tralac’s Daily News selection
Diarise: South Africa’s March merchandise trade statistics will be released on Thursday
The United States should work to achieve a single, comprehensive agreement with Kenya that removes barriers to trade and investment, instead of pursuing a phased approach, the US Chamber of Commerce said in a document viewed by Reuters. In comments submitted to the US Trade Representative, the Chamber’s US-Africa Business Center said a high-standard agreement that eliminated all tariffs would boost the long-term economic outlook for both countries, and further position Kenya as a model for economic reform across Africa. It said the bilateral negotiations would enhance work by African countries to forge a broader African Continental Free Trade Agreement. The Chamber said the trade talks should focus on achieving a high-standard bilateral agreement that sets a precedent for future US trade deals with other sub-Saharan African nations. [ pdf Statement of the US Chamber of Commerce on Negotiating Objectives for a US-Kenya Trade Agreement (564 KB) ]
It should eliminate all tariffs and address non-tariff barriers for industrial and farm goods, including US tariffs on imports of steel and aluminum from Kenya, while expanding market access for remanufactured goods exports.
It also called for commitments to ensure US access to Kenya’s services market, and address IP rights and enforcement as they relate to patents, copyrights, trademarks, and trade secrets.
In addition, the deal should eliminate forced technology transfers, include an investor-state dispute settlement mechanism, and formalize a joint commitment to follow good regulatory practices.
To facilitate digital trade, it should spell out a mutual right to transfer and store data across borders for all sectors, prohibit data localization requirements, and ban customs duties and taxes on electronic transmissions.
USSEC is in the process of developing and implementing a program to build support for the easing of Kenya’s GM import ban. In our view, local industry stakeholders (feed manufacturers, importers, crushers, poultry and livestock farmers, the food industry) have a major role to play in generating the practical and political support to make this happen. We believe this program can be reinforced through the inclusion of provisions on agricultural biotechnology in a future US-Kenya Trade Agreement.
USSEC and ASA believe the inclusion of similar language on the authorization procedures for GM crops that was included in the Agricultural Biotechnology section (Articles 3.12-3.16 in the Agriculture section) of the United States-Mexico-Canada Agreement (USMCA) could be a very positive step in any negotiation with Kenya. In our view the use of the language in these provisions would be appropriate since Kenya already has a biosafety framework in place, including a regulatory procedure for GM import approvals.
To ensure that the approval procedures are conducted in a timely fashion, USSEC and ASA suggest that the trade agreement also includes a provision on the mutual recognition of scientific risk assessments carried out in other countries. This is an objective of the African Union which wishes to see coordination and strengthening of “ongoing biosafety initiatives in order to harmonize regulatory practices and promote cooperation and mutual recognition of biosafety regulatory decisions, among other goals”.
Today is the closing date for submissions to the USTR. They can be accessed here.
African countries may seek to exchange their sovereign debt for new concessional paper to avoid using funds needed to battle the fast-moving coronavirus to pay private creditors, according to a United Nations body. The African Union, the UN Economic Commission for Africa and a group of finance ministers from the continent are designing a special-purpose vehicle for the swap. The mechanism would be underwritten by a triple-A-rated multilateral lender or central bank and used to convert commercial debt into longer-maturity paper with a five-year grace period and lower coupons, according to Uneca. “Bondholders should in principle be eager to participate because they will give up an obligation that is illiquid for triple-A paper that you can put in any basket,” Uneca’s executive secretary, Vera Songwe, said in an interview. “We don’t want Africa to go into default, let’s be clear.”
Songwe said she is working on the proposal to pause about $16.25bn in commercial debt payments this year with the backing of finance ministers including Ghana’s Ken Ofori-Atta. AU special envoy, Tidjane Thiam, former CEO of Credit Suisse Group AG, said the group is in talks with bondholders, ratings agencies and some countries to make a commercial debt standstill viable. “It’s better to come into this scheme in an orderly manner than six to nine months down the road having to go to Washington to negotiate this alone under duress.” [Bloomberg: China in Africa is more than a land grab]
E-commerce sales hit $25.6 trillion globally in 2018, up 8% from 2017, according to the latest available estimates released today by the UN’s trade and development body, UNCTAD, at the start of its UNCTAD eWeek event. According to the UNCTAD analysis, the estimated 2018 e-commerce sales value, which includes business-to-business (B2B) and business-to-consumer (B2C) sales, was equivalent to 30% of global gross domestic product (GDP) that year. The 2017 value of global e-commerce was estimated at $23.8 trillion, based on a revised methodology. The value of global B2B e-commerce in 2018 was $21 trillion, representing 83% of all e-commerce, comprising both sales on online market platforms and electronic data interchange transactions. B2C e-commerce was valued at $4.4 trillion, up by 16% from 2017. Cross-border B2C e-commerce sales amounted to $404 billion in 2018, representing an increase of 7% over 2017. [ pdf UNCTAD Estimates of Global E-Commerce 2018 (544 KB) ]
High Level Live Session video: Coping with the economic fallout of the COVID-19 crisis in Africa. What role for trade and digital policies?
