tralac’s Daily News selection
AfCFTA Year Zero Report (AfroChampions Initiative)
This assessment, which was completed before COVID-19 struck, showed that despite the euphoria, AfCFTA commitment and implementation readiness of African governments are surprisingly below 50%. COVID-19 now threatens to derail AfCFTA – which is the more reason the continent should press ahead and use AfCFTA as one of the weapons to beat COVID-19 and speed up post-COVID economic recovery. The rankings by AfroChampions sought to answer two questions: which countries are the most committed to the AfCFTA process. And which countries have the best implementation readiness in terms of trade infrastructure, customs efficiency and access to credit.
The most AfCFTA committed country is Rwanda which scores 83.93% on the commitment scale; and the least committed country is Eritrea with a score of 0.85%. The country with the best implementation readiness is South Africa, with a score of 68% on the implementation readiness scale. South Sudan has the lowest score for readiness. The overall average commitment level of the continent to AfCFTA is at 44.48%; and its overall implementation readiness level is at 49.15%.
Some of the most committed countries (such as Ghana, Mali, Togo, Uganda) are not necessarily the most prepared in terms of trade infrastructure, customs efficiency and access to credit for industry. Conversely, some of the least committed countries (such as Botswana, Namibia, Tanzania) performed very strongly in terms of implementation readiness. A note on the indicators used:
Commitment to the Free Trade Agreement/Treaty (Signing and ratification of AfCFTA and a publicly accessible national AfCFTA implementation strategy).
Commitment to Free Movement (Signing and ratification of Protocol on Free Movement of people and country’s Visa Openness).
Trade Facilitation Readiness (quality of trade-Infrastructure and efficiency of Customs).
Access to Credit (Ease of Getting Credit and Cost of Credit).
Table 1 shows the breakdown and weights for all indicators and sub-indicators. While countries could be ranked on a broader set of indicators, the four main indicators above are considered the minimum criteria to show a country’s AfCFTA commitment and readiness in Year Zero of AfCFTA’s operational phase. See Annex 5 for the method used to calculate the ranking. [Astean Chongo: Intra-African trade during the Covid-19 pandemic]
Ms Theo Clarke MP: Now, more than ever, we must keep our promise to help Africa trade out of poverty (PoliticsHome)
Next, we must focus on Africa’s special situation. First, UK Ministers should intensify meetings with experts for advice on how we can keep trade with Africa flowing. Second, the UK and others should target funding urgently for “safe-trade” measures on the continent – such as testing, protective equipment and hand-washing facilities for truckers and officials at key ports and border crossings – being rolled-out by leading development organisations like TradeMark East Africa. Third, we should work with African leaders to chart out a new economic partnership covering trade, green investment and technology, a model the rest of the world can follow to build-back-better. There is much the Government can do to help British companies to export around the world, such as the work being done by the Trade Minister Greg Hands to reduce tariffs. This would make a huge difference to local businesses in the West Midlands such as the ceramic industry in Staffordshire. [Note: The author is Conservative MP for Stafford and co-chair of the UK’s APPG TOP]
Angola produced 8,000 tons of coffee in 2017 – a fraction of the more than 230,000 tons it produced annually in the early 1970s when it jockeyed with Côte d’Ivoire and Uganda for the title of Africa’s top exporter. The country aims to reclaim its former glory as part of efforts to diversify an economy that has become highly dependent on oil exports. “Angola’s growth in GDP was remarkable,” said Paul Akiwumi, director of UNCTAD’s division for Africa and least developed countries, “although it was too dependent on one commodity and has proven to be unsustainable in the long term.”
To help, UNCTAD is working with farmers, the government and other players in the country’s coffee sector to assess how producers and exporters could better position themselves within the global value chain. Last November, UNCTAD held, as part of the national green export review process, a workshop in Uíge province to train more than 200 farmers and local public officials to map value chains, assess the opportunities and challenges for green sectors like coffee and draft an action plan. Challenges identified included a lack of access to finance and information, poor roads and unproductive plants and farming methods – most trees are over 40 years old and yields are less than half of what they used to be. “What’s required,” Mr. Akiwumi said, “is a comprehensive and coherent strategy to develop productive capacities in a holistic manner.”
The EU-UNCTAD joint programme for Angola: Train for Trade II is mobilizing all its components to work on the challenges identified.
The World Bank has posted three new papers on trade in services:
Bernard Hoekman: Facilitating trade in services. In 2016, the Government of India proposed negotiations on an agreement to facilitate trade in services to complement the 2013 WTO Trade Facilitation Agreement in goods. The proposal did not find much support, but plurilateral talks launched in 2017 on various policy areas encompass areas that are very relevant from a services trade facilitation perspective. This paper argues (pdf) that participating in the current plurilateral talks can do much to achieve services trade facilitation objectives by identifying good regulatory practices. Although elements relevant to services trade facilitation are on the table in the WTO, there are important gaps. Identifying priorities for complementary international cooperation to facilitate trade in services on a plurilateral basis requires initiatives that bring together governments, services industry associations, and sectoral regulators.
