tralac’s Daily News Selection
Diarise: EAC experts meeting on outstanding issues under Phase 1 of the AFCFTA negotiations (22-24 July)
The selection process for the next WTO Director General began today, and will continue on Thursday and Friday.
View the press conference from the candidates interviewed today: Dr Jesús Seade Kuri (Mexico); Dr Ngozi Okonjo-Iweala (Nigeria); Mr Abdel-Hamid Mamdouh (Egypt)
Tomorrow’s interviews: Mr Tudor Ulianovschi (Moldova); Ms Yoo Myung-hee (South Korea); Ms Amina C. Mohamed (Kenya)
Friday’s interviews: Mr Mohammad Maziad Al-Tuwaijri (Saudi Arabia); Dr Liam Fox (United Kingdom)
Extract from the vision statement posted by Ms Amina C. Mohamed (pdf): Once recovery is under way, however, we will still face the need to update the trading system to respond appropriately to pressing global issues like climate change, the digital revolution, deepening poverty and sustainable development. The WTO should be where governments come together to forge trade responses based on concertation among themselves, sharing of best practices, and reaffirmation of key principles. Bilateral and Regional Trade Agreements can bring important benefits, especially where localized interests relevant to near neighbours are at stake. But a trading world networked by overlapping preferential arrangements among subsets of economies cannot be a substitute for the rules-based multilateral trading system.
Secretary-General of the AfCFTA Secretariat, Mr Wamkele Mene, would like Africans to take advantage of the opportunities in digital trade because Africa is “one of the fastest-growing penetrations of mobile subscribers in the world.” “Digital trade is possible through mobile phones. We know, from the experiences of various countries across Africa, that you can access distant markets using your mobile phone,” Mr Mene told Africa Renewal in an exclusive interview. He added: “It is a question of leveraging all those technological innovations and advantages into a common platform for free trade in Africa, under the AfCFTA agreement.”
Already, women traders in countries such as Kenya and Nigeria are applying digital solutions in informal trade. The AfCFTA, he explained, intends to establish the requisite regulatory environment and architecture, through laws and digital platforms. “We need to find a way to digitize our customs capabilities to make them seamless across the continent. It is going to take quite a lot of work, but I believe it’s possible.”
Q: The commencement of free trade in Africa trade was expected to increase intra-African trade from 18% to about 50% within a few years. Is that timetable still on?
A: We aim to reach up to 50% of intra-African trade between now and 2030. So, there is not that much time. COVID-19 aside, whether we can reach 50% of intra-African trade depends on our capacity to accelerate regional value chains in Africa’s industrial development. Second, the manner and pace with which we implement the agreement, collectively, will also determine whether we increase that number from 18% up to 50%, and hopefully above that. So, it is an objective that we will have to actively work towards, and we will have to vigorously pursue.
Tripartite Capacity Building Programme, phase II: AfDB posts a GPN
The key outputs from the Bank’s intervention ($1.1m in funding to the COMESA Secretariat) will be the development of guidelines, procedures, regulations and manuals required to operationalize the Agreement in areas such as rules of origin and dispute settlement. The Programme will also support the establishment of online databases for non-tariff measures in Tripartite RMCs, building on the pilots under Phase I. This will improve transparency in trade, speed up the resolution of non-tariff barriers (NTBs), deter arbitrary application of regulatory measures that hinder trade, and improve awareness of traders about legitimate regulatory requirements, which provides a foundation for them to improve their capacity for compliance. The programme will enhance awareness of traders and the business community on the market access opportunities now availed by the Agreement, with a view to effectively harnessing such opportunities.
COMESA NTBs Focal Points meeting: update
At least 82% of the reported non-tariff barriers in the COMESA region are those imposed on imports and exports of goods and services and are largely operational by design. According to trade experts, these type of NTBs are easy to identify and monitor. Thus, from an analytical perspective, the relatively high rate of resolution of NTB cases in COMESA, which is over 95%, does not necessarily imply that the mechanisms established to eliminate NTBs are effective.
Rather it shows that mechanisms in place capture more of the operational as opposed to the behind-the-border types of NTBs. The behind-the-border measures are mainly imposed internally and include domestic legislations covering health, technical, product, labour, environmental standards, internal taxes or charges, and domestic subsidies. According to the COMESA Director of Trade, Dr Christopher Onyango, the latter category is much more complex and difficult to identify and have in recent times become major sources of NTBs. He was speaking at the opening of the virtual 8th Meeting of the COMESA NTBs Focal Points which took place last week, 8 – 10 July 2020. Its objectives were to deliberate on the revised COMESA Non-Tariff Barriers regulations, the 2nd draft of the Working Procedures on implementation of COMESA NTBs regulations and to consider the outstanding Intra-COMESA NTBs.
