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WTO Members clinch agriculture export competition deal, weigh next steps for negotiating future
Trade ministers clinched a deal to eliminate agricultural export subsidies this Saturday, following a five-day meet in the Kenyan capital of Nairobi. The WTO Ministerial Conference, the biennial highest decision-making gathering of the multilateral trade system, also agreed a series of other deliverables on farm trade and least developed country issues, while ultimately leaving open the question of how the WTO’s negotiating arm will evolve.
Deliberations during the week of 15-19 December touched upon an array of intricate matters and politically thorny dilemmas, such that decisions adopted on Saturday make it clear that the “post-Nairobi” landscape for the global trade body both as an institution and a negotiating forum is now set to look markedly different than the one preceding the ministerial. The result has consequently drawn a mixed preliminary welcome from trade officials and observers alike, as they work to parse through the various outcomes.
The agreement disciplining agricultural export competition, for example, has been lauded as “historic” by trade officials – an achievement that eluded the trade system for 60 years since the GATT imposed similar curbs on export subsidies for industrial goods. Unsurprisingly deep divisions on the subject among members persisted up to the final hours of the ministerial, requiring round-the-clock negotiations.
On agricultural matters, despite fundamental differences, members managed to bridge their divides – and achieved a result that is likely to have significant ramifications for farm trade and for least developed countries’ participation in global trade flows.
Even so, the text of the ministerial declaration shows that members were unable to overcome profound differences in other key areas, with the document explicitly stating that WTO members remain at odds over the reaffirmation of the Doha Round and subsequent ministerial declarations and decisions.
“We recognize that many Members reaffirm the Doha Development Agenda, and the Declarations and Decisions adopted at Doha and at the Ministerial Conferences held since then, and reaffirm their full commitment to conclude the DDA on that basis. Other Members do not reaffirm the Doha mandates, as they believe new approaches are necessary to achieve meaningful outcomes in multilateral negotiations. Members have different views on how to address the negotiations,” the declaration reads.
In effectively acknowledging the opposing viewpoints without reconciling them – agreeing to disagree – the declaration has shed little light on what lies ahead for the negotiating function of the global trade body, which has long struggled to move out of the shadow cast by the continued lack of resolution in the Doha Round trade talks. The drafting of Part 3 in the ministerial declaration – on the WTO’s future – now presents both a challenge and an opportunity for members, without yet clarity on how to go about them.
“We have to be clear-sighted of the situation we’re in today,” WTO Director-General Roberto Azevêdo told members in the closing ceremony, noting specifically the unresolved divide among members. “We have to face up to this problem. We have to address it.”
The ministerial declaration does note some areas of potential agreement, not least in the “strong commitment” that all members have to continue negotiating the Doha Round issues – while at the same time noting that members do not share the same view of whether they want to continue this work using the existing Doha structure.
The declaration specifically refers to agriculture – domestic support, market access, and export competition – as well as the other two core issues of industrial market access and services as issues where members aim to advance work. It also mentions rules – an area that saw much negotiation but no separate substantive decisions at this ministerial – as well as development and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement issues.
The declaration states that this “future agenda” should include work on the areas that did see substantive decisions at this ministerial, and that future work will keep development “at its core” with special and differential treatment “integral” to it.
Officials have now been instructed to “find ways to advance negotiations,” with regular reports from the Director-General to the General Council, which is the WTO’s highest-making decision body under the ministerial conference.
One question that was raised in the broader discussions on Doha was how the ministerial declaration would treat the concerns raised from some of the organisation’s newer members, who had undertaken significant market access commitments when joining on the understanding that they would not be required to take additional commitments as a result of the Doha talks, and that the other members were in on-going negotiations aimed at arriving at corresponding levels.
Sources confirmed that this had been one of the key issues under debate in the Ministerial’s final days, raised by members such as China, as well as very recently acceded members such as Russia, Saudi Arabia, Chinese Taipei, and Oman.
The ministerial declaration ultimately features a recognition of the “special situation” faced by “Article XII” members under the WTO Agreement, given these market access commitments, noting that their situation “shall be taken into account” in the negotiations.
Regarding how to engage the WTO in addressing so-called new issues – a critical demand from the almost entire membership, even if most vocally by the US and EU – the document also notes a continued disagreement, while leaving enough ambiguity in its drafting to allow a potential range of options.
“While we concur that officials should prioritize work where results have not yet been achieved, some wish to identify and discuss other issues for negotiation; others do not. Any decision to launch negotiations multilaterally on such issues would need to be agreed by all Members,” the declaration reads.
Negotiating arm
Hours before the ministerial began on 15 December, conference chair Amina Mohamed, the Kenyan Cabinet Secretary for Foreign Affairs and Trade, had warned that members essentially faced two choices over the coming days that would set the tone for the WTO’s future.
“If we have a successful ministerial it will change because we will have invigorated it, we will have renewed the organisation, hopefully modernised it,” said Mohamed to reporters at the time.
She warned, however, that a far different scenario could await the global trade body should the Nairobi talks fail. “If we don’t agree then we will see a change, because obviously what the membership will be saying collectively is that the negotiating function of the WTO is broken.”
In the months – and years – ahead, questions will likely continue to abound as to what future awaits the various modalities of WTO’s negotiating arm, particularly its multilateral mode when compared to the results seen in other major global governance efforts this past year.
The adoption of the UN Sustainable Development Goals (SDGs) for 2030, as well as the successful adoption of a universal climate deal in Paris earlier this month, had drawn many comparisons to the WTO multilateral negotiations under the Doha Round in the weeks and days ahead of the conference, with officials urging the global trade body’s members to draw inspiration from those processes and results.
Digital economy
One of the notable substantive achievements from this ministerial was the announcement of the conclusion of “plurilateral” talks among 53 WTO members to expand the product coverage of the Information Technology Agreement (ITA), a critical mass negotiation furthered in parallel to Doha Round talks since its launch outside the formal framework of the WTO ITA Committee three years ago.
The completed ITA-II has been heralded for being the WTO’s first tariff-cutting deal since its establishment 20 years ago, with the tariff cuts agreed by the participants set to be extended to the full membership of the global trade body.
An achievement of great significance, the ITA-II involves products currently valued at US$1.3 trillion annually and responds to the continued evolution of the global digital economy. For many, this model of Most-Favoured Nation (MFN)-based, open plurilateralism, represented by the ITA-II may become an increasingly more common alternative to multilateral trade agreements under the WTO.
WTO members also extended their moratorium prohibiting customs duties on electronic transmissions until the next ministerial conference in 2017, along with renewing a related work programme. The organisation’s General Council is mandated to report in December 2016 and July 2017 on related issues arising in WTO bodies where the work programme is being implemented.
Regional trade agreements
The continued proliferation of regional trade agreements (RTAs) has been another area of both interest and concern for WTO members, with the ministerial declaration including language reaffirming “the need to ensure that [RTAs] remain complementary to, not a substitute for, the multilateral trading system.”
In this context, ministers have agreed that WTO members should hold discussions on the “systemic implications” of such trade deals under the Committee on Regional Trade Agreements, citing the goals of transparency and greater understanding. They have also agreed to work toward the long-standing goal of turning the existing provisional Transparency Mechanism within the WTO into a permanent one, in line with instructions from a General Council decision nearly a decade ago, without setting a deadline for this goal.
The language draws from a proposal made by Brazil on the subject in the context of the WTO’s rules negotiations, though it drops the language that the South American economy had suggested for reporting such outcomes to the General Council for guidance and directions for action within a year’s time, with a view to finishing this effort by the next ministerial conference. The decision puts in place a more active process that may help members to engage in dialogue within the organisation on the relationship of the evolving global trade system with the WTO’s role.
Agriculture: four new decisions
The Nairobi package includes new ministerial decisions covering a special safeguard mechanism for developing countries; a decision on export subsidies and other “export competition” elements; a decision on cotton; public stockholding for food security purposes.
The decisions, which are legally binding, represent the “most significant outcome on agriculture” seen in the WTO’s 20-year history, Azevêdo told members.
Special safeguard mechanism
The G-33 group assembling a set of developing countries, that includes China, India, and Indonesia as well as many smaller economies, had argued in favour of a special safeguard mechanism that will allow developing countries to raise tariffs temporarily to respond to sudden import surges and price depressions. However, agricultural exporting countries such as Australia, Brazil, and the US had contested against a safeguard in the context of a broader deal to cut tariffs, fearing that otherwise the higher duties could serve to restrict access that exporters have at present to these countries’ markets.
The new decision states that developing countries will “have the right to have recourse” to a special safeguard mechanism “as envisaged under paragraph 7 of the Hong Kong Ministerial Declaration.” This paragraph anticipates that developing countries will have the right to “a Special Safeguard Mechanism based on import quantity and price triggers.”
It also says that WTO members will pursue negotiations on a special safeguard mechanism for developing country members in dedicated negotiating sessions of the WTO agriculture committee.
Export competition
This decision groups together export subsidies with other types of export support instruments that can distort competition: export credits, export credit guarantees and other types of export financing; exporting state trading enterprises; and food aid.
When the Doha talks were launched, the EU insisted that these other types of arrangements also be disciplined in parallel to efforts to phase out and ultimately eliminate export subsidies. The EU subsidised exports at very high levels – reaching €10 billion in 2000 – and since almost totally curbed.
Historically, the US has been the main provider of export credits and food aid, while Canada, New Zealand and Australia have operated exporting state trading enterprises, some of which have since been privatised.
While the EU has discontinued export subsidies for most products, Switzerland, Norway, and Canada still notify support to the WTO, and some developing countries such as India or Turkey also provide this type of support but have not formally notified it to the trade body.
Although the Hong Kong ministerial declaration has said that developing countries should be allowed to provide Article 9.4 export subsidies – related mostly to marketing and internal transportation – for five years after export subsidies are eliminated, the legal authority for doing so under the Agreement on Agriculture has already expired.
Export subsidies
Under the decision, developed countries will immediately eliminate their remaining agricultural export subsidies. These types of payments have long been seen as particularly trade-distorting, and already prohibited for manufactured goods. At the Hong Kong ministerial conference in 2005, members agreed that these payments would be eliminated by 2013, although the wider stalemate on the Doha agenda meant that this deadline was missed.
A footnote provides an exception until 2020 for developed countries that provide these subsidies on “processed products, dairy products, and swine meat,” to accommodate countries such as Switzerland and Canada that still use this type of support. The exception nonetheless would require the countries concerned not to export these products to least developed countries.
Developing countries must also eliminate their export subsidies by the end of 2018. Again, a footnote provides an exception until 2022 for some countries which have notified their support to the WTO.
An extended 2023 deadline is also provided for developing countries to use export subsidies for transport and marketing, which were originally covered under article 9.4 of the Agreement on Agriculture. The arrangement is in keeping with other WTO clauses providing “special and differential treatment” to developing countries – often in the form of longer implementation periods for commitments. Least developed countries and net food importing developing countries will be allowed to do so until 2030.
Special arrangements are made for export subsidies on cotton. Developed countries would have to immediately implement their export subsidy commitments for this product, and developing countries would have until January 2017 to do so. More ambitious disciplines on cotton have long been a special demand of West African cotton-producing countries in the C-4 – Benin, Burkina Faso, Chad, and Mali.
Export credits, export credit guarantees, or insurance programmes
The decision says that maximum credit repayment periods for developed countries would be eighteen months. The EU, Brazil, and other members had proposed nine month repayment periods under certain conditions. Although current US legislation allows repayment periods of up to 24 months, actual practice is believed to be 18 months.
Developing countries would initially also be allowed to extend credit for longer periods of up to 36 months, although this would be gradually reduced to 18 months over the course of a four-year implementation period.
Exporting state trading enterprises
The decision states that WTO members must ensure that exporting state trading enterprises do not operate in a manner that circumvents any other disciplines. This could be interpreted as meaning that these enterprises must not be allowed to operate in a way that effectively subsidises exports once the relevant deadlines in the export subsidy section of the text have expired.
A “best endeavours” clause would also commit members to making their best efforts to ensure that any export monopoly powers exerted by these bodies do not distort trade, the text says.
Food aid
New language on food aid would commit WTO members to refrain from providing in-kind food aid where this might cause an adverse effect on local or regional production of the same or substitute products. The decision would also require them to ensure that international food aid does not unduly impact established, functioning commercial markets of agricultural commodities.
The decision would also establish new commitments affecting the extent to which countries would be allowed to “monetise” food aid – meaning for donors to sell in-kind food in recipient countries so as to raise funds for development projects.
The text would require WTO members to monetise international food aid “only where there is a demonstrable need” for transport purposes, or where monetisation is used to redress food deficit requirements or “insufficient agricultural production situations” which give rise to hunger and malnutrition in least developed and net food-importing countries. Other requirements are also included in the decision - such as for a market analysis to take place before monetisation occurs.
Public stockholding
On public stockholding, the G-33 group of developing countries has argued that current farm subsidy rules unfairly constrain their ability to purchase food at administered prices as part of their public programmes for food security purposes. The 2013 Bali ministerial saw WTO members agree not to challenge these schemes under the trade body’s dispute settlement process, and members agreed a year later that this arrangement would apply until a permanent solution is reached.
The G-33 have argued that price inflation over the last two decades have eroded the degree of flexibility they have to provide farm subsidies, even if purchases are made at administered prices that are below the level of international market prices.
The new text says that WTO members note the Bali decision, and also reaffirm a November 2014 decision extending the arrangement until a permanent solution is reached.
Saturday’s agreement also says that negotiations will be held on the subject in dedicated negotiating sessions of the WTO’s agriculture committee – but that these will be distinct from Doha negotiations.
Cotton
African countries have long sought stricter disciplines on cotton, and in particular in the area of domestic support. The Hong Kong ministerial declaration, agreed in 2005, committed members to finding an “expeditious” solution to the problems facing the sector. Washington has long argued that policies in “emerging” developing countries should also be addressed by any resolution to this issue, as domestic support levels have risen in recent years.
With no negotiations on agricultural domestic support at Nairobi, there is little in this area on cotton in the final conference decision. However the text does include measures on market access and – as noted above – also on export competition.
The new agreement says that developed countries shall grant “to the extent provided for in their respective preferential trade arrangements” duty‑free and quota‑free market access for least developed country cotton exports, from 1 January 2016 onwards.
Developing countries “declaring themselves in a position to do so” would undertake the same commitment – and a footnote clarifies that this would include China, both for general market access commitments and also in their preferential trade agreements. In the past, the US has often argued that China ought to undertake market access commitments as part of a broader sectoral agreement in this area. The most recent proposal from the C-4 group would also have included separate market access commitments for developing countries, including China.
An annexed product list would also specify which other cotton-related products would benefit from similar market access treatment.
Substantive advances for LDC issues
Given the complex and political nature of issues at stake for the WTO’s poorest members, observers suggested that the conference did mark an important step forward within the multilateral trading system by adopting a set of binding multilateral provisions on preferential rules of origin for least developed countries (LDCs) as well as a new decision on the services waiver.
LDCs had repeatedly voiced concerns that these preferential rules of origin are often too restrictive and impose onerous compliance burdens, making it difficult for them to take full advantage of existing preferential margins.
The decision adopted in Nairobi now sets a timeframe for preference-granting members to undertake the commitments contained in the decision by 31 December 2016.
