African Court of Justice in Arusha, Tanzania. According to the EALS, holding meetings without the involvement of Attorneys General of the partner states “has led to delays in realisation of objectives of the Treaty and brought conflicts and confusion in the integration processes.” Reached for comment, Olivier Nduhungirehe, Rwanda’s Minister of State in charge of the East African Community, and current chairperson of the Council said he could not comment on a matter that has gone to court.

Another way in which the Council has violated the Treaty, it is noted, is creating an institution - the Ad Hoc EAC Service Commission – to undertake the work of human resource and administration at the EAC Secretariat without having the institution properly established by the Heads of State through the Summit. “Consequently, we are seeking orders that all decisions that the Council of Ministers has made in violation of the Treaty, especially those relating to its 39th Meeting held in November 2019, be nullified. The importance of this case is to bring to the attention of the entire citizenry of EAC the importance of respecting laws of the Community in order to realise the benefits of regional integration.”

Nigeria: FG directs FMITI to establish Agro-allied industries in 36 states (Sun News)

The Federal Ministry of Industry, Trade and Investment has been directed by President Muhammad Buhari to establish agro-allied industry in each state of the federation. The Minister of State for Industry, Trade and Investment, Mariam Katagum, confirmed the development when a delegation from the Amana Farmers and Grains Suppliers Association of Nigeria led by its chairman, Haruna Pambeguwa, visited her office. Katagum said the decision to establish agro-allied industry in each senatorial district in the country is part of government’s efforts to achieve food security and stimulate economic activities to eradicate hunger in the country. The minister said the Federal Government would give necessary support towards the development of the cotton, textile and garment sectors of the economy. [Bloomberg Tax: Widening the tax net in Nigeria. Is an increase in VAT rate the way to go?]

Central African Republic Economic Update: strengthening domestic revenue mobilization to sustain growth in a fragile state (World Bank)

The report notes that the improved security situation is leading to brighter economic prospects, with the real GDP growth rate estimated at 4.8% for 2019. The authors indicate that although the country’s growth rate has outpaced that of countries in the Central African Economic and Monetary Community and Sub-Saharan Africa, it continues to lag behind peer countries such as Burkina Faso, Malawi, Mali, Niger, and Uganda. The report also reveals (pdf) that while CAR is still at high risk for debt distress, its efforts to streamline public expenditure and clear domestic arrears are driving down the public debt level to below CEMAC and Sub-Saharan Africa averages and bringing it closer to the debt levels of its peers. The report presents a number of options to address the growing needs of Central Africans: [Data collection in fragile states: innovations from Africa and beyond]

Today’s Quick Links:

Payce Madden: Patent policies and their effects on African innovation

UK eyes lion’s share of SACU, SADC trade

African Road Safety Observatory: update

UNECA’s policy dialogue on land policy reform, social-economic transformation in Southern Africa

Rwanda, Zimbabwe to strengthen trade ties

Uganda: Coffee export earnings drop

Uganda: Will government’s new 5-year growth plan deliver middle income?

Kenya: Cost of imports to rise as trade agency introduces new levy

Regional integration in South Asia: implications for green growth, female labor force participation, and the gender wage gap