He said several strategies and mechanisms have so far been put in place to reduce the occurrences and eliminate NTBs since the establishment of COMESA, particularly following the advent of the FTA regime. However, the NTBs have remained prevalent and continue to constrain the growth and expansion of intra-COMESA trade and investments. In the COMESA region, some NTBs have remained unresolved for long, some dating back to 2000. “In as much as willingness and commitment of parties involved may be critical, the effectiveness and capability of the mechanisms and institutional structures to resolving all types of NTBs require sustained review,” Dr Onyango explained. “Regulations should take into account the nature, forms and categories of various non-tariff measures, domestic policies, laws and regulations and the diversity of economic sectors. But even more importantly, the regulations and procedures should be inclusive, taking into account small scale enterprises, youth and women as important players in the integration process.”
Women-led businesses across Africa are already significantly impacted by COVID19. A survey conducted by ImpactHER with over 1,300 women SME owners across 30 African countries revealed that most women-led SMEs are at risk of permanent business shutdown as a result of the pandemic. In responding to how COVID-19 has affected their business operations, 80% of the respondents reported that they had to temporarily shut down their business. Of those that are still fully or partially operating, 41% reported that they had significantly reduced the number of work hours, 34% reported that they laid off workers, and 25% reported that they had to reduce their employees’ salaries. Similarly, in a survey conducted by UN Women with 165 women entrepreneurs in Mali, as much as 96% had seen their economic activity reduced in the first two months of the crisis. Also, women-led businesses are being impacted at a faster rate than SMEs led by men. A survey by UN Women and the SME agency of Cote D’Ivoire showed that a significantly higher number of women-led businesses has been forced to stop its operations because of the crisis (64% for women-led businesses as compared to 52% for men-led).
527 million women work in the four hardest-hit sectors – accommodation and food services, real estate, business and administrative activities, manufacturing, and wholesale/retail trade, unsuitable for remote-working. This represents 41% of total female employment vis-à-vis 35% of total male employment. Of 740 million informal economy women workers, 42% work in these sectors vis-à-vis 32% of men. Women comprise 70% of the global health workforce, at the front lines of response. Already encumbered by gendered labour-market disadvantages, women workers have been disproportionately affected by job loss, reduced working hours and bankruptcy. Also, health risks to health workers, paid and unpaid care work and violence against women have escalated with COVID-19 and lockdowns. Women contribute 37% of the global GDP. Moreover, all types of women’s care work, including unpaid work generate $11 trillion globally (9% of global GDP). Deploying women’s full potential is critical to economic recovery. However, it is unclear how much the sizeable G20 (or non-G20) economic packages have invested in women’s priorities, despite evidence that the socio-economic impacts of COVID-19 are worse for women.
The crisis will worsen economic loss, including the $160 trillion loss in wealth globally due to gender earning gaps. If shrinking fiscal space in countries of the Global South prompts spending cuts in public services, this will have further harsh impact on poor women and girls. Intentional expansion of fiscal space that recognizes and invests in women’s specific priorities must be central to the design of recovery packages. [Executive Director of UN Women, Phumzile Mlambo-Ngcuka: Addressing the needs and rights of at-risk and crisis-affected women and girls]
In the past months, IPAs have continued to strengthen their online presence. A total of 77% of national IPAs worldwide have provided COVID-related information and services online as they developed specialized virtual platforms and tools. The response, however, has been asymmetric, and differences in their digital capacity, culture and resources have surfaced. While developed countries are multiplying their digital channels of communication on COVID-related business issues for investors, 44% of national IPAs from developing countries provided no or little information for investors about the pandemic on their websites or social media channels.
The offering of investment facilitation and aftercare services by IPAs has expanded, with an increased focus on strengthening linkages between foreign companies and the local economy. The enhanced role of IPAs as trouble-shooters and business support institutions will likely remain after the pandemic. After focusing almost exclusively on providing retention and aftercare support to existing investors during the past few months, IPAs are now promoting investment help to restart economies. The new focus is on traditional as well as emerging opportunity areas linked to renewed national priorities and a growing demand in sectors such as health, food and agriculture, and tech-related sectors.