Regarding the value addition threshold, the document allows for the use of materials not originating from an LDC to make up to 75 percent of the final value of a product for it to qualify for preferential treatment. Some observers consider, however, that 75 percent non-originating material is in fact still prohibitive, given modern manufacturing methods based on global value chains which require in some cases only very little domestic content.
Discussions on the services waiver for LDCs – which had proved difficult on certain technical aspects early in the morning on Friday – eventually led to a compromise on the draft text proposed by Rwandan Minister of Trade and Industry François Kanimba, who was facilitating those talks.
The draft text adopted in Nairobi provides for an extension of the existing services waiver until 31 December 2030. LDCs had argued that three years had essentially been lost between the waiver’s adoption in 2011 and when the first notifications were submitted this year. These countries argued that an extension of the duration of the waiver was therefore needed. Australia, the US, and the EU had reportedly raised some reluctance on this aspect but indicated they would not oppose the text.
Another key feature of the text concerns the encouragement for both developed and developing members “in a position to do so,” that have not notified preferences, “to redouble efforts” to notify them. At press time, 21 WTO members had submitted their notifications. The text further specifies that these preferences should have “commercial value” and “promote economic benefits.”
In the lead up to the conference, some LDCs had expressed dissatisfaction regarding the scope of the notifications made so far over the past months to “operationalise” the services waiver, in line with their collective request tabled last year. Some were of the view that the notifications were not “commercially meaningful” enough, and have therefore tried to deepen the coverage of the notifications, while also attempting to change certain regulations to work more in their favour.
However, one source mentioned that given the political sensitivities around issues such as mutual recognition, the reduction of administrative visa procedures and fees, work and residence permits, and licenses for LDC services suppliers and independent professionals, these aspects were unlikely to be addressed.
“Members shall give special priority to addressing regulatory barriers of interest to LDCs,” reads the decision.
The text also contains provisions related to the provision of technical assistance and initiation of a process to review the operation of notified preferences.
Special and differential treatment
Discussions on special and differential treatment (S&DT) continued to prove divisive on Friday, before ultimately collapsing. The proponents met in the morning to “essentially restate their positions and even backslide,” said one developed country trade delegate.
After some discussions on the nature of the disagreements between the 28-nation EU and the G-90 – which is comprised of the African, LDC, and African, Caribbean and Pacific (ACP) Groups – the United States suggested focusing on the Monitoring Mechanism (MM), as it could provide a forum for monitoring S&D issues and improve beneficiaries’ ability to utilise S&D provisions.
Other developed countries reportedly said that the MM could indeed be a good platform to identify and discuss problems. However some developing countries raised the point that MM does not have a negotiating function.
One particular issue that emerged strongly in the discussions relates to the scope of the beneficiaries of the proposals put forward by the G-90. Some countries argued that some of the flexibilities being sought could only be provided to LDCs, while others were of the view that any S&DT outcome should apply to all developing countries, unless they were LDC-specific proposals.
Reportedly, the G-90 was said to have perceived some of the proposals as not conducive of their own interests, notably with regard to industrialisation and investment.
Various consultations took place on the subject, however issues related to balance of payments, sanitary and phytosanitary measures, technical barriers to trade, safeguards, LDC-specific issues and also tariff negotiations have been cited as being particularly problematic.
The revised text presented by the facilitator in this issue, WTO Deputy-Director General Yonov Frederick Agah, was rejected by the G-90 and LDCs as it did not reflect any consensus, said one source close to the process. Instead, on Saturday morning, the G-90 submitted a draft decision which included text on future work on the issue, instructing the Committee on Trade and Development in Special Session (CTD SS) to continue to negotiate on the basis of specific proposals tabled by the G-90 last November with a view to achieving agreement on all proposals by 31 July 2016.
An outcome on S&DT could not be secured as members had “opposing interests,” explained Azevêdo.
“S&DT is an area that is horizontal, crossing across all WTO agreements. These are also difficult negotiations, as it is about the flexibilities in the agreement,” he said.
However, one delegate suggested that if these issues could not be resolved in the past several months, it is unrealistic to think there could be a solution by that deadline, said a delegate.
Sources indicate that on early Saturday morning, one S&D proposal which had been identified earlier by Agah as a “doable” and related to Trade-Related Investment Measures was put forward as a standalone item outside the LDC package. However, this was rejected by South Africa, Cameroon, Jamaica, Uganda, and Tanzania, sources said.
According to Azevêdo, there were some proposals that could have been agreed to but the proponents preferred to maintain a more ambitious set of proposals for future harvest.
Trade remedies, fisheries talks flounder
Though agriculture and LDC issues did see substantive outcomes in Nairobi, the negotiations to advance some proposed deliverables from the WTO’s “rules” talks failed to bear fruit, despite a series of informal, bilateral, and small group meetings over the week.
A chair’s text tabled early Friday, which brought together various elements of these proposals into a possible draft ministerial decision on anti-dumping and countervailing measures and another on fisheries subsidies disciplines, received pushback on a number of fronts.
The first draft decision would have instructed the WTO Committee on Anti-Dumping Practices, through its Working Group on Implementation, to study and make recommendations to report to the General Council on a specific list of topics. This would be done in order to ensure “maximum possible” predictability and objectivity in implementing the relevant provisions in the Anti-Dumping (AD) Agreement. The Committee on Subsidies and Countervailing Measures would also have been instructed to study these outcomes to determine their relevance and report conclusions to the General Council.
Some industry voices have cautioned that the proliferating use of trade remedies could threaten expansion or foreign investment in growing and salient industries, pointing to areas such as clean energy technologies. Other experts in Nairobi, however, considered that the steps proposed chair’s text would not have been a high-ambition outcome.
The document was panned by several nations, including Russia among others, who had also circulated its own revised draft decision on transparency issues in anti-dumping and countervailing measures on Friday morning. Moscow reportedly expressed disappointment that the chair’s text did not explicitly include a reference to the Agreement on Subsidies and Countervailing Measures (SCM) in the instructions paragraph on implementation recommendations, as featured in its proposal.
The second draft decision on fisheries subsidies would have decided to work towards completing negotiations within specific timeframe – potentially two years, though this was bracketed – for prohibitions on subsidies linked to illegal, unreported, or unregulated (IUU) fishing and those provided to any vessel or fishing activity “negatively affecting fish stocks that are in an overfished condition.”
This language was reportedly resisted in the final stretch on Friday by the 28-nation EU. The chair’s document would also have had members commit to a best endeavour standstill on introducing new fisheries subsidies contributing to overcapacity and overfishing in so far as these undermine the development livelihood and food security prospects of developing countries – a move rejected by China, given its estimated sizeable domestic support in this area.
The draft decision also included additional fisheries subsidy programmes notifications commitments under the SCM Agreement with guidance on format outlined in an annex, taking into account each members’ resources and technical capacity. China and India reportedly struck out against the supplementary notifications on Friday afternoon, reiterating concerns these did not constitute a development outcome, due to the potential additional burden it could imposed on poorer countries.
The failure to clinch a deal on fisheries subsidies in particular met with mixed reaction among experts. Some considered that the chair’s text would ultimately have been relatively weak, while others expressed disappointment at the fallout, given its references and potential contribution to the global community’s new sustainable development agenda. However, group of 28 WTO members did release a ministerial statement on fisheries subsidies on Thursday pledging to reinvigorate WTO work in order to achieve ambitious and effective disciplines on fisheries subsidies, a move welcomed by ocean conservation groups.
Still others said that a concrete mandate for carrying multilateral work forward on fisheries subsidies is now found through a relevant SDG, although some also pointed to the fisheries subsidies disciplines inked as part of the recent 12-nation Trans-Pacific Partnership (TPP) as an example of ongoing efforts at the regional level.
Price of inaction
The Nairobi ministerial ultimately yielded some substantive decisions for negotiators to applaud – with China, for instance declaring “this is a big, big victory. This conference will be remembered for its historic contribution to development.” In addition, it also saw a concluded ITA-II, higher participation and a new negotiating approach from developing and least developed economies, the accession of Liberia and Afghanistan and expressions of interest from Somalia and Iran.
However, the road ahead for the WTO may still be a rocky one, though also with potential opportunities for creativity if members so choose.
“Members must decide – the world must decide – about the future of this organisation,” said WTO Director-General Roberto Azevêdo during the closing moments of the ministerial.
“The world must decide what path this organisation must take. Inaction itself is a decision and I believe the price of inaction is too high,” he added, noting that the year ahead leaves them with a “very serious task.”
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AfDB’s new guidance on Environmental and Social Impact Assessment to boost sustainable development in RMCs
The African Development Bank Group (AfDB) gives high priority to the provision of high quality technical guidance to its Regional Member Countries (RMCs) to strengthen capacity for sustainable development and to foster ownership of the Integrated Safeguards System (ISS).
The new Integrated Environmental and Social Impact Assessment (IESIA) guidance materials are the third component of the ISS and are intended to provide necessary knowledge to Bank’s RMCs when undertaking environmental impact assessments for Bank financed projects/programs. They can be also be used by the Bank’s Operational staff in reviewing and clearing these studies and in project supervision.
High quality technical guidance is key to ensuring effective compliance, capacity and ownership of the ISS for Bank staff and borrowers alike. The key criteria which govern the scope and content of this guidance are:
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The guidance has been carefully designed to address the new and more challenging elements and required outputs of the OSs – in particular those set out in OS1 on Environmental and Social Assessment
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The guidance addresses a number of emerging or challenging issues or topics relevant to the scope of the OSs, recognised implementation challenges and the changing profile of Bank operations
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The guidance provides specific support to the key environmental and social risks associated with operations in a number of priority sectors
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The guidance is be “easy-to-use”, accessible and designed to meet the practical needs of project staff involved in Bank operations and in borrower institutions.
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The scope and scale of the guidance draw on the experience of other MDBs and development agencies and take account of lessons learned on what is practical, easy to use and effective.
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The guidance is designed to be reviewed and updated on a regular basis
Using ISS policy principles, ESAP procedures and the guidance materials as benchmarks, the AfDB has given priority to developing the capacity of country safeguard and environmental management systems all over Africa. The endeavour will entail, beyond a genuine policy dialogue on sustainability issues with relevant governmental authorities and Civil Society, performing a thorough diagnostic and assessment of country systems using the principles of precision equivalence and acceptability to determine whether the existing systems can manage and mitigate the environmental and social impacts of the overall program or have areas that need to be improved. The assessments will be the basis for identifying measures to improve the safeguard systems and to build capacity in the program, if needed. The Bank and the RMC will agree upon support measures to strengthen the safeguard systems and include these in an action plan and will monitor the implementation of the program and the agreed actions.
The Bank intends in longer term to design a specific Technical Assistance Scheme for strengthening capacity of country systems in line with Paris Declaration and Accra Agenda for Action. The Bank may develop the TAS as a separate product in the operation, through parallel efforts financed by development partners, or through other appropriate arrangements.
The guidance materials are organized in three volumes briefly described below.
Volume 1: Environmental and Social Assessment Instruments and Outputs
In OS1 and the ESAP, several new environmental and social assessment instruments and outputs are introduced. These include the use of Strategic Environmental and Social Assessment (SESA) for policy and programme lending and the use of Environmental and Social Management Frameworks and Systems (ESMFs and ESMSs) for programme lending and Financial Intermediaries. There is also greater emphasis on compliance monitoring during project implementation as well as greater attention to country systems.
For Bank operations staff and their counterparts in borrowers or clients, it is vital that they have clear and easy to use guidance on these different instruments and outputs. This guidance is therefore designed specifically to complement the ESAP Annexes, which provide templates and report formats in many cases. The main purpose of this category of guidance should be to:
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Make it clear to Bank and RMC staff as well as to ESIA practitioners what is the nature of the different instruments in the specific context of the OSs and ESAP
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Assist clients to prepare TORs, report formats and select high quality consultants
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Evaluate the quality of reports and deliverables to judge if the ISS policy and technical requirements are followed satisfactorily
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Highlight key issues of importance for good environmental and social compliance.
» ISS Guidance Materials, Vol. 1: General Guidance on Implementation of OS 1 (PDF, 4.13 MB)
Volume 2: Environmental and Social Assessment Topics
The OSs introduce or elaborate on a number of key ESA requirements and topics. It is of great importance to provide Bank and borrower staff with clear and easy to use guidance to ensure a high level of understanding of what is required, best practice on meeting the requirements and where appropriate sources of good technical information.
Some of these topics reflect specific OS requirements such as applying safeguards to policy and programme lending, public (free, prior and informed) consultation and grievance mechanisms. Some address specific areas of environmental and social risk not previously covered specifically by Bank policies, such as vulnerable groups, cultural heritage, environmental flows, biodiversity, GHG emissions and labour standards. Others cover topics long recognised to be of great importance and where compliance may be improved through better technical guidance, such as resettlement or pollution control.
On the whole, this category of guidance has greatly benefited from the wide range of guidance already prepared by MDBs and other development agencies over recent years. The challenge has been for the Bank to identify the best knowledge available and shape it to be suitable for use in the context of the OSs and ESAP implementation, with particular attention to ease of use and optimum size.
» ISS Guidance Materials, Vol. 2: Guidance on Safeguard Issues (PDF, 3.88 MB)
Volume 3: Guidance on Specific Sectors called Sector Keysheets
30 specific project types, within four key sector areas for which checklists should be prepared. The aim of such checklists should be to identify typical project components, sources of impacts, commonly applied assessment methods and likely management options. These can be used by Bank staff to assist in the process of screening projects in the early stage of the Project Cycle as well as for tailoring TORs for Environmental and Social Assessments.
The preparation of such checklists and sector specific guidance by development agencies has been common over the past two decades or more. Many have been produced in a variety of different “shapes and sizes”. However, it is interesting to note that few if any MDBs are currently applying sub-sector guidance of this kind within their safeguards systems. For example, the World Bank Group’s Environmental, Health and Safety Guidelines are organised around types of pollution or risk.
Extensive consultation with the Bank’s environmental and social specialists for different sectors has be essential to determine how sub-sector specific guidance would be valuable. Overtime, this material will be supplemented with new guidance on other topics and emerging issues as necessary. It is therefore important for the Bank to receive some feedback from users in order to take full account of how useful such guidance has been for user agencies, what format and scale would be best suited for use by Bank staff and the selection of specific sectors for which checklists may be useful to carry on further revision and updates.
» ISS Guidance Materials, Vol. 3: Sector Keysheets (PDF, 6.15 MB)
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Cote d’Ivoire: Boosting shared prosperity through the creation of quality employment
Côte d’Ivoire is wrapping up a very good year. Peaceful presidential elections have just been held. The country’s growth rate is among the highest in Africa. It even won the Africa Cup of Nations. However, a new World Bank’s report on the economic situation in Côte d’Ivoire reveals that in recent years, this robust economic health is not translating to quality employment for the majority of the Ivorian population.
The Ivorian economy remained robust in 2015. Growth held steady at around 9%, supported by public and private investments and by the rapid growth in the building and public works and transport sectors, as well as in finance. This transformation is visible to anyone visiting Abidjan, with its impressive number of cranes, cars, and banks. However, Cote d’Ivoire must now tackle the challenge of shared growth, considering that this sound performance is not being reflected in a significant decline in the poverty rate or in higher incomes for the population living below the poverty line. The income gap between the poor and the rest of the population remains high, reveals a new report on the economic situation in Cote d’Ivoire, published by the World Bank.
