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The G20 trade agenda under Turkey’s presidency
Further integrating low-income developing countries and SMEs into global value chains will help meet the G20’s target of boosting global growth by an additional 2.1% by 2018, writes Nihat Zeybekci, Minister for the Economy, Republic of Turkey
Following its establishment with the onset of the global financial crisis in 2008, the G20 emerged as a prominent forum in the global economy for coordinating global economic policies. Although some questioned its effectiveness at first, on the grounds that it has no enforcement mechanism, the G20’s designation as the premier forum for global economic governance, at the 2009 Pittsburgh Summit, strengthened its role in global policymaking.
Indeed, representing almost 85% of global gross domestic product, more than 75% of global trade and two-thirds of the global population, G20 countries are major global actors. With undeniable weight in the global economy, the G20 provides an important platform to act together and adopt integrated, coordinated, effective policies to meet global challenges. Although such platforms for policy coordination might be more urgently needed during crises, the G20 remains relevant for discussing solutions for longer lasting systemic issues.
Turkey’s agenda has focused on inclusive and robust growth through collective action. The focus on inclusiveness, as one of the three ‘I’s of Turkey’s G20 presidency, is particularly important. Turkey has extended the scope of G20 discussions to the rest of the world, especially by bringing the challenges facing low-income developing countries (LIDCs) to the attention of G20 countries.
Turkey’s aim is to ensure collective growth through sharing prosperity with those in vulnerable economic conditions. Trade is the easiest and most practical way of doing this. Turkey thus attaches great importance to trade, as a means of boosting global growth and sustainable development.
The four main issues on the G20’s trade agenda this year are the cyclical and structural reasons behind the global trade slowdown, policies for enhancing the participation of small and medium-sized enterprises (SMEs) and LIDCs into global value chains (GVCs), ways to strengthen the multilateral trading system, and the compatibility of regional trade agreements with the multilateral trading system.
Turkey grew by 3.8% in the second quarter of 2015, more than 24 members of the European Union. Nevertheless, its foreign trade has still been affected by the global slowdown.
Although, the Turkish economy continued to grow on average by 5.1% for 23 quarters and expects growth of 4% for 2015, exceeding World Trade Organization (WTO) forecasts for global growth at 2.8%. Turkey forecasts exports of $144.6 billion by the end of 2015, with a decrease of 8.3%.
As G20 president, Turkey attaches special importance to analysing the causes behind the global trade slowdown, in order to develop policies to overcome them.
Both cyclical and structural factors play a role. Cyclical factors such as weak demand in advanced economies offer some explanation, as do structural factors such as changes in the relationship between world trade and income. Only through deep and wide trade reforms can this trend be reversed and trade growth be revived.
Multilateral trade liberalisation
Accordingly, ensuring the implementation of the past commitments, including those on fighting protectionism, is key to reversing the slowdown in global trade. Indeed, the G20 has been exceptionally successful in, and therefore praised for, preventing the rise of protectionist measures after the 2008 crisis. The G20 still plays an important role in preventing protectionism, since, although the number of newly introduced protectionist measures by G20 countries has decreased recently, the cumulative number continues to increase since 2008.
One major factor affecting the slowdown since the financial crisis is maturing GVCs in the advanced parts of the world. Encouraging policies for fostering greater integration of LIDCs and SMEs into GVCs is important so LIDCs can play a more effective role, while also contributing to global trade.
Indeed, GVCs provide opportunities for SMEs and firms in low-income countries through enabling them to participate in global production chains without producing complete products. Through the internet and e-platforms, SMEs can integrate themselves digitally into the supply chain. Through integrating into the GVCs of multinational corporations, SMEs can become part of new production processes, transfer technology and skills, and enrich their access to markets and financial resources. Nevertheless, even slightest burdens imposed by outside factors affect their GVC participation disproportionately. Thus, effective policies are needed to boost the participation of LIDCs and SMEs in the GVCs, not only at the firm level, but also at national and global levels.
G20 discussions throughout the year clearly demonstrated that multilateral trade liberalisation can revive global trade growth. It requires strengthening the multilateral trading system and re-energising the Doha Development Agenda. A successful WTO ministerial conference in Nairobi in December 2015 will be key.
Clear attention to the role of regional trade agreements is also required to ensure they complement the multilateral trading system – as intended – rather than disrupt it. The global trading system must work efficiently and coherently across all elements, including bilateral, regional, plurilateral and multilateral agreements. Therefore, increasing the regional and multilateral complementarity remains a key issue, in terms of strengthening the multilateral trading system.
These issues were all discussed at the meeting of G20 trade ministers on 6 October 2015 in Istanbul. Our discussions on deep and broad policies to overcome the cyclical and structural factors underlying the global trade slowdown led to the reaffirmation of fully implementing the trade-related actions determined in comprehensive growth strategies of the G20 countries. The ultimate aim is to boost global growth by an additional 2.1% by 2018. The ratification and implementation of the WTO Trade Facilitation Agreement is one such commitment on which considerable progress has been achieved. As of the G20 trade ministerial meeting, 48 WTO members (almost one-third of its membership) had completed the internal procedures for ratification. Implementing measures could reduce trade costs by between 12% and 17.5%.
Regarding GVCs, we noted the importance of continuing vigilance on prioritising solutions to the problems faced by SMEs and LIDCs while keeping discussions alive on the G20 agenda. As policymakers, we have learnt necessary lessons from the discussions on what to do and what to refrain from.
Global trade complementarity
On the day before the meeting, the Transpacific Partnership was finalised. It was praised by the G20 countries, together with the call for regional trade agreements to complement the multilateral trading system and include a continuously working mechanism to include parties that remain outside. The way to increase global trade includes establishing cooperative relations among regional institutions and creating institutional structures throughout the world that have common commercial, economic and legal features.
With regard to improving the multilateral trading system, our deliberations clearly showed that all G20 countries are committed to the WTO and the multilateral trading system. We also discussed our expectations for the Nairobi ministerial meeting and our shared keen interest as well as willingness to deliver concrete outcomes despite possible differences. Most importantly, our discussions have increased the chances of success in Nairobi, which will help strengthen the multilateral trading system. The success of Nairobi, together with a successful United Nations climate change conference in Paris in December 2015, and the recent adoption of the Sustainable Development Goals, will definitely contribute to development.
China, which will hold the G20 presidency in 2016, declared it will organise a trade ministers’ meeting in Shanghai in 2016 – an announcement that was welcomed by all.
Trade remains an important tool for the global economy and for sustainable development. And so it remains for the G20 agenda and efforts on economic policy coordination. Turkey will continue to play its part in the most constructive way as one of the leading emerging economies of the world.
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Northern Corridor transport rates drop
The Northern Corridor has registered a general decline in transport costs while the Central Corridor shows a steady but marginal increase in the past five years.
According to the 2015 East Africa Logistics Performance Survey, the cost of transport from the port of Dar es Salaam to the landlocked countries of East Africa is twice higher than that from the port of Mombasa to the neighbouring EAC countries.
“The average transport cost from Mombasa to Kampala came down from $3,400 in 2011 to $2,500 in 2015, while the rates from Dar-es-Salaam to Kampala have increased from $2,507 in 2011 to $4,500 in 2015,” says the report.
Gilbert Langat, chief executive officer at the Kenya Shippers Council, noted that the 2008 post-election violence in Kenya saw many shippers and cargo traders shift to the port of Dar es Salaam due to the losses they incurred during this period. This lasted till 2012, when Kenya was going through election campaigns again.
“Many shippers and cargo traders were not sure of the outcome of the Kenyan elections during 2012 period and preferred to ship their goods through the Dar port. So the Dar port saw an increase in cargo clearance, and transport on the Central Corridor also improved,” said Mr Langat.
“But after the 2013 elections, with President Uhuru Kenyatta and his counterparts Paul Kagame of Rwanda and Yoweri Museveni of Uganda focused on improving business at the port of Mombasa and the Northern Corridor, the cost of cargo clearance dropped.”
The focus by the three presidents, he said, has seen the cargo clearance time drop from eight days to four days currently.
“For the Dar es Salaam port and Central Corridor to continue making profits after losing business to Mombasa again, they had to increase its rates for both clearance and transport,” noted Mr Langat.
“To improve logistics ranking, the country’s leadership has to partner with the other EAC states on appropriate infrastructure investments, regulatory framework, logistics financing and harmonisation of regional transportation laws,” he added.
The Dar port, the report says, has an average dwell time of nine days compared with Mombasa with five days dwell time. The global cargo dwell time benchmark is three days.
The high dwell time is attributed to multiple agencies involved in clearing cargo at the port.
The transit cargo times from Mombasa to Malaba have come down to 200 hours against a target of 120 hours.
Dar has higher shore handling charges than Mombasa for transit export while Mombasa has higher import volumes.
The survey, conducted annually, analyses the performance of trade logistics in the East African Community member states with respect to the indicators of time, cost and complexity (CTC) against those of the world’s leading trade hubs.
This year’s survey ascertains the improvement in the three areas that were identified to be of major concern in the 2014 report: Efficiency of goods clearance; system availability and reliability; and the quality and availability of infrastructure.
The survey tracked specific quantitative and qualitative indicators of logistics performance in terms of cost, time and complexity of executing trade transactions.
Freight forwarding companies, shippers and transporters formed 90 per cent of the sample population during the survey, while 10 per cent consisted of various logistics firms involved in the movement of goods and services around the East African region.
Overall, Rwanda performed better than the other economies and ranked at position one in 2015, with a score of 3.66 compared with 3.52 in 2014.
Burundi is fifth with a score of 2.25 against 2.78 in 2014 with the political situation there contributing to the dismal perception of its performance.
Kenya stands at position three with a score of 3.07 in 2015 against 2.82 in 2014. Tanzania slipped from position three in 2014 to position four in 2015, with scores of 2.77 and 2.89 respectively.
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Infrastructure, a catalyst for Africa’s development
The first-ever Programme for Infrastructure Development in Africa (PIDA) Week opened on Friday, November 13 in Abidjan, with the African Development Bank (AfDB) reiterating its commitment to supporting efforts seeking to address the continent’s infrastructure needs.
Moono Mupotola, AfDB’s Director for NEPAD, Regional Integration and Trade, said implementation of the PIDA Priority Action Plan (PAP) projects, which PIDA Week will examine, will have a direct impact on the Bank’s ability to deliver on its five new focus areas. Under the new AfDB President, those priorities are to Light up and power Africa; Feed Africa; Industrialise Africa; Integrate Africa; and Improve the quality of life for the African people.
“Energy plays a big part in industrialisation and job creation,” Mupotola said, adding that the energy sector will consume 59 percent of PIDA PAP’s estimated investment of US $68 billion to be realised in 2020. The other sectors are transport, water and ICT.
In bridging the financing gap, Ibrahim Mayaki, NEPAD Agency’s Chief Executive Officer, called on private sector participation and the need to increase domestic resources in the face of dwindling donor assistance. “We need bankable projects to attract private sector investment,” he said.
The discussions also highlighted the issue of sound policy measures and reforms to guarantee private sector partnership that will lead to, among other things, job creation.
