tralac’s Daily News Selection
5th anniversary of the Nairobi Ministerial Decision: pdf Review of implementation, identification of gaps and the way forward (125 KB) . The following submission (dated 2 March) is being circulated at the WTO at the request of the delegation of Tanzania, on behalf of the LDC Group:
What the LDCs are expecting from MC 12. As briefly summarized above, there is an imbalance between the efforts deployed by LDCs countries in the CRO since the Nairobi Decision in terms of submissions, analysis, and the level of the response so far received from preference-granting members. Implementation of the Ministerial Decision should remain a shared responsibility and not rest exclusively on evidence brought by the LDC Group. Ensuring that “preferential rules of origin applicable to imports from LDCs are transparent and simple and contribute to facilitating market access” is a clear objective of the multilateral community, embedded since 2005 in the Hong Kong WTO Ministerial Decision and reinforced in target 17.12 of the SDGs. The LDCs believe that is therefore necessary to strengthen the mandate of the Committee on Rules of Origin at the 12th Ministerial Conference by:
Setting clearer obligations for preference granting members regarding an intensification of their efforts to monitor the impact of their RoO on LDCs’ imports and to simplify requirements in line with the provisions of the Nairobi Decision and the best practices as illustrated by the LDC Group in past submissions to the CRO; and
Strengthening the role of the WTO Secretariat to monitor conformity with Nairobi Decision. This will have significant spill over benefits for the entire international trading system in an area that is currently unregulated.
A strong mandate of the Committee on Rules of Origin will lead to an effective participation by both Geneva and capital-based experts in the Committee meetings with a clear agenda on the work ahead. To reach this objective the LDC group will engage with preference-granting members to develop appropriate language to be submitted for consideration of ministers at the next Ministerial Conference.
Liberia heads WTO African Group of Ambassadors. The head of the Liberian Delegation to the Permanent Mission of the AU, Dr Isaac W. Nyenabo, has been appointed as chairman for the period of three months on a rotational basis of the African Group of Ambassadors, commonly called the African Group of Ambassadors in Brussels. The three-month tenure of Amb. Nyenabo commences from March 4 through June 4, 2020. Algeria, Cameroon, Kenya, Lesotho, Libya, São Tomé and Príncipe, South Africa, Togo, and Uganda will serve as vicechairpersons of the Bureau of African Ambassadors.
The European Commission will next week publish its EU-Africa ‘strategy’, which the bloc hopes will form the basis of a new ‘partnership’ with the African continent. EU Foreign Affairs chief Josep Borrell will launch the blueprint on Monday, kick-starting seven months of negotiation between ministers and leaders from the two continents. Last week, Borrell courted controversy at an EU-African Union meeting in Ethiopian capital Addis Ababa, when he implied that the EU would provide African leaders with military support, something which would be in breach of the current EU legal framework. “We need guns, we need arms, we need military capacities and that is what we are going to help provide to our African friends because their security is our security,” the Spanish diplomat said.
But EU officials are anxious that their new Africa strategy, based around partnerships on trade, migration, environmental policy, digital and mobility does not get derailed by the delayed talks on the post-Cotonou trade and political accord which covers 48 of the 54 Africa countries. Negotiators from the EU and the ACP agreed on 17 February to extend until December the Cotonou Agreement, signed in 2000, which covers trade and political relations between the EU and the ACP.
The AfCFTA: Perspectives for Africa, policy choices for Europe (SWP)
It is, however, too early to be discussing modifying the European Union’s trade policy towards Africa, or for this to be an issue for the upcoming German Council Presidency. Nevertheless, Germany and the European Union should continue to follow and support the process of establishing the AfCFTA, which is an important political process with significant long-term economic potential for Africa. The question of whether ratification of the AfCFTA agreement means that the European Union should start negotiations with the AU about an EU-AU trade agreement to supersede the existing EPAs has already been discussed in Germany. Currently such negotiations would be neither possible nor sensible. And the African side has no incentive, because most of the states of Sub-Saharan Africa already enjoy completely free access to the EU’s markets. This applies not only to all the countries that participate in EPAs, but also to all the LDCs, which profit from unilateral EU trade preferences. South Africa and the states of North Africa already enjoy extensive tariff-free access for industrial goods.
African free trade is vital for growth (Mail and Guardian)
At the Black Business summit on Wednesday, AfCFTA secretary general Wamkele Mene, said the negotiators would have completed everything by the July deadline for the trade area to come into force. He said the negotiators are hard at work in Addis Ababa, trying to conclude the outstanding trade negotiations. He added that the rules of the origin of goods were 90% completed, with only automobiles, textile and clothing and sugar needing still to be negotiated. “I am confident that we are going to conclude these outstanding areas. We are accustomed to working under very severe time constraints.”
Trudi Hartzenberg, tralac’s executive director, said: ”This [the AfCFTA] is an incredibly ambitious project. You are trying to integrate 55 members of the African Union, and they are very diverse in terms of levels of economic development.” Hartzenberg said what makes the trade area so difficult to negotiate is the fact that the continent is home to many of the world’s least-developed countries, with many of them landlocked and lacking diverse economies. [African trade and energy developments poised to boost agriculture]
Africa may only see impact of new free-trade deal after three years. Carlos Lopes (former UNECA executive secretary): “It will take at least a year to have schedules approved by the majority of countries, unless regional blocs harmonize their offerings. Phase two on trade in services and later phase three on e-commerce are even more complex.”