In the report entitled “The Might of the Elephant – Benefitting from Strong Growth to Create Better Jobs” (La force de l’éléphant, pour que sa croissance génère plus d’emplois de qualité), World Bank economists recommend boosting productivity in the three main employment categories: self-employment, wage employment, and agricultural employment.
“The main economic challenge facing Cote d’Ivoire is the promotion of a shared economic growth that guarantees higher incomes for the population living below the poverty line, and narrows the income gap between the poor and non-poor. However, the rapid growth posted in recent years has not yet translated into a significant decline in poverty,” notes Jacques Morisset, Program Leader at the World Bank and co-author of the report. The report cites a myriad reasons for this phenomenon, which is mainly due to the dearth of quality jobs, in particular for the majority of Ivorians who are either self-employed or employed in a family business with no career development prospects.
Are jobs available? Yes, but they are far from productive.
The report notes that the extractive, finance, and communications sector are making a significant contribution to economic growth. However, they generate few jobs and have little direct impact on the vast majority of Ivorian households. Prior to the 2014-2015 period, the agricultural sector was less productive than other sectors, despite the fact that is employs the majority of Cote d’ Ivoire’s poor. The recent upturn in this sector is expected to lead to a sharp decline in rural poverty, owing in particular to the 17% increase in the farmgate price of cocoa in October 2015. Prices nevertheless remain dependent on international markets, where fluctuations continue to adversely affect the living conditions of producers.
Cote d’Ivoire has a large working-age population, the vast majority of whom are employed. 93% of working-age Ivorians report that they are employed, and the report notes an unemployment rate of just 7%. However, while the unemployment rate is extremely low relative to the rates observed in industrialized countries, young graduates are still struggling to make a decent living. This relatively low unemployment rate is explained in part by the use of statistical categories that are not adapted to the prevailing situation in Africa. It can also be attributed to the fact that unemployment is a “luxury” that few Africans can afford. They have to earn a living, even from small jobs that offer no job security, as unemployment benefits are not available in Africa.
Finding a job is not the main challenge facing Ivoirians, it is rather securing a quality job. Indeed, most Ivorians work long hours without earning an income that would allow them to enjoy a decent standard of living. The average monthly income for workers is approximately CFAF 97,266 (or $197), which is lower than the average in Africa. It should be noted that this average income has increased marginally over the past decade, owing to rapid population growth and the relative stagnation of the Ivorian economy up to 2011. Economic recovery has paved the way for higher incomes since 2012, and this positive trend is expected to continue through 2015, although the data is not yet available.
Going forward
Drawing on examples from other countries, the report explores ways in which Cote d’Ivoire could guarantee quality jobs for its working-age population, which is expected to double over the next 15 years. It recommends a structural transformation of the labor market through a gradual transfer of workers to non-agricultural jobs. This would be good news for the majority of Ivorians, as incomes earned by self-employed persons and workers in the non-agricultural sectors are generally higher. To successfully achieve this transformation, productivity in the following three employment categories needs to be boosted through several actions:
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Self-employment: make jobs more secure through basic contracts, and support young entrepreneurs, including women, by combining training programs and the provision of micro-credit.
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Wage employment: encourage business start-ups and the shift to the formal sector by streamlining administrative procedures; make access to credit easier by providing more information and developing innovative instruments; promote apprenticeships and continuing training by forging partnerships between government authorities and employers.
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Agricultural employment: encourage the marketing of agricultural products by facilitating the emergence of economies of scale for small farmers; facilitate community networking and partnerships along the value chain; promote access to and the use of new technologies by farmers to help lower their production and transaction costs.
This report, which is intended for the general public, provides examples of best practices drawn from successful experiences in other countries, and can serve as a guide for Cote d’Ivoire. It recommends the urgent implementation of a comprehensive job policy that will allow Cote d’Ivoire to achieve its goal of become an emerging economy as soon as possible. The country must also boost the productivity of its working-age population by promoting the transfer of workers to more productive sectors of the economy and achieving productivity gains in the sectors that will continue to employ the majority of Ivorian workers.
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Republic of Congo: Mitigating the impact of oil market fluctuations on fiscal revenue
According to the most recent edition of the World Bank’s monitoring report on the economic and financial situation in the Republic of Congo, growth in Congo trended upwards in 2014 after stagnating for a three-year period. This upturn was not, however, enough to achieve the country’s development objectives. Compounding this concern is the fact that certain problems that surfaced in 2014 could dampen growth in the years ahead. Growth has already slowed in 2015.
“Buoyed by a robust recovery of the oil sector, a rebound in the Congolese economy is expected between 2016 and 2017. However, this economic recovery will not be enough to allow the country to resolve its cash flow problems,” notes Djibrilla A. Issa, World Bank Country Manager for the Republic of Congo. In a context of oil price volatility, the report considers ways in which the government might be able to create a fiscal safety net.
The report is banking on a growth rate of roughly 3.5% over the 2015-2017 period compared to a 4.5% rate posted between 2012 and 2014, attributable to weaker domestic demand resulting from lower State expenditures, a decline in private investment, and the shrinking domestic market. In 2016, the resumption of oil production and the continued oil-related investments by Total E&P Congo and Chevron (in the Moho Nord and Lianzi oil fields) will mitigate the impact of these factors on growth.
The authors of the report point to five major problems in the country’s economic policy in recent years: (i) inadequate budget programming leading to frequent budget amendments; (ii) a decline in domestic demand due in part to the expulsion of undocumented persons; (iii) the apparent inability of the Treasury to pay its bills on time despite budget surpluses; (iv) a gradual increase in salaries in tandem with a decrease in State revenue; and (v) a steady deterioration in the quality of government financial data. The Congolese government would benefit from the adoption of appropriate measures aimed at improving its budget programming and the periodic publication of reliable data on its public finances. It could follow the example of certain countries in the subregion that regularly publish sound data on their public finances.
According to the report, the Congolese economy’s heavy reliance on oil sector revenue requires the adoption of a more disciplined approach to the management of these revenues. The recent drop in oil prices has, over a six-month period, led to a cash flow crisis that the government is still trying to resolve. This indicates that the authorities have not made any provisions for a management mechanism to mitigate the impact of sudden economic changes on public finances, despite the fact that the country has a stabilization fund and a surplus that was built up over the last ten years. An operational mechanism to draw down on these resources in times of need could therefore have allowed Congo to avoid current problems with budgetary and fiscal adjustments.
“The Government of Congo would significantly benefit from the adoption and application of a dynamic budget and fiscal rule, so as to curb the heavy reliance on the oil market for its economic health,” underscores Fulbert Tchana Tchana, Senior Economist at the World Bank.
In addition, with a view to improving management of its oil revenue, the report suggests that the Congolese government could:
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Adopt a budget rule based on the non-oil primary balance;
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Establish transparent institutions and mechanisms to improve the management of its revenue;
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Draft and rigorously apply the rules related to the accumulation and transfer of savings to the stabilization fund;
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Adopt and consistently implement a mechanism to build up the equity fund (for future generations);
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Outline a management policy for equity fund investments.
On the whole, a medium-term expenditure framework is essential to ensuring proper management of oil sector revenue.
» Republic of Congo Economic Update: The Road to Economic Development Fiscal Buffer in a Context of Volatile Oil Prices | September 2015 (PDF, 11.94 MB)
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Making social safety nets a priority in Gabon
The first edition of the Gabon Economic Update considers the establishment of a social safety net system that could offer protection to the poorest Gabonese, helping them cope with economic instability.
Since 2013, the growth rate has steadily fallen from 5.6% in 2013, to 4.3% in 2014, and then to 4.1% in 2015, due to the country’s heavy reliance on oil production and exports.
The report entitled “Protecting the Poor Despite Slower Growth” reveals that the decline in oil prices has led to a contraction in public investment and the labor market. The private sector shed at least 4,000 jobs (6% of the workforce) in 2014. Construction activities were the hardest hit, posting a 15% decline in its labor force compared to 2013.
Despite a wealth of natural resources and average per capita income of $10,660 in 2014, a large segment of the population earns low wages or is unemployed. These individuals have no buffer against external shocks such as a decline in oil prices and, for this reason, need to be protected.
In the past few years, the Gabonese government took steps to institute a social safety net system, which is not yet operational. Through its human investment strategy, launched in December 2013, Gabon is trying to offer protection to the most vulnerable, which consists of more than 95,000 households. The system plans to implement cash transfers and income-generating activities.
In order to get this system up and running, Gabon will have to undertake a more in-depth analysis of poverty and vulnerability, conduct an institutional audit of the system, draft a deployment plan, and then pilot it.
In addition to an analysis of socioeconomic conditions, the publication also highlights the following economic developments:
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Negative growth in the buildings and public works sector was offset by higher-than-expected growth in the extractive industries sector and by the expansion of the services sector. Oil and manganese production increased by 6.6% and 6%, respectively, at the end of the first six-month period of 2015.
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Although the services sector posted a slight decline, it remained the main engine of growth in 2014, accounting for a 3.5 percentage point growth, led by the telecommunications and transport sectors.
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The non-oil industries sector also contracted. This sector’s industries, which are largely oriented toward the domestic market (mining, manufacturing, wood processing, electricity, water, and refining), are limited by the size of the economy and impacted by the decline in activity in the buildings and public works sector.
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Growth in the agricultural sector, however, rose by close to 7%, as a result of the emergency plan for food security, which focuses on the promotion of agricultural and livestock products (cassava, bananas, rice, vegetables, poultry, and pork) and programs aimed at orchard development. Despite these gains, the sector remains underdeveloped.
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The poverty rate in Gabon, which includes those living on less than $3.00 per day, stood at roughly 22.7% of the population in 2014. If growth turns out to be lower than projected in the medium term, it is unlikely that this rate will fall.
The Gabon Economic Update, published annually by the World Bank, focuses on the country’s recent economic developments. Each edition is devoted to a specific topic and aims to foster discussion amongst those seeking to improve Gabon’s economic trajectory.
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Five Southern Africa countries to plug sugar deficit in Kenya
Five Southern African countries are the beneficiaries of duty-free sugar exports to Kenya approved under the new Common Market for Eastern and Southern Africa quota deal.
Allocation criteria based on domestic surpluses that the 19-member economic bloc adopted two weeks ago in Lusaka, Zambia, will see Malawi, Zambia, Mauritius, Swaziland and Zimbabwe export duty-free sugar to Kenya to plug the deficit there.
“The scramble for the Kenya sugar market will be between the countries with a surplus. Egypt has been edged out and Uganda will only ride on the East African Community open market while competing with other qualified countries,” said Nelson Ndirangu, director for economics and external trade in Kenya’s Ministry of Foreign Affairs and International Trade.
Egypt, which has been accused of flouting the rules of origin by importing sugar and repackaging it for export, has fallen further down the priority list because of deficits in the domestic markets.
Uganda, which was under the spotlight recently after President Yoweri Museveni and Kenya’s Uhuru Kenyatta struck a deal to allow Ugandan sugar to access Kenyan market, has been edged out because it is ranked as a deficit market.
The allocation criteria were agreed upon at the Comesa Council of Ministers meeting held in Zambia earlier this month during which Kenya was also allowed to delay opening its market for sugar for another year until February 2017.
The criteria gave countries with domestic surpluses leeway to export up to 70 per cent of the declared sugar deficit in Kenya, while the balance of 30 per cent will be allocated depending on a country’s share of intra-Comesa trade in the commodity.
Sources at Kenya’s Ministry of Foreign Affairs and International Trade said the five countries and Madagascar, which has a deficit had already expressed interests in servicing the unmet demand of 200,000 tonnes in Kenya beginning next year.
The quotas will be allocated using current years figures for each country.
A draft report by the trade and Customs experts indicates that under the surplus category, Swaziland leads with 570,195 tonnes, followed by Mauritius and Zambia at 414,074 tonnes and 268,000 respectively.
In the intra Comesa trade category, Zambia commands 34.95 per cent of the market share.
The other countries command a market share of below five per cent each.
Other EAC member states in the Comesa bloc include Rwanda and Burundi, all with a deficit and a below 5 per cent market share in the intra-trade category.
The quota system has brought to an end to nine months of first come first served trade that started in February 2015.
In the first 10 months of 2014, Egypt exported 10,700 metric tonnes of sugar and 11,600 tonnes in 2015. Zambia exported 5,100 tonnes in 2014 and 19,600 tonnes in 2015 while Madagascar and Mauritius exported 30,400 tonnes and 22,600 tonnes respectively in 2015.
Egypt produces two million tonnes of sugar against a consumption of three million tonnes, leaving a deficit of one million tonnes. Egypt is, however, the second largest trading member in the bloc with a 27.86 per cent market share.
Egypt had proposed an option whereby 40 per cent of the quota would be based on sugar production, 40 per cent on trade and 20 per cent on sugar surplus.
Although the proposal was defeated, Egypt’s suggestion that the criteria be reviewed after every two years was allowed.
Egypt protested that relying on surplus production denies member states with sufficient capacity an opportunity to export sugar that meets the Comesa rules of origin.
“Egypt felt frustrated because of its capacity to import raw sugar, produce, package and export but after two years we may see a review in Egypt’s favor,” said a source privy to the discussions.
Other members, however, insisted that the formula should not encourage importation of sugar from world markets but instead encourage domestic production. Kenya was warned that the safeguards will not be extended beyond 2017.
To boost sugar production, Kenya intends to privatise government-owned firms and pay farmers on the bases of sucrose content as opposed to volume of sugarcane.
As the summit was going on in Lusaka, the Kenya Privatisation Commission invited bidders to submit applications for stakes in Nzoia, Chemelil, South Nyanza, Muhoroni and Miwani Sugar companies.
Setback
However, the process suffered a setback last week when the High Court stopped the process after the Transition Authority challenged the legality of the auction.
The Privatisation Commission, however, said it was advised by the Attorney General’s Office that it was exempted from seeking the authority’s input in transferring the agricultural assets, which under the Constitution, now belong to respective counties and not the national government.
Despite the government’s efforts to bring faster maturing cane varieties, adoption has been slow because they require more labour between crops. Local leaders have also been vocal against the privatisation of the companies, which would wean farmers of endless government bailouts.
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Kenya, EU set to ratify trade partnership by next December
An Economic Partnership Agreement (EPA) meant to give preferential access to a range of Kenyan agricultural goods and services to the European market could be ratified before the end of next year.
Bernd Lange, the head of the European Union Parliament delegation attending the ongoing World Trade Organisation (WTO) talks in Nairobi, Thursday told Kenyan MPs and senators that the draft trade agreement was set to be ratified by next December.
“We import coffee, cut flowers, tea, some fish and vegetables. In EPAs, there are possibilities to discuss further trade arrangements. Time is limited for Kenya to December 2016 to ratify a trade pact. We want the EPAs text to be ready by January,” said Mr Lange.
A deadlock on the EPA negotiations could see Kenyan goods worth billions of shillings subjected to steep EU taxes, which would make them non-competitive and effectively lock them out of the European market.
At a meeting with joint committees on Finance, Trade and Commerce at the Senate chambers, Mr Lange said the EU and the East African Community (EAC) member States are working on ratification of EPAs.
“This is the most important step that will give market access for Kenyan and the east African region to the EU. The ratification of the EPAs deal will remove barriers that hinder Kenyan goods such as cut flower, tea and coffee to the EU market,” he said.
