tralac’s Daily News Selection
AU Summit timeline
36th Ordinary Session of the Executive Council (6-7 February). The Executive Council will consider the draft agenda and the draft decisions and declarations of the Assembly with appropriate recommendations for consideration by the Heads of State scheduled to take place from 9-10 February 2020. The Executive Council will further consider the reports and updates of the sub-committees of the Executive Council and Ad-hoc Ministerial Committees on, inter alia: Progress made by the AfCFTA; Statute of the African Peer Review Mechanism; Update on the Digital Transformation Strategy for Africa (2020-2030); Draft Social Agenda 2063.
37th Session of the AUDA-NEPAD Heads of State and Government Orientation Committee (8 February). The HSGOC session will receive opening statements from: President Macky Sall (Senegal, chairperson of the NEPAD Heads of State and Government Orientation Committee), Moussa Faki Mahamat (Chairperson of AUC), President Abdel Fattah El-Sisi (Egypt, Chairperson of the African Union).
AUDA-NEPAD at 33rd Ordinary Session of the African Union Summit. Featured event (8 February): Launch of Conditions for Success in the Implementation of the AfCFTA
South Africa and the AU in 2020: extract from President Cyril Ramaphosa’s weekly newsletter
At the end of the week, I will travel to Addis Ababa in Ethiopia for the African Union summit at which South Africa will assume chairship of our continental organisation for the next year. We plan to use this great responsibility, among other things, to promote the economic empowerment of the women of Africa. There has never been a better time to do so. With the African Continental Free Trade Area coming into operation this year, we have an opportunity to ensure that women and women-owned businesses are able to meaningfully benefit from what will be the world’s largest common market for goods and services. Just as there can be no real gender equality without economic emancipation for women, so too there can be no sustainable economic growth for any country unless women are full and equal participants.
It’s still up in the air whether the African Union can keep its promise to deliver a continental passport by the end of the year. The travel document would allow visa-free travel between the Union’s 55 member countries. The potential economic impact is huge. Recently-released data show that intra-African travel continues to lag the world. The continent’s 1.2 billion people made far fewer intra-continental trips—in total, and per person—than Europeans, Asians and Americans.
Will expansion help Tazara get back on track? (The East African)
The board of directors of the Tanzania-Zambia Railway wants the two countries to expand the business to Malawi, Rwanda and Burundi. “We took note of the negative trend in some of the key performance indicators recorded in the first half of the year ending December 31, 2019, and we urge the management to ensure that actions are taken to reverse the trend and put the performance back on track,” says a communiqué issued this past week in Dar es Salaam following Tazara’s board of directors meeting. Tazara’s latest performance report shows that the company performed below capacity in the first half of the 2019/2020 financial year, transporting just over 56%, or 88,529 tonnes, of its target cargo volume of 157,734 tonnes, between July and December. This is a 9.7% drop compared with the same period in 2018 when 98,024 tonnes of cargo moved between the two countries. Tazara’s priorities are listed to tap more private investment and to link the railway to landlocked neighbouring countries. However, none of these have been implemented.
Northern Corridor deal set for review (The East African)
The 10-year-old Northern Corridor trade agreement will be updated by March to address emerging trade opportunities, meet current needs and boost regional trade. This was the main resolution of the 48th executive meeting of the Northern Corridor Transit and Transport Co-ordination Authority member states — meeting in Mombasa, Kenya recently. The member states are Kenya, Uganda, South Sudan, Democratic Republic of Congo, Rwanda and Burundi. “The revised draft of Agreement and protocols has been received and is awaiting a validation workshop in March this year before its submission to the Council of Ministers,” said executive secretary Omae Nyarandi.
The revised trade agreement will include the use of Kenya’s Standard Gauge Railway, which was not there in 2007 when the agreements were being drawn up; joint funding of infrastructure such as roads, one-stop-border posts, motion weighbridges; and speed up implementation of the Customs Union Protocol by adopting a single window system for regional custom data transfer to end cross-border delays. Trade Mark East Africa has committed budgetary support of $393,000 for the recruitment of system developers to enhance the current online tools — which are a transport observatory system and the regional information system — and are expected to be officially launched in the next two months.