Job creation, particularly for the youth, could be realised through developing agriculture, which goes hand-in-hand with boosting rural infrastructure, according to Rhoda Peace Tumusiime, African Union’s Commissioner for rural economy and agriculture. She described infrastructure as a catalyst for achieving most of Africa’s development.
“I see a lot of connectedness between infrastructure, agriculture, rural development and trade,” she stated. “Infrastructure has increased intra-African trade from 11 to 16 percent in the past few years, she noted.
Over the last decade, the AfDB has invested directly over US $30 billion in infrastructure, which has constituted over 50 percent of the Bank’s lending activities.
High level forum to brainstorm on solutions for integrating Africa through
The first-ever Programme for Infrastructure Development in Africa (PIDA) Week will be held at the African Development Bank (AfDB) headquarters in Abidjan, Côte d’Ivoire, from November 13 to 17, 2015, under the theme “Accelerating Infrastructure Implementation for Africa’s Integration”.
PIDA is a joint initiative of the Africa Union Commission (AUC), the New Partnership for Africa’s Development (NEPAD) and the AfDB. It seeks to promote regional economic integration by bridging Africa’s massive infrastructure gap that hampers the continent’s competitiveness in the global market.
The infrastructure deficit is traced to Africa’s colonization. “The delay that Africa accumulated during colonization gave to the Continent an infrastructure system that harms its own development. PIDA is a strategy to break those barriers and set continental priorities which brought consensus and commitments both at technical and political levels,” observed NEPAD Agency’s Chief Executive Officer, Ibrahim Mayaki.
The initiative provides a common framework for African stakeholders to build the infrastructure necessary to increase intra-African trade, boosting socio-economic development across the continent. PIDA estimates the cost of closing Africa’s infrastructure deficit to be about US $360 billion between 2011 and 2014, with significant investments required by 2020.
“As we open up Africa with high quality regional infrastructure – especially rail, transnational highways, information and communications, air and maritime transport – Africa will witness a phenomenal boost in intra-Africa and global trade; the entrepreneurial spirit of small and large businesses, and millions of our young people, will be unleashed,” AfDB’s President Akinwumi Adesina said during his inauguration in September 2015.
PIDA Week is expected to create synergy between different PIDA-related activities held earlier such as the meetings of the Steering Committee, the Council for Infrastructure Development (CID), the Infrastructure Consortium for Africa (ICA), the NEPAD Infrastructure Project Preparation Facility (IPPF), and the Continental Business Network meeting.
The event will help to formulate measures that need to be addressed by African Heads of State and Government, including policy decisions necessary for tackling barriers hindering infrastructure development. It will also discuss private sector contributions to project implementation.
PIDA Week will include panel discussions on gender and inclusive infrastructure development; PIDA’s role in the realization of Agenda 2063; a high-level dialogue on the effects of job creation on infrastructure development; and a roundtable with partners on PIDA’s Service Delivery Mechanism (SDM), among other events.
Approximately 150 participants are expected at the event, including infrastructure commissioners from the African Union, infrastructure experts from development institutions, regional economic communities, the United Nations, and the private sector.
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Joint Statement of the Heads of BRICS Competition Authorities: Durban, 2015
We, the Heads of Competition Authorities of the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa, at a meeting on 13 November 2015 during the 4th BRICS International Competition Conference in Durban, South Africa which was held under the theme “Competition and Inclusive Growth’’:
Recognising, as set out in the Ufa Declaration of 9 July 2015, that as BRICS countries are emerging markets and developing economies which face similar challenges, it is important to continue in our joint efforts aimed at improving competition law and policy enforcement in order to achieve growth in our economies and the protection of consumers;
Acknowledging that dialogue amongst the BRICS countries in the field of competition policy and enforcement, based on mutual respect and trust, is essential; Further recognising that effective competition policy enforcement by the BRICS countries requires, in the context of economic globalization, strengthening of the cooperation and coordination between the BRICS competition authorities;
Agreed to conclude the Memorandum of Understanding in the field of competition policy in order to strengthen the cooperation and coordination between the BRICS Competition Authorities;
Agreed to activities under the proposed Memorandum of Understanding to strengthen such cooperation through the sharing of best practices in respect of laws, rules and policies; joint participation in capacity building initiatives such as conferences and seminars; the conduct of joint studies and coordination in enforcement proceedings.
13 November 2015, Durban, South Africa
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CEMAC: Why is economic growth lagging and what can be done about it?
During the last two decades, the average growth of the Economic and Monetary Community of Central Africa (CEMAC) has been slower than the sub-Saharan African (SSA) average.
Given that many CEMAC countries aspire to reach emerging country status within the next two decades, this paper, using a growth accounting approach, identifies the main components of growth and analyzes the differences with respect to comparator countries. Results of the analysis show that convergence of CEMAC countries toward emerging market levels has stalled, while some lower-income, faster-growing economies have been catching up. Decomposing growth by contributing factors, we find that total factor productivity has had a negative impact on CEMAC’s growth.
This paper compares CEMAC countries’ growth performance with that of comparator countries. Specifically CEMAC countries are compared with SSA countries; SSA emerging markets; SSA frontier economies; and a group of selected Asian countries. Although CEMAC’s average per capita income is higher than the average of SSA countries and of SSA frontier markets, because of abundant oil resources, CEMAC’s per capita GDP growth has been slower than in comparator countries.
Improving CEMAC’s productivity requires, among others measures, addressing its challenging business climate and promoting a more diversified economy with a stronger private sector. Because CEMAC lags behind its peers in terms of structural competitiveness and governance, this paper assesses the impact of reforms in specific areas of the World Bank’s “Doing Business” indicators. This is done through an analysis whereby the CEMAC countries catch up with benchmark groups in specific areas of the business climate. By comparing how the regional ranking would improve overall with various scenarios of catching up, this paper identifies which reforms would provide the highest gains in improving the business climate. The last part of the paper analyzes channels through which ongoing shortcomings in the business climate undermine gains in the overall competitiveness of CEMAC economies.
This paper makes three contributions to the analysis of long-term productivity in CEMAC. The first one is the scope as we compute production functions for all SSA countries. Second, the accounting methodology in growth rates allows us to make cross-country and cross-region comparisons. Third, we identify the areas of weaknesses with respect to business climate and competitiveness, and the areas for most effective reforms.
Growth Facts
Per capita GDP growth in CEMAC has been slower than in most SSA countries. Although average per capita income in SSA, African FEs, and Asian peers has risen steadily, average per capita GDP in CEMAC has grown more modestly since the early 2000s. Moreover, a country disaggregation shows that the high average CEMAC per capita growth largely stems from the oil boom in Equatorial Guinea which started in the mid-1990s. CEMAC experienced a convergence process toward SSA EM income levels from the mid-1990s to the mid- 2000’s when its average GDP per capita grew faster than in EMs. However, since 2005, and despite high oil prices until recently, the convergence process has stalled. As a consequence, the per capita income gap has remained at about 30 percent of the SSA EM income level. At the same time, faster-growing, lower-income SSA FEs have been catching up. In 2000-13, the average per capita real GDP growth in CEMAC was 1.4 percentage points slower than in the SSA frontier countries. This comparison shows an even larger decrease when excluding Equatorial Guinea and considers the five other CEMAC countries’; this implies the convergence was largely due to the oil sector.
GDP growth in the CEMAC has been highly volatile and dependent on oil. With the exception of the Central African Republic (CAR), CEMAC economies remain mainly driven by the oil sector; this explains the region’s higher-than-average growth volatility. Oil sector performance explains the very rapid per capita growth in Equatorial Guinea and the severe contraction of the Gabonese economy in 1999. Moreover, the disparity in per capita GDP across CEMAC countries is relatively high and has been widening in the last two decades. While in the early 1990s the regional average per capita GDP was about 20 percent of the average in the two richest countries (Equatorial Guinea and Gabon), in 2013 this ratio was around 16 percent.
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B20: Openness in the business community
This year’s B20 summit set a new standard for participation and inclusivity across a variety of fields, says Rifat Hisarcıklıoğlu, Chair, B20, and President, Union of Chambers and Commodity Exchanges of Turkey
Since 2010, the Business 20 – or B20 for short – has operated as the G20’s most prominent and influential outreach group. In this capacity, it has convened business executives, association leaders and policy experts from across the world every year to develop new recommendations relevant to the global business community and economy. Between 2010 and 2014, more than 400 recommendations from a wide variety of fields were developed through this process, in areas as diverse as trade, infrastructure and anti-corruption.
When Turkey was formally awarded the presidency of the G20 and its constituent outreach groups for 2015, Prime Minister Ahmet Davutoğlu introduced a new kind of leadership for the process. Instead of operating under the status quo, the Prime Minister encouraged a strategic vision for the G20 and B20 that would place an emphasis on the three ‘I’s of inclusiveness, implementation and investment. After all, at its core the G20 is about global leadership, not just about the members themselves. And, by many accounts, in recent years the G20 had fallen short in driving real, discernible change in the world.
We at the B20 took this directive seriously, and worked to create an inclusive conference that prioritised action over mere talk. In this spirit, the B20 held regional consultations in nine countries on four continents during the year. These forums – spread out among both G20 and non-G20 countries – brought previously uninvolved business leaders into the fold, and allowed them to vote on the proposed topics they saw as most important. This feedback helped shape the direction the B20 took in crafting the prioritised recommendation list that was handed to the G20 leaders in September.
In the spirit of inclusiveness, B20 Turkey also introduced the new SMEs and Entrepreneurship Taskforce this year. Given that small and medium-sized enterprises (SMEs) now account for two thirds of all private-sector jobs and 80% of net job growth globally, the time was ripe for the B20 to represent smaller businesses more formally in its process of developing recommendations, and to give more focus to the challenges they face. Such challenges include financial regulations, which have choked SME lending since 2008, as well as skills and managerial gaps that have increasingly worsened for smaller businesses in recent years.
B20 Turkey outlines its recommendations for solving such issues in the B20 Policy Summary. It furthermore endorses the mandate of the newly formed World SME Forum (WSF) to scale up the potential of SMEs globally. The WSF is an independent, not-for-profit organisation that can advocate for SME interests among regional and international standard setters (such as the G20 or the Asia-Pacific Economic Cooperation forum) and have a say when potentially impactful or harmful legislation is being pushed. The WSF can also coordinate with global organisations to deliver better services to SMEs and integrate them more fully into international value chains, which are quickly becoming central to the global economy.
In addition to the SMEs and Entrepreneurship Taskforce, B20 Turkey features five other taskforces, all with their own sets of recommendations: Trade; Infrastructure and Investment; Anti-Corruption; Employment; and Financing Growth.
The Trade Taskforce recommends that governments avoid tariffs and localisation barriers that strangle trade, as well as policies that insulate firms from competition and kill innovation. The taskforce continues to implore governments to ratify the World Trade Organization’s Trade Facilitation Agreement.
The Infrastructure and Investment Taskforce calls for the resolution of the global gap in infrastructure funding – a problem that has become more pressing in recent years. To do so, it recommends that governments implement regulations and standards that invite both foreign and domestic investment, as well as develop project marketplaces that can increase liquidity.
