tralac’s Daily News selection
A political heavy-hitter from Nigeria is shaking up the race to lead the World Trade Organization, but her immediate challenge is whether the rest of Africa will rally behind her candidacy this week. Nigeria on Friday nominated Ngozi Okonjo-Iweala, a former finance minister and corruption-buster who now sits on the board of Twitter, to succeed Brazil’s Roberto Azevêdo as WTO director general in Geneva, ideally by September.
To her supporters in Geneva, she is just the candidate that the beleaguered institution needs for a reputational boost, steering it into the much-vaunted “African century” and away from the stark polarization of Washington-Beijing hostilities that have brought the WTO to a practical standstill in the past months. Okonjo-Iweala’s critics argue her expertise lies more in finance than trade, with one diplomat saying she was “not a trade name” and an African official saying, “International trade law isn’t really on her CV. Did they want to play the gender card with a high-profile successful woman close to the private sector?” [Reuters Factbox: Who’s bidding to be next World Trade Organization chief?]
This report [compiled as an input to the inaugural AU-RECs Coordination Meeting of mid-2019 and just released by SADC] highlights the Status of Regional Integration in SADC and seeks to inform SADC Member States and the wider range of relevant stakeholders on the progress made in achieving the regional integration agenda. It covers four key pillars:
Industrial Development and Market Integration
Infrastructure Development in Support of Regional Integration
Special Programmes of Regional Dimension
Peace and Security Cooperation.
Extract: More than 33 protocols have been signed by Member States to drive forward the integration agenda of SADC. These protocols range from trade and investment, peace and security, to transboundary natural resources and the empowerment of women and young people (see Table 1.1: Status of Protocols and Agreements in SADC). However, not all the protocols and agreements have been ratified to advance the regional laws from being stated intentions to actual application. Some of the protocols and agreements yet to be ratified by SADC Member States are:
Protocol on Science, Technology and Innovation signed in 2008. It aims to promote development and harmonization of science, technology, and innovation policies, advocating investment in research and development and promoting public awareness of science and technology;
Protocol on the Facilitation of Movement of Persons signed in 2005. It seeks to fulfil the objectives of the SADC Treaty, which requires Member States to develop policies aimed at the progressive elimination of obstacles to the free movement of capital and labour, goods and services and of the people of the Region generally among Member States;
Protocol of Trade in Services signed in 2012. The protocol, among other things, provides for the establishment of “an integrated regional market for services”, to unlock the potential of the Region’s services market so that businesses and consumers may take full advantage of the opportunities presented by a shared community in SADC;
Protocol on Environmental Management for Sustainable Development signed in 2014. It aims to harmonize all existing regional instruments that deal with environmental issues;
Protocol on Employment and Labour signed in 2014. The protocol provides and recognises the importance of collective bargaining; social dialogue and consultations among employers, trade unions and government, equal treatment and social protection for workers and their families in the Region;
New Protocol on the Tribunal in the Southern African Development Community signed in 2014. It specifies that the new Tribunal’s jurisdiction will be confined to advisory interpretation of the SADC Treaty and any other protocols adopted by Member States; and the
Agreement on Assistance in Tax Matters signed in 2012. It requires that Member States draw up effective guidelines for the effective exchange of information and the implementation of mutual agreement procedures.
Tanzania Economic Update: Addressing the impact of COVID-19 (World Bank)
Notwithstanding Tanzania’s strong growth performance in 2019, a new World Bank report says its economy will also suffer the effects of the COVID-19 pandemic and global economic crisis. The World Bank’s 14th Tanzania Economic Update (TEU) forecasts economic growth to slow sharply in 2020, to 2.5% from the 6.9% growth the government reported in 2019, while recognizing significant uncertainty as the pandemic continues to unfold. The report recognizes mitigating steps government has already taken, and this forecast assumes the authorities will take additional health and economic policy measures to mitigate negative impacts. However, there are downside risks for even slower growth if additional policy response is delayed or not well-targeted, or the external environment does not markedly improve this year. The TEU analyzes the key transmission channels of the global crisis to the Tanzanian economy, including lower export demand, supply chain disruptions for domestic producers and suppressed private consumption. International travel bans and caution against contracting the virus have severely hurt the tourism sector, which had been one of the fastest-growing sectors in the economy. Key transmission channels under our baseline scenario include:
Export demand will decrease as growth slows for Tanzania’s main trade partners and travel restrictions halt tourist arrivals. Firms exporting agricultural commodities and final manufactured goods will continue to be affected. For Tanzanian exports like textiles that are part of global value chains, this will in turn reduce demand for imported raw materials and intermediate goods. The volume of exports will also shrink as disruption in value chains pushes up the costs of inputs and transportation, delaying import delivery times and thus the quantity of the imports that exporting industries use as raw materials. Preliminary reports from the port of Dar es Salaam show that maritime traffic has slowed down. Second-round effects will also be generated by Tanzania’s regional trade partners that also export to Europe and Asia. As these countries experience lower demand from China, India and the EU, they will seek fewer goods and services from Tanzania. Our baseline assumption is for exports to decline by 10.0%, and imports by 1.5%, driven mainly by lower volumes.
