tralac’s Daily News Selection

tralac’s Daily News Selection

16 Mar 2020

Customs duty on e-transmissions: India, South Africa make new submission at WTO (Economic Times)

India and South Africa have made a new submission at the WTO against the proposed extension of the moratorium on customs duty on electronic transmissions, raising concerns on the possible inclusion of digitisable goods in its scope that could severely hit developing countries. “Today, members (countries) are waking up to the weighty impact of the moratorium assuming the scope of the moratorium is centred on digitised and digitisable goods. The moratorium will be equivalent to developing countries giving the digitally advanced countries duty-free access to our markets,” said a recent joint communication by India and South Africa to the General Council of the WTO.

India and South Africa argued that in 1998, the digital economy was at its inception, and the world wide web was only starting to be used by the general public. There was no clarity on how the economy would be transformed by digital advancements. “Today, the digital economy is growing rapidly. This is radically changing trade as we knew it. With the advent of new technologies — 3D printing, big data analytics and artificial intelligence — our economy is being further transformed. With regards to traditional trade in goods, 3D printing is expected to be a game changer,” the submission said, adding that the moratorium would lead to loss of use of tariff as a trade policy, which historically has been important for the growth of developing economies.

AfCFTA updates:

  1. South Africa’s DTI calls for the finalisation of AfCFTA tariff schedules

    One of the immediate tasks of the AfCFTA is to ensure that the tariff schedule listing all products covered by the agreement for tariff liberalisation and the indispensable rules of origin are finalised to ensure that the implementation date of 1 July 2020 is met. Therefore, the current administration has a responsibility to work with other AU member states to finalise the detailed modalities in order to establish a platform on which the benefits of the AfCFTA can be derived for both South Africa and its African counterparts. This was said by the Deputy Minister of Trade and Industry, Mr Fikile Majola during an Economic Policy Dialogue to unpack the AfCFTA which took place in Cape Town. He emphasised that there was a need to be ready to take full advantage of the opportunities that will become available in the ongoing implementation of AfCFTA agreement and that should create a more open integrated continental market and enhanced intra-Africa trade.

    “While this policy dialogue aims to discuss the AfCFTA with the intention of determining its bearing on South Africa, it is prudent to give a glimpse into the possible trade and economic spin-offs for our country. Though some opinion-makers indicate that the AfCFTA is very ambitious because of the many disparities between the countries development stages, especially relating to trade capabilities, infrastructure and administrative frameworks such as competition and intellectual property policies, however, notwithstanding such deficiencies we are confident that the potential benefits of the AfCFTA will be significant in increasing intra-Africa trade and foreign direct investment,” said Majola.

  2. Nigeria’s National Action Committee for implementation of the AfCFTA has advertised a range of positions. They include: Trade economist, Senior business analyst, ICT Officer, Communications coordinator.

  3. A commentary by George Elombi (senior vice president of the African Export-Import Bank): With tariffs gone, the work begins for African trade

COVID-19: updates

  1. Economic impact of the COVID-19 on Africa. The ECA, on Friday, warned the unfolding coronavirus crisis could seriously dent Africa’s already stagnant growth with oil exporting nations losing up to $65bn in revenues as crude oil prices continue to tumble. Speaking at a Press Conference in Addis Ababa, ECA Executive Secretary, Vera Songwe, said having already strongly hit Africa’s major trading partner, China, COVID-19 was inevitably impacting Africa’s trade. She said although a few COVID-19 cases have been reported in some 15 countries far, the crisis was set to deal African economies a severe blow. “Africa may lose half of its GDP with growth falling from 3.2% to about 2 % due to a number of reasons which include the disruption of global supply chains,” said Ms, Songwe, adding the continent’s interconnectedness to affected economies of the European Union, China and the United States was causing ripple effects. She said the continent would need up to $10.6bn in unanticipated increases in health spending to curtail the virus from spreading, while on the other hand revenue losses could lead to unsustainable debt. COVID-19, Ms. Songwe said, could reduce Nigeria’s total exports of crude oil in 2020 by between $14bn and $19bn. The ECA estimates COVID-19 could lead to Africa’s export revenues from fuels falling at around $101bn in 2020. [ pdf UNECA presentation (1.37 MB) ]

  2. Mauritius extends travel restrictions to EU, UK, Switzerland and Reunion Island for next two weeks. As from 20 00 GMT, Wednesday 18 March 2020, Mauritius is extending travel restrictions for a period of two weeks on foreign passengers coming from or having transited during the last 14 days in countries of the European Union, including United Kingdom and Switzerland. Also, as from today 20 00 GMT, all foreign passengers coming or transiting from Reunion Island will not be allowed to enter Mauritius for the next two weeks. As for Mauritians coming from these countries, they will be automatically placed in quarantine for a period of two weeks. These preventive measures have been announced, this morning, at a press conference by the Prime Minister, Mr Pravind Kumar Jugnauth, in Port Louis, following a high-level committee on Covid-19. As yet there is no case of Covid-19 in Mauritius. It is to be noted that Mauritius has already taken a number of policy decisions to restrict travel from a number of high risk countries such as Hong Kong, China, South Korea, Italy and Iran. [Related: Financial support plan of Rs 9 billion for economic operators affected by COVID-19]