The Employment Taskforce urges governments to recognise that skills education and business mobility must be improved. Governments are encouraged to implement sensible strategies for their citizens, and to allow more open access to innovators and entrepreneurs. To do so, member countries should implement G20-wide entrepreneur visa programmes as soon as possible. Educational reforms that stress managerial and entrepreneurial skills, as well as computer literacy, should be implemented.
The Financing Growth Taskforce recommends that governments finalise the financial reform agenda and enable regulatory consistency across markets. It furthermore advocates policies that would broaden and deepen SME access to financing, a necessary feature of any plan to grow smaller enterprises in the future.
Achieving greater transparency
The B20 also maintains that systemic corruption can no longer be downplayed and ignored. Its Anti-Corruption Taskforce calls for concrete measures to expedite the elimination of corruption. The taskforce proposes the introduction of digital customs and procurement systems across all G20 nations. Such systems – based on previously successful trials in Turkey and elsewhere – would greatly reduce corruption, save money and engender new trust in public institutions.
On 3-5 September 2015, these recommendations were formally unveiled for G20 leaders at the B20 conference in Ankara. After nearly a year’s worth of work developing these recommendations, this moment was both meaningful and rewarding for all of us involved in the process. These recommendations, after all, have the potential not only to spur economic growth, but also to create millions of jobs for individuals throughout the world. There is thus a definite pride in seeing them advance to the international stage.
Moreover, we at the B20 Secretariat were proud of the conference itself. With attendance from more than 1,200 individuals from 68 countries (449 from outside Turkey), the 2015 B20 conference was the most international yet. Better still, it was inclusive, from the months leading up to it, all the way to the sessions themselves. The panels were kept diverse, all attendees were able to participate in the exchanges, and the conference itself maintained an open and friendly air that encouraged discussion before and after sessions.
Given the importance of the topics and recommendations at hand, as well as the goals set out at the beginning of the year, such openness and inclusiveness are huge successes for the B20 in 2015.
B20 Turkey Antalya Summit Statement
A delegation of leading CEOs met with heads of government on 15 November 2015 at the outset 2015 G20 leaders’ summit. The CEO group, drawn from across the G20 economies, appealed for new commitments to kick-start the global economy for the benefit of all – against a backdrop of sluggish GDP growth and falling trade flows.
The business leaders called for action to support trade, investment, and employment and SME growth – drawing on a series of recommendations developed by the global business community under the 2015 Turkish B20 presidency.
Among the B20 priorities conveyed during the meeting were calls to:
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Ratify and implement the World Trade Organization’s Trade Facilitation Agreement (TFA) – which new research suggests could boost global trade flows by an unprecedented US$3 trillion;
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Roll back protectionist trade policies, especially non-tariff barriers starting with localization barriers to trade;
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Take concrete action to increase youth and women participation in the labour force – including by developing national skills strategies, ramping up counseling programmes, on-the-job training, apprenticeships, and placement-service programmes;
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Establish country-specific infrastructure strategies to boost investment in much-needed infrastructure projects worldwide;
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Improve SME access to finance to unlock the potential of the world’s small businesses to contribute to global growth and employment. There is, for example, and estimated US$1.4 trillion shortfall of trade finance for SMEs according to the Asian Development Bank;
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Strengthen institutional mechanisms for financial regulatory cooperation between regulators and all key public and private-sector stakeholders.
Rifat Hisarcıklıoğlu, B20 Turkey Chair and President of the Union of Chambers and Commodity Exchanges of Turkey said: “We were pleased with the G20 leaders’ responsiveness to the business recommendations. The B20 is an important complement to the G20 mission for sustainable global growth, and our CEOs provide valuable day-to-day practical experience on key areas where the G20 can make meaningful progress.”
Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company and Chair of the International Business Advisory Council to the Turkish G20/B20 Presidency said: “Global economic growth and job creation has to be priority No. 1 for businesses, governments and civil society institutions, and this can only be accomplished through rigorous cooperation and accountability among these three prongs of the Golden Triangle.”
Mr. Kent added: “To this end, in 2015, we have provided robust recommendations to G20 governments that will jump start growth through policy reforms in trade, employment, SMEs and infrastructure. We’ve also increased the dialogue among G20 governments and business representatives so that policy reforms unlock new investment and allow us to rise above the status quo and deliver increased economic opportunity for women, young people and families around the world.”
This year, the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the International Chamber of Commerce (ICC) established the World SME Forum to advocate the interests of global SMEs under the inclusivity scope of B20 Turkey. The Forum, in line with the recommendations of the newly established SMEs and Entrepreneurship Taskforce will take advocacy efforts up to a whole new level.
Since 2010 the B20 has put forward recommendations to the G20 annually, many of which have translated into important G20 commitments to support private-sector led growth following the financial crisis.
To that end, “Regulations must focus on growth and not just financial stability,” said the Chairman& CEO of BBVA, Francisco González. “We recommend the G20 leaders to pause in order to assess the whole picture and the cumulative impact of the reforms as well as to recalibrate accordingly if necessary to better allow the financial industry to support growth.”
Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises and First Vice Chairman of the International Chamber of Commerce said: “Today marked the sixth consecutive meeting of international CEOs and G20 heads of government. The objective of our direct dialogue is to provide substantive commercial guidance to G20 leaders in the laudable efforts to support growth, jobs and opportunity for all.”
A key year for global policymaking
This year’s G20 is one of a series of major international summits aimed at forging a more sustainable and prosperous future for the global community. In addition to G20-specific policy recommendations, the B20 CEOs called on the G20 to provide the leadership necessary to further progress in ongoing negotiations in key intergovernmental forums.
Commenting on the recently launched UN Sustainable Development Goals (SDGs), John Danilovich, Secretary General of the International Chamber of Commerce said: “It is clear that effective implementation of the SDGs will require widespread business engagement. Many businesses are already playing a leading role in promoting sustainable development, but with the right support and incentives from government we can do much more. It’s vital that the G20 shows leadership in engaging the private sector to deliver on the promise of the SDGs.”
In just two weeks’ time world leaders will gather in Paris for the start of the landmark Paris Climate Conference (COP21). Gerard Mestrallet, Chairman and CEO of Engie and moderator of the Business Dialogue for COP21 said: “Organizations working with more than 6 million companies have made it clear that the business community wants to see an ambitious climate deal at COP21 in Paris this December. More leading companies and investors are taking climate action than ever before. The G20 must build on this momentum by sending a clear and unequivocal signal of their ambition for a successful outcome at COP21.”
In mid-December trade ministers will convene in Nairobi for the WTO’s 10 Ministerial Conference. Güler Sabancı, Coordinating Chair of B20 Turkey Trade Taskforce and Sabancı Holding said: “The world trade agenda is at a critically important juncture. Global trade flows dropped by an estimated six percent in the first half of 2015. Governments must commit to ambitious outcomes within the WTO to revitalize trade as a driver of growth and jobs. Implementation of the Trade Facilitation Agreement must be a starting point for this agenda.”
The G20 in 2016
We have high expectations that tomorrows G20 deliberations will reflect our recommendations to spur the macro-economic recovery, increase women and youth employment, reform financial regulation, expand trade, and intensify the role of small- and medium-sized enterprises said Yu Ping, who will serve as the Sherpa of B20 China. We will closely review the G20 communiqué and structure B20 Chinas work plan he said.
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African states to back India’s push to remain ‘pharmacy of developing world’
Africa is rallying behind India in its push to protect a controversial patent policy on medicine, to ensure that poor countries still have access to cheaper generic drugs manufactured by Indian pharmaceutical companies.
India is known as the “pharmacy of the developing world,” as medicines produced by generics companies in the country are among the most affordable in the world.
At the recent India-Africa Business Forum, African leaders agreed to support India’s stand on the full use of the flexibilities provided by the agreement on Trade-Related aspects of Intellectual Property Rights (Trips) – administered by the World Trade Organisation – at the upcoming WTO Ministerial Summit from December 15 to 18 in Nairobi.
US pharmaceutical companies such as Roche, BMS, Bayer and Pfizer, and trade lobby groups have been at the forefront of the push for a review of India’s intellectual property rights (IPR) law so that they comply with international trade norms – a move that could deny poor countries access to cheaper generic drugs manufactured by Indian firms.
Intellectual property rights are granted to inventors, artistes, and other creators regarding the use of their innovations.
Under the Indian Patents Act, if the government considers a drug to be unaffordable for the nation’s general population, it can issue a compulsory licence granting companies permission to manufacture a generic version at a fraction of the cost of the original drug. Furthermore, based on norms set by the WTO, if it is in the public interest, such a licence can be awarded by a government without the consent of the patent owner.
However, the US has been contesting this flexibility in a bid to protect its multinational pharmaceutical companies.
According to a WTO trade expert in Geneva, the IPR clause on flexibility in drug patenting will be a top agenda for the US at the WTO Ministerial Summit in Nairobi.
“The US has introduced ‘Trips-plus’ provisions that more aggressively protect patented drugs, plants, and seeds from public use and in some cases backtrack on the limited gains made in the Doha Declaration,” said the expert.
In the 2001 WTO Doha Round, the Declaration on Trips and Public Health provided a limited amount of flexibility, allowing the domestic manufacturing of generic drugs for public health crises.
The US, he said, prompted by pharmaceutical companies, has utilised international IPR to sue governments of developing countries for manufacturing generic versions of patented drugs.
In many poor countries, where the cost of patented drugs is high, cheap medicines are relied on to treat public health crises such as HIV/Aids, cancer as well as other potentially deadly health problems like diarrhoea.
In March 2012, for instance, India’s patent office allowed Hyderabad-based Natco Pharma to make a generic version of German pharmaceutical company Bayer’s cancer drug Nexavar. Bayer’s Nexavar reportedly costs about $4,500 a month for 120 pills while Natco’s generic version costs about $145 for a month’s dose.
Swiss multinational Novartis owns the cancer drug Glivec and it holds a patent for the drug in many countries including the US. Pfizer, another US drug company, is also involved in patent-related disputes in India.
According to an April 2013 article in the US medical journal Blood, the price of branded Glivec was $92,000 per patient, per year in the US, while in India, the drug was being sold for around $21,171.
“When patents are granted in the country, Indian generic manufacturers will not be able to automatically produce cheaper versions of these medicines, which could have a significant impact on access to affordable medicines, both in India and beyond, as many newer medicines [invented after 1995] are highly likely to be patent-protected,” said Ison Ndirangu, director of economic affairs and international trade in Kenya’s Ministry of Foreign Affairs and International Trade.
This means drugs for diseases like cancer and HIV, whose generic versions are cheaper, will not be accessible to many due to their high cost.
“African leaders agreed to support India’s role in providing high-quality, low-cost generic medicines, which are essential for healthcare around the world,” said Mr Ndirangu.
However, he said, Africa and India agreed to collaborate in the drug manufacturing sector.
“Kenya, for example, is in discussions with India to help us set up drug manufacturing plants so that we can produce the same drugs at a lower cost,” said Mr Ndirangu.
Although Kampala-based pharmaceutical firm CIPLA-Quality Chemicals Ltd, an Indian pharmaceutical company, manufactures antiretroviral and anti-malarial drugs for the East African market, the cost of production is high, which results in lower quantities, which are not enough for regional consumption.
