News
tralac’s Daily News selection
Trade events to diarise:
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East Africa has been impacted by COVID-19. Cross border trade has especially declined. To discuss mitigation and trade strategies, TradeMark East Africa has assembled an illustrious panel for a conversation on Monday, 6 April 2.30PM-4.00pm, East Africa time.
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WTO’s 2020 Public Forum, 29 September - 2 October. Under the main theme Building on 25 years of the WTO, the Public Forum’s three sub-themes are: WTO - past, present and future, Innovation in the digital age, Collective action for sustainable trade”. The call for proposals will open soon. Registration is due to open on 4 May 2020.
WTO Accession Newsletter: selected country updates (pdf, WTO)
Ethiopia: Following the 4th meeting of the Working Party held on 30 January, over 160 written questions were received from two members. Currently, Addis is working on the responses to these questions. Once the responses are ready, an updated set of documentary inputs will be prepared for the next Working Party cycle.
Somalia: At the General Council meeting on 3 March, Ambassador Ebyan Mahamed Salah of Somalia announced the imminent submission of the Memorandum on the Foreign Trade Regime to the Secretariat. Accompanied by Chief Negotiator Maryan Hassan, she stressed that the Government of Somalia was committed to economic reforms and considered WTO accession as a crucial process to consolidate its reform efforts. She also informed the WTO membership that the IMF approved Somalia’s eligibility for debt relief under the HIPC Initiative.
Sudan: Following the Chair Visit by Mr Katsuro Nagai (Japan) in January, the Secretariat has been in touch with Khartoum regarding the preparation of updates to the Factual Summary of Points Raised which would take account of recent developments in economic and trade policies following the establishment of the Transitional Government in August 2019. In parallel, Sudan has been in touch with the Secretariat regarding the organisation of outreach activities involving the Council of Ministers and the private sector in the near future.
From isolation to integration: The borderlands of the Horn of Africa (World Bank)
The World Bank Group’s Horn of Africa Regional Initiative promotes resilience and economic opportunity in one of the world’s most challenging regions for security and development. Within the region, extreme poverty, vulnerability, fragility, and food insecurity are disproportionately concentrated in the arid and remote border regions. But despite its challenges, there are areas in the borderlands with real economic potential. For example, the region’s international borders have long allowed communities to benefit from price differentials through licit and illicit trade. Pastoralism and trade, the dominant livelihoods in the Horn of Africa, require the easy movement of people and goods within and across borders - and continue to heavily rely on cross-country clan and ethnic affiliations. Local institutions therefore still play a key role in regulating and facilitating economic activity and managing conflict, especially as the formal institutions are often weak or absent. Even in areas at the periphery of state control, the borderlands remain highly connected to circuits of global capital and exchange. Extract (pdf):
To unpack these observations and examine the analytical and policy implications of a borderlands perspective for the World Bank and other national and international policy makers, the World Bank commissioned five background papers, which are being published along with this overview. The remainder of this overview introduces each of the background papers; summarizes some of the drivers of fragility and sources of resilience in the region; discusses key themes that run across the papers, namely, livelihoods, mobility, and gender; sets out recommendations for action; and concludes by touching on some current World Bank initiatives that are relevant to issues identified in the background papers.
The geopolitical context in the Horn of Africa has changed markedly since the background papers were commissioned. A tentative peace deal has been agreed between the rival political groups led by President Salva Kiir and Riek Machar in South Sudan, while in Sudan a transitional civilian-led government has replaced the regime led by former President Omar al-Bashir (after nearly 30 years in power). Ethiopia remains in transition, but Prime Minister Abiy Ahmed Ali has made wide-ranging changes after being elected as prime minister by the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) in April 2018. He began a rapprochement with Eritrea after nearly two decades of stalemate and regional proxy warfare, released political prisoners, pardoned and welcomed back armed groups and opposition members, apologized for human rights violations, and announced his intention to open up the Ethiopian economy. Finally, in Somalia, the federal government has taken notable steps to consolidate its control over regional governments, has undertaken economic reforms, and has also taken concrete steps toward debt relief. The longer-term impact of these geopolitical changes remains to be seen, but the broader structural challenges identified by the background papers continue to remain relevant to the region.
The World Bank has begun posting a series of Trade and COVID-19 Guidance Notes
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pdf Do’s and don’ts of trade policy in the response to COVID-19 (109 KB) . Experience from previous global and food crises provides some guidance for appropriate trade responses during the crisis and those that are likely to undermine effective national and global responses. However, the speed, scale and nature of this crisis are unprecedented which requires thinking outside of the normal box by analysts and exceptionally brave steps from policy-makers. There are however, some positive measures that governments can take to ameliorate the impact of the current crisis.
