tralac’s Daily News Selection
Kenya’s Ministry of Industrialization, Trade and Enterprise Development posts a call for consultants to provide technical assistance towards the negotiations for the proposed FTA between Kenya and the United States of America. The closing date for submissions of expression of interest is 28 July, 2020 at 10.00 am.
Technical Expert Legal Advisory Services. The consultants will, inter alia, undertake the following tasks:
Undertake capacity building training to the negotiators and other select groups on legal matters to be considered during negotiations
Undertake analytical study on legal issues on the proposed Kenya –USA FTA to provide evidence for decision making in all areas of negotiations. This study will analyse legal issues arising from Free Trade Area Agreements USA has signed with other countries, carry out an assessment of legal impact of proposed FTA on Kenya’s Trade, border revenue collections, and Investment among others
Profile of potential sectors to benefit from KE-US FTA
Undertake analysis of legal issues arising on other WTO Agreements that are relevant to the proposed FTA and identify legal and policy space that could guide in the negotiations, with the aim of translating the FTA to a development tool
To advise on the legal position that Kenya should pursue in Service Sectors negotiations;
Analyze legally how the FTA will impact on Kenya’s bilateral and regional commitments in existing Regional Economic Communities in which Kenya is a member.
Technical Expert Economic Advisory Services. The consultants will, inter alia, undertake, the following tasks:
Undertake simulations in economic trade scenarios between Kenya and USA to inform decision making, in the context of industrial, agricultural and services sector development
Carry out analytical economic studies on Investment and IPR in the context of proposed FTA
Economically advise on the position that Kenya should pursue in trade of goods service sectors in the negotiations.
Technical Expert Multilateral Trade Advisory Services. The consultants will, inter alia, undertake the following tasks:
Undertake multilateral trade negotiation simulations on various trade scenarios between Kenya and USA to inform decision making, in the context of industrial, agricultural and services sector development
Develop, using outcome of multilateral trade analytical work, redlines/boundaries and fall back positions in all areas of negotiations taking into consideration Kenya’s strategic interests and existing bilateral, regional and multilateral commitments.
Technical Expert Agricultural Goods SPS and Standards. The consultants will, inter alia, undertake the following tasks:
Undertake agricultural analysis studies on the proposed Kenya-USA FTA to provide evidence for decision making in all areas of negotiations. This study will analyze Free Trade Area Agreements USA has signed with other countries, carry out an assessment of the impact of proposed FTA on Kenya’s Trade, border revenue collections, and Investment among others;
Profile potential agricultural sectors to benefit from KE-US FTA
Undertake analysis on agricultural WTO Agreements that are relevant to the proposed FTA and identify multilateral level flexibilities and policy space that could guide in the negotiations, with the aim of translating the FTA to a development tool.
Analyse on how the FTA will impact on agricultural goods in Kenya’s bilateral and regional commitments in existing Regional Economic Communities in which Kenya is a member.
The purpose of this assignment is to study the policy processes at the RECs through a careful mapping of policy actors and actor coalitions, policy interests and incentives, the set of institutional arrangements that enable or constrain policy and how these are linked to national policy processes, and subsequently, how the implementing partners can effectively engage and influence norms at this level. The aim of the assignment will, inter alia, be to: Analyse governance structures of the RECs with the aim of assessing how they engage with organised CSO groups at regional level (such as, East Africa Civil Society Organisations’, West African Civil Society Forum, the Southern Africa Development Community Council of Non-Governmental Organisations and the SADC Civil Society Forum CSOs, as well as other regional CSO networks), member states, the African Union, and other relevant commissions involved in policy making on Domestic Resource Mobilisation.