Before 2005, India did not grant product patents on medicines. This allowed for the production of low-cost generic versions of medicines that were patented in other countries. Competition among generic producers in India has seen the price of medicines to treat diseases such as HIV, hepatitis and cancer fall by more than 90 per cent.
India has become a key source of essential medicines, such as ARVs, at a low cost and over 96 per cent of all HIV medicines purchased by donors for treatment programmes in developing countries come from India.
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Zimbabwe (re-)opens to the West
Zimbabwe, in an economic quagmire for nearly two decades, has begun to implement economic reforms that, if continued, could help the nation improve the quality of life for the majority of its citizens. This nascent reform movement also suggests that government leaders have realized that its current singular reliance on China will not solve the country’s economic ills.
Recent efforts by Finance Minister Patrick Chinamasa to restructure the country’s debt is a recognition by the government that food dependency, low growth, and virtually no foreign investment is not sustainable as economic policy. Zimbabwe owes creditors $8.1 billion, with nearly half that amount in arrears. Indeed, between 2011 and 2014 alone, 4,610 companies in the manufacturing sector closed, and 55,443 jobs were lost according to United Nations and African Development Bank figures.
Zimbabwe’s reform effort began in 2009 when Zimbabwe moved from hyperinflation – which saw poverty rates rise to 72 percent and triggered the sharpest drop in gross domestic product of any economy since the end of World War II – to a dollar-based economy.
With no other options, the economically fraught country entered into a stabilization program with the IMF and has performed well. At the World Bank/IMF meetings in Lima, Peru last month, Chinamasa presented a plan to restructure the country’s debt that was endorsed by the U.S., the U.K., Germany, France, the World Bank, and the IMF. If it stays on track, Zimbabwe could restructure its outstanding debt by as early as mid-2016, which would be a first step in creating an environment that can attract desperately needed external financing and investment.
Related to these economic reforms is legislation pending in parliament that would allow farmers, black and white, to lease land for 99 years. Long-term leases would help restore the rule of law in a sector characterized by arbitrary land seizures, and signal to foreign investors that commercial contracts may in fact be respected.
The country’s commercial banks need to support any land-tenure legislation so that leases can serve as collateral for badly needed credit and financing for farmers. It is estimated that $2 billion is required to restore a semblance of productivity in the once-robust agricultural sector. Transferable long-term leases that can be used as collateral are the only hope for the recovery of Zimbabwe’s agricultural sector.
Even with progress on debt restructuring and land reform, the country’s indigenization policy, which requires Zimbabweans to own 51 percent of any foreign investment, continues to be a deterrent to revitalizing the economy. While responsibility for implementing the policy has been moved from the more radical Ministry of Youth and Economic Empowerment to the relevant line ministries, the government still needs to be transparent in the enforcement of the policy. Local content laws are part of the investment landscape across Africa, but Zimbabwe’s have been more onerous than any other country in the region.
Zimbabwe has entered a political and economic transition whose outcome is far from clear. The reformers have gained momentum with the tacit support of the country’s 91-year-old president, Robert Mugabe. The increasingly bitter succession struggle, that pits the president’s wife, Grace Mugabe, against the veteran ZANU-PF leader and vice president, Emmerson Mnangagwa, as well as the former party stalwart, Joyce Mujuru, among others, will impact the pace and direction of the reform process. Nevertheless, Zimbabwe has few options but to continue its re-engagement with Western financial institutions and donors.
Zimbabwe’s former friends should work to encourage these fledgling reforms, particularly those aimed at engaging Zimbabwe’s battered but determined private sector. After all, the private sector has contributed significantly to democratic progress across the continent, including in Kenya, South Africa, and Nigeria.
Indeed, the European Union made the right move in 2013 when it lifted most of its sanctions on Zimbabwe, imposed in 2002 in response to electoral fraud and human rights abuses, in an effort to encourage economic and political reform. The EU also extended more than $200 million in financial support. Travel and financial sanctions still remain on Mugabe and his wife, as does an arms embargo on the nation.
Congress and the Obama administration should follow the EU’s lead and sharply reduce its sanctions on Zimbabwe. Even though current sanctions are targeted on 100 individuals and a number of entities, they have been a deterrent to any new investment in the country.
The U.S. can keep sanctions on Mugabe without negatively impacting the majority of Zimbabweans, as current U.S. policy does, by allowing the country to participate in the African Growth and Opportunity Act (AGOA), which provides duty free access to the U.S. market for some 6,400 products.
Participation in AGOA would stimulate job creation, innovation, and economic and political reform as well as support labor-intensive sectors such as manufacturing, apparel, and agricultural producers. In Zimbabwe, business and the private sector are key advocates of reform – this is where the U.S. should be placing support.
Witney Schneidman is a nonresident fellow at the Africa Growth Initiative in the Global Economy and Development program.
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tralac’s Daily News selection: 13 November 2015
The selection: Friday, 13 November
EU-Africa Valletta Summit: download the Action Plan, Political Declaration
WTO negotiators start to stake out shape of Nairobi Declaration (Bridges)
Negotiators have tabled a flurry of proposals on the text of the WTO’s ministerial declaration, ahead of the organisation’s ministerial conference in the Kenyan capital city of Nairobi being held in less than five weeks’ time.
China warns WTO its cheap exports will soon be harder to resist (Reuters)
CFTA negotiations: towards an African Business Council (AU)
The African Union Commission engaged the Private Sector on the Continental Free Trade Area negotiations processes during a three-day Conference of the African Private Sector in Victoria, Seychelles. The conference was organized by the AUC in partnership with the Pan African Chamber of Commerce and the Seychelles Chamber of Commerce and Industry. The objectives of this conference included enabling private sector participants to dialogue with the Commission and sharing knowledge and experience about the CFTA. The governance structure of the CFTA provides for the establishment of an African Business Council as a necessary platform for aggregating and articulating the views of the Private Sector in the continental policy formulation processes. The ABC will thus be instrumental in collecting, processing and presenting the views of the private and business operators throughout the African continent.
Seychelles islands woo African businesses to become hub for African trade (SNS)
Speaking to the press at a meeting dubbed the ‘African Prosperity conference’ that is being hosted by the island nation, the Chairman of the Seychelles Chamber of Commerce and Industry, Marco Francis called for greater partnership between African nations. The Africa Prosperity Conference which is coming to an end today is being organized under the umbrella of Pan African Chamber of Commerce and Industry. This is a network of 34 national chambers of commerce of Africa established in 2009.
Nakumatt boss to speak at continental trade forum (CapitalFM)
Business openings in Africa catch eye of UAE investors: Allan Odhiambo spoke with Hamad Buamim, President and CEO, DCCI (Business Daily)
Regional cooperation in SADC stock exchanges: increasing the availability of shares? (New Era)
The Committee of SADC Stock Exchanges (CoSSE) was established to facilitate the cooperation and consists of ten stock exchanges from the region. Angola, Democratic Republic of Congo, Lesotho, Madagascar and Seychelles are not yet members. [The author, Festus Nghifenwa, is SADC FIP Implementation Coordinator at Namibia's finance ministry]
We do not need a dominant currency, we need one with value (Namibia Economist)
The only question is: are there persons or groups of persons in Namibia who have the stomach to start a meaningful debate on what our Rand convertibility means for us? Given the extreme asymmetry between the South African economy and all other economies in the region, even if one put them all together, it will not be an easy task to confront the elephant to change the dispensation. Deutsche Bank released a report this week on South Africa’s latest drive to entice the international capital market back to SA government bonds. The results were dismal and the august bank thinks the Rand is going to go deep down the abyss. Compare this to the 3-day Namibian road show in Europe which had a far more successful and positive outcome in the form of a quick, favourable US$750 million Eurobond.
SACU members need each other - Zuma (The Namibian)
Sub-Saharan Africa currency crisis persists (Zimbabwe Independent)
Namibia's trade deficit doubles in Q3 2015 (Nambia Statistics Agency)
Namibia's trade deficit widened to N$10,5bn in the third quarter of 2015 versus a N$5,2bn shortfall in the second quarter, the statistics office said yesterday. The increase was due to rising imports, which rose 22% in the third quarter to N$24,5bn, the agency said. Botswana topped Namibia’s export destinations with goods worth N$3.2bn exported to that country, this represents an increase of 11% from N$2.8bn in the corresponding quarter of the preceding year. Namibia’s exports to RSA rose by 35.7%, translating into N$3bn when compared to N$2.2bn in the corresponding quarter a year earlier. This was the largest increase during the period under review. In addition, exports to Spain rose by 7%, to N$0.830bn, from N$0.767bn in the same period last year.
Transporters want JPM to find solutions to Dar-Congo route (The Citizen)
Tanzania Truck Owners Association is now pressing for the new government to find lasting solutions to the chronic problems facing transporters of cargo between Dar es Salaam and the Democratic Republic of Congo, via Zambia. Tatoa representatives, under their chairperson, Ms Angelina Ngalula, yesterday presented their complaints to Tanzania’s ambassador in the DRC, Anthony Cheche, who is currently in the country. They called upon Mr Ngalula to submit their complaints, ranging from cumbersome procedures for movement of cargo and unofficial charges imposed by transporters on transit cargo to responsible authorities. They also want him to work on such challenges as: unnecessary delays in the movement of cargo to DRC, failure by insurance companies in the DRC to compensate for the 47 trucks that were recently gutted by fire, unnecessary weigh bridges as well as higher costs of running a transport business on that route as compared to others.
Botswana: Corridors have potential to add value (Daily News)
Mr Fitt [permanent secretary in the Ministry of Transport and Communications] said Botswana was working on improving telecommunications coverage in the Trans Kgalagadi Corridor and that by next month, his ministry would meet all the three major network providers to come up with ways of ensuring that there was network coverage throughout the corridor.
Angola pardons Mozambican debt (AIM)
Angola has decided to pardon half of Mozambique's debt of $61.5m US dollars. Mozambican President Filipe Nyusi at the end of his state visit to Angola told reporters that his Angolan counterpart, Jose Eduardo dos Santos, has assured him that half the debt will be written off, while the other half will be transformed into investment. Nyusi also announced that the question of suppressing entry visas between Mozambique and Angola will be solved next year. Mozambique has signed agreements to suppress entry visas for short visits with most members of SADC. But Angola has not yet negotiated such an agreement, despite the close historical ties between the two countries.
Angola’s financial sector: a roundtable report (CMI)
In the roundtable discussions, two themes emerged. The first is that the elite dominance of the financial sector means that a clear distinction between the public and the private does not hold in Angola. This poses difficulties for analysts of Angola’s economy, since what appear to be ‘private sector’ developments are instead often an extension of the interests of the governing elite. It is also a challenge for international corporations operating in Angola, who may find themselves on uncertain terrain in an economy where ownership structures are often deliberately opaque and obfuscating. The second theme emerging was the relative uniqueness of Angola’s financial sector and economy in Africa. Angola’s financial sector has grown incredibly rapidly, but remains highly concentrated in five banks and has weak links to the remainder of the economy, failing to act as a catalyst for diversification. While Angola’s financial sector appears like an outlier when compared to its sub-Saharan African neighbours, experiencing a sui generis trajectory due to its political structure, it is more similar to the financial sectors in other oil rich economies such as the Gulf states.