He told a joint Senate committee on Finance, Commerce and Budget, and National Assembly Finance, Planning and Trade team that the EU Parliament is ready to begin the ratification process once Kenya and the European Commission reach and sign an agreement.
“We hope that by December, the EU and EAC, and in particular Kenya will have ratified the trade deal so that we give Kenya and EU people a Christmas gift,” Mr Lange said. He led more than 20 EU leaders to the meeting.
Senator Billow Kerrow noted that Kenya faces stringent conditions on standards, making it hard to export its products.
“Just like in other goods, we have serious challenges in terms of non-tariff barriers that we get in services. Kenya is unable to export its skilled manpower.
“In the area of flower export to the EU, for instance, we are being subjected to very high standards making it impossible to access the EU market,” said Mr Kerrow.
In the fisheries sector, he said, Kenya faces up to 80 conditions on sanitary standards, making it impossible to export.
“We have signed a deal with US on Agoa but we don’t benefit because of these barriers, which make it difficult to access the market. Africa today needs to trade, not aid from developed world,” Mr Kerrow said.
The EU head denied accusations that the regional bloc and the developed world were not keen to strike a deal that would end subsidies in agriculture.
He said the stringent standards and other barriers apply to member states on a case by case basis, and not as a blanket rule.
EU Commissioner for Agriculture and Rural Development Phil Hogan, who visited Kenya Coffee Research Institute in Embu on Thursday, said Kenya needs to improve the competitiveness of its agricultural exports through disease control and research to ease access for its commodities to the European market.
EU is the primary market for Kenyan coffee, with exports to the region having grown by 17 percent last year to Sh2.6 billion due to improved production and higher prices, earning local farmers Sh1.5 billion at an average price of Sh22, 300 per 50 kilogramme bag.
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WTO members secure “historic” Nairobi Package for Africa and the world
WTO members concluded their Tenth Ministerial Conference in Nairobi on 19 December by securing an historic agreement on a series of trade initiatives. The “Nairobi Package” pays fitting tribute to the Conference host, Kenya, by delivering commitments that will benefit in particular the organization’s poorest members.
The Nairobi Package contains a series of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries. These include a commitment to abolish export subsidies for farm exports, which Director-General Roberto Azevêdo hailed as the “most significant outcome on agriculture” in the organization’s 20-year history.
The other agricultural decisions cover public stockholding for food security purposes, a special safeguard mechanism for developing countries, and measures related to cotton. Decisions were also made regarding preferential treatment for least developed countries (LDCs) in the area of services and the criteria for determining whether exports from LDCs may benefit from trade preferences.
“Two years ago in Bali we did something that the WTO had never done before – we delivered major, multilaterally-negotiated outcomes,” DG Azevêdo declared. “This week, here in Nairobi, we saw those same qualities at work. And today, once again, we delivered.”
The WTO’s Tenth Ministerial Conference was held in Nairobi, Kenya, from 15 to 19 December 2015, the first such meeting hosted by an African nation. The Conference was chaired by Kenya’s Cabinet Secretary for Foreign Affairs and International Trade, Amina Mohamed.
Ms Mohamed admitted that ministers “faced challenging moments,” in concluding the Nairobi Package, which required an extra day of intensive negotiations to conclude. “Tough calls had to be made but we did bite the bullet.”
“We have reaffirmed the central role of the WTO in international trade governance,” she added.
The Conference was opened on 15 December by Kenya’s President, Uhuru Kenyatta. During the opening session, the Conference was also addressed by Ms Mohamed, DG Azevêdo and the Chair of the WTO’s General Council, Fernando de Mateo. They were joined at the Opening Ceremony by President Ellen Johnson Sirleaf of Liberia, whose country concluded its WTO membership negotiations on 16 December.
Agreements on agriculture
A centrepiece of the Nairobi Package is a Ministerial Decision on Export Competition, including a commitment to eliminate subsidies for farm exports. DG Azevedo described it as the “most significant outcome on agriculture” in the organization’s 20-year history.
“WTO members – especially developing countries – have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade,” he declared. “Today’s decision tackles the issue once and for all.”
A number of countries are currently using export subsidies to support agriculture exports. The legally-binding decision would eliminate these subsidies and prevent governments from reverting to trade-distorting export support in the future.
Under the decision, developed members have committed to remove export subsidies immediately, except for a handful of agriculture products, and developing countries will do so by 2018. Developing members will keep the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023, and the poorest and food-importing countries would enjoy additional time to cut export subsidies.
The decision contains disciplines to ensure that other export policies are not used as a disguised form of subsidies. These disciplines include terms to limit the benefits of financing support to agriculture exporters, rules on state enterprises engaging in agriculture trade, and disciplines to ensure that food aid does not negatively affect domestic production. Developing countries are given longer time to implement these rules.
Ministers also adopted a Ministerial Decision on Public Stockholding for Food Security Purposes. The decision commits members to engage constructively in finding a permanent solution to this issue. Under the Bali Ministerial Decision of 2013, developing countries are allowed to continue food stockpile programmes, which are otherwise in risk of breaching the WTO’s domestic subsidy cap, until a permanent solution is found by the 11th Ministerial Conference in 2017.
A Ministerial Decision on a Special Safeguard Mechanism (SSM) for Developing Countries recognizes that developing members will have the right to temporarily increase tariffs in face of import surges by using an SSM. Members will continue to negotiate the mechanism in dedicated sessions of the Agriculture Committee.
In addition, a Ministerial Decision on Cotton stresses the vital importance of the cotton sector to LDCs. The decision includes three agriculture elements: market access, domestic support and export competition.
On market access, the decision calls for cotton from LDCs to be given duty-free and quota-free access to the markets of developed countries – and to those of developing countries declaring that they are able to do so – from 1 January 2016. The domestic support part of the cotton decision acknowledges members’ reforms in their domestic cotton policies and stresses that more efforts remain to be made. On export competition for cotton, the decision mandates that developed countries prohibit cotton export subsidies immediately and developing countries do so at a later date.
Decisions of benefit to LDCs
The Nairobi Package also contains decisions of specific benefit to LDCs, including enhanced preferential rules of origin for LDCs and preferential treatment for LDC services providers.
Preferential rules of origin for LDCs
The Ministerial Conference adopted a decision that will facilitate opportunities for least-developed countries’ export of goods to both developed and developing countries under unilateral preferential trade arrangements in favour of LDCs.
The decision in Nairobi builds on the 2013 Bali Ministerial Decision on preferential rules of origin for LDCs. The Bali Decision set out, for the first time, a set of multilaterally agreed guidelines to help make it easier for LDC exports to qualify for preferential market access.
The Nairobi Decision on Preferential Rules of Origin for LDCs expands upon this by providing more detailed directions on specific issues such as methods for determining when a product qualifies as “made in an LDC,” and when inputs from other sources can be “cumulated” – or combined together – into the consideration of origin. It calls on preference-granting members to consider allowing the use of non-originating materials up to 75% of the final value of the product.
The decision also calls on preference-granting members to consider simplifying documentary and procedural requirements related to origin.
Key beneficiaries will be sub-Saharan African countries, which make up the majority of the LDC Group, the proponent for the Nairobi Decision on Preferential Rules of Origin for LDCs. More information on rules of origin is available here; a briefing note on the negotiations for a Nairobi Decision is available here.
LDC trade in services
The Ministerial Decision on Implementation of Preferential Treatment in Favour of Services and Service Suppliers of Least Developed Countries and Increasing LDC Participation in Services Trade extends the current waiver period under which non-LDC WTO members may grant preferential treatment to LDC services and service suppliers. The period has been extended 15 years until 31 December 2030.
The waiver allows WTO members to deviate from their most-favoured nation obligation under the General Agreement on Trade in Services (GATS). To date, 21 members have submitted notifications granting preferences to LDC services and service suppliers; the notifications are available here. The decision also instructs the WTO’s Trade in Services Council to encourage discussions among members on technical assistance aimed at increasing the capacity of LDCs to participate in services trade. It also sets up a review to monitor the operation of the notified preferences.
Ministers reaffirm central role of WTO in global trade talks, acknowledge divide on future of Doha Round
In their Nairobi Declaration, ministers cited the “pre-eminence of the WTO as the global forum for trade rules setting and governance” and recognized the contribution the rules-based multilateral trading system has made to the strength and stability of the global economy.
“We reaffirm the need to ensure that Regional Trade Agreements (RTAs) remain complementary to, not a substitute for, the multilateral trading system,” ministers declared, adding that the WTO’s Committee on Regional Trade Agreements (CRTA) would discuss the systemic implications of RTAs for the multilateral trading system and their relationship with WTO rules.
Ministers acknowledged that members “have different views” on how to address the future of the Doha Round negotiations but noted the “strong commitment of all Members to advance negotiations on the remaining Doha issues.”
“This work shall maintain development at its centre and we reaffirm that provisions for special and differential treatment shall remain integral,” ministers declared.
- Ministers also stated that, while negotiators should prioritize work where results have not yet been achieved, “some wish to identify and discuss other issues for negotiation; others do not. Any decision to launch negotiations multilaterally on such issues would need to be agreed by all Members.”
DG Azevêdo acknowledged “persistent and fundamental divisions on our negotiating agenda” and said WTO members “have to face up to this problem.”
“Members must decide – the world must decide – about the future of the Doha Round,” he declared. “This impasse is already harming the prospects of all those who rely on trade today – and it will disadvantage all those who would benefit from a reformed, modernized global trading system in future.” His full speech is available here.
Ministers also welcomed the adoption of Decisions covering a Work Programme on Small Economies; TRIPS Non-violation and Situation Complaints; and a continued Work Programme on Electronic Commerce.
WTO members secure landmark $1.3 trillion IT trade deal
In another significant outcome from the Nairobi Ministerial, WTO members representing major exporters of IT products agreed on 16 December on the timetable for implementing a landmark deal to eliminate tariffs on 201 information technology products valued at over $1.3 trillion per year.
Negotiations on the expanded Information Technology Agreement (ITA) were conducted by 53 WTO members, including both developed and developing countries, which account for approximately 90 per cent of world trade in these products. However, all WTO members will benefit from the agreement, as they will all enjoy duty-free market access to the markets of the members eliminating tariffs on these products.
The list of 201 products was originally agreed by the ITA participants in July 2015.
This breakthrough followed months of intensive negotiations among the ITA participants. Their review of “draft schedules” involved a process whereby each of them indicated over what timeframe and how they intended to implement the elimination of duties on these products.
For every product on the list, ITA participants have negotiated the level of reductions and over how many years it will fully eliminate the tariffs. As a result of these negotiations, approximately 65% of tariff lines will be fully eliminated by 1 July 2016. Most of the remaining tariff lines will be completely phased out in four stages over three years. This means that by 2019 almost all imports of the relevant products will be duty free.
More details on the Agreement are available here.
Accessions
Trade ministers on 16 December welcomed the conclusion of negotiations on the accessions of Liberia and Afghanistan at the Tenth Ministerial Conference. Liberia’s President, Ellen Johnson Sirleaf, was present at the ceremony marking the formal conclusion of the negotiations, eight years after it applied for WTO membership. President Sirleaf said the country’s “accession to the WTO marks another turning point in our history” and an important step towards meeting Liberia’s “aspirations for the growth and development of our people.”
Liberia will formally become a member of the WTO 30 days after notifying the organization that it has ratified its accession terms. More information on Liberia’s accession is available here.
Trade ministers also welcomed the conclusion of Afghanistan’s WTO accession negotiations on 17 December. Afghanistan’s First Deputy Chief Executive Mohammad Khan Rahmani said Afghanistan’s WTO accession “is a clear sign for all the world to see that the country is building a business-friendly environment.”
Afghanistan applied for WTO membership in 2004 and will formally take its seat at the WTO 30 days after its ratification instrument is received. More information on Afghanistan’s WTO accession is available here.
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WTO delivers ground-breaking deal for development
The World Trade Organisation (WTO) today has delivered a landmark deal that is good for fairer global trade and good for development at its 10th Ministerial Conference in Nairobi, Kenya.
The 10th WTO Ministerial Conference, gathered in Nairobi since Tuesday, agreed today on a global trade deal that benefits developing countries in Africa and around the world by getting rid of trade distorting export subsidies in agriculture. As regards EU producers, they will for the first time see a level playing field in export competition, a key priority for EU negotiators.
After a tough week of negotiations important decisions have been taken to improve rules on agricultural trade. Furthermore, the deal opens up opportunities for the poorest and most vulnerable developing countries to integrate better into the global trading system. The EU team, led by Cecilia Malmström, Commissioner for Trade, and Phil Hogan, Commissioner for Agriculture, was at the forefront of efforts to broker a deal. Ministers also mapped out the future direction for WTO trade negotiations and started a debate on new issues that the WTO should address.
Cecilia Malmström, welcoming the deal, said: “We’ve had some long days and nights of intense negotiations here in Nairobi, and our work has paid off. The EU has successfully concluded what we set out to achieve. The WTO, meeting for the first time in Africa, has been able to deliver a good deal for developing countries. Today’s decision opens real opportunities for more trade and investment and reinforces the global trading system. For those who had doubts, it proves the relevance of the WTO and its capacity to deliver results. That’s good news for our work in the years ahead”.
Phil Hogan added that “this is a square deal for EU agriculture, for farmers in the developing world, in particular for the least developed countries. We have delivered on our objectives outlined ahead of the negotiations. In recent years, the EU has led the way in agreeing to renounce the use of export subsidies. Now, for the first time, there are binding disciplines on subsidies such as export credits, where our competitors are subsidising trade worth billions every year. These new binding controls will level the playing field for EU exporters. Also, our competitors will not be able to circumvent these rules through use of state trading enterprises - a key demand for the EU. We have also achieved our objectives on food aid and the special safeguard mechanism. The food aid deal will mean less displacement of local African production, which means it’s good for African farmers and good for the Migration agenda.”
Today’s decisions, building on the agreement reached in Bali two years ago, improves the global environment for trade. In practical terms, today’s deal:
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Will stop the use of subsidies and other schemes unfairly supporting agricultural exports. The elimination of export subsidies will protect vulnerable farmers in developing countries from the damaging effects of export subsidies. And it will fast-track the removal of these subsidies in the case of cotton.
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Ensures that food aid for developing countries is given in a way which does not distort local markets
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Seeks to simplify the conditions that exporters from the poorest countries have to meet, so that their products benefit from trade agreements (so-called rules of origin). It also gives more opportunities for businesses from the poorest countries to provide services in the WTO’s 164 member countries.
These changes will be phased in gradually. More time is allowed to developing and least developed countries to adapt themselves to different aspects of the rules.
For European producers and exporters, the deal brings new opportunities by creating a more level playing field towards both developed and emerging economies. Specifically, it will benefit EU farmers by ensuring an end to export subsidies in key sectors such as wheat flour, sugar and dairy.
The Ministerial also saw the finalisation of the update of the 1996 Information Technology Agreement, which when implemented will remove duties covering €1.2 trillion in trade. Consumers will benefit from the elimination of tariffs and thus more affordable prices on products such as media players, game consoles and GPS.
These two agreements are a shot in the arm for the global trading system. They come on the back of other important multilateral successes with the UN’s 2030 Sustainable Development Goals and last week’s climate change agreement. It provides a firm basis for work in 2016 to further opening multilateral trade opportunities and to broaden and modernise the WTO’s current agenda.
» Access the Ministerial decisions and other key documents here.
