tralac’s Daily News selection
WTO Director-General Roberto Azevedo plans to depart: The WTO will make an announcement Thursday about its Director-General Roberto Azevedo, a spokesman said, following reports he is planning to step down before his term expires next year. The comment came after Bloomberg reported that Azevedo had told governments he planned to step down before the end of his mandate, with the news agency suggesting he would leave on 1 September.
Covid-19 and export restrictions: The limits of international trade law and lessons for the AfCFTA (ECA)
The Economic Commission for Africa today released a policy brief which provides a preliminary analysis, from an African perspective, of the limits of international trade law in times of crisis such as now and offers powerful policy recommendations for African policy makers to consider. Following a brief analysis of the law of international trade as it applies to the movement of Covid-19-essential goods, the study concludes that, in times of real emergency such as now, the role of law in assuring access to essential medical supplies on the international market is highly diminished. The impact has been severe especially on those countries that lack sufficient local manufacturing capacity. Four major lessons emerge from the analysis:
Industrialisation: first comes the industrialisation imperative. If the economic case for industrialisation and related diversification in Africa has been compelling for too long, Covid-19 now makes it a matter of survival for the Continent and its citizens.
Research and Development: then comes the need for an infrastructure of knowledge made up of skilled manpower to maintain a degree of research and development capacity. Africa can succeed in its industrialisation and diversification drive only if it is underpinned by robust R&D strategy and knowledge base.
Effective multilateralism: not only does industrialisation take time, even an industrialised Africa with a diversified economic base will need to put trade with the rest of the world at the centre of its strategy for supply security in all sectors, enabling African manufacturers to be part of well-functioning regional and global value chains. As such, Africa needs to continue to advocate for effective multilateralism in trade that ensures the rules of the game are tightened and applied by its members in good faith, in the collective interest, and with a sense of solidarity.
Revisiting the AfCFTA Agreement: finally, learning from the deficiencies of the global trading system exposed by Covid-19, and considering that Covid-19 struck while Africa was preparing to launch the operational phase of the AfCFTA, Africa should use this window of opportunity to revisit the provisions of the AfCFTA Agreement and craft additional rules to guarantee the freest possible flow of trade in essential products at times of difficulty such as this. [COVID-19: Revamping Africa’s telecoms infrastructure crucial for digital health services]
The coronavirus pandemic cut global trade values by 3% in the first quarter of this year, according to the latest UNCTAD data published in a joint report by 36 international organizations. The downturn is expected to accelerate in the second quarter, with global trade projected to record a quarter-on-quarter decline of 27%, according to the report by the Committee for the Coordination of Statistical Activities. The report is a product of cooperation between the international statistics community and national statistical offices and systems around the world, coordinated by UNCTAD. “Everywhere governments are pressed to make post-COVID-19 recovery decisions with long-lasting consequences,” UNCTAD Secretary-General Mukhisa Kituyi said. “Those decisions should be informed by the best available information and data. I’m proud that UNCTAD has played a central role in bringing so many international organizations together to compile valuable facts and figures to support the response to the pandemic.”
According to the report, the drop in global trade is accompanied by marked decreases in commodity prices, which have fallen precipitously since December last year. Next, UNCTAD will release a new monthly trade nowcast, which will provide quarterly nowcasts for merchandise trade. It is also revamping its existing Trade-in-Services bulletin that monitors the latest trends in global trade in services. Future editions will include a nowcast for the latest quarter.
IMF podcast with Papa N’Diaye (Head of Research in the IMF’s African Department): N’Diaye says by the end of 2020, the region will face income losses of about $200bn relative to what they were expecting 6 months ago.
South Africa and Covid-19: selected postings
Statement by the Department of Trade, Industry and Competition: The impact of Covid-19 on South Africa’s economy. On 8 May 2020 Minister Patel addressed a meeting of about 100 CEOs convened by BLSA, where he stated that the pandemic was likely to have a devastating effect on the economy, though the extent of the damage was not yet clear; that many firms in South Africa were in difficulty as a result of the current circumstances and millions of workers were without an income. The Department would like to reiterate that Minister Patel has consistently put forward the view on the devastating impact of COVID-19 on the SA economy since the declaration of the national disaster. He pointed out already on 24 March 2020 at a media briefing that the pandemic will put a strain on the economy, including small business owners and ordinary citizens. The Department would also like to put it on record that Minister Patel recognises the very significant impact of the pandemic and the lockdown on the economy. It is imperative that there is a more measured and responsible public commentary during this trying times in our country in particularly and the globe in general, given the enormous consequence on human lives if we get it wrong. [Download: pdf DTIC submission on its Covid-19 response] (879 KB)
Stats SA’s COVID-19 business impact survey: Nine in ten businesses report reduced turnover. The second survey showed that nine in ten (90%) responding businesses’ turnover was lower than their normal expected range, up from 85% in the first survey. 30% of respondents indicated they can survive less than a month without any turnover, while over half (55%) indicated that they can survive between 1 and 3 months. Only 7% can survive for a period longer than 3 months.
South Africa’s COVID-19 strategy needs updating: here’s why and how
Daily Maverick: Unpacking the rationality of South Africa’s lockdown regulations
South Africa: NAAMSA’s Automative Export Manual 2020 (pdf)
The 2020 publication, just as the previous annual publications since 2007, provides a comprehensive guide on the export and import performance of the South African automotive industry under the current Automotive Production Development Programme (APDP). The aim of the manual is to identify and report on the major automotive export destinations, the major countries of origin, the main automotive export trade blocs, the most important automotive products being exported and imported, the top growth markets and products, as well as the impact of the trade arrangements enjoyed by South Africa on automotive trade patterns. Extract:
The automotive sector has been one of the most visible sectors receiving foreign investments, with the seven OEMs investing R7,3bn in 2019, while also making investment commitments of R40bn over the next five years. Concurrently, the component sector invested R3,5bn in 2019, whilst expecting to invest a further R20bn in domestically sourced components over the next five years. Investment at this scale is significant and will promote local value addition, while importantly, technology is also embodied in the investment.