Zimbabwe: Zimra opposes tax incentives (The Herald)
The Zimbabwe Revenue Authority says offering tax incentives to foreign companies is tantamount to surrendering the country’s taxing rights and would negatively impact on socio-economic development. But, Zimra commissioner general Gershem Pasi said tax incentives mostly resulted in benefits accruing to the country of origin of the concerned companies and not the host country. He cited China as having successfully implemented the concept of SEZs, attributing this to the fact that the zones were created for Chinese investment rather than foreign companies.
SA, Zim trade relations still intact (NewsDay)
A South African minister says despite the rejection of the rand by some sectors of the Zimbabwean economy, trading and economic relations between the two countries have remained strong. Local retailers and traders have been rejecting the South African rand as it continues its depreciation against the United States dollar. One dollar is currently being exchanged at between R13 and R14.
Egypt: Higher import tariffs ahead (Ahram)
In an attempt to control the imports bill and reduce the demand for foreign currency, the government plans to increase customs duties on a number of imported products. Believing that many imported goods are luxury items and others have locally manufactured alternatives, the Customs Authority has been commissioned to prepare a list of imports that will be subject to higher tariffs. The head of the Customs Authority, Magdi Abdel-Aziz, refused to release the names of the targeted products to avoid hoarding by traders in the internal market. He said the list of products will consist of manufactured items and not include raw materials or intermediate goods. Ahmed Shiha, head of the Importers Division at the Egyptian Federation of Chambers of Commerce, told Al-Ahram Weekly he is against the move because it will lead to another wave of high prices that consumers, not importers, will pay.
Ethiopia: Development Effectiveness Review 2015 launch (AfDB)
The AfDB will launch its Development Effectiveness Review 2015 on Ethiopia on Wednesday, November 18 in Addis Ababa. The review provides a comprehensive report on the Bank’s performance in the country and tracks how the Bank’s operations have contributed to the Ethiopia’s development results.
Burundi: text of UNSC resolution
It urged the Government to cooperate with East African Community-led, African Union-endorsed mediation to immediately convene an inclusive inter-Burundian dialogue with all peaceful stakeholders, both in and outside the country, in order to find a consensual and nationally owned solution. In that context, it expressed full support to mediation by Yoweri Museveni, President of Uganda, on behalf of the Community, and invited the Secretary-General to deploy a team that would, in coordination with the Government, African Union and other partners, develop options for addressing political and security concerns. The Secretary-General was also requested to present in 15 days options on the United Nations’ future presence in the country.
Informal cross-border trade in Eastern Sudan: a case study from Kassala and Gedarif states (CMI)
This paper is part of a wider study on eastern Sudan’s border communities and border problems. It is an attempt to provide an initial assessment of informal border trade between the Gedarif and Kassala States with, respectively, Ethiopia and Eritrea. The findings will hopefully provide some insights that would help draw appropriate policies that minimize government losses and maximize benefits from ICBT, especially for border communities in the region.
AG attacks SADC Tribunal proposal (The Namibian)
Attorney General Sacky Shanghala this week called on government-employed lawyers not to support a proposal that the Law Society of Namibia should sue government over the decision to suspend the operations of the Southern African Development Community Tribunal. Addressing the National Assembly on Wednesday, Shanghala said the proposal would subject lawyers in the Office of the Attorney General, who he said were a significant part of the Law Society's membership, to unethical behaviour and a conflict of interest if they participated in a decision against their own client.
IMF inputs to the G20 Leaders' Summit: Global prospects and policy challenges, International migration: recent trends, economic impacts, and policy implications
Cost of diaspora remittances seen falling to 3% after EU talks (Business Daily)
SADC Ministerial: environment and natural resources conference
SADC-CNGO: Seychelles takes over the presidency (State House)
South Africa to step up investments in Uganda (Daily Monitor)
South Africa, Russia talk trade at Moscow meeting (StarAfrica)
South Africa’s position on climate change ahead of UNFCCC COP 21 Summit (The Presidency)
The AU's Specialized Technical Committee on Education, Science and Technology: access prepared documentation
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EU’s migration cash for Africa falls short
The European Union’s efforts to stem the flow of refugees from Africa was undermined on 12 November by member states who failed to match EU money for a €1.8 billion trust fund to the tune of €1.72 billion, raising just €78 million.
EU and African leaders were meeting in Valletta, Malta, for a two-day summit in response to the migration crisis. €1.8 billion from the EU budget and European Development Fund was stumped up for the emergency trust fund, which will pay for measures to tackle the reasons refugees flee.
“For the Africa Trust Fund and our response to be credible, I want to see more member states contributing and matching the €1.8 billion the EU has put forward,” European Commission President Jean-Claude Juncker said as EU leaders signed the deal.
But, at time of going to press, 25 of the 28 member states, and two non-EU donors Norway and Switzerland, had pledged a total of around €78.2 million matching funds, far short of what Juncker has called for.
The European Commission has said it expects further contributions in the future. A European Council meeting will be held to further discuss migration this afternoon, although the UK and Poland are not present.
President of Senegal Macky Sall said the €1.8 billion fund was simply not enough. He added that if multinational corporations paid their taxes in Africa, and if fair prices were paid for African goods, the continent would not need anywhere near as much development aid.
Action plan
Later, EU and African leaders signed a five point action plan. It aims to secure Africans’ help in returning illegal migrants to their home country and clamping down on people smugglers.
The plan offers Africans larger but limited legal channels of migration and cash to improve the economic and social situations in their countries. The fund will be the financing instrument used to implement the plan.
European Council President Donald Tusk said the EU was in a “race against time” to save the Schengen area of passport free travel. “We are determined to win that race,” he said. “Without effective border controls, Schengen will not survive.”
As the migration crisis worsened, some member states reinstated border controls with other EU countries. Today, Sweden was the latest country to add itself to the list, which also includes Hungary, Germany and Slovenia.
Maltese Prime Minister Joseph Muscat said that safeguarding borders and renewing migration laws was vital, but not in order to create a “Fortress Europe”.
Referring to the plan and fund, he said, “This is an important first step forward but no one is expecting this to be the be all and end all.”
Development cash for checkpoints?
Civil society organisations have warned that, if they do pay into the trust fund, EU countries could divert development cash meant for schools and hospitals to checkpoints and barb wire.
Sara Tesorieri, Oxfam’s migration policy lead in Malta, said, “The EU Trust Fund for Africa must have a clear separation between development aid and security cooperation envelopes – these have different objectives and do not belong in the same pot.”
EU officials told EurActiv that the trust fund would not be conditional on issues such as returning migrants to Africa.
Campaigners also fears that member states could be tempted to use any future trust fund contribution to top up their Overseas Development Assistance (ODA).
In April, the European Commission said the EU would miss its 2015 ODA target of 0.7% of Gross National Income (GNI). Member states have now reconfirmed the 0.7% goal, as part of the Sustainable Development Goals, but hope to hit it by 2030, fifteen years late.
EU officials told EurActiv that it would be up to national governments to decide how their contributions were defined.
Development aid experts told EurActiv that any money classed as ODA would have to comply with reporting requirements.
But that did not mean countries would not try to use their contributions to increase the ODA percentage, raising the risk that development cash would be redirected to the migration crisis. Only the UK, Sweden, Luxembourg, and Denmark surpassed the 0.7% target last year.
Norway largest recipient of Norwegian aid
Norway, which also beat its 0.7% target, was criticised this week for cuts in long-term development aid to pay for domestic refugee costs.
It has decided to use more than a fifth (21%) of the aid budget to cover its refugee costs – making Norway by far the largest recipient of its own development aid.
The country will receive almost ten times more aid funds than the second largest aid recipient, which in 2014 was Afghanistan, said Save the Children Norway.
Meanwhile, officials from EU member states have been meeting in Brussels to discuss slashing the EU draft budget for 2016. Proposed cuts could reduce the EU’s chief fund for poverty eradication by nearly a quarter.
“While European leaders have been shaking hands and promising greater development cooperation with their African counterparts, their representatives in Brussels have been working to cripple the EU’s ability to fund such cooperation,” said Oxfam’s Tesorieri.
Key points
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EU to provide initial €1.8 billion to a new Emergency Trust Fund to support projects aimed at reducing migrant flows from Africa to Europe and displacement of people within Africa;
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Future development cooperation to focus on projects which will reduce migratory pressures: includes fostering jobs and economic growth in areas migrants come from or transit through, a scheme to reduce the development impact of remittances by cutting transfer costs and joint research on the causes of migration;
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Opportunities for legal migration to be “promoted”. Only concrete step agreed was an increase in the number of EU-funded scholarships for African students and academics;
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New programmes to be set up by end-2016 to increase protection and economic opportunities of displaced people in the Horn of Africa and North Africa;
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Increased cooperation on combatting illegal immigration and people trafficking, including creation of joint investigative team as a pilot project in key transit country Niger;
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Repatriation of failed asylum seekers to be accelerated. At least ten African countries agreed to help European states identify illegal immigrants without official documents (making them difficult to deport).
Background
The European Union has agreed on a plan, resisted by Hungary and several other ex-communist members of the bloc, to share out 160,000 refugees among its members, a small proportion of the 700,000 refugees the International Organization for Migration (IOM) estimates will reach Europe’s borders from the Middle East, Africa and Asia this year.
The EU is also courting Turkey with the promise of money, visa-free travel, and new accession talks if Ankara tries to stem the flow of refugees across its territory.
In the frontline of the refugee influx this year, Greece has been criticised for failing to implement EU law on registering new arrivals. Now, the EU plans to persuade refugees to wait in Greece for paid flights to other countries offering asylum, rather than risk dangerous winter treks through the Balkans.
During a mini-summit with Balkan states on 25 October, Athens committed to hosting 50,000 more refugees by the end of this year. Another 50,000 places should be made available in countries further north along the Balkan road. The EU has promised funds to Greece and the other countries to provide emergency help.
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WTO negotiators start to stake out shape of Nairobi Declaration
Negotiators have tabled a flurry of proposals on the text of the WTO’s ministerial declaration, ahead of the organisation’s ministerial conference in the Kenyan capital city of Nairobi being held in less than five weeks’ time.
With controversy over the fate of the trade body’s long-running Doha Round continuing to loom over the talks, officials have agreed to divide the declaration into three parts: the first looking at the WTO’s achievements to date, the second containing Nairobi outcomes, and the third setting out how negotiating issues would be addressed in the future.
This structure was agreed following consultations held by three facilitators appointed by the Director-General: Ambassador Gabriel Duque of Colombia, Ambassador Harald Neple of Norway, and Ambassador Stephen Karau of Kenya.
Some major traders such as the US are believed to oppose the continuation of the Doha agenda under its current framework after the Nairobi conference, whereas many developing countries favour continuing talks so as to address the unresolved Doha issues.
“It will be impossible to mention whether we can continue Doha or not,” speculated one negotiator in comments to Bridges.
Ambassadors from all WTO member countries were invited to attend a meeting on Tuesday to discuss part 1, on the trade body’s achievements to date, as well as a similar consultation on Wednesday to discuss part 3, on the way forward after Nairobi.