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tralac’s Daily News selection: 18 December 2015
The selection: Friday, 18 December
The Intra-African Investment Report: consultancy services for conducting data collection (AfDB)
The Intra-African Investment Project aims to (i) contribute to a better understanding and knowledge of intra-African Investments, a rapidly growing phenomenon and a critical source of growth and jobs for the continent on which data is still patchy, (ii) increase efficiency of intra-African private sector investment at the regional/continental levels, (iii) promote regional firm productive capacities and sustainable development of regional value chains (RVC) and (iv) integrate development of investment and trade at the regional and continental levels. The successful consultants are expected, inter alia, to: collect data on the scale, trends, composition of Intra-African Investment flows and stocks and address impediments of IAI; to illustrate best practices where local enterprises are connected with global/regional value chains and benefits created such as job creation, income growth, technology spill-over, skills development, etc.
Serious lack of Sub-Saharan intra trade (Chamber Trade Sweden)
In a special report commissioned for our chamber partner organisations in Africa, 'Globalization, protectionism and economic growth', the author Fabian Wallen puts forward conclusions underlying the serious effects of the lack of regional SSA trade and integration. The report was presented at chamber seminars in Zambia and Zimbabwe, in November, as part of our capacity building on Industrial Development. The report will be launched officially in the beginning of 2016. We hope the report will promote further discussion within the chamber family in Africa.
Ghana’s transit trade fortunes in West Africa dip (GhanaWeb)
The Ghana Ports and Harbours Authority says Ghana is losing significant revenue due to continued drop in transit trade between the country and her West African neighbours. Officials attribute the trend, among others, to the introduction of axle load regulation which has seen shippers from the Sahel Region boycott Ghana’s ports over high cost. Figures from the authority indicate Ghana lost about 50% of cargo trade with Burkina Faso, Mali and Niger from one million tons annually since 2009 to 500 thousand tons in 2014. Marketing and Public Relations Manager at GPHA, Paul Asare Ansah, says Ghana paid the price in the country’s quest to maintain the integrity of her corridors. He was addressing police regional commanders forum on transit trade organized in Kumasi by the Ghana Shippers Authority in collaboration with the Borderless Alliance.
Kenya, Ghana push for African trade market (The Standard)
Kenya and Ghana are pushing for the formation of an African company that would provide a continental market for goods and services to promote trade among the 50 countries of the African Union. The structure of the enterprise, to be named Pan African Trade Hub System (Paths), will be modelled along the Africa Development Bank, and registered in Kenya, Ghana, Mauritius and Tunisia. It is projected to be operational by 2017.
Ethiopia: 'Green Export' review update (UNCTAD)
During the workshop [22-23 December], participants will discuss the potential for supporting the development of sustainable value chains, assess existing market opportunities and review options for generating increased added value. National sustainable development priorities and relevant sectoral policies will also be considered. As a result of the workshop, stakeholders will select the priority green sectors that will be further analyzed and supported in the framework of the NGER.
Extract from Ethiopia's draft NGER: There is a large un-tapped potential for developing countries to advance the development of green sectors. In this context international trade, through exports and imports of green goods and services, can facilitate the development of green sectors. There are formidable challenges, however, to undertaking the transitions successfully and engaging in international trade. Principal approaches towards this goal include the creation of an enabling environment through improved regulatory and institutional frameworks for the green economy, productive capacity building, investment and related financial services, and more open trade, with greater attention to social equity, in green goods and services to enhance market access and investment opportunities. [Download the draft report]
Roadmap to boost intra-COMESA trade in maize (COMESA)
The COMESA Mutual Recognition Framework (C-MRF) was launched in Kampala yesterday. It is aimed at providing equivalence of analytical results and recognition of certificates of analysis issued by the laboratories of the participating countries. This will eliminate the need for multiple testing by both the exporting and importing country. The C-MRF was developed by the COMESA Secretariat in partnership with six countries with significant maize trade. They comprise Kenya, Malawi, Rwanda, Uganda, Zambia and Zimbabwe and will also pilot the Framework. The key components of the MRF are common grading criteria, proficiency testing for Aflatoxin analysis and a risk-based sampling protocol.
Swaziland’s SACU sugar sales projected to grow (Swazi Observer)
Swaziland's sugar sales in the SACU market are projected to grow at 3.25% in the short term and 2.5% thereafter. According to the Royal Swaziland Sugar Corporation, the implementation of the dollar based reference price mechanism has resulted in the institution of a variable tariff that protected the SACU market from low cost imports, hence SACU sugar price was projected to increase.
El Niño cools Africa’s economic engine (WSJ/Business Day)
SADC Agromet Update: 2015-2016 season
SA-AGOA: South Africa to open poultry quota Friday (Politico)
Commodities and Development Report 2015 (UNCTAD)
Smallholder farmers constitute the largest contingent of the poor and yet they produce more than 8% of the world's food, in value terms. The report argues for specific measures at the national, regional and global levels, including in international trade and investment agreements, for unleashing the full business potential of smallholders. It showcases good policy practices, including the role of strong political leadership in reversing the policy neglect that small farmers have suffered from. Extract: Regardless of differing estimates of the extent and the value of post-harvest losses, the resulting low returns on farming investments may discourage many farmers from engaging with markets, and retreating into subsistence farming or off-farm activities instead. Mitigation technologies vary by product. For perishable fruits and vegetables, introducing and maintaining cold storage facilities in rural areas is challenging in most low-income countries because of the high capital investment needed, unreliable electricity supply and lack of maintenance. The absence of a domestic cold-chain infrastructure also limits the possibility of smallholders to participate in regional and international value chains. [Download]
Why agricultural product standards matter for small traders in developing countries (World Bank Blogs)
New World Bank Group research offers a first look at how a specific set of mandatory product standards - in this case, the maximum pesticide residue permitted on unprocessed food - impacts exporters. Novel firm-level data for exporters from 42 developing countries from 2006-2012 were analyzed along with data on pesticide standards for 243 agricultural and food products in 63 importing countries. We found that pesticide standards differ greatly across countries. These findings have clear implications for developing countries trying to reduce poverty by expanding agricultural trade.
MC10 updates:
Bridges Daily Update #4: 'As clock runs down, WTO Nairobi talks kick into gear'
Azevêdo welcomes efforts to help implement Trade Facilitation Agreement (WTO)
DG Azevêdo noted the unique architecture of the TFA, which provides developing and least-developed countries with the flexibility to tailor their commitments and implementation schedules according to their specific needs and commensurate with their level of development. I.V. Mazorodze, Commissioner of Customs and Excise with the Swaziland Revenue Authority, said efforts undertaken by his government so far on implementation have included the creation of a National Trade Facilitation Committee, the development of a National Trade Portal, training of customs clearing agents, upgrading border infrastructure and the drafting of a new Customs Act. He noted that Swaziland's ranking in the World Bank's “Doing Business” survey has improved significantly in recent years. The country currently ranks 30th worldwide for the survey's “trading across borders” indicator.
Ambassador Michael Froman: launch of the Global Alliance for Trade Facilitation (USTR)
“I’d like to say from our own perspective, we know, as is the case for many countries, that SMEs are really the driving force of the economy. They are the job creators. And yet, when we ask our SMEs what are the biggest challenges they see facing them when they engage in international trade, the number one issue they point to are the complexities in the various customs procedures and border measures, and the TFA very much is an effort to address them."
PACCI: 'Urge your government to ratify the agreement on trade facilitation'
The Pan African Chamber of Commerce and Industry notes, with deep concern, that most African governments have yet to put in place all the necessary measures for the ratification of the Agreement on Trade Facilitation. PACCI calls upon national chambers of commerce and business associations to push for ratification by their government and allow prompt implementation of the long-awaited Agreement on Trade Facilitation.
Kenya rules out hitches under WTO’s trade automation deal (Business Daily)
Kenya has ruled out hitches as it begins to open its customs and border procedures to the rest of the world under the WTO’s ambitious Trade Facilitation Agreement. Kenya, one of the 60 states that had signed the TFA by yesterday, says it is already running ahead of other developing states after recent automation of its ports and border procedures.
Sh15bn boost from Denmark to streamline cargo handling in Mombasa (Daily Nation)
Kenya yet to sign trade deal scrapping taxes on ICT imports (Business Daily)
Kenya expects to sign the WTO agreement that is aimed at removing taxes on Information Communication Technology products like TV decoders and computers to promote economic growth and jobs creation. Foreign Affairs and International Trade secretary Amina Mohamed on Thursday said the State is still monitoring the Information Technology Agreement, which gives 201 goods duty-free access to markets of the WTO members from July next year.
EA seeks common warehouse rules to plug revenue leakages (Business Daily)
The Treasuries of the EAC states are seeking common rules to tighten supervision of customs warehouses and stem tax evasion. Treasury cabinet secretary Henry Rotich said there were differences in the warehousing regimes in the region that make it difficult to enforce best practices, thereby leading to revenue leakages.
Zambia plans to establish export-import bank (World Bulletin)
The Zambia Development Agency has recommended the establishment of the EXIM bank to the government, according to ZDA Manager in Charge of Export Albert Halwampa. "At the moment, in Zambia, there is no institution that subsidizes export finance to support traders, as there is in many other countries. The establishment of this specialized bank will enable Zambian traders to take advantage of international trade initiatives," Halwampa said. "Zambia is trying to become an export-led economy, so the EXIM bank will help to boost foreign exchange earnings that will serve to grow the national economy," Halwampa explained.
Afreximbank plans Sh350bn in trade finance to ease Africa forex crunch (Business Daily)
Egypt: Country Partnership Framework (World Bank)
The CPF reflects a clear departure from past World Bank support for Egypt. This is not only by its proposed scale, which is considerably larger than in the past, but also by its focus on supporting the country’s efforts to renew its social contract with its citizens. The three closely interconnected key pillars of the CPF are improving governance, supporting private sector job creation, and improving social inclusion.
AfDB, Egypt ink $500m loan agreement, Egypt Suez Canal revenue drops to $408.4m in November (Ahram), Egypt says consultancy firms behind failure to reach agreement on Ethiopia dam (Ahram)
Latin American Economic Outlook 2016: the time is now for a new Latin America-China partnership (OECD)
Since 2000, the trade relationship between Latin America and China has experienced an exceptional expansion, multiplying 22 fold, compared to a 3 fold increase with the world at large, says the report. The evolution of China’s participation in Latin American global value chains has been remarkable and has even surpassed intraregional ones: between 2000 and 2011, the region’s intraregional share of backward linkages grew from 5% to 9%, and China’s share roared from 1% to 11%. Today, China is the largest trading partner for Brazil, Chile and Peru. Latin America has to advance in its integration agenda, building on existing platforms such as Mercosur, the Pacific Alliance and CARICOM to grasp the benefits of higher integration in global value chains. [Download]
MTN takes fight over Nigerian fine to court (Business Day)
Sudan prepares proposals to bolster trade with Russia (Sputnik)
Zimbabwe: Doing Business performance review workshop (The Herald)
Beitbridge: Traffic volumes increase (The Herald)
Kenya's PPP Unit: 3 keys to success, 5 lessons to share (World Bank Blogs)
IGAD committed to establishing a gender management system (IGAD)
Lesotho: Coalition parties blast SADC (Lesotho Times)
Trilateral cooperation on trade and investment: implications for African industrialisation (IDS)
Stuck in a patent policy rut: considerations for trade agreements (Brookings)
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As clock runs down, WTO Nairobi talks kick into gear
Negotiations at the WTO’s ministerial meet have gained pace, sources say, with Thursday’s talks set to run through the night as members search for common ground that enables them to advance on contentious areas while setting the stage for the organisation’s future work.
Agriculture: countries stake out positions
All-night talks on Wednesday led by a small group of approximately ten countries produced a new agriculture text by early on Thursday that was circulated by the talks’ facilitator, Lesotho minister Joshua Setipa. While many countries said they welcomed the draft as a negotiating basis, others told a ministerial-level meeting at 4 PM that they were unhappy with the result. The facilitator was expected to issue a new draft text on Friday morning.
Thursday’s draft would commit members to eliminating export subsidies – but with little of substance on a proposed new safeguard that the G-33 developing country coalition has said is needed to protect farmers from sudden import surges or price depressions.
Farm exporting countries have warned they could only agree to the safeguard as part of a broader deal to cut tariffs. India issued a statement noting dissatisfaction with the talks’ progress, later indicating plans to table a revised text with Indonesia and Turkey.
Eliminating export subsidies
The draft texts would commit developed countries to eliminating their export subsidies by 2020, with most developing countries doing so three years later. An exception would be made for transport and marketing export subsidies, which developing countries could provide until the end of 2028. Least developed countries (LDCs) and net food-importing developing countries would have another two years to phase these payments out.
Australia has argued that the clause covering these payments has expired. The US told Thursday’s meeting it was unhappy with the proposed extension.
On cotton, the draft provides for an immediate end to export subsidies provided by developed countries, and grants one more year for developing countries to do the same.
Despite a push from the EU and others to secure similarly constraining language on the agricultural export credits used by the US, sources said this section of the text remained relatively weak.
Maximum credit repayment periods could be as long as eighteen months, the new draft says – although the previous negotiating text in this area, tabled in 2008, stipulated no more than six. The EU, Brazil, and other members recently proposed nine month repayment periods under certain conditions. China told Thursday’s meeting that this part of the text should be improved, while Canada, Norway, and Switzerland sought additional concessions.
One source told Bridges that while current US legislation allows repayment periods of up to 24 months, actual practice is 18 months.
A separate section of the text, on agricultural exporting state trading enterprises, would simply instruct members to continue negotiations in Geneva. The US had previously proposed effective commitments in this area, based on the draft 2008 texts.
Food aid: “best endeavour” commitments
New disciplines on food aid would seek to ensure that humanitarian assistance does not serve as a disguised export subsidy by undercutting otherwise viable farmers in the recipient region.
However, Lesotho and Zimbabwe were among those expressing concern at Thursday’s consultation. Sources told Bridges that the draft text would place few real restrictions on donor countries’ ability to provide in-kind aid, or to discipline “monetisation” – the sale of food aid to raise funds for development projects.
“The proposal does not move away from tied food aid programs and would not exert any pressure to reform the status quo,” said Oxfam America’s Gawain Kripke in comments to Bridges.
Froman: Development “too important to leave to Doha”
Thursday morning, US Trade Representative Michael Froman gave a highly-anticipated speech in which he reiterated his call for members to free themselves “from the strictures of the Doha framework.”
“Moving beyond Doha doesn’t mean leaving its unfinished business behind. Rather, it means bringing new approaches to the table. Development is too important to leave to Doha,” he said.
Sources say bilateral and small group meetings are now likely on how the ministerial declaration should address the future of the long-running Doha Round – as well as potential language on “new” trade-related issues. The subjects have not yet been dealt with in a large-room format, trade officials said.
An updated version of the draft ministerial declaration was released earlier on Thursday, following discussions on Wednesday. Though a handful of brackets had been removed, according to a version seen by Bridges, notably those paragraphs in Parts 1 and 3 relating to the reaffirmation of the Doha Round and subsequent ministerial declarations and decisions remained bracketed.
Following an evening meeting at the level of heads of delegation, trade officials confirmed that the talks on the ministerial declaration and potential Nairobi deliverables would go through the night. At this stage, some trade sources have suggested that the conference could drag on into Saturday, despite hopes expressed by key officials that the meeting could still finish by the scheduled close of Friday.