South Africa: Trade statistics for December 2019 (SARS)
The South African Revenue Service released trade statistics for December 2019 on Friday which recorded a trade surplus of R14.85bn. The year-to-date (1 January to 31 December 2019) trade surplus of R24.70bn is an improvement from the R15.23bn surplus for the comparable period in 2018. Exports increased by 4.1% year-on-year whilst imports for the same period showed an increase of 3.3%. The R14.85bn trade surplus is attributable to exports of R103.31bn and imports of R88.47bn. Exports decreased from November 2019 to December 2019 by R13.02bn (11.2%) while imports decreased by R22.22bn (20.1%). Top 5 countries for exports: China (11.0%), United States (7.5%), Germany (7.1%), United Kingdom (6.9%), India (5.2%). Top 5 countries for imports: China (16.9%), Germany (7.4%), United States (6.3%), Nigeria (5.9%), Saudi Arabia (5.9%)
Journal of African Trade: selected recent articles from Volume 6, Issue 1-2, December 2019
Trade and industrialisation in Africa: SMEs, manufacturing and cluster dynamics. There is evidence of dynamism in Africa, both within individual SMEs and in clusters of SMEs. In understanding the challenges faced by this sector, and in examining the prospects for their participation in external trade, we review the experience of 25 African clusters using four dimensions: the nature of unintended externalities (e.g., external economies), market orientation and upgrading and growth trajectories, cluster dynamism and joint action for upgrading, external institutional support and upgrading. In terms of policy challenges for SMEs and export trade we discuss four major areas: (i) participation in governed global value chains feeding into high-income markets, (ii) export sales to non-regional low-income markets, (iii) export sales to regional markets and (iv) informal sector cross-border trade to regional economies. We conclude that for Africa, trade and industrialisation are integrally linked and attempts to facilitate regional trade policies cannot ignore the need for developing appropriate industrial policy and adopting an approach of developmental regionalism. This is especially evident with respect to SME development. [The authors: Raphael Kaplinsky, Mike Morris]
The impact of regional integration on Africa’s manufacturing exports. This paper analyses the impact of Regional Trade Agreements on intra-regional manufactured exports in Africa. Using data from 1990 to 2015 for 45 African countries, a structural gravity model was estimated using the Poisson pseudo maximum likelihood estimator that controlled for heteroscedasticity and allowed for bilateral zero trade values between trading partners. The study also accounted for multilateral resistance effects, endogeneity of RTAs, and the phased-in impacts of RTAs. On average, a regional trade agreement led to a 72% increase in manufacturing exports between members within 12 years of the ratification of the trade agreement. [The author: Rodgers Mukwaya]
The effects of trade facilitation on trade performance in Africa. In this paper, we assess the effects of trade facilitation measures and their combined effect (using principal component analysis) on trade performance in a sample of 52 African countries within a structural gravity model framework for the period 2006–2015. The results suggest that trade facilitation improves trade performance in Africa; the better the level of trade facilitation, the larger the extent of trade flows. From a policy perspective, reducing trade costs across borders remains key to improve trade performance in Africa. [The authors: Daniel Sakyi, Sylvanus Kwaku Afesorgbor]
WTO structured discussions on investment facilitation for development: informal ministerial meeting on investment facilitation for development. The following communication dated 31 January 2020 is being circulated at the request of the delegation of Chile:
Ministers (23 January, Davos) re-affirmed their commitment to work towards a concrete outcome on investment facilitation by MC12 and to keep the momentum in the forthcoming crucial months, including by conducting further outreach activities. They also confirmed the decision to move into negotiating mode as of March 2020 in order to achieve such concrete outcome.
Ministers welcomed the Philippines as the newest participant in the Initiative, following the announcement made at the meeting in Davos. There are now 99 participating WTO Members, representing well over half of the WTO’s membership – as well as 64% of world GDP, 78% of global trade and 68% of global foreign direct investment (inward stock).
Ministers conveyed their strong support and commitment in favour of the joint initiative and confirmed that a framework on investment facilitation is seen as an important element to update and strengthen the multilateral rules-based system and make it more responsive to present-day needs and global challenges – notably the financing of the 2030 Sustainable Development Goals, which will require a significant mobilization of investments.
Finally, Ministers welcomed the strong support and engagement by the private sector in favour of the initiative – as highlighted in a separate high-level meeting with business leaders, civil society and academics held at the World Economic Forum’s Annual Meeting 2020 in Davos.5 Ministers expressed their readiness to further strengthen the dialogue with business and investors, including micro, small and medium-sized enterprises.
The international community reaffirmed its commitment to reach a consensus-based long-term solution to the tax challenges arising from the digitalisation of the economy, and will continue working toward an agreement by the end of 2020, according to the Statement by the Inclusive Framework on BEPS released by the OECD on Friday. The Inclusive Framework on BEPS, which groups 137 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules, decided during its 29-30 January meeting to move ahead with a two-pillar negotiation to address the tax challenges of digitalisation.
Participants agreed to pursue the negotiation of new rules on where tax should be paid (“nexus” rules) and on what portion of profits they should be taxed (“profit allocation” rules), on the basis of a “Unified Approach” on Pillar One, to ensure that MNEs conducting sustained and significant business in places where they may not have a physical presence can be taxed in such jurisdictions. The Unified Approach agreed by the Inclusive Framework draws heavily on the Unified Approach released by the OECD Secretariat in October 2019. Endorsement of the Unified Approach is a significant step, as until now Inclusive Framework members have been considering three competing proposals to address the tax challenges of digitalisation. A Programme of Work agreed in May 2019 has been replaced with a revised Programme of Work under Pillar One, which outlines the remaining technical work and political challenges to deliver a consensus-based solution by the end of 2020, as mandated by the G20. Inclusive Framework members will next meet in July in Berlin, at which time political agreement will be sought on the detailed architecture of this proposal.