Trade officials told Bridges that the content of part 2 would only be finalised at the ministerial itself.
Nine proposals
Negotiating coalitions and individual countries have tabled nearly a dozen new proposals since last Friday, ranging in length from one paragraph to a six-page document.
The submissions mostly lay out proposed text for parts 1 and 3 of the draft declaration, although one also identifies a list of proposed declarations or decisions for adoption in Nairobi under part 2.
Ten farm exporting countries, including both developed and developing nations, also submitted a short proposal on the text of part 1 of the draft declaration.
The group includes around half of the membership of the Cairns Group of agricultural exporters, as well as one non-member, Rwanda. The co-sponsors propose that part 1 of the declaration recall that fundamental reform of farm trade is an integral part of the WTO’s Agreement on Agriculture under its Article 20, one that was reaffirmed in the Doha Declaration.
A separate short proposal from Brazil would have the third part of the declaration reaffirm the need for regional trade agreements to remain complementary to the multilateral trading system, rather than substitute for it. Brazil proposes that the WTO Committee on Regional Trade Agreements should map the systemic implications of these accords and their coherence with WTO rules.
The most detailed proposal is from the group of African, Caribbean, and Pacific (ACP) countries, which along with outlining issues for post-Nairobi discussions, also envisages the adoption of declarations or decisions on export competition and cotton, as well as on various “development and [least developed country, or LDC] issues” such as duty-free, quota-free market access for LDCs and fisheries subsidies.
Another shorter submission from the African Group mirrors many of the ACP concerns.
Large developing countries
China, India, Indonesia, and South Africa joined forces with Ecuador and Venezuela to submit a proposal with detailed text on parts 1 and 3 of the draft declaration, which would see WTO members reaffirm the declarations and decisions adopted at Doha as well as all subsequent ones.
Meanwhile, proposals from the group of small, vulnerable economies (SVEs) and the group of recently-acceded members (RAMs) each sought to maintain flexibilities that had been negotiated to date by their members in future talks at the WTO.
In negotiations this year, the US in particular has questioned whether China, a RAMs group member, should be able to benefit from additional flexibility on agricultural domestic support that was granted to this group under the draft Doha negotiating text that was tabled in 2008. Beijing has argued that any effort to cap its current farm subsidy entitlements would amount to breaching one of its “red lines” in the negotiations.
South Korea also tabled a text-based proposal as Bridges went to press, with another reportedly expected from the Arab Group. A joint communication by Colombia, New Zealand, and Pakistan regarding fisheries subsidies was also released at the time of this writing, referring to the WTO’s “central role” in improving disciplines on fisheries subsidies, and proposing a commitment to continue work in clarifying and developing better disciplines.
Agriculture negotiations
Vangelis Vitalis, the New Zealand ambassador who chairs the WTO agriculture talks, held small group consultations on public food stockholding last Friday, trade sources told Bridges.
However, the consultation did not reveal any common ground between members on the controversial issue. The G-33 group of developing countries continues to argue that WTO members should agree to a “permanent solution” that would allow them more flexibility to buy food at government-set prices under WTO subsidy rules, while farm exporting countries insist that governments should not be allowed to include market price support under the trade body’s “green box” – designed for payments that cause no more than minimal trade distortion.
Agriculture negotiators were reportedly having a little more success in addressing export competition, although the US was said to be reluctant to accept proposed disciplines on export credits and on food aid that had been included in the 2008 draft Doha deal.
Trade sources told Bridges that the US was reportedly preparing a proposal that would set out their concerns.
The chair was reported to be planning another small group consultation on the question of the special safeguard mechanism this coming Friday. G-33 members have recently proposed that the Nairobi ministerial agree to an “accessible and effective” mechanism that would allow them to raise tariffs temporarily in the event of a sudden import surge or price depression.
“We need more time to discuss,” one negotiator told Bridges.
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The African Union Commission engages the Private Sector on the Continental Free Trade Area (CFTA) negotiations processes
The African Union Commission (AUC) engaged the Private Sector on the Continental Free Trade Area (CFTA) negotiations processes during a three-day Conference of the African Private Sector that ended on 12 November 2015 in Victoria, Seychelles.
The conference was organized by the AUC in partnership with the Pan African Chamber of Commerce (PACCI) and the Seychelles Chamber of Commerce and Industry. The objectives of this conference included enabling private sector participants to dialogue with the Commission and sharing knowledge and experience about the CFTA.
The governance structure of the CFTA provides for the establishment of an African Business Council as a necessary platform for aggregating and articulating the views of the Private Sector in the continental policy formulation processes. The ABC will thus be instrumental in collecting, processing and presenting the views of the private and business operators throughout the African continent.
Mrs. Treasure Thembisile Maphanga, Director of the Department of Trade and Industry of the African Union Commission, reminded the participants that if Africa has to double intra-African Trade – one key aspiration embedded under the African Union Agenda 2063 – there is need to fast-track the establishment of the CFTA negotiations by the indicative deadline of 2017.
To achieve this milestone, she invited the Private Sector to partner with the African Union Commission in implementing the mandate and urged the Private Sector to take ownership of the process establishing the African Business Council. Underscoring that this is an ambitious agenda the Director emphasized the importance of the Private Sector in leapfrogging in terms of integration.
Sharing the same sentiments, the President of Tanzania Chamber of Commerce, Industry and Agriculture, Eng. Peter Chisawillo pointed out that Private Sector is fundamental to boosting Intra-African Trade. He welcomed the CFTA negotiations and stressed the readiness of the Tanzania Chamber of Commerce, Industry and Agriculture to support the initiative. “Africa must do business with Africa first. We have to think continentally about competitiveness and Africa’s share in global trade,” he said. In support, the CEO of the East Africa Chamber of Commerce and Industry, Mr. Charles Kahuthu echoed, “The African Business Council is the way to go for Africa.”
Appreciating the consultation by the African Union Commission, the President of the Pan African Chamber of Commerce and Industry, Dr. Seth Adjei Baah, pointed out that “we are all working together for the common good of Africa”. He advised that the establishment of the African Business Council should not weaken existing Private Sector organizations that are operating at national, regional and continental levels.
The meeting concluded with a Communiqué that raised observations and recommendations by the Private Sector for further consultations with Regional Economic Communities (RECs), Regional Business Councils, Regional/National Chambers of Commerce, among others, on the establishment of the African Business Council.
The International Trade Centre (ITC) also provided technical inputs that support the process of establishing a dialogue platform between the African Union and the Private Sector.
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Minister Ebrahim Patel officially opens 4th BRICS International Competition Conference
Minister of Economic Development, Mr Ebrahim Patel, officially opened the 4th BRICS International Competition Conference on 12 November 2015 in Durban. The Conference is convened under the theme: “Competition and Inclusive Growth”. This is the first conference of BRICS Competition to be held in African continent.
In his opening address, the Minister highlighted the immense role played by competition authorities amongst BRICS countries in economic development. “The Competition Commission promotes employment and advance the social welfare of South Africa,” said Minister Patel.
South Africa’s Competition Commissioner, Mr Tembinkosi Bonakele, said BRICS countries share many similarities when it comes to competition policy.
“We learn a lot from the other BRICS nations because some of the cases are very similar to the ones that we are investigating; sharing the experiences of dealing with the cases is very important,” said Commissioner Bonakele.
The BRICS bloc represents an important voice for the developing countries in the global antitrust policy discourse. The conference has attracted over 500 participants from different parts of the world, with a strong representation from BRICS countries as well counterparts in the continent.
Other speakers at the Opening Ceremony were eThekwini Executive Mayor, Hon James Nxumalo; KwaZulu-Natal Premier, Mr Senzo Mchunu and MEC of Economic Development, Tourism and Environmental Affairs, Mr Mike Mabuyakhulu.
After the official opening, delegates went into parallel and plenary sessions, discussing a wide range of topical issues in the area of competition law enforcement such as:
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The Abuse of Dominance Enforcement, State-Owned Enterprises
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Public Interest issues in Competition
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Competition, Economic Development and Trade.
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South Africa’s position on climate change ahead of UNFCCC COP 21 Summit
The Twenty-First Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) takes place in Paris at the end of November through to mid-December.
This is an historic opportunity for the international community to respond to the challenge of climate change collectively and with a renewed sense of urgency by adopting an agreement with supporting decisions under the Convention that will contain legal obligations for all countries to take actions to address climate change. This agreement has to set the world on a trajectory to keep the increase in average global temperature since the start of the industrial era to below two degrees Centigrade.
For South Africa, a fair and ambitious agreement will mark the successful conclusion of a mandate agreed to by consensus at the Durban conference in 2011 to enhance implementation of the existing Convention. Having launched the negotiations that will conclude this year, South Africa has a special interest in doing all that it can to ensure the success of the Paris COP and is providing its full support to the incoming French Presidency.
The Paris Agreement needs to be as ambitious as possible and to address the environmental challenge, whilst protecting the development space of developing countries. It is in our national interest to have a legal agreement that is fair, strengthens the multilateral rule of law, provides predictability and allows us to respond more effectively to our pressing socio-economic challenges and acute vulnerability to climate change.
As the current Chair of the Group of 77 and China and an active member of the Africa Group of Negotiators (AGN) and Brazil, South Africa, India and China (BASIC) Group, South Africa also has the special responsibility of advancing the collective and shared interests of developing countries in the negotiations for the Paris Agreement. This necessitates defending the legal rights of developing countries under the Convention, including to receive the support they require to make the transition to a low carbon economy and to adapt to the reality of a climate that is already changing and the loss and damage that is associated with this. It is also a fundamental principle of the Convention that our actions must be based on equity and differentiation of action and support, given different capacities and national circumstances and different responsibilities for causing climate change.
The provision of financial resources, technology transfer and development and capacity building, is central to the Paris Agreement. The reality is that without adequate, predictable and sustainable means of implementation, it will be impossible to reach our agreed temperature target. This is because key mitigation potential is in developing countries, such as South Africa, and these countries are not able to realise this potential on their own.
We also have to be guided in Paris by the latest science on climate change. The Fifth Assessment Report of the Inter-Governmental Panel on Climate Change confirms that each of the past three decades has been successively warmer than the preceding decades and exceed levels reached at the height of the industrial revolution. The evidence of accelerating global warming and its devastating impacts are clear for all to see.
It is in this context of the need to urgently address the global problem of climate change that South Africa has submitted its Intended Nationally Determined Contribution (INDC) to the UNFCCC Secretariat well ahead of the Paris conference. The level of ambition contained in our INDC is an affirmation of the seriousness of our commitment as government to deal with climate change.
The INDC builds on a strong basis of existing national policies and actions, given that as an African and developing country, climate change is not a new issue for us. Our society has long since been forced to adapt to the reality of a changing climate and increasingly frequent extreme weather events that are the result of emissions of greenhouse gases generated over centuries, predominantly by developed countries.
The impacts of a changing climate affect nearly every sector of our economic and social development, governance, as well as the delivery of services to our people – from healthcare to agriculture, to infrastructure and human settlements, to defense, water and sanitation. Effectively managing this challenge requires a national response that builds and sustains South Africa’s social, economic and environmental resilience as well as our emergency response capacity.