Rules, fisheries proposals
Several ministerial statements in Thursday morning’s plenary session identifying fisheries subsidies disciplines as a desired Nairobi outcome had raised hopes among some trade watchers of potential news.
However, uncertainty mounted as night fell around next steps for proposals made this week as part of the WTO’s overall rules negotiations, of which fisheries subsidy disciplines are a part.
At press time, sources said that bilateral and small-group consultations have been held with the “proponents” as well as with other countries that have expressed concerns, in a bid to identify a path towards consensus on a rules text. Several members also reportedly commented on a revised draft decision by the African, Caribbean, and Pacific (ACP) Group of countries looking to complete negotiations within two years of the Nairobi meet for disciplines on two types of fisheries subsidies.
Some countries reportedly expressed reservations to a paragraph in the ACP document that would aim to prioritise these disciplines. Another suggestion was to expand language in a subsequent paragraph on how these were defined, with the draft currently specifying these as subsidies provided to vessels engaged in illegal, unreported, or unregulated (IUU) fishing, as well as subsidies to any fishing activity negatively affecting fish stocks that are in an “overfished condition.”
In addition, some members were reportedly uncomfortable with a paragraph saying members should “aim to refrain” from providing capacity enhancing subsidies to fishing fleets insofar as these affect the sustainability of fish stocks, undermine development, and threaten food security. The ACP Group met late Thursday afternoon to consider these comments.
Questions remained on Thursday evening as to whether the issue facilitators would draft a text trying to reconcile different approaches and divergent views.
In a side event outside the rules negotiations, a group of 28 WTO members released a ministerial statement on fisheries subsidies, aiming to reinvigorate the organisation’s work on ambitious and effective fisheries subsidies disciplines including, but not limited to, prohibitions on those linked to overfishing and IUU fish activities.
The group also commits to not provide any such subsidies, reaffirms a series of other international commitments, refers to transparency, and special and differential treatment. A footnote indicates, however, that adjustments may be made to the final text in order to account for eventual MC10 outcomes.
“The WTO has a central role in fisheries subsidies reform. It is the only place where binding rules can be established, something that is essential, ” said New Zealand trade minister Todd McClay, joined by others on the dais.
Eyes on services waiver, S&DT
Discussions on special and differential treatment (S&DT) proved divisive, sources say. Those talks are now being facilitated by WTO Deputy Director-General Yonov Frederick Agah.
At press time, the latest updates on this issue indicated that members are keen to have an outcome in this area, with support emerging on the bulk of the proposals, though divisions remain on sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT).
One source said during the course of the day that the sticky point is whether the non-LDC specific provisions among the nine proposals in play should apply to all developing countries and how binding the language should be.
One LDC delegate mentioned that talks on S&DT will necessarily have to be taken up after Nairobi, while referring to the text which contained a set of LDC-specific decisions. Another source explained that given the G-90 attempt to refocus discussions on proposals, which they say are based on their need, some countries were trying to bring the Group back to the Chair’s text tabled a few days ago.
According to a G-90 communiqué, any development outcome in Nairobi could not be achieved without concrete responses in the form of decisions which “add value,” and which include key proposals advanced by the group in order “to recalibrate and galvanise their industrialisation and investment initiatives.”
G-90 ministers expressed concern that “the spirit of compromise sought by predominantly developed members of the WTO is so far lacking. There is a growing impatience among some members and not just OECD countries,” said a trade delegate.
Work to reach a compromise on the preferential conditions provided under the services waiver for LDCs is also underway. At press time, the facilitator on this issue, Rwandan Minister of Trade and Industry François Kanimba, was expected to shortly release a draft which would extend the waiver until 2030, encouraging countries who have not done so to notify their preferences. The text no longer refers to LDC requests to facilitate administrative procedures via work permits and qualification requirements, according to a copy seen by Bridges.
“I am confident that this draft decision can enjoy members’ consensus,” reads the draft text.
Afghanistan joins
Amid the frenzied negotiating climate, ministers were able to celebrate the expected entry of a new WTO member – the Islamic Republic of Afghanistan, an LDC – after eleven years of talks, during an official welcome ceremony which took place on Thursday.
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Business potential of smallholder farmers must be unleashed for sustainable development, report says
The world’s smallholder farmers manage just 12 per cent of all agricultural land, yet they produce more than 80 per cent of the world’s food (in value terms). They deserve more attention therefore from policymakers to unleash their full business potential, the UNCTAD Commodities and Development Report 2015 says. As global poverty affects smallholders disproportionately, achieving poverty reduction goals will require taking a fresh look at how policies must be designed and coordinated so as to cater to their needs.
Though there are marked differences by country and region in the average size of small farms, it is estimated that more than 90 per cent of the 570 million farms worldwide are managed by an individual or a family, and that mostly they rely on family labour. Estimates further show that about 2.5 billion people depend on agricultural production systems for their livelihoods. Smallholder farmers also play a key role in environmental sustainability objectives, including climate change mitigation, by protecting biodiversity in agriculture.
“It is now time for the international community to recognize the vital role smallholders play the world over in ensuring continued access to nutritious natural food and the achievement of global food security,” UNCTAD Secretary-General Mukhisa Kituyi said. “I call on all development partners who have pledged to increase resources directed to the fight against climate change to devote special attention to smallholder farmers who are key players in sustainable agricultural practices.”
The report highlights a number of enduring challenges facing smallholders. Those challenges include limited access to agricultural inputs (such as fertilizers, seeds, land and labour) and credit markets, unfulfilled capacity to commercialize their produce due to deficient or non-existing infrastructure such as paved roads and lack of access to market information, which leads to power imbalances tilted against smallholders in markets.
The report showcases a number of instances where factors, such as innovative financing mechanisms, access to contract farming, better and increased training, knowhow and motivation services, and agricultural and financial services using information and communications technology, have gradually increased smallholders’ productivity and integration into markets.
Moving away from business as usual and striving to achieve the Sustainable Development Goals, the report argues, will require a better alignment of policies, pledges and actions at the national, regional and international levels. It will also require ensuring that development finance and climate finance for the agricultural sector target primarily small-scale farming as well as women and young people, who are acknowledged as key actors in agricultural transformation.
The report shows that developing countries can benefit from greater participation of smallholders in sustainable commodity production and trade. To this end, the report suggests that these countries put in place policies to support sustainable agricultural development, strengthen institutional capacities, provide appropriate infrastructure, facilitate technology access, secure land tenure and create a business-friendly environment for smallholders. The report distils evidence on the degree of integration of smallholders from a sample of developing countries in export value chains. It also sheds light on the need to devote greater attention to smallholders in national policymaking as well as in international trade and investment agreements.
In addition, the report warns of the paucity of good practices in preserving smallholders’ interests in existing large-scale investment contracts in agriculture, especially in Africa. Furthermore, there are very few cases of investment policy measures that cater for the needs of home-grown small investors. Such measures, the report argues, are key to sparking domestic investments in the agricultural sector.
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World Bank Group scales up support for Egypt
The World Bank Group’s Board of Executive Directors on 17 December 2015 endorsed a new Country Partnership Framework (CPF) to support Egypt during a critical period of economic and social transformation. The Board also approved a US$1 billion in a development policy finance operation for Egypt to help the country carry out key economic reforms.
The World Bank Group’s support is tailored to help Egypt address its economic and social challenges. It builds upon the Government of Egypt’s medium-term strategy and national priorities for promoting macroeconomic stability and private sector-led job creation, strengthening service delivery, and fostering social justice and inclusion. Priorities include measures to support fiscal consolidation, reorient public spending towards growth and social services, promote energy security, develop a targeted social safety net, strengthen institutional arrangements to improve service delivery in rural sanitation, and modernize public administration.
The CPF will also help implement the World Bank Group’s strategy for the Middle East and North Africa Region, which is focused on supporting peace and stability, prerequisites for fighting poverty and boosting shared prosperity. “World Bank Group support to Egypt will focus on the country’s urgent need to create more jobs, especially for the youth, improve quality and inclusiveness in service delivery, and promote more effective protection of the poor and the vulnerable,” said Asad Alam, World Bank Country Director for Egypt, Yemen and Djibouti.
The CPF for Egypt, prepared jointly by the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), covers the period 2015 through 2019. It is informed by consultations with a broad range of stakeholders in Egypt. During this 5-year period, IBRD plans on financing around US$6 billion while IFC plans on financing of about US$2 billion for total World Bank Group financing of US$8 billion.
“Jump starting the economy can’t happen without enabling the private sector to play a catalytic role in diversifying the economy, increasing competitiveness, and creating jobs,” said Mouayed Makhlouf, IFC Regional Director for the Middle East and North Africa. “IFC will continue to support the private sector and reforms that create a level playing field and a business-friendly environment to support Egypt’s growth.”
The CPF reflects a clear departure from past World Bank support for Egypt. This is not only by its proposed scale, which is considerably larger than in the past, but also by its focus on supporting the country’s efforts to renew its social contract with its citizens. The three closely interconnected key pillars of the CPF are improving governance, supporting private sector job creation, and improving social inclusion.
New US$1 billion Development Finance Support for Egypt
The World Bank Group’s Board of Executive Directors today also approved a US$1 billion operation – the First Fiscal Consolidation, Sustainable Energy, and Competitiveness Programmatic Development Policy Financing (DPF). This is the first in a programmatic series of three annual development finance loans to Egypt.
“We are pleased to support the Government’s reform program of promoting fiscal consolidation, ensuring sustainable energy supply, and creating a supportive business environment for entrepreneurs,” said Asad Alam, World Bank Country Director for Egypt, Yemen and Djibouti. “This program is a central element of our CPF to promote policy and institutional reforms for inclusive growth,” he added.
The DPF supports fiscal consolidation through higher revenue collection, greater moderation of the wage bill growth, and stronger debt management; ensuring sustainable energy supply through reducing energy subsidies and liberalizing the energy market to allow for greater private sector engagement; and enhancing the business environment through a package of reforms designed to cut red tape, reduce barriers to entry, and promote better competition policies. The proposed DPF is part of a programmatic series, with the second and third DPFs subject to satisfactory implementation of the multi-year reform program, particularly with respect to an adequate macroeconomic framework. The operation has been prepared in close coordination with the African Development Bank which is providing parallel financing.
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Roadmap to boost intra-COMESA trade in maize
Intra-COMESA trade in grains is set to rise following the launch of a roadmap that will address differences in standards and regulations that impede regional trade in maize.
The COMESA Mutual Recognition Framework (C-MRF) was launched in Kampala, Uganda, Thursday 17 December 2015. It is aimed at providing equivalence of analytical results and recognition of certificates of analysis issued by the laboratories of the participating countries. This will eliminate the need for multiple testing by both the exporting and importing country.
The C-MRF was developed by the COMESA Secretariat in partnership with six countries with significant maize trade. They comprise Kenya, Malawi, Rwanda, Uganda, Zambia and Zimbabwe and will also pilot the Framework.
The key components of the MRF are common grading criteria, proficiency testing for Aflatoxin analysis and a risk-based sampling protocol.
At the launch, the Director of Agriculture and Industry in COMESA Mr. Thierry Mutombo Kalonji said the lack of mutual recognition of technical standards and conformity assessment (testing and certification) was a persistent non-tariff barrier.
“COMESA Secretariat initiated the framework in recognition of the fact that regulatory barriers are sometimes a result of varied technical capacities in the public and private sector entities across the region,” Mr Kalonji said.
“Without mutual recognition of standards and certificates of analysis, regulatory barriers persist; causing an unpredictable regulatory environment that comes at a high cost to traders and contributes to the growing informal trade, now estimated at over 80% in some countries.”
Further, countries with developed food control systems face difficulties trading with those with weak systems and hence staple foods crossing borders are subjected to conformity assessment procedures that come at a high cost to traders.
Presenting an overview of the framework, Dr Mukayi Musarurwa, a Standards Quality Assurance Consultant at the COMESA Secretariat said the initiative was meant to facilitate greater flexibility where regulatory frameworks differ.
“The C-MRF will be a central instrument in driving deeper levels of regulatory policy coordination and integration between Member States in COMESA. It will facilitate a more seamless trans-regional market and underscore MS’s’ objectives for a functional Free Trade Area and Common Market,” Dr Musaruwa said.
The C-MRF will be domesticated and implemented in the member states through Mutual Recognition Agreements (MRAs) for conformity assessment. The MRAs, will entail Member States accepting each other’s conformity assessment and grading systems in order to avoid subjecting maize products to unnecessary & overlapping conformity assessment & grading procedures in both the exporting and importing country.
The launch was preceded by training a pool of facilitators from the public and private sector from the participating countries on sampling and grading which are key components in the implementation of the C-MRF.
Speaking at the launch, Chairperson of Operation Wealth Creation Gen. Salim Saleh who represented the Grain Council of Uganda, hailed the COMESA-led initiative as timely as the problems encountered in the market were common and needed collective actions given the common challenges faced in the market.
“We have great unexploited potential to feed the region but as you know, food safety and technical standards remain one of the bottlenecks that we grapple with on a daily basis,” Gen Saleh said.
Mr. Cyprian Batala, a Commissioner in the Ministry of Trade, Industry and Cooperatives, Uganda, officially launched the C-MRF.
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Countries adopt new plan to utilize Internet and information technologies in implementation of new Sustainable Development Agenda
Information and Communication Technologies essential for achieving 2030 Sustainable Development through commitment to World Summit on the Information Society vision
Countries reaffirmed their commitment to utilize Information and Communication Technologies (ICT) as an essential tool for achieving the new Sustainable Development Goals at a high-level meeting of the UN General Assembly on 16 December 2015.
The General Assembly adopted the outcome document on the overall review of the implementation of the outcomes of the World Summit on the Information Society towards the end of a two-day 10-year review meeting.
The outcome document, in addressing a range of emerging challenges and opportunities, welcomes the remarkable evolution and spread of Information and Communication Technologies to almost every community in the world enabling knowledge sharing, economic growth and empowering sustainable development.
The meeting convened by UN General Assembly President Mogens Lykketoft was attended by highlevel representatives from all Member and observer States and observers, and representatives of all relevant stakeholders of the World Summit on the Information Society.
ICT for Development
“ICT has played an increasingly important role in promoting economic and social development, such as enhancing productivity, facilitating trade, creating quality jobs, providing ICT-based services such as e-health and e-learning, and improving governance,” said Mr. Lykketoft.
Bridging the Digital Divide
UN Secretary-General Ban Ki-moon said, “This High-Level review is timely coming just three months after the adoption of the 2030 Agenda for Sustainable Development. ICTs can be an engine for achieving the Sustainable Development Goals. They can power this global undertaking.”
“Today, more than 80% of households in developed countries have internet access. Meanwhile, two out of three households in developing countries do not. Women are half the global population – yet 200 million fewer women than men have access to the Internet. We must bridge these divides,” said Mr. Ban.
This outcome document highlights the significant digital divides, which need to be addressed through strengthened enabling policy environments and international cooperation to improve affordability, access, education, capacity-building, multilingualism, cultural preservation, investment and appropriate financing.
Challenges and Gaps
Importantly, the outcome document addresses the new and emerging challenges, including cybercrimes, cyber attacks, and the use of ICTs for terrorist purposes. In this regard, it recognizes the leading role for governments in cybersecurty matters relating to national security. It further recognizes the important role of international law, especially the UN Charter, in building confidence and security in the use of ICTs by States.