Lower transit trade is also expected to decrease Tanzanian exports of transport services to its neighbors. Dar es Salaam port is the second largest port in East Africa and has become a gateway for Tanzania’s neighbor countries. Preliminary exports-imports data at the transaction level for 2018 show that between 25 and 30% of the total imports that arrive through Dar es Salaam are later sent using land transport to Uganda, Rwanda, Burundi (through the Northern and Central corridors) and Zambia and Malawi (through the Southern corridor). Disruptions and closures at the borders could reduce the traffic and thus the exports of freight transport (90% of registered trucks carrying cargo from Dar es Salaam port are Tanzanian), which are estimated to represent around 75% of total exports transport services ($1.3bn in 2019). The regional transport corridors are also key for Tanzania’s trade with its neighbors, given that its exports to countries in East Africa have become more prominent: Tanzanian exports to the region in 2018 represented 16.7% of its total exports (up from 8.5% in 2001), with Kenya (6.6%), Malawi (2.2%), Burundi (2.2%), and Zambia (0.8%) as the main trade partners.
There is widespread concern about the potential impact of the COVID-19 pandemic on Africa’s agricultural and food systems. This should certainly be a priority for leaders across the public, private, and development sectors: some 650–670 million people in Africa, roughly half of the population, already face food insecurity. Of those, more than 250 million people are considered to be severely food insecure. Agriculture is also one of Africa’s most important economic sectors, making up 23% of the continent’s GDP. In sub-Saharan Africa, it provides work for nearly 60% of the economically active population. Africa’s exports of food and agricultural products are worth between $35bn and $40bn a year, and some $8bn a year flows through intra-regional trade in these products (Exhibit 1). In addition, Africa’s food and agricultural imports amount to between $45bn and $50bn a year—along with $6bn a year in imports of agricultural inputs. Extract:
Around 80% of agriculture exports from Africa are to four regions: Western Europe (around 45%), South and East Asia (20%), the Middle East (10%), and North America (5%). Based on 2015–18 averages, those exports are valued at some $35bn to $40bn a year (Exhibit 3). This could result in a severe economic blow for countries such as Côte d’Ivoire, Ethiopia, Ghana, Kenya, Tanzania, and Uganda - all of which rely on these exports as their primary or secondary source of export earnings.
Supply disruptions could put between $1bn and $5bn of export value at risk for 2020 and affect the livelihoods of 10 million farmers through job loss or price reductions—and up to 40 million people could be affected if dependents are factored in (see sidebar, “Export crops at risk from supply and demand disruptions”).
Tunisia Public Expenditure Review: Modernizing the state for better and fairer public spending (World Bank)
This PER employs a rich set of detailed spending data at the level of the central government and state-owned enterprises to analyze how public expenditures in Tunisia can be allocated and spent in a more effective and equitable manner. It is organized in three blocks. The first block - composed of chapters one to four - analyzes the macro-fiscal profile and the two largest spending items, namely wages, energy, and food subsidies, as well as the single largest liability, namely pensions, and the social protection system which is critical for protecting vulnerable households from shocks and from the potential negative effects of certain reforms. The second block - composed of chapters five and six - covers the education and health sectors, the two most important social services for human capital development, which account for the largest share of social spending. The third block - composed of chapters seven to nine -analyzes the issues of public investment efficiency and SOE performance in the electricity, water, roads, and transport sectors.
International Trade Committee of the House of Commons: address by Deputy-Director General Alan Wolff (WTO)
Given the strains on the trading system caused by the pandemic, both with respect to health and national economies everywhere, international cooperative action is necessary. One way to proceed would be to build on the initiatives that have already been offered and to maximize the scope of consensus with respect to subjects to be covered. To frame today’s discussion for essential collective actions, the following four questions deserve to be answered:
First: in the face of the pandemic, is the current level of policy space — the scope for unconstrained trade-restrictive national actions — appropriate, or should it be modified?
Second: Is there anything trade ministers can do acting collectively to aid in the much-needed economic recovery?
Third: Should the current crisis give rise to broader trade initiatives, under the heading of WTO reform?
Fourth: Are there near-term organizational steps to be taken as a way to regularize discussions?
Trade in digital services is booming: here’s how we can unleash its full potential (WEF)
Since the start of the COVID-19 pandemic, digital services such as online education, virtual meeting rooms and online marketplaces have kept our economies running and helped us stay connected. Almost all of these services are underpinned by cross-border digital trade. Even if you meet colleagues from your own town in a video conference, consult a local doctor online, or follow a virtual class by a teacher in your neighbourhood, the companies providing the networks and platforms for these interactions are probably at least partly in another country. The global exchange of digital services is easy to overlook given its intangibility, but it’s been one of the fastest-growing areas of trade in recent years. Trade in telecom and IT services, which underpin digital trade in services, has been growing particularly strongly. In 2018, telecommunications, computer and information services was the fastest-growing services sector in terms of global exports, increasing by 15%, according to the WTO. A closer look at three areas of digital trade in services at the core of the response during the pandemic - telework, remote education and healthcare - shows what needs to be done to allow this sector to flourish.