The South African INDC therefore sets out our national adaptation and mitigation plans and emission reduction targets and indicates the financial and investment requirements. It is the product of an extensive nationwide public participatory process, within the short time period provided by the United Nations. Over the past four months government held a series of provincial conferences, engagements and stakeholder workshops with business, labour, academia, civil society groupings and all three spheres of government. The result, in our view, is an INDC that is ambitious, fair and pro-development. It takes into account South Africa’s triple challenge of poverty, inequality and unemployment, but yet still represents a progression beyond the voluntary pledge we announced at the Copenhagen COP in 2009.
The UNFCCC Secretariat has just released a synthesis report on the aggregate impact of all the INDCs received ahead of Paris and civil society groups have produced their own independent and impressive scientific analytical works on the INDCs. These studies clearly show that we are not on track to meeting the less than two degree goal and that there is a serious disparity between the ambitious plans submitted by developing countries and the far less ambitious plans from developed countries. These studies also show that for the Paris Agreement to be effective and equitable, it must unlock substantial public finance for mitigation, both to fulfil developed countries’ fair share and to help unlock greater ambition in developing countries.
Our message ahead of Paris is that climate change is a global problem, requiring a global solution, which can only be effectively addressed multilaterally, under the broad based legitimacy of the UNFCCC and with all Parties contributing their fair share.
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Low prices should give no cause for complacency on energy security, IEA says
Latest World Energy Outlook also sees clear signs that the energy transition is underway, but warns strong direction is needed from Paris climate summit
An extended period of lower oil prices would benefit consumers but would trigger energy-security concerns by heightening reliance on a small number of low-cost producers, or risk a sharp rebound in price if investment falls short, says the International Energy Agency (IEA) in the 2015 edition of its flagship World Energy Outlook publication (WEO-2015).
The report finds that the plunge in oil prices has set in motion the forces that lead the market to rebalance, via higher demand and lower growth in supply, although the adjustment mechanism in oil markets is rarely a smooth one. In the central scenario of WEO-2015, a tightening oil balance leads to a price around $80 per barrel by 2020. But WEO-2015 also examines the conditions under which prices could stay lower for much longer. Since prices at today’s levels push out higher-cost sources of supply, such a scenario depends heavily on the world’s lower-cost producers: reliance on Middle East oil exports eventually escalates to a level last seen in the 1970s. Such a concentration of global supply would be accompanied by elevated concerns about energy security, with Asian consumers – the final destination of a huge share of regionally-traded oil – particularly vulnerable. Developing Asia, a region in which India takes over from China as the largest source of consumption growth, is the leading demand centre for every major element of the world’s energy mix in 2040 – oil, gas, coal, renewables and nuclear. By 2040, China’s net oil imports are nearly five times those of the United States, while India’s easily exceed those of the European Union.
“It would be a grave mistake to index our attention to energy security to changes in the oil price,” said IEA Executive Director Fatih Birol. “Now is not the time to relax. Quite the opposite: a period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats.”
The report also underlines that the single largest energy demand growth story of recent decades is near its end: China’s coal use reaches a plateau at close to today’s levels, as its economy rebalances and overall energy demand growth slows, before declining. India – the subject of an in-depth focus in WEO-2015 – moves to centre stage in global energy, with high levels of economic growth, a large (and growing) population and low (but increasing) levels of energy use per capita all pushing energy demand to two-and-a-half-times current levels.
Overall, world energy demand grows by nearly one-third between 2013 and 2040 in the central scenario of WEO-2015, with the net growth driven entirely by developing countries. The links between global economic growth, energy demand and energy-related emissions weaken: some markets (such as China) undergo structural change in their economies and others reach a saturation point in demand for energy services. All adopt more energy efficient technologies, although a prolonged period of lower oil prices could undercut this crucial pillar of the energy transition; diminished incentives and longer payback periods mean that 15% of the energy savings are lost in a low oil price scenario. Lower prices alone would not have a large impact on the deployment of renewables, but only if policymakers remain steadfast in providing the necessary market rules, policies and subsidies.
In advance of the critical COP21 climate summit in Paris, there are clear signs that an energy transition is underway: renewables contributed almost half of the world’s new power generation capacity in 2014 and have already become the second-largest source of electricity (after coal). The coverage of mandatory energy efficiency regulation has expanded to more than one-quarter of global energy consumption. The climate pledges submitted in advance of COP21 are rich in commitments on renewables and energy efficiency, and this is reflected in the WEO-2015 finding that renewables are set to become the leading source of new energy supply from now to 2040. Their deployment grows worldwide, with a strong concentration in the power sector where renewables overtake coal as the largest source of electricity generation by the early-2030s. Renewables-based generation reaches 50% in the EU by 2040, around 30% in China and Japan, and above 25% in the United States and India.
The net result of the changes seen in the WEO-2015 central scenario is that the growth in energy-related emissions slows dramatically, but the emissions trajectory implies a long-term temperature increase of 2.7 °C by 2100. A major course correction is still required to achieve the world’s agreed climate goal. “As the largest source of global greenhouse-gas emissions, the energy sector must be at the heart of global action to tackle climate change,” said Dr. Birol. “World leaders meeting in Paris must set a clear direction for the accelerated transformation of the global energy sector. The IEA stands ready to support the implementation of an agreement reached in Paris with all of the instruments at our disposal, to track progress, promote better policies and support the technology innovation that can fulfil the world’s hopes for a safe and sustainable energy future.”
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Southern African Development Community (SADC) Ministerial Environment and Natural Resource conference
‘It is time for a Great Green Wall in the Southern African Dry lands’
SADC Experts of Environment and Natural Resources agreed with the decision of the 1st Specialised Technical Committee Agriculture, Rural Development, Water and Environment and Climate Change that called for the creation of a similar framework like the Great Green Wall for the Sahara and Sahel Initiative (GGWSSI) in the Dry lands of Southern Africa. This declaration was a result of discussions during the conference of the Ministers of Environment and Natural resources of the SADC that took place from 2nd to 6th November 2015 in Gaborone, Botswana.
Dr. Elvis Paul N. Tangem, Coordinator of the GGWSSI, presented the background and current status of the GGWSSI during the Experts Meeting. provided the historical context that led to the creation of the Initiative by Head of states, which was due to severe land degradation and desertification, and extreme climatic conditions in the Sahel and Sahara regions and the negative impact it is having on the lives and livelihood of the population in the region despite the efforts of National governments, CSOs and Development Partners. He pointed out that, not being a panacea for all the environmental and climate challenges, the GGWSSI have contributed immensely in the combat against land degradation, desertification and building of resilience to Climate change in the region. As for the practical implementation of the initiative, it came out that the GGWSSI have brought synergy in the combat against land degradation which have led to coordinated efforts and encouraged complementarity in the region leading to the good results witnessed today.
As to the reasons justifying a similar initiative in the Southern African region, the Coordinator underscored that the region faces similar challenges in with dryness, droughts, floods and vulnerability to the Sahel and Savannah region, but lacked a common platform through which efforts and resources can be channeled and synergies made and best practices shared like the GGWSSI. At the policy level he highlighted that the up-scaling of the GGWSSI in the SADC region is in-line with the current policies of the AUC which is that of streamlining development initiatives and encouraging synergies as witness with the implementation of the STCs and with global agendas and targets like the Bonn Challenge, the Aichi targets the Land Degradation Neutrality and the African Land restoration Initiative amongst others.
On the value addition of the GGW in the Southern Africa region, he underlined the fact that the initiative is not coming to replace or compete with the current initiatives in the region. “Quite the contrary, the initiative is coming as a political and advocacy platform that will go a long way at complimenting the existing efforts,” he emphasized. He indicated that the GGWSSI has a decade of experience at regional and global levels and is implemented in 21 Member states, with global Partnership, and political momentum from the Commission amongst others. The Coordinator called upon the Experts to advice the Ministers to adopt the Initiative in line with the resolution of the STC and declarations from various fora, example of the Beat famine Southern Africa conference of March, 2015 in Lilongwe, Malawi.
After appreciating and acknowledging the need and urgency of the creation of such an initiative in the region, the Experts expressed their readiness to support the programme and urged the Ministers to adopt it. The participants also raised the issue of the ‘Modus Operandi, practicability, financing and how the initiative can be work with the current ongoing programmes and strategy especially the Sub Regional Strategy to Combat desertification (SRAP).’
The experts also recognized that the initiative is very relevant for the region. It was further recommended that the environment department of SADC secretariat should work with the Department for Rural Economy and Agriculture of the Commission on the way.
Meeting of Ministers Responsible for Environment and Natural Resources Management
Press Statement
SADC Ministers responsible for Environment and Natural Resources met on 6th November 2015 in Gaborone, Botswana. The objectives of the meeting were to review progress on the implementation of existing programmes, consider and approve new regional policies, strategies and programmes in the sector, and adopt a regional common position for the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change due to take place in Paris, France, in December 2015.
The meeting was attended by 9 SADC Member States. In attendance were Ministers from Botswana, Mauritius and Namibia, Deputy Minister from and Mozambique while Zimbabwe and Zambia were represented by their Ambassador and High Commissioner respectively to the Republic of Botswana and Angola by the Secretary of State. Swaziland and South Africa were represented by Senior Officials. Also in attendance was the delegation from SADC Secretariat led by the Deputy Executive Secretary for Regional Integration, Dr Thembinkosi Mhlongo.
The meeting was officially and chaired by the Minister of Environment, Wildlife and Tourism of the Republic of Botswana, Honourable Tshekedi Khama, who is also the Chairperson of the SADC Committee of Ministers of Environment and Natural Resources.
Ministers underscored the contribution of natural resources and the environment to the socio-economic development of the region. They observed that SADC is rich in natural resources, such as fisheries, forests, minerals and is home to the largest populations of wildlife, especially elephants and rhinos.
Ministers noted that these natural resources are threatened by amongst others illegal harvesting, illegal trade, over exploitation and the impacts of climate change. These challenges undermine progress that the region is making in the fight against poverty, food security, job creation and economic development. They emphasized the need to elevate the fight against poaching and control the illegal trade in wildlife to safeguard the region’s fauna and flora.
Ministers noted that the region has developed Protocols on Forestry, Fisheries, Wildlife Conservation and Law Enforcement, Environmental Management for Sustainable Development, and Shared Watercourses; which promotes sustainable management and utilization of natural resources and the environment.
Ministers noted progress in efforts towards curbing the poaching of rhinos and elephants, development of capacity in the areas of environmental education, measurement of forest carbon, and negotiation skills for effective engagement at multilateral forums. They also noted that the region has developed a number of Transfrontier conservation areas such as the Kavango-Zambezi (Kaza), Limpopo and most recently the MalawiZambia TFCAs. Ministers endorsed the guidelines on the TFCA development and Tourism concessions.
During the meeting, Ministers approved new programmes and strategies to further intensify the regional integration agenda, promote adaptation to climate change, reduce greenhouse gas emissions, foster low carbon development pathways and resource use efficiency. They approved the Sub-Regional Action Programme to Combat Desertification (SRAP) and Strategies on Climate Change, the Green Economy, and Law Enforcement and Anti-Poaching. Ministers welcomed the inclusion of the blue economy as one of the new frontiers for SADC Member States.