The broader automotive industry’s contribution to the GDP in 2019 stood at 6,4% (4,0% manufacturing and 2,4% retail). As the largest manufacturing sector in the country’s economy, a substantial 27,6% of value addition within the domestic manufacturing output was derived from vehicle and automotive component manufacturing activity, positioning the industry and its broader value chain as a key player within South Africa’s industrialisation landscape. Manufacturing-driven growth has the highest impact on job creation, and with its linkages throughout the economy, the multiplier effects of manufacturing are higher than most other sectors. In 2019, the domestic automotive industry once again excelled on the export side, despite facing domestic and foreign economic headwinds. The export value of vehicles and automotive components comprised a record R201,7bn, equating to 15,5% of South Africa’s total exports. A record 387 125 vehicles worth a record R148,0bn, along with a record R53,7bn in automotive components, were exported to 151 countries in 2019. [Data, graphics pointer in the report: Exports to regions section - from p43 onwards]
Relief as Kenya, Zambia ease border restrictions (The Citizen)
There was some relief yesterday regarding the recent border closures yesterday, with Kenya allowing Tanzanian truck drivers to cross the Namanga entry point after producing Covid-19 test results. Londigo District Commissioner Frank Mwaisumbe said yesterday some of the 300 trucks that were denied entry into Kenya until their drivers had undergone Covid-19 tests, had been allowed to proceed. “We have reached an agreement. One can now test in Tanzania and then produce the results certificate at the border to be allowed by the Kenyan authorities to proceed with the journey,” he said. However, those who tested positive were denied entry into Kenya. So far, Kenya has turned back 25 truck drivers who tested positive for Covid-19 in the last 24 hours at the Namanga border point, the Health ministry said in Nairobi yesterday (Wednesday). The foreigners included 23 Tanzanians, a Ugandan and a Rwandan, Health Chief Administrative Secretary Rashid Aman said.
At the Tunduma-Nakonde border between Tanzania and Zambia, a decision by Zambia to close the entry point has seen both countries feeling the pinch, prompting the latter to consider reviewing its own decision. “We were asked to clear all oil tankers and avert creating a petroleum crisis in Zambia but as clearing agents, we refused. We want the Government of Zambia to allow all vehicles at the border to be cleared,” he said. This, he said, was because 85% of vehicles that were stranded at the border were destined for the DRC. “So we thought the decision to allow only oil tankers was not in good faith rather, it was simply meant to help one country in its petroleum requirements,” he said. It’s estimated that by yesterday evening, 1,500 trucks would’ve been stranded at the Tunduma-Nakonde border.”We have asked Tanzania Revenue Authority to ensure that they do not allow the processing of oil tankers only at the expense of others,” he said. The temporal border closure is also delaying Zambia’s main copper exports via Dar es Salaam, reports say.
Tanzania Daily News: The government has strongly refuted claims that Zambia has closed the Nakonde border, a frontier between Tanzania and the Zambia
Coronavirus creeps along East Africa’s trucking corridors: AFP report
Kenya: SGR cargo trains down 50% as pandemic chokes trade (Business Daily)
Pressure on the international trade and more restrictions around port operations have seen the number of cargo trains on the Standard Gauge Railway fall by half in the first four months of the year as the coronavirus continues to bite off a chunk of the economy. Data from Nairobi’s Inland Container Deport (ICD) show that the number of trains transporting cargo from Mombasa to Nairobi dropped to an average of six in April, compared to the average of 10 recorded in the final quarter of 2019. The drop has also been registered in the volume of cargo which also recorded an almost 50% drop on a monthly average between January and March to 267,531 tonnes in the compared to last year’s 515,682 tonnes every month. The ICDN data now contradicts claims by the SGR operator that it was doing an average of 14 freight trains on average in a tweet that depicted even more cargo volumes in April.
Minerals for climate action: The mineral intensity of the clean energy transition (World Bank)
A new World Bank Group report finds that the production of minerals, such as graphite, lithium and cobalt, could increase by nearly 500% by 2050, to meet the growing demand for clean energy technologies. It estimates that over 3 billion tons of minerals and metals will be needed to deploy wind, solar and geothermal power, as well as energy storage, required for achieving a below 2°C future. The report, Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition, also finds that even though clean energy technologies will require more minerals, the carbon footprint of their production—from extraction to end use—will account for only 6% of the greenhouse gas emissions generated by fossil fuel technologies.
The coronavirus pandemic risks cancelling out recent progress in transitioning to clean energy, with unprecedented falls in demand, price volatility and pressure to quickly mitigate socioeconomic costs placing the near-term trajectory of the transition in doubt. Policies, roadmaps and governance frameworks for energy transition at national, regional, and global levels need to be more robust and resilient against external shocks, according to the latest edition of World Economic Forum’s Fostering Effective Energy Transition 2020 (pdf) report published today. The report draws on insights from Energy Transition Index (ETI) 2020, which benchmarks 115 economies on the current performance of their energy systems – across economic development and growth, environmental sustainability, and energy security and access indicators - and their readiness for transition to secure, sustainable, affordable, and inclusive energy systems.
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