Internet Governance
The outcome document urges the need to promote greater participation and engagement in Internet governance discussions that should involve governments, the private sector, civil society, international organizations, the technical and academic communities, and all other relevant stakeholders. In that light, the Internet Governance Forum (IGF) has played a role as a multistakeholder platform for discussion of Internet governance issues.
In a specific decision contained in the document, the General Assembly extends the IGF mandate for another 10 years, while recognizing that during this period, the IGF should continue to show progress on working modalities, and participation of relevant stakeholders from developing countries.
ICTs for Sustainable Development
Finally, in a key forward-looking decision of the outcome document, the UN Member States call for close alignment between the WSIS process and the 2030 Agenda for Sustainable Development, highlighting ICT’s cross-cutting contribution to the Sustainable Development Goals and poverty eradication.
“In 2015, we embarked on a journey – a journey of climate action, a journey of sustainability, a journey of prosperity for all the nations and communities sharing this one planet. ICTs and the Internet must help drive this journey,” said Mr. Ban.
As agreed by all UN Member States, the General Assembly will hold a High Level Meeting on the overall review of the implementation of WSIS outcomes in 2025.
Related News
Winner of Saana Institute Africa Trades Essay Competition 2015 announced
The Saana Institute, InterAnalysis Ltd. (TradeSift software), Centre for the Analysis of Regional Integration at Sussex (CARIS) at the University of Sussex and the Trade Law Centre (tralac) are happy to announce the winner of the 2015 Africa Trade Essay Competition.
The winner of the competition is Ms Ifeoluwa Ogunbufunmi, a fourth year Law student at the University of Lagos in Nigeria, for her essay on how the Tripartite Free Trade Area (TFTA) and Continental Free Trade Area (CFTA) can make the biggest contribution to boosting inter-African trade and respond to Africa’s economic development challenges and opportunities.
Apart from the cash prize of USD 1,000, Ms Ogunbufunmi presented her essay during the Trade and Development Symposium (TDS) taking place alongside the WTO 10th Ministerial Conference at the Hilton Nairobi, where she was accompanied by the Dean of her faculty. Ms Ogunbufunmi’s essay will also be published by tralac.
The judges commented:
“Includes some very practical suggestions for broader stakeholder involvement in the TFTA and CFTA negotiations to shape outcomes that address fundamental development challenges.”
“The author recognises that these agreements are not ends in themselves but means to addressing development challenges.”
Second place goes to Ms Rutendo Tavengerwei, a Zimbabwean 4th year Law student with the University of the Witwatersrand Johannesburg in South Africa who will receive USD 750.
The five shortlisted candidates, all deemed highly commendable entries, will receive book sets on the CFTA, TFTA and broader African regional integration issues from tralac for their essays.
The judging panel consisted of:
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Mr Tom Pengelly - Co-Founder and Managing Director of Saana Consulting and Team Leader of the DFID Trade Advocacy Fund;
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Professor Jim Rollo - Professor Emeritus of European Economic Integration at Sussex University and an Associate Research Fellow at the Centre for the Analysis of Regional Integration (CARIS) at Sussex. He is also Co-Founder and Finance Director of InterAnalysis Ltd;
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Ms Trudi Hartzenberg - Executive Director of tralac;
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Mr Stephen Karingi - Director for the United Nations Economic Commission for Africa’s (UNECA) division of Regional Integration and Trade; and
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Mr Dominique Njinkeu - Lead Trade Facilitation Specialist and Program Coordinator of the Trade Facilitation Facility at the World Bank
Saana Institute, tralac, InterAnalysis Ltd (TradeSift) and CARIS would like to thank Mr Karingi and Mr Nijnkeu for participating in the judging panel.
Related News
Azevêdo welcomes efforts to help implement Trade Facilitation Agreement
Director-General Roberto Azevêdo welcomed on 17 December the pledges made by governments and private sector entities to help developing and least-developed countries implement the WTO’s Trade Facilitation Agreement (TFA), declaring efforts to provide support have “got off to a good start”.
“There is significant support and funding available from a range of partners to help with trade facilitation measures, and specifically with the implementation of the Trade Facilitation Agreement,” the Director-General said. “This is very positive, and we must keep this momentum… the more extensive and faster the implementation of the Trade Facilitation Agreement, the greater the benefits will be.”
DG Azevêdo spoke at an event on trade facilitation which included the launch of the Global Alliance for Trade Facilitation, a new public-private platform that seeks to use private sector expertise and resources to support trade facilitation reforms. The event took place on the sidelines of the WTO's 10th Ministerial Conference in Nairobi.
Adopted at the WTO's 2013 Ministerial Conference in Bali, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
The TFA will enter into force once two-thirds of the WTO's membership has accepted the Agreement. To date, 63 WTO members have ratified the TFA, with six new accessions received in the past few days and others expected shortly.
The benefits of the TFA were highlighted at the event, with several speakers offering concrete examples of how trade facilitation is being implemented and how it has helped companies and national economies.
I.V. Mazorodze, Commissioner of Customs and Excise with the Swaziland Revenue Authority, said efforts undertaken by his government so far on implementation have included the creation of a National Trade Facilitation Committee, the development of a National Trade Portal, training of customs clearing agents, upgrading border infrastructure and the drafting of a new Customs Act.
He noted that Swaziland's ranking in the World Bank's “Doing Business” survey has improved significantly in recent years. The country currently ranks 30th worldwide for the survey's “trading across borders” indicator.
Elizabeth Kimani, General Manager of Nairobi-based Masai Flowers, cited the importance of quick customs clearance for her business. For the busy St. Valentine's Day holiday, hiccups in flower deliveries not only have important economic impacts but, she noted with humour, can also sour relationships.
DG Azevêdo noted the unique architecture of the TFA, which provides developing and least-developed countries with the flexibility to tailor their commitments and implementation schedules according to their specific needs and commensurate with their level of development.
In July 2014, the WTO announced the launch of the Trade Facilitation Agreement Facility (TFAF), which will assist developing and least-developed countries in implementing the TFA. The aim of the Facility is to help WTO developing and least-developed country members find assistance programmes of donor members and organizations and, when assistance cannot be found, to fund project preparation and project implementation.
Selena Jackson, the World Bank's special representative to the WTO, noted that the Bank set up its Trade Facilitation Support Program a year and a half ago to assist governments with TFA implementation, with $36 million in funding. To date, 47 countries have expressed interest in receiving assistance, with implementation programmes launched in 20 countries.
DG Azevêdo stressed the importance of close public-private cooperation in ensuring smooth implementation of the TFA.
“The private sector is well aware of the problems caused by high costs and long delays at the border – and the barriers to trade that they represent,” he said. “These barriers can often mean the difference between being able to compete internationally – or not.”
The Director-General said the launch of the Global Alliance “is a very important moment for the WTO, and for the entire trade facilitation community.” He thanked the World Economic Forum, the International Chamber of Commerce, the Center for International Private Enterprise, and donor countries for supporting the initiative. His full speech is available here.
The Global Alliance is supported by contributions from Canada, Germany, the United Kingdom and Australia. A number of multinational companies have also pledged support, including A.P. Møller-Mærsk, DHL, Wal-Mart, eBay and Huawei.
United States Trade Representative Michael Froman said implementation of the TFA can help promote export diversification, attract investment, improve revenue collection and support the engagement of small and medium-sized enterprises (SMEs) in the global economy.
“From our own perspective, we know that SMEs are really the driving force of the economy, they're the job creators,” Mr Froman said. “When we ask our SMEs what are the biggest challenges facing them when they engage in international trade, the number one issue they point to are the complexities at the border, the various customs procedures and border measures. The TFA is very much an effort to address that.”
Lord Francis Maude, the United Kingdom's Minister of State for Trade and Investment, noted that the TFA would produce “real benefits” for all WTO members, but for developing countries in particular.
“At present, one standard container from Sub-Saharan Africa will take 31 days on average and cost nearly $2000 to ship,” he said. “To do the same from East Asia is ten days less and half the cost.”
The reforms required by the TFA are “hard,” Lord Maude admitted. “It's tackling inertia, it's tackling vested interests who are used to things being done in a particular way.”
More information on trade facilitation and the TFA can be found at www.wto.org/tradefacilitation.
About the Alliance
Trade facilitation
The World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) provides a unique opportunity to promote inclusive growth by making cross-border trade easier, quicker and less costly for businesses of all sizes.
In ratifying the TFA countries will commit to a series of reforms to reduce red-tape at borders – from measures on the release and clearance of goods, through to enhanced cooperation between border agencies. It is estimated that full implementation of the Agreement could reduce trade costs by an average of 14.3%.
A recent WTO study suggests that implementing TFA reforms could create around 20 million jobs – the vast majority in developing countries. The Agreement will help developing countries diversify their exports and tap into global value chains. More transparent and predictable border procedures will also make it easier for small- and medium-sized businesses to connect with customers in foreign markets for the first time.
The Global Alliance for Trade Facilitation
In this context three major private sector organizations – the Center for International Private Enterprise, the International Chamber of Commerce and the World Economic Forum – have joined forces in the Global Alliance for Trade Facilitation.
The Alliance is a unique public-private platform to leverage private sector expertise, leadership and resources to support effective trade facilitation reforms measured by real-world business metrics.
The Alliance’s activities are supported by the governments of the United States, the United Kingdom, Canada and Germany and will also draw on contributions from businesses from a range of sectors and geographies.
With the overarching aim of accelerating ambitious trade facilitation reforms, the core activities of the Alliance will include:
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Building understanding of the benefits of trade facilitation within both the public and private sectors;
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Establishing sustainable multi-stakeholder dialogues on trade facilitation;
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Mobilizing public-private partnerships to drive change, engaging local businesses and associations;
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Technical and financial assistance in support of capacity building; and
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Benchmarking and evaluation based on established business metrics.
It is envisioned that the Alliance will support efforts in 12 to 15 developing countries on an annual rolling basis – while also working at global and regional levels to enhance stakeholder awareness of the importance of trade facilitation and of the role of public-private cooperation in implementing the TFA. To ensure synergy with the activities of other international programmes, the Alliance will actively engage with other international bodies, donors and associations.
With the full political endorsement of national governments, the Alliance’s in-country projects will leverage the expertise and resources of leading companies and international organizations – as well as providing a platform for local business communities to identify trade bottlenecks and to work collaboratively with governments to support effective reforms.
The Alliance’s trade facilitation indicators will provide a yardstick of country-level progress and create a competitive incentive for countries to implement trade facilitation reforms – making them more attractive for trade and investment and empowering their local business community.
Related News
tralac’s Daily News selection: 17 December 2015
The selection: Thursday, 17 December
Profiled new analysis: ‘Diversifying African trade: the road to progress’ (Atlantic Council)
To fully harness the transformative potential of trade, African countries will have to learn to navigate this constrained global environment and fully embrace opportunities to diversify their international trade flows. ‘Diversifying African Trade: the road to progress’, a new report by Atlantic Council Africa Center Senior Fellow Aubrey Hruby, examines the current obstacles hampering international trade across the continent and provides recommendations for policy makers in Africa and across the world. Key recommendations include: speed up regional integration through targeted political will and enhanced financial and technical support, specifically for regional economic communities; maximize product diversity by improving Africa's Export Processing Zones to create competitive export-orient clusters; invest in infrastructure with a particular focus on the power sector; eliminate trade inefficiencies by continuing to reduce both tariff and non-tariff trade barriers with the help of new technologies, as well as streamlining immigration policies and removing onerous visa requirements. [The author: Aubrey Hruby] [Download]
Tripartite Free Trade Area adopted as flagship for SCRM (UNECA)
The Tripartite Free Trade Area, has been adopted as a flagship project under the Sub-regional Coordination Mechanism for East and Southern Africa. “The Tripartite Free Trade Area with its pillars on industrialization, trade, and infrastructure, is a natural candidate for an SRCM flagship project” reads the outcome statement of the SRCM meeting organized by ECAs’ Sub-Regional Offices for East and Southern Africa and the Southern African Development Community in Gaborone, Botswana.
African countries export just 0.3% of world’s high-tech products (UNCTAD)
Although developing countries as a whole accounted for 52% of global exports of high technology products in 2014 – an 18% point rise since 2000 – African countries are lagging behind, representing just 0.3% of this total, the UNCTAD Technology and Innovation Report 20151 has found. The report, subtitled ‘Fostering innovation policies for industrial development’, examines how Africa’s Governments can better implement science, technology and innovation policies, and coordinate them with industrial policies and industrial development plans. The report provides in depth analyses of industrial and science, technology and innovation policies in Ethiopia, Nigeria and Tanzania, along with regional trends and initiatives in policies in other African countries. The report shows that patterns of policy conceptualization, design, planning and implementation are critical to the success of companies and hold the key to making technology work for business. [Download: full report, summary]
MC10 updates:
Reminder: tralac’s Resource Box
Featured tweet: @AusMIKTA: Inside the 1st MIKTA Trade Dialogue in margins of MC10 - exploring ways to cooperate on trade and economic issues
African media poorly prepared for WTO - experts (The Star)
Push Africa’s agenda at WTO talks, CTPD urges African trade ministers (Lusaka Times)
Achim Steiner/Scott Vaughan: 'Trade agreements must be prepared to support global action to save the climate' (Daily Nation)
Fran O'Sullivan: 'Time for a rethink on two-tier WTO' (NZ Herald)
Guarantee LDCs more trade freedom, Uganda tells WTO (Daily Monitor)
India's statement to MC10 plenary [Download]
Setback for India: WTO draft text silent on country’s demands (Economic Times)
WTO members conclude landmark $1.3 trillion IT trade deal (WTO)
WTO members representing major exporters of information technology products agreed today (16 December) at the WTO’s Tenth Ministerial Conference, in Nairobi, on the timetable for implementing a landmark deal to eliminate tariffs on 201 IT products valued at over $1.3 trillion per year. Negotiations were conducted by 53 WTO members, including both developed and developing countries, which account for approximately 90 per cent of world trade in these products. However, all 162 WTO members will benefit from the agreement, as they will all enjoy duty-free market access to the markets of the members eliminating tariffs on these products. The list of 201 products was originally agreed by the ITA participants in July 2015. [Various downloads available]
Bridges Daily Update 3: Draft deal on rules of origin
Earlier in the day, a draft ministerial decision on preferential rules of origin for LDCs also emerged after various consultations aimed at solving the remaining outstanding issues. The draft text will now be forwarded to ministers by Ambassador Steffen Smidt of Denmark - who chairs the talks - for adoption. Building on the guidelines contained in the Bali ministerial decision, the text - a copy of which has been seen by Bridges - sets out criteria for preferential rules of origin for LDCs. The text outlines requirements for preference-granting countries in areas such as the determination of substantial transformation, cumulation, simplification of documentary requirements and implementation, flexibilities, and transparency.