Crisis (IPC Phase 3) outcomes persist (pdf) in much of Zimbabwe, southern Madagascar, and parts of Mozambique where the harvest has yet to start and in conflict-affected areas of Mozambique and DRC. The start of the green harvest in some areas is helping to improve some household’s food consumption. Humanitarian assistance is mitigating food insecurity outcomes in parts of Zimbabwe, Madagascar, Malawi, and Mozambique where Stressed! (IPC Phase 2!) continues. The main harvest is expected in late-April/May across much of the region, leading to large-scale improvements in food security to Stressed (IPC Phase 2) and Minimal (IPC Phase 1), as most households, will consume maize grain from own production. However, Crisis (IPC Phase 3) outcomes are expected to persist in parts of Zimbabwe, DRC, and Mozambique, where crops failed due to poor rainfall or conflict disrupted the agriculture season.
Several urban areas in the region were under lockdown in March, which were implemented to reduce the spread of COVID-19, limiting the livelihoods for the urban poor. Most urban populations in countries like Malawi, Zimbabwe, and Madagascar earn their incomes through informal employment like petty trade with little savings. With restrictions limiting people movement, these petty trade activities have been adversely affected leaving a large number of households having difficulty accessing market foods. The situation is worse in Zimbabwe where the poor macroeconomic conditions are now compounded by the impacts of COVID-19. Overall, food assistance needs are expected to be higher than previously anticipated across the region due to the direct and indirect impacts of COVID-19.
Speaking during the first Extra-Ordinary Meeting of the Trade and Customs Committee of member States today, Secretary General of COMESA Ms. Chileshe Kapwepwe noted the gains achieved in strengthening market integration, investment and structural transformation are under threat, if Member States do not stand together and collectively respond to the crisis. The meeting convened by the COMESA Secretariat through video-conference and attended by over 90 trade and customs experts from the 21 Member States. Its sole agenda was to discuss proposed guidelines for the movement of goods and services across the COMESA region during the COVID-19 pandemic.
The SG said the draft Guidelines have been developed to help consolidate and coordinate efforts to manage the situation and rally Member States to conform to uniform standards to minimize disruptions in the supply chain for essential goods. Ms Kapwepwe noted that the situation in the local economies is made worse by the fact that 80% of workers are employed in the informal sector and with all segments of value chains from plants, logistics of distribution, to the role of shops and restaurants, having been disrupted. The draft Guidelines will be presented to the meeting of the COMESA Intergovernmental Committee before they are adopted by the Council of Ministers in the next two weeks. If adopted, they will open an opportunity for States to work together and institute measures to safeguard regional integration benefits while cushioning traders, businesses and the vulnerable groups. [COMESA: Plans afoot to publicize Common Investment Area agreement]
EAC Partner States have been urged to treat truck drivers and crew who test positive for COVID-19 in the host Partner State rather than deporting them to the country of origin as this will result in further spread of the disease. Through a 17-page document titled ‘EAC Administrative Guidelines to Facilitate Movement of Goods and Services During the COVID-19 Pandemic’ sent to Partner States, the Secretariat calls on Partner States to enforce mandatory screening or testing of truck drivers and crew at border posts and undertake mobile monitoring during transit at selected inland points. Partner States have been further advised to quarantine those with symptoms for 14 days under the supervision of the respective Ministry of Health.
To facilitate cross-border trade during the ongoing crisis occasioned by the novel coronavirus, Partner States have been called upon to, among other things: adopt an multi-sectoral and coordinated approach; provide access at all designated points for entry and exit of goods; treat cross-border movement of trucks and cargo as essential services. Among the items that are supposed to be prioritized as essential goods to mitigate the COVID-19 pandemic are food, fuel, medicaments, agricultural products and inputs, security supplies, emergency and humanitarian relief goods.
Early evidence shows that international trade is collapsing, threatening access to goods and critical supplies. In response, a new UNCTAD policy brief outlines a ten-point action plan to help industries involved in the movement of goods keep free-flowing trade afloat during the COVID-19 crisis and its aftermath. The plan calls for policies that: Ensure uninterrupted shipping; Keep ports open; Protect international trade of critical goods and speed up customs clearance and trade facilitation; Facilitate cross-border transport; Ensure the right of transit; Safeguard transparency and up-to-date information; Promote paperless systems; Address early-on legal implications for commercial parties; Protect shippers and transport service providers alike; Prioritize technical assistance. [ pdf COVID-19: A 10-point action plan to strengthen international trade and transport facilitation in times of pandemic (1.15 MB) ]
The world’s top 10 exporters of medical products ship 27-75% of these goods to their RTA partners according to the report. It also finds that WTO members have eliminated tariffs on over 84% of medical products for 2020 under their various RTAs. Moreover, medical products face an average tariff of 1.6% within RTAs as compared to the 3.8% average tariff for medical products traded outside RTAs, suggesting room for further trade liberalization at the WTO. The report also examines other provisions (pdf) in RTAs that may restrict or facilitate trade and also highlights the need for forging mutual recognition agreements that recognize standard conformity assessments by authorities in other countries. Key points include:
The share of exports by the world’s top 10 exporters of medical products to their regional trade agreement partners ranges from between 27% for China to almost 75% for Italy. The majority of the top 10 traders in such products are EU member states.
In their RTAs, WTO members had liberalized over 84% of these products by 2020. The share is higher for developed members (99.5%) than for developing (84.3%) and least developed members (68.4%).