US Embassy officials yesterday told a media briefing on economic issues touching on the two countries that the deal is a significant step. “The amendment to the US – Kenya Air Transport Agreement in Washington, DC last month will come to force following an exchange of diplomatic notes at the end of the week or early next week,” deputy economic counsellor US Department of State Chris Angelis said. She said that although direct flights between Kenya and US commenced in 2018, it did not include the seventh-freedom traffic rights for all cargo operations to the bilateral air transport agreement. The US Embassy also disputed claims that its trade pact with Kenya could undermine the EAC and the AfCFTA. “The trade pact between Kenya and US is a model to post-Agoa trade arrangement with the continent. US has also engaged the continental body,” the US Embassy team said.
Eswatini: AfDB’s Country Strategy Paper 2020-2024
In the new CSP, the Bank and the Government identified a number of operations and has developed a pipeline for the period 2020-2024 that include two transport sector interventions in roads and railways, two agriculture projects, a renewable energy sector program and one water project under Priority Area 1. Priority Area 2 envisages implementation of one policy based operation and one public finance management project. The total cost of the indicative lending program is UA 610 million.
Eswatini’s current account posted surpluses since 2012, but the surplus has been dwindling since 2016. Exports slowed down from 41.9% of GDP in 2014 to 39.0 % in 2018, while imports increased from 38.1% of GDP to 38.4% of GDP, which triggered a contraction of the trade balance as percentage of GDP from 3.8% in 2014 to 0.6% in 2018. Net services exports averaged -4% of GDP since 2014, a reflection of the country’s huge demand for foreign services partly due to skills shortage.
The World Bank Group’s Board of Directors today discussed the Country Partnership Framework for Senegal that lays out the World Bank Group program for FY20–FY24 and expressed broad support for the WBG’s engagement in Senegal’s structural reforms to achieve economic transformation and become an emerging economy by 2035. Senegal’s economic expansion has been accelerating and growing consistently above 6% per year since 2014. This high growth trajectory places Senegal among best performers in Sub-Saharan Africa and is reflective of incipient structural transformation, supported by reforms aimed at improving the investment climate, governance and investment in infrastructure, energy and agriculture. The growth outlook is favorable and projected to remain solid at about 6.8% in 2020, reflecting higher investment and exports. Growth could exceed 7% from 2021 onwards if fiscal vulnerabilities are contained and transformational reforms are implemented to crowd-in private sector investments. [The World Bank in Senegal]
Tanzania: IMF completes 2020 Article IV Mission
The pace of economic activity appears to have increased in recent months prompted by higher public investment, a rebound in exports, and an increase in credit to the private sector. As a result, real GDP growth is estimated to be close to 6 percent, with activity buoyant in the construction and mining sectors. Other economic indicators point to a benign economic environment, with annual inflation at 3.7 percent, a stable exchange rate, foreign exchange reserves equivalent to near 5 months of imports, and public debt at below 40 percent of GDP. Prudent fiscal and monetary policies have delivered economic stability. To sustain these gains, increase private investment, and create jobs, there is a pressing need to proceed with targeted economic reforms. [Tanzania and the IMF]
South Africa’s current account deficit narrowed to its lowest in nearly a decade in the last quarter of 2019 as Africa’s most industrialised economy recorded a significantly higher trade surplus, central bank data showed said on Thursday. The current account deficit narrowed to 1.3% of GDP in the fourth quarter of 2019 from a shortfall of 3.7% in the third quarter. The deficit was the lowest since a small surplus of 0.4% in the final quarter of 2010, and well shy of the 3.5% shortfall for the quarter forecast by economists surveyed by Reuters. The trade balance showed a wider surplus of R102.5bn ($6.68bn) in the fourth quarter, more than double the revised R44bn surplus in the previous three months. The central bank said the marked improvement in the trade balance was due to an increase in the value of merchandise exports against a decline in imports, allowing for a rise in both prices and volumes at a time when the rand weakened substantially against the US dollar. [SARB: Current account of the balance of payments; Standard Bank: Q4 GDP worse than bad]
The Federal Government of Somalia has cleared its arrears to the International Development Association, completing the process of normalizing its financial relationship with the World Bank Group. With this clearance, Somalia has fully re-established its access to new resources from IDA and paved the way to receive debt relief under the Heavily Indebted Poor Country and Multilateral Debt Relief Initiative to promote growth and recovery over the coming years. [The World Bank in Somalia]
South Africa: Trade in illicit cigarettes on the way to being stubbed out (Daily Maverick)
The substantial rise in revenue from tobacco products is a silver lining to South Africa’s increasing fiscal debt. In the 2019/20 financial year, nominal excise tax revenue from domestic production of cigarettes and cigarette tobacco (of which at least 95% is from cigarettes) increased by 19.2% from R12.1-billion to R14.4-billion. In fact, in the 2019/20 financial year the reported revenues were 14% higher than the budgeted revenue. In 2018/19, the tobacco industry declared 15.6 billion cigarettes for excise tax purposes. In 2019/20 they declared 17.3 billion cigarettes, an increase of 11%. Should this increase in cigarette sales concern public health advocates? We don’t think so. Smoking prevalence doesn’t change dramatically from one year to the next. The increase in declared cigarettes indicates that illicit trade has probably reached a turning point and is now receding. [The authors, Corné van Walbeek, Kirsten van der Zee and Nicole Vellios, are attached to the Research Unit on the Economics of Excisable Products (REEP) at the University of Cape Town]
World food prices declined in February for the first time in four months due to a sharp fall in the export prices of vegetable oils, partly driven by fears that the coronavirus (COVID-19) outbreak will slow global demand. The FAO Food Price Index, which tracks monthly changes in the international prices of commonly-traded food commodities, averaged 180.5 points in February, down 1.0 percent from the previous month but still 8.% higher than a year earlier. [West Africa grain prices record slower growth]