Box 1: How IPAs are leveraging social media channels for investment promotion and facilitation during the pandemic
Box 2: Findings from the UNCTAD regional webinar for IPAs from the EAC and SADC
A move by the African Refiners & Distributors Association (ARA), and the African Union, to ensure common standard for the importation and refining of petroleum products on the continent remains critical to trade, environment and the economy of the region, stakeholders said, Wednesday. Under the plan, Africa is expected to adopt harmonized AFRI Clean Fuel Specifications across. The Cleaner Fuel spec recommends adoption of AFRI five (50 ppm sulphur for gasoline and diesel) by 2025, and AFRI 6 spec (10 ppm for same products) by 2030. ARA Executive Secretary, Anibor Kragha, had told The Guardian that the objective is to stop the importation of fuels not meeting these AFRI specs into Africa by 2021, and give existing refineries until 2025 to upgrade their facilities to produce the cleaner specs. Kragha disclosed that the ECOWAS Council of Ministers of Hydrocarbons in February 2020 already recommended product imports to meet AFRI five specs by 2021, and regional refineries to meet AFRI five specs by 2025. While some stakeholders are concerned about the poor implementation of existing regulations in Nigeria, they noted that the new standard would allow petroleum products to be moved easily across Africa.
The Next Generation Africa Climate Business Plan: Ramping up development-centered climate action (World Bank)
The Next Generation Africa Climate Business Plan provides a platform to further galvanize climate action by prioritizing its focus on the region’s core development challenges and priorities. The plan is grounded in the World Bank’s commitment to support climate-resilient and low carbon development across the developing world and its solid engagement in technical and financial assistance to support climate action in Africa. Extract (pdf):
The COVID-19 pandemic could wreak havoc on the health and economy of the Africans while the global economic shock is going to slow Africa’s engines of growth and spur the first recession in the region in 25 years. The effects include the reduction of African exports, a decline in services like tourism, remittances and access to financial markets, and will cost the region between $37bn and $79bn in terms of output losses for 2020. The earlier and the more aggressive the restrictions of social movement, the quicker the recovery, as policy aims at flattening the “two curves”, benefiting both health and the economy. While a successful containment policy is possible and the experience of African countries fighting the Ebola virus epidemic suggests African solutions can also be effective, the welfare losses, the food insecurity and the political uncertainty will be very high.
Africa’s engines of growth are diversified, but agriculture is the largest, representing 15% of the continent’s total GDP. The relative value of agriculture, forestry, and fishing varies greatly, from 2% each in Botswana and South Africa to 50% in Chad and 62% in Somalia. In Burundi and Madagascar, the shares are more than 80%. The engine of agricultural growth is driven by total factor productivity rather than expansion in the amount of land, water, and input usage. The manufacturing sector, including the extractive sector, has been a notable engine of growth in resource rich countries in Africa, especially in boom years (Cust, J., and others; forthcoming). The extractive sectors have the potential to continue to produce growth for the next two to three decades, serve as inputs to diversify the economy, and provide both fiscal and export resources for governments. The sector has suffered from weak governance and global commodity swings but continues to be central to achieving higher productivity and growth. The oil price shock of March 2020, driven by geopolitics and reduced demand in light of the pandemic, will affect net oil-exporting countries and result in increased liquidity issues, lost tax revenues, and currency pressure.
As countries “continue to grapple with malnutrition in all its forms, including the growing burden of obesity,” Secretary-General António Guterres said that this year’s State of Food Security and Nutrition in the World report “sends a sobering message”. The authoritative global study tracking progress towards ending hunger and malnutrition, is produced jointly by the FAO, IFAD, UNICEF, WFO and the WHO. While Asia currently has the greatest quantity of undernourished (381 million), people, the report showed that the number in Africa is growing fast (250 million), followed by Latin America and the Caribbean (48 million). And although the global prevalence hungry has changed little, over the last five years, hunger has grown in step with the global population, which, in turn, hides great regional disparities. With 19.1% of its people undernourished, Africa is hit hardest and becoming even worse. This is more than double the 8.3% rate in Asia and 7.4% in Latin America and the Caribbean. On current trends, by 2030, Africa will be home to more than half of the world’s chronically hungry.
Keeping trade open amid COVID-19 crisis central to achieving SDGs and economic recovery: WTO’s report to UN High-level Political Forum
IMF staff completes virtual mission to Zambia: statement