Transition towards Green Growth in Mozambique: policy review and recommendations for action (AfDB)
The African Development Bank has launched the report, “Transition towards Green Growth in Mozambique: policy review and recommendations for action,” which summarizes the development process of the Green Economy Action Plan prepared to operationalize the ambitious goals of the country’s Green Economy Roadmap – a plan that outlines the country’s path to become an inclusive middle income country by 2030 through sustainable infrastructure, efficient and sustainable use of natural resources, and the strengthening of resilience and adaptive capacity to socio-economic shocks and climate variability. Mozambique has grown at an impressive average rate of 7.2% during the last decade, driven by foreign direct investment, agricultural growth and infrastructure investment. To the detriment of the more than half the population living below the poverty line however, the country has a poor record of transforming fast economic growth, driven by capital-intensive mega projects, into sustained poverty reduction. [Download]
Mozambique hosts the first Food Safety forum in Africa: update (UNIDO)
The forum helped highlight the importance of standards and capacity building for strengthening the national food safety system and ensuring the provision of safe products, and served as a platform for presenting best practices in the field from Brazil and Portugal,. Experts highlighted the need to engage various stakeholders in food safety capacity building.
Mozambique loses over 219,000 hectares of forest every year (Club of Mozambique)
Sub-Saharan Africa’s sovereign bond issuance boom (World Bank Blogs)
The newly released 2016 edition of the International Debt Statistics shows a rapid rise in sovereign bond issuance in some Sub-Saharan African countries. This includes those countries that have benefited from Heavily Indebted Poor Countries and Multilateral Debt Relief Initiative debt relief programs. At the end of 2011, bond issuance totaled $1bn and by the end of 2014, it amounted to $6.2bn. Steady global market conditions and the potential for higher returns for investors have helped pave the way for more access to international markets, where the average return for these bond issuances is about 6.6%, with an average maturity of 10 years. [The author: Rasiel Vellos], [Downloads]
Zimbabwe: Car imports cost $4bn (The Herald)
Zimbabwe has spent about $4,87bn on car imports since 2009 as consumers continue to shun the limited and more expensive local market. According to statistics from the 2016 National Budget car imports value more than doubled in 2010, increasing to $1,81bn from $428,4m in 2009. The figure remained almost flat the following year before hitting a record in value terms in 2012 after vehicles worth $1,1bn were imported.
Mauritius: IMF completes 2015 Article IV Mission
The medium-term outlook is favorable if sound policies continue to be implemented. The implementation of new public investment programs would catalyze private investment and help to raise GDP growth to close to 4% in 2016 and beyond, with rates of inflation below 3%. Higher imports associated with these investment programs are likely to widen the current account deficit to some 6–6.5% of GDP. International reserves are nonetheless projected to strengthen gradually, supported by continued capital inflows as Mauritius seeks to leverage its financial sector as a hub to channel significant investments to Africa and Asia.
Kenya: IMF Review Mission
Discussions focused on the appropriate policy mix in support of the authorities’ objective of fostering inclusive, investment-driven growth while maintaining macroeconomic stability and debt sustainability. There was broad agreement that the macroeconomic policies will need to be prudent, in order to contain inflation within the target range, maintain public debt on a sustainable path, and further reduce the current account deficit.
South Africa: Treasury on South Africa's rating at Baa2 (GCIS)
The reappointment of Minister Pravin Gordhan as the Minister of Finance will ensure policy continuity. The Minister has affirmed that Government will stay the course of sound fiscal management and focus on fiscal consolidation and debt stabilisation in the medium term. He assured that any extra expenditure would only be accommodated if extra revenue is raised and any revenue raising opportunity would be carefully considered so as to ensure that it does not damage growth or affect the poor negatively. Moody’s concerns about a rising risk of fiscal slippage are being addressed.
Forced displacement and refugees in Sub-Saharan Africa: an economic inquiry (World Bank)
The paper examines the refugee situation in Sub-Saharan Africa from a long-term angle, from the perspective of refugees' own agency as well as from the perspective of the host community. The paper aims to shed light on the economic lives of refugees in their host communities. Starting with an overview of the situation of refugees in Sub-Saharan Africa, the paper draws on findings from the literature to debunk some entrenched beliefs about refugees. The discussion of refugee crises in Burundi, Kenya, Rwanda, Tanzania, and Uganda draws some lessons. The decision to return is discussed and it is argued that the decision depends on the socioeconomic condition in the host country versus the country of refuge, integration versus return policies in place, the individual set of skills of each refugee, and his or her subjective perception of the political climate in both countries.
ILO Global Estimates on Migrant Workers
Of the estimated 67.1m domestic workers in the world, 11.5m, or 17.2% are international migrants. About 73.4% (or around 8.5m) of all migrant domestic workers are women. South-Eastern Asia and the Pacific host the largest share, with 24% per cent of the global number of female migrant domestic workers, followed by Northern, Southern and Western Europe, with 22.1% of the total, and the Arab States with 19%. [Downloads available]
South Africa: 75 000 foreign nationals granted permits (IOL)
Tax-benefit microsimulation modelling in Zambia: a feasibility study (UNU-WIDER)
The paper focuses on the details of the tax-benefit system and possible data sources, building on information collected in the initial scoping study of all countries in the Southern African Development Community and East African Community. The paper concludes with an assessment of the feasibility of producing a tax-benefit micro-simulation model and its potential sustainability into the future.
Zimbabwe: Concourt challenge for ZIMRA powers (The Herald)
Toward a more business friendly tax regime: key challenges in South Asia (World Bank)
Sudan's National Trade Facilitation Committee: update (UNCTAD)
South Africa: Davies endures tough year as trade partners cry foul (Business Day)
Rwanda: Clinton Foundation, Visa partner to link farmers' payment systems (New Times)
KRA to clear imported goods before they arrive at Mombasa port starting January (Business Daily)
Egypt, Ethiopia, Sudan to hold more Nile dam talks on 27,28 December (Ahram Online)
Gabon: Economic Update (World Bank)
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Related News
Technology trade deal reached at Nairobi WTO Ministerial
A group of 53 World Trade Organisation members negotiating a tariff-cutting agreement on information and communication technology goods reached a final deal in Nairobi, Kenya, on Wednesday evening, bringing to a close more than three tumultuous years of talks.
“It took a lot of hard work and a lot of time. But, most importantly, it took compromise and flexibility,” Director-General Roberto Azevêdo told reporters, adding that he hoped it would inspire progress in other negotiations at the WTO ministerial.
The pact – an update to the WTO’s 1996 Information Technology Agreement (ITA) – would see tariffs removed on 201 products, such as new-generation semi-conductors, magnetic resonance imaging (MRI machines), video game consoles, computed tomography (CT) scanners, and various advanced medical products.
Some estimates place the gains from this expanded deal – known as ITA-II – at US$1.3 trillion in annual trade. The list of products, which together cover 10 percent of global trade, had already been confirmed in July, leaving the participants in this initiative still needing to agree on the “staging” for phasing out tariffs.
Participants had aimed to conclude the staging talks and submit tariff schedules by early December to achieve sign-off by ministers in Nairobi. However, talks dragged on, with a deal at the ministerial ultimately hinging on whether China would submit a revised tariff schedule, and whether those changes – characterised as necessary to resolve technical errors – would be agreeable to the group.
Under the deal’s terms, tariffs on 65 percent of products would be eliminated on 1 July 2016, making up 88 percent of imports. Within three years, this would increase to 89 percent of tariff lines - 95 percent of imports – with full elimination within seven years.
Though the concessions of the ITA-II are required only of its participants, the benefits would be extended to all WTO members. The ITA-II participants are a subset of the original ITA’s membership and have said that they hope other countries sign on.
Liberia welcomed in
Another key development was the formal invitation of Liberia into the WTO, with the ceremony attended by the nation’s president, Ellen Johnson Sirleaf and Kenyan President Uhuru Kenyatta. The Liberian leader called the news “another turning point” in her nation’s history.
Once Liberia ratifies the protocol of accession it will become the 35th least developed country (LDC) within the WTO. Currently, 19 governments are negotiating to join the global trade body, with six of these being LDCs: Bhutan, Comoros, Equatorial Guinea, Ethiopia, Sao Tomé & Principe, and Sudan. Afghanistan, another LDC, is slated to have its accession ceremony on Thursday.
Liberia had submitted its formal accession request in June 2007. Given its recent challenges including the Ebola crisis, experts say that WTO accession will bring the country into a rules-based system that will encourage economic reforms, in turn generating inclusive growth.
Draft deal on rules of origin
Earlier in the day, a draft ministerial decision on preferential rules of origin for LDCs also emerged after various consultations aimed at solving the remaining outstanding issues. The draft text will now be forwarded to ministers by Ambassador Steffen Smidt of Denmark – who chairs the talks – for adoption.
Building on the guidelines contained in the Bali ministerial decision, the text – a copy of which has been seen by Bridges – sets out criteria for preferential rules of origin for LDCs. The text outlines requirements for preference-granting countries in areas such as the determination of substantial transformation, cumulation, simplification of documentary requirements and implementation, flexibilities, and transparency.
One of the issues that had proven divisive in the negotiations involved finding common ground on the various methodologies that exist for establishing substantial transformation, designed to evaluate the extent of meaningful local production.
Members “shall adopt” a calculation method involving the value of materials not from LDCs, the draft decision says. After extensive discussions on the level of the threshold of value addition, the text says that members “shall consider” allowing 75 percent of foreign inputs to make up the final value of a product to qualify for preferential treatment. Language on the related section of the draft decision seems to have accommodated some developing countries’ concerns who had pushed for the term “consider” over “aim.”
Some flexibilities for developing countries seems to be contained in the document to allow them to undertake commitments in relation with the stated provisions on a best endeavour basis. If adopted, members would be expected to notify measures in compliance with the decision by 31 December 2016.
S&DT talks struggling
Despite the advances on rules of origin, consultations on special and differential treatment (S&DT) are also struggling to move forward. According to a source, the G-90 developing country coalition is reportedly willing to submit a proposal for ministerial consideration, including a number of decisions which have proved contentious throughout the entire process.
One African official told Bridges that part of the G-90 strategy was to push for an outcome on a set of proposals of key interest for the group, touching upon flexibilities supporting industrialisation.
“The thorny question of differentiation and the definition of the future work programme continue to underpin the divisions,” said one delegate. At press time, positions were still entrenched, and several delegates from developed and developing countries commented that disagreements were too many to allow for a ministerial outcome.
Services waiver
Regarding the LDC services waiver, Wednesday’s discussions also proved difficult, with many outstanding issues as members work to agree language on the preferential conditions provided under the waiver approved earlier. One developed country delegate, however, expressed hope that differences would be ironed out once issues move to the level of ministers.
“The issues being discussed can be resolved, however timing makes it difficult,” said an African official. Some of the issues discussed involve reducing administrative procedures and fees for visas, work and residence permits, and licenses for LDC services suppliers and independent professionals, the issue of mutual recognition, and the LDC request for additional definition of the term “preferential treatment” in the sense of the waiver.
Ministerial statements draw scrutiny
The second day of the conference also saw a series of plenary statements by various ministers, which were analysed closely by trade watchers for possible political signals.
Speaking that morning, Indian trade minister Nirmala Sitharaman said that she had “taken careful note” of calls by some countries to start work on “new issues,” while warning against overloading the WTO agenda while Doha issues remained unresolved.
One negotiator from an agricultural exporting country told Bridges that he saw signs of flexibility in Indonesian Trade Minister Thomas Lembong’s statement, which reportedly made no mention of safeguards to protect developing countries from sudden surges of farm goods, despite Jakarta being the coordinator of the G-33 negotiating group, which has championed this issue.
Australian Trade Minister Andrew Robb said that the issue facing negotiators is “not whether Doha is alive or not.” Instead, he said, members needed to agree on how to make the WTO’s negotiating function more effective. Mexico’s trade minister Ildefonso Guajardo Villareal echoed these sentiments, saying that the issue of whether Doha was dead or alive was “a sterile discussion.”
Meanwhile, the Deputy Director-General of the UN Food and Agriculture Organization sought to rebut arguments that US Trade Representative Michael Froman had made in an opinion piece in the Financial Times on Monday. The Doha Round could be concluded quickly if WTO members kept the promises they’d made to tackle trade distortions, wrote DDG Jomo Kwame Sundaram in a letter to the same newspaper.
The negotiations at the conference on both substantive issues and the ministerial declaration have now been broadly divided into two “tracks,” announced last night at an informal meeting of heads of delegation by Azevêdo and conference chair Amina Mohamed, Kenya’s Cabinet Secretary for Foreign Affairs and Trade.
One track will be on substantive issues, with the ministers of Lesotho, Jamaica, and Rwanda coordinating the dossiers for agriculture and cotton, rules, and LDC issues, respectively. No minister had been confirmed as a facilitator for special and differential treatment (S&DT) at press time. The other track will be on the ministerial declaration, led by Amina Mohamed with the support of two “Friends of the Chair,” the ministers of Mexico and Norway.
While spokesperson Keith Rockwell told reporters that the first part of the ministerial declaration – on the WTO’s achievements and the global macroeconomic climate – is relatively mature and the second part is a placeholder for substantive outcomes, the third part “remains very divisive,” given the “highly politically charged issues” of the Doha Round’s next steps and possible inclusion of new issues.
New texts on rules, questions on cotton
At press time, consultations on possible outcomes linked to the trade body’s “rules negotiations” remained ongoing. Sources confirm that Australia and the 28-nation EU on Tuesday presented a draft joint proposal – based on earlier separate drafts in these talks – for a ministerial declaration geared towards boosting WTO members’ notifications of fisheries subsidy programmes.
The African, Caribbean, and Pacific (ACP) Group of countries have also reportedly distributed a revised draft decision that would see members aim to complete negotiations within two years for disciplines on subsidies provided to vessels engaged in illegal, unreported, or unregulated (IUU) fishing, as well as on subsidies to any fishing activity negatively affecting fish stocks that are in an “overfished condition.”
In addition, Russia has circulated a revised draft decision for a rules outcome that would have members decide to further proceed with discussions on ways to review members’ anti-dumping and countervailing policies and practices, floating the idea of establishing a factual review system for these.
An informal heads of delegation meeting on Wednesday evening did not reach concrete consensus on any of these proposals, sources said, with some members maintaining that these trade transparency-related efforts do not constitute a development outcome. Other sources suggested, however, that results in rules might be more forthcoming should other tough areas in the talks move.
On cotton, top negotiators from West African countries said that some progress had been made on a draft negotiating text that ministers were still considering, a decade after ministers first called for an “expeditious” solution to address distortions in the sector.
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Diversifying African trade: The road to progress
As World Trade Organization members meet in Nairobi, Kenya, for their 2015 Ministerial, the potential economic impact of African trade – for Africa, but also the rest of the world – has never been more relevant. Home to thirty-three of the world's least developed countries and only responsible for 3 percent of global trade, Africa stands to reap enormous benefit from investing in trade as a vehicle for economic development and growth.
However, African countries face substantial challenges, as the global collapse of commodity demand and China's recent economic slowdown will test the resilience of the numerous economies that rely on a small range of products and partners.
To fully harness the transformative potential of trade, African countries will have to learn to navigate this constrained global environment and fully embrace opportunities to diversify their international trade flows. Diversifying African Trade: The Road to Progress, a new report by Atlantic Council Africa Center Senior Fellow Aubrey Hruby, examines the current obstacles hampering international trade across the continent and provides recommendations for policy makers in Africa and across the world.
Key recommendations include:
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Speed up regional integration through targeted political will and enhanced financial and technical support, specifically for regional economic communities
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Maximize product diversity by improving Africa's Export Processing Zones to create competitive export-orient clusters
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Invest in infrastructure with a particular focus on the power sector
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Eliminate trade inefficiencies by continuing to reduce both tariff and non-tariff trade barriers with the help of new technologies, as well as streamlining immigration policies and removing onerous visa requirements