Malawi Economic Monitor: From crisis response to a strong recovery (World Bank)
The COVID-19 pandemic is expected to have considerable negative impact on Malawi’s growth in 2020. Economic activity will be affected by both global and domestic factors. Global factors that have impacted Malawi include (pdf):
Disruption in global value chains: Global value chains, especially the importation of key production inputs, have been disrupted as social distancing affected output in exporting countries. However, Malawi’s key trade partners—South Africa and China—have both begun reducing previously severe restrictions. South Africa has reduced its lockdown level from 5 (the most severe) to 4 in May, and 3 in June, which is expected to mitigate this impact. South Africa’s exports fell by more than 60% y-o-y in April, before rebounding in May, but they were still more than 25% below the year prior. Moreover, China is the largest supplier of intermediate inputs for manufacturing in Malawi. After active COVID-19 cases in China declined, production and exports started rebounding from March, and since that time, they averaged only 1.5% below the year prior.
Increased trade and logistics costs and delays: Flow of goods through Malawi’s borders and those of its key trade partners is being affected by frequent transit stoppage, lack of personal protective equipment for border officials, and higher cost of air cargo. This is compounded by policy unpredictability and information asymmetry in a context where Governments are regularly adopting new trade measures. If the different actors engaged in supply chains are not aware of these new requirements, this can risk unnecessary disruptions. Malawi Revenue Authority customs data suggest that imports were 26% lower in April and May 2020 than in the same period last year (based on value for duty purposes estimates), which coincides with reported delays in shipments from South Africa. Informal imports coming from Mozambique and Zambia have also reportedly decreased. Some countries have also pursued export restrictions on some medical and agricultural commodities, which could trigger negative spillovers. Malawi has blocked re-exports of medical products, particularly masks. Moreover, Malawi’s continuing export ban on maize in the midst of a bumper harvest is weighing on potential income growth.
Decreased demand in export markets: Lower global demand and trade restrictions are expected to weigh on some export products. Key product markets are facing severe recessions, including the European Union (about 32% of Malawi’s exports) and other trade partners — South Africa (10%) and rest of Africa (26%). However, as Malawi’s main exports are tobacco (over 50%), sugar, and tea, global demand for these products has been relatively inelastic in the past decade, mainly affected by supply shocks and changes in contracts, so that the impact may be somewhat mitigated. However, the tobacco auction season through early July has seen a decrease in sales, with a 11.9% reduction in sales values, due to a 14.7% reduction in volumes partially offset by a 3.2% increase in average price.
Significant decrease in tourism: Tourism has been heavily affected, but its contribution to growth in Malawi is lower than in EAC countries. The flow of visitors has effectively come to a standstill, with increased risk aversion and travel bans combining with Malawi closing its international airports since the beginning of April. This has also been affected by lower domestic business travel and tourism. However, tourism is a smaller sector than in some neighboring countries. According to the World Tourism Organization, 870,000 tourists visited the country in 2018, with only 17% from outside Africa. This is only about half the total figure for countries such as Kenya and Tanzania, where more than 50% of visitors are from outside Africa. The decrease in tourism is expected to reduce GDP growth of services such as transportation (about 2.9% of GDP) and accommodation and food services (about 2.0% of GDP).
South Africa: official perspectives on economic and trade policy issues
SA Reserve Bank: July 2020 statement of the Monetary Policy Committee. Our second quarter estimate for output has been revised lower. The Bank currently expects GDP in 2020 to contract by 7.3%, compared to the 7.0% contraction forecast in May. Even as the lockdown is relaxed in coming months, for the year as a whole, investment, exports and imports are expected to decline sharply. Job losses are also expected to rise further. Easing of the lockdown has supported growth in recent weeks and high frequency activity indicators show a pickup in spending from extremely low levels. However, getting back to pre-pandemic activity levels will take time. GDP is expected to grow by 3.7% in 2021 and by 2.8% in 2022. South Africa’s terms of trade and commodity export prices remain high. While oil prices are generally low, they have increased since the May meeting. The Brent crude oil price is expected to average about $40 per barrel in 2020, rising to $45 per barrel in 2021 and $50 per barrel in 2022.