Investment facilitation and Mode 3 trade in services: Are current discussions addressing the key issues? Based on a novel approach to measuring the cost of trade in services for Modes 1 (cross-border supply), 2 (consumption abroad), and 4 (temporary movement of service suppliers), developed by the World Trade Organization Secretariat, this paper reviews available evidence on factors affecting trade costs for services supplied via a commercial presence in a host country market, so-called Mode 3 trade. It does so with a view to answering the question of whether the current “facilitation” agendas on services and investment proceeding at the WTO focus on the most important factors affecting Mode 3–related trade costs, by far the most important of all modes of supplying services internationally. [The authors: Roerto Echandi, Pierre Sauve]
Liberalizing versus facilitating Mode 4 trade in services. The growing importance of services trade for countries across the world is well-documented in the services and trade literatures. At the same time, regulatory and administrative barriers to the movement of service suppliers to deliver services internationally have resulted in very low shares of “Mode 4” trade in total services trade. Against this background, this paper conceptualizes an agenda for trade facilitation in services as it would apply to the movement of natural persons. It also provides descriptive statistical evidence from the Organisation for Economic Co-operation and Development’s Services Trade Restrictiveness Index database. The paper differentiates between regulatory measures that may improve transparency or facilitate access for service providers and those measures that impede Mode 4 trade as well as the administrative, financial, and economic costs of compliance with such measures. [The authors: Anirudh Shingal]
Selected trade data releases, perspectives on trade policy issues:
US international trade in goods and services, March 2020. The US Census Bureau and the US Bureau of Economic Analysis announced today that the goods and services deficit was $44.4bn in March, up $4.6bn from $39.8bn in February, revised.
Canadian international merchandise trade, March 2020. Canada’s merchandise exports fell 4.7% to $46.3bn in March, the lowest level since January 2018. Total imports declined 3.5% to $47.7bn, a level not observed since October 2017. Both exports and imports were down almost 10% on a year-over-year basis. Canada’s trade deficit widened from $894m in February to $1.4bn in March. In real (or volumes) terms, March exports decreased 4.8% and imports were down 5.8%.
Turkey’s March 2020 trade data reveals alarming economic landscape. Turkey’s foreign trade deficit has risen by 180% within the past year following the prevention measures against COVID-19 that reduced export volume significantly, with a 17.8% decrease in exports. The ratio of exports to imports left a deficit of 5.4 billion Turkish liras ($766.13m), with imported goods totaling 18.8 billion liras while exports only reached 13.4 billion liras. Imports grew by just 3.1% compared to the previous year, and industrial production, especially agricultural products and quarrying, made up a majority of exports.
Philippine export and import statistics March 2020: preliminary highlights. Total external trade in goods in March 2020 amounted to $11.44bn, a decline of 25.7% from the $15.40bn external trade in the same month of the previous year. Of the total external trade, $4.53bn (39.6%) were exported goods and $6.91bn (60.4%) were imported goods. The country’s balance of trade in goods in March 2020 posted a $2.38bn deficit, which was lower by 28.6% than the %3.33bn deficit in March 2019. Export sales in March 2020 amounted to $4.53bn, a decrease of 24.9% from the $6.03bn total export generated in March 2019. Total imported goods in March 2020 amounted to $6.91bn, indicating a reduction of 26.2% from the value of imported goods during the same month of the previous year amounting to $9.37bn.
China’s April trade data will be posted tomorrow: exports and imports are expected to record double-digit declines.
APEC Trade Ministerial: statement on COVID-19. We encourage economies to pursue facilitative measures that will expedite our economic rebound. To this end, we have directed our Senior Officials to develop a coordinated approach to collecting and sharing information on policies and measures, including stimulus packages for the immediate responses to the economic crisis and long-term recovery packages, which could help respond to the economic challenges brought on by the pandemic. Where possible, these efforts should take into account recommendations from the APEC Business Advisory Council. This sharing of information seeks to ensure that the strength and learning of one economy may translate into best practices for the region as a whole. [ASEAN intervenes to fight death spiral of food export restrictions]
Simon Lester: Senator Hawley’s many misunderstandings of the WTO. Senator Josh Hawley has a NY Times op‐ed today entitled “The WTO should be abolished.” Debates about the scope and nature of the WTO and the trading system in general are important, but this op‐ed gets so many facts wrong that it cannot serve as the basis for a useful discussion. In this blog post, I’ll go through a few of them. If the early response on Twitter is any indication, plenty of other pro‐trade folks will be doing a similar exercise, so keep an eye out for other commentary on this. Hawley starts off with this:
The US Chamber of Commerce’s US-UK Business Council welcomes the formal launch of negotiations towards a US-UK trade agreement. In light of the public health crisis and economic downturn arising from COVID-19, these negotiations offer a vital opportunity to deepen one of our most successful commercial partnerships and in so doing, help get our economies on the road to recovery. The U.S.-UK Business Council released updated priorities for these talks, underlining dozens of areas where a robust agreement will benefit both sides. There are also several issues where the United States and the UK can together demonstrate leadership in advancing strong principles globally.
Joint statement of USTR Robert Lighthizer and UK Secretary of State for International Trade Elizabeth Truss
Global Trade Review: UK SMEs hopeful for export opportunities as US trade talks begin