  3. South Africa: Statement by President Cyril Ramaphosa on measures to combat COVID-19 epidemic. Any foreign national who has visited high-risk countries in the past 20 days will be denied a visa. South African citizens returning from high-risk countries will be subjected to testing and self-isolation or quarantine on return to South Africa. Travellers from medium-risk countries – such as Portugal, Hong Kong and Singapore – will be required to undergo high intensity screening. All travellers who have entered South Africa from high-risk countries since mid-February will be required to present themselves for testing. We will strengthen surveillance, screening and testing measures at OR Tambo, Cape Town and King Shaka International Airports South Africa has 72 ports of entry in the country which are land, sea and air ports. Of the 53 land ports, 35 will be shut down with effect from Monday 16 March. Two of the 8 sea ports will be closed for passengers and crew changes. [Business Insider: Here are all the border posts South Africa is closing to combat Covid-19]

  4. Kenya: It won’t be long before Coronavirus shuts down local supply chains. What the policymakers ought to be doing at the moment is not to wait until we are in a crisis. They must have data at their fingertips. The data must include which drugs will be affected most, what is the consumption patterns of, say, essential cancer drugs and those for diabetes, hypertension, etc.? what are the sources, the lead time as well as distribution channels? Without the data, we run the risk of making haphazard decisions that may hurt the people in the long run. The Kenya Pharmaceutical Board Chairman, Dr Jackson Kioko, promised that Kenya would ban exports of drugs due to declining stocks. He did not, however, clarify as to what will trigger a formal ban that other countries have already made. Studies show that the Kenyan pharmaceuticals market is worth Sh100 billion, 80% of which is prescription drugs. Although Kenya exports 50 to the COMESA region and 75% to East African Community, most of these exports are re-exports from India and China. The impact of Kenya banning exports will have far reaching implications in the region. Even if the country doesn’t ban exports, disruptions in China and a ban in India will impact much of Africa. What are the implications of this emerging scenario? What lessons will Africa learn from the potential crisis? [The author: Bitange Ndemo]

  5. Morocco to create $1bn fund to counter coronavirus outbreak. Morocco’s King Mohammed VI ordered the creation of a 10 billion dirham ($1bn) fund to upgrade health infrastructure and help vulnerable economic sectors in the wake of the coronavirus outbreak, the royal cabinet said on Sunday. The fund will help acquire the necessary health equipment and assist sectors such as tourism as well as help maintain jobs and mitigate the pandemic’s social repercussions, a royal cabinet statement said. Morocco, which confirmed 28 coronavirus cases, suspended all international passenger flights, closed schools and cancelled all events and gatherings of more than 50 people. The global pandemic has taken a toll on Morocco’s tourism sector, a key source of hard currency flow for the country accounting for 10% of its gross domestic product. Morocco attracted 13 million tourists in 2019, up 5.2% from a year earlier. [Related: South Africa’s finance minister says will need to set aside further funding for coronavirus]

  6. Nigeria: CBN unveils palliative measures to cushion impact of coronavirus on economy. The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele Monday announced some policy measures to douse the adverse economic impacts of the COVID-19 pandemic on the economy. The measures include a moratorium of one year on all principal repayments, effective March 1, 2020 as well as interest rate reduction on all applicable CBN intervention facilities from nine per cent to five per cent per annum for one year effective 1 March 2020. Speaking at a media briefing, the apex bank boss also announced the creation of a N50 billion targeted credit facility through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises that have been particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants, among others. [Text of CBN statement: CBN policy measures in response to COVID-19 outbreak and spillovers (pdf)]

South Africa: Poultry industry at odds over big increase in chicken import tariffs (Daily Maverick)

Government’s new chicken regulations mean the import tariffs will be increased to 62% from 37% on frozen bone-in chicken portions (a 25% increase), and to 42% from 12% (a 30% increase) on frozen boneless portions. Unati Speirs, the chairperson of Ebiesa, says: “The country is officially in recession, and consumers and small business owners need all the help they can get. Why ramp up the tariff so substantially? The evidence is clear – these tariff increases will lead to price increases for consumers. It will further damage the growth of many black poultry importers who are trying to build businesses, who already operate at a disadvantage, both to the large poultry importers and the local poultry industry. Many of these businesses are already marginal, and this is likely to mean some of our members simply have to shut up shop, depriving people of jobs and an income.” Ebiesa represents the interests of emerging black importers of chicken to South Africa. These are small South African businesses that each sustain between three and five employees and provide quality poultry to mainly the second economy.

Related: Increased poultry tariffs may result in US backlash. According to Bloomberg, Robert Mearkle, a spokesperson for the US Embassy in Pretoria, said: “The US government is deeply disappointed with South Africa’s decision to raise the already high tariff rates on imported poultry to a substantially higher level.” He said ensuring that US poultry exports continued to have fair access to the South African market was critical.

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