Trade, Industry and Competition Department Budget Vote 2020/21: speech by Minister Ebrahim Patel. The industrial age is not over, but it will be profoundly re-shaped by digital technologies, greener industries and industrial agility. South Africa must find its niche in this new environment. There can be no return to the ‘old normal’. And nor should there be. It was not fit for future purpose. Established industries, though critical in our economy, will not be able to create the millions of jobs required. To prepare for the post-covid world, we will strengthen efforts around reconstruction and recovery, including broader pacts with workers and businesses, focused on saving as many firms and jobs; identifying new opportunities; embracing digital technologies to recover and change; addressing economic inclusion with greater urgency. Building on the solid progress of last year, but adapting our strategy in light of the historical moment created by the pandemic, each of the six priority programme areas will now be recalibrated to save lives and protect livelihoods:
To strengthen economic dynamism, we will complete two new Master plans: one for furniture which employs 65 000 people in SA with potential for many more small-scale artisans; plus another for the steel industry, the foundation of our industrialisation, employing nearly 250 000 people. But the Department’s mandate is not only to produce new Masterplans; more importantly is to ensure implementation, which will be the focus of masterplans for autos, clothing, sugar and poultry.
To help pivot the economy from its reliance on imports, to greater levels of local manufacture, we will finalise at least three new agreements on localisation and supplier development, following discussions with CEOs at: Fast food producers, Hardware stores, Grocery retailers, Food and consumer goods manufacturers - CTFL retailers and manufacturers.
In the area of trade: to provide trade support to local firms, both in the domestic market and for exports, we will complete talks with the EU on trade access; strengthen the actions against illegal imports - Smugglers beware – we will crack down further on customs fraud on imported goods, building on early successes by SARS; and seek agreement to enable the AfCFTA to commence trade by the start of 2021. South Africa is well-positioned to become a major supplier of industrial goods and value-added services to the continent. A combined push from the IDC and ECIC can contribute to this. We will develop tangible targets to guide the work of South Africa’s Foreign Economic Representatives stationed at embassies, focused on export promotion and investment enhancement. Economic diplomacy is essential to building resilience.
- pdf Address to the National Assembly Budget Vote Session: Ebrahim Patel, Minister of Trade, Industry and Competition (139 KB)
10th BRICS Trade Ministers Meeting: summary of briefing by Minister Ebrahim Patel. The second observation he shared with his BRICS counterparts is that the benefits of highly integrated supply-chains come with enormous vulnerabilities when they are disrupted. African countries are learning the hard lesson that if we are simply exporters of raw materials and importers of medication, medical equipment and other critical goods, then our ability to ensure protection of citizens in moments like these, is compromised,” Minister Patel stated. He added that building resilient and diversified supply-chains must include building domestic manufacturing capabilities as part of building new, inclusive supply-chains: “An inclusive supply-chain means that manufacturing capacity is diversified across countries and South Africa, and indeed the African continent, is ready to expand production for both existing product lines and new product opportunities. This does not entail disengaging from global trade, investment and cooperation – they remain important sources of growth and development and we will certainly need to intensify international cooperation. However, we do not think it wise or the right time to consider new binding global or plurilateral rules in haste at a time of such crisis. We need to retain flexibility to respond with all available policy tools to address the crisis and effect economic recovery.”
India’s commerce and industry minister Piyush Goyal used the BRICS platform to underline the need for enhanced transparency from countries to build trust and ensure that their role as “a pre-eminent trade partner” was not lost, in what was seen as a message to China.
National Treasury Budget Vote: speech by Minister Tito Mboweni. We all agree that economic growth is urgent. One of the key projects that the National Treasury will be driving is to work closely with our colleagues in the rest of Government to drive a package of reforms to improve productivity, lower costs and reduce demands of state-owned companies on the public purse. These measures include finalising electricity determinations, unbundling Eskom and taking other steps to open up energy markets, modernising ports and rail infrastructure, and licensing spectrum. The Deputy Minister, Dr David Masondo, has been tasked with the critical job of driving Operation Vulindlela, which coordinates the critical structural reforms our economy desperately needs to grow. He will work closely with the Presidency in this endeavour, and it will put economic growth at the centre of what we do as the National Treasury and as Government. To realise the full benefits of these reforms for the economy’s growth potential over the long term, implementation should begin now. [Speech by Deputy Minister David Masondo]