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pdf Trade in critical COVID-19 products (3.20 MB) . Using a new database on trade in covid-19 relevant products, this paper looks at the role of trade policy to address the looming health crisis in developing countries with highest numbers of recorded cases. It shows that export restrictions by leading producers could cause significant disruption in supplies and contribute to price increases. Tariffs and other restrictions to imports further impair the flow of critical products to developing countries. Extract:
Export policy is only part of the story. Many developing countries tax their own health care systems by imposing tariffs on imports of medical products. The effect of these measures is to increase the domestic price of essential products, thus further reducing welfare. Applied tariffs of key covid-19 products in the 20 developing countries with the highest number of cases are on average over 6% (Table 2). Personal protection equipment products such as aprons, medical masks and protective clothing are subject to tariffs over 10%. Severely affected countries such as Iran impose even higher import restrictions of key covid-19 products, especially for personal protection equipment. As recent data collected by the Global Trade Alert show, several of the 20 developing countries most affected by covid-19 have started implementing import reforms in the past days. For instance, Pakistan introduced tax and import duty exemption for medical and testing equipment, while Brazil eliminated tariffs on medical and hospital products. Many of these reforms are on a temporary basis: protection is suspended rather than eliminated. While this is a step in the right direction, exporters might be reluctant to enter markets if they perceive policy changes to be temporary. Locking-in tariff reductions and other policy changes in WTO commitments would be a more effective trade policy reform to address the covid-19 health crisis.
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Managing risk and facilitating trade in the COVID-19 pandemic. Maintaining trade flows as much as possible during the COVID-19 pandemic will be crucial in providing access to essential food and medical items and in limiting negative impacts on jobs and poverty. Some countries are closing border crossings and implementing protectionist measures such as restricting exports of critical medical supplies. Although these measures may in the short-term provide some immediate reduction in the spread of the disease, in the medium term they may undermine health protection, as countries lose access to essential products to fight the pandemic. Instead, governments should refrain from introducing new barriers to trade and consider removing import tariffs and other taxes at the border on critical medical equipment and products, including food, to support the health response. Trade facilitation measures can contribute to the response to the crisis by expediting the movement, release, and clearance of goods, including goods in transit. The World Bank Group provides guidance and technical assistance to developing and least developed countries to implement best practices to facilitate the free flow of goods. [ pdf Trade Facilitation Best Practices Implemented in Response to the COVID-19 Pandemic (174 KB) ]
Additional Guidance Notes:
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McKinsey: Tackling COVID-19 in Africa. To address these needs and help inform the response of leaders across the continent, this paper presents:
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An initial analysis of COVID-19’s economic impact, which finds that Africa’s GDP growth in 2020 could be cut by three to eight percentage points. We find that the pandemic and the oil-price shock are likely to tip Africa into an economic contraction in 2020, in the absence of major fiscal stimulus.
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A framework for near-term action by governments, the private sector, and development institutions to mitigate this impact. These actions are drawn from a global scan of economic interventions already being implemented or considered, plus our recent discussions with public- and private-sector leaders across Africa.
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AfDB approves $2m emergency assistance for WHO-led measures to curb COVID-19 in Africa. Specifically, the WHO Africa region will use the funds to bolster the capacity of 41 African countries on infection prevention, testing and case management. WHO Africa will also boost surveillance systems, procure and distribute laboratory test kits and reagents, and support coordination mechanisms at national and regional levels. The grant will contribute toward a $50 million WHO Preparedness and Response Plan, which other partners including the United Nations system, are also supporting. The Bank Group is expected to unveil a financial assistance package that will enable governments and businesses to undertake flexible responses to lessen the economic and social impact of this pandemic. Last Thursday, the Bank raised an exceptional $3bn in a three-year social bond, the proceeds from which will go to help alleviate the economic and social effects of the pandemic. It is the largest dollar-denominated social bond launched in international capital markets to date.
Ethiopia Poverty Assessment: Harnessing continued growth for accelerated poverty reduction (World Bank)
The poverty headcount in Ethiopia is falling. The share of the population below the national poverty line decreased from 30% in 2011 to 24% in 2016. This decrease was achieved in spite of the fact that the 2015-16 survey was conducted during the severe El-Nino drought. The observed reduction in poverty is robust to the use of alternative deflators. The fall in the poverty headcount was driven mainly by Ethiopia’s strong economic growth over that period. This poverty assessment focuses on the evolution of poverty and other social indicators in Ethiopia between 2011 and 2016. It uses data from a variety of sources, mainly the Household Consumption and Expenditure Survey, the Welfare Monitoring Surveys, the Ethiopia Socioeconomic Survey and the Demographic and Health Surveys, to observe trends in monetary and non-monetary dimensions of living standards and to examine the drivers of these trends, with a special focus on government programs. [Download: Summary report]
Environmental integrity and doing business in Zimbabwe: Challenges and engagement of sustainable enterprises (ILO)
Zimbabwe has a wealth of natural resources and is rich in biodiversity. The national Government is trying to achieve private sector led economic growth and the challenge to pursue both economic development and sound environmental management at the same time appears clear. The objective of this paper is to explore the views of different groups of the business community, including workers, managers and owners of the formal as well as of the informal economy, on how environmental integrity is being pursued in Zimbabwe. Both quantitative and qualitative/interpretative methods have been applied. The results of a perception survey have been explained through qualitative interviews with Zimbabwean experts. The paper concludes suggesting actions that the private sector can adopt to improve the existing situation and further strengthen its engagement towards environmental integrity in the country.