Ministers noted that Member States continue to implement multilateral environmental agreements (MEAs) of priority to the SADC region. In particular, the three Rio Conventions on Climate Change, Biodiversity and Desertification. They therefore underscored the need for the region to develop common positions with a view to speak with one voice in order to achieve outcomes that are beneficial to the region. In this regard Ministers approved a common position for the forthcoming negotiations at the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) scheduled for December 2015 in Paris, France, as mandated by the SADC Summit of August 2015.
The SADC Common Position emphasizes on adaptation while also focusing on mitigation and the measures for achieving these. The measures include finance, technology transfer and adoption, and capacity building. The SADC position is aligned to the African Common Position.
On the Convention on International Trade in Endangered Species (CITES) Ministers urged SADC Member States to prepare and make submissions towards the 17th Conference of the Parties to take place in Johannesburg, South Africa, from 24th September to 5th October 2016. The Convention aims to regulate trade in endangered species of wild fauna and flora that are traded internationally.
Ministers called upon Member States and other stakeholders to scale-up the implementation of the approved strategies and programmes in order to control and where possible reverse the current trend of environment and natural resources degradation.
Ministers expressed appreciation to the Government and people of the Republic of Botswana for hosting the meeting and for the warm hospitality accorded to them and their delegations.
Done at Gaborone, Botswana, this 6th day of November 2015
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Economic and Social Council President urges stronger cooperation to thwart tax evasion and avoidance
Citing an enormous loss of $100 to $240 billion dollars in uncollected global corporate income tax revenues each year, Oh Joon, President of the United Nations Economic and Social Council (ECOSOC) on 11 November 2015 stressed the need to curb tax evasion and avoidance and called for stronger international tax cooperation.
“Taxation represents a stable and predictable source of finance. Complemented by other sources, it is central to financing development needs and providing public goods and services,” said Mr. Oh in his remarks to the joint meeting of ECOSOC and the UN General Assembly’s Second Committee, the world body’s main forum for discussions on economic and financial issues.
The joint meeting held under the theme ‘Domestic Resource Mobilization: Where to go after Addis?’ identified resources and challenges to finance sustainable development.
“The challenge is that many countries are hindered in their efforts to collect their taxes. Business models and value chains have become more international, integrated and dependent on intangibles. They have given rise to a number of loopholes in the area of taxation,” said Mr. Oh adding that tax evasion and avoidance pose a great threat to financing sustainable development.
Mr. Oh said that as per the recent Organisation for Economic Cooperation and Development (OECD) estimates, between four to ten per cent of global corporate income tax revenues are lost annually, totalling to the amount of $100 to $240 billion.
He added that the loss is felt stronger in developing countries with greater needs for investment in development.
Mr. Oh stressed on stronger international cooperation to combat tax evasion and avoidance and added that the lack of information exchange between the countries is a huge opportunity for tax avoiders and evaders.
He added that discussions on the current landscape of international tax cooperation can help identify priorities for reform and make concrete suggestion for improved international cooperation.
Mr. Oh also recalled that in the Addis Ababa Action Agenda, UN Member States had decided to enhance the resources of the UN Tax Committee to strengthen its effectiveness and operational capacity.
Mr. Oh announced that the Tax Committee will meet twice a year and will also increase its engagement with ECOSOC through the Special Meeting on International Cooperation in Tax Matters.
Lastly, Mr. Oh called for the continued engagement of all relevant stakeholders, as “this is the only way to ensure that the responses to international tax challenges can gain sufficient global ownership, and confirm the faith of honest taxpayers in their tax system and their government.
Combating Tax Evasion Especially Critical for Developing States, Second Committee, Economic and Social Council Hear at Meeting on Domestic Resource Mobilization
Domestic resource mobilization and taxation were crucial to achieving sustainable development, several panellists stressed today at a joint meeting of the Second Committee (Economic and Financial) and the Economic and Social Council.
The discussion, “Domestic Resource Mobilization: Where to go after Addis?”, spotlighted taxes as a stable source of finance and citizen participation in State accountability. Tax evasion and tax loopholes hampered development efforts in both developed and developing countries. The meeting, which also included an interactive discussion with Member States, underscored the need for strong cooperation between different organizations in the area of taxation.
The panel, presided over by Second Committee Chair Andrej Logar (Slovenia) and Economic and Social Council President Oh Joon (Republic of Korea), who also delivered opening remarks, heard an introductory speech from Alexander Trepelkov, Director of Financing for Development, Department of Economic and Social Affairs, as well as the following panellists: David Rosenbloom, Director of the International Tax Programme at New York University; Victoria Perry, Chief of Tax Policy, International Monetary Fund (IMF); Blanca Moreno-Dodson, Lead Economist for Tax Policy at the World Bank; Gail Hurley, Policy Specialist at United Nations Development Programme (UNDP); and Tatu Ilunga, Senior Policy Adviser at Oxfam America. Eric Mensah, Assistant Commissioner of Ghana Revenue Authority and Member of the United Nations Committee of Experts on International Cooperation in Tax Matters, joined the panel via video link from Ghana.
In his opening remarks, Mr. Logar emphasized that all sources of finance – public and private, domestic and international – would be needed to achieve the Sustainable Development Goals. Tax systems should make the task of paying taxes for those who honestly sought to meet their tax obligations “as painless an experience as possible”. Many developing countries had been able to significantly improve their tax-to-GDP (gross domestic product) ratio; however, that average ratio for low-income countries was still estimated to be around half of that of member countries of the Organisation for Economic Co-operation and Development (OECD).
Mr. Joon said the challenge was that more and more countries were hindered in their efforts to collect the taxes owed to them. Multinational companies and individuals had become increasingly aggressive in their tax planning and policies. As a result, tax evasion and avoidance was rampant. Recent estimates by the OECD showed that between 4 and 10 per cent of global corporate income tax revenues were lost annually, which translated to between $100 and $240 billion. The loss of corporate income tax was more strongly felt in developing countries. Curbing tax evasion and avoidance depended on cooperation between countries. Tax evaders and avoiders thrived on international gaps in cooperation and the lack of information exchange between countries.
Delivering the introductory statement, Mr. Trepelkov highlighted the importance of inclusive cooperation among tax authorities and technical assistance to strengthen the tax systems of developing countries. On extractive industries taxation, the United Nations Tax Committee had recently approved guidance on tax treaty issues and capital gains, including indirect sales. The Committee also discussed a draft code of conduct to promote transparency and international cooperation in addressing tax base erosion. Turning to the work of the Department of Economic and Social Affairs, he said its Financing for Development Office had carried out a small programme of capacity development in international tax cooperation. The programme had also developed practical tools, such as the United Nations handbook on protecting and broadening the tax base of developing countries.
Opening the panel discussion, Mr. Rosenbloom said that, for nearly 100 years, it had been well recognized that jurisdictions had a legitimate right to tax by reason of either the source of tax base or the residence of the taxpayer. It was widely accepted that taxation was appropriate as a means of seeking contribution to defray the expenses of Governments from which taxpayers had received benefits. In that regard, income taxation was the fairest form of taxation. The United Nations was best qualified to assist developing countries to defend their interests and deal responsibly with taxpayers from outside their borders whose affairs fell within those countries’ tax jurisdictions. The United Nations should involve itself directly in improving the skills of developing country tax policymakers and tax administrators.
Ms. Perry outlined IMF tools to assist lower-income countries in their tax administration and policy. Online tools and products could enable the international community to rally around a series of ideas to assist developing countries with their tax needs. South-South cooperation was critical in domestic resource mobilization, including regional and country-to-country cooperation. Developing States should work together to bolster tax bases and not compete to undercut them. Base erosion and profit shifting solutions could only be applied to developing countries with modifications. While cross-border tax issues were important, other items such as revenue administration, the effectiveness of value added taxes and proper enforcement of personal income taxes should be addressed.
Ms. Moreno-Dodson said that developing countries on their own could not resolve tax issues. The momentum now was ideal to work together, she said, crediting the Sustainable Development Goals for harnessing international cooperation on financing for development issues. The World Bank stood ready to gather different voices and tools to design a plan that would address domestic tax issues. The plan was to allocate more resources to help developing countries reinforce their capacity and improve dialogue with multinational and international institutions. Taxes on pollution, corrective taxation and telecommunication taxation could be new sources of funds and resources, she said, emphasizing the role of improved income distribution. It was important to come up with practical and collective solutions, rather than unilateral proposals. The focus must be on reinforcing partnerships between regional tax organizations and enhancing vital South-South relationships.
Ms. Hurley discussed the UNDP’s recently launched “Tax Inspectors Without Borders” programme, which focused on helping developing countries raise domestic resources. The initiative centred on increasing capacity in auditing and related issues, which was especially problematic in countries with weak administrative tax departments. Tax audit experts would not just be deployed from developed States, but also from developing countries, reinforcing South-South cooperation. Pilot programmes had shown that tax revenue could be increased. UNDP had a country presence and a local understanding of country-specific needs. While domestic resource mobilization was the most important source of finance, it was vital to take into account challenges faced by least developed countries, landlocked developing countries and small island developing States. The key investments that those countries needed to make were expensive and unlikely to attract private investment.
Mr. Ilunga said that, while the OECD Action Plan on Base Erosion and Profit Shifting was a first step towards addressing the taxation issues of developing countries, more needed to be done, such as increased capacity-building and international cooperation on tax issues. Administrative skills for revenue collection and increased administrative capacity for fiscal administration were important as well. A key component of capacity-building was political will and there was no one-size-fits-all solution. The action plan did not go far enough. Among its shortcomings was that multinational companies only had a reporting requirement in countries where they had headquarters. Developing States that had no tax agreements in place with the United States, for example, would have no access to information. As the international community got closer to the upcoming G20 meeting, a second-generation reform process should be developed to address those issues not covered by the Action Plan.
Mr. Mensah said that capacity-building was necessary in the areas of tax audit, transfer pricing and treaty negotiations, as developing countries needed the technical capacity to engage in international tax matters with the players on the international tax scene. From personal experience, he and his team of treaty negotiators had “stumbled from one negotiation to the other, literally giving away taxing rights on a silver platter”, but had benefited from capacity-building programmes by the international tax community, and were thus more able to effectively engage the system. The Action Plan was a “brilliant” initiative for tackling tax avoidance and evasion, but, while developing countries might benefit from the spin-off, that was not the Plan’s aim. On the OECD Automatic Exchange of Information, no “meaningful benefit” would be achieved until developing countries had the capacity and systems to tap into the global standards.
In an ensuing interactive discussion, the representative of Trinidad and Tobago, on behalf of the Caribbean Community (CARICOM), said that Governments in his region were faced with the challenge of raising tax revenue while simultaneously attracting foreign direct investment through fiscal incentives. Over the next 15 years, CARICOM planned to work towards tax reform with the goal of creating more efficient tax systems. To that end, it was critical to improve transparency within the international financial system.
The delegate from South Africa, on behalf of the “Group of 77” developing countries and China, said that illicit financial flows had an adverse impact on domestic resource mobilization and the sustainability of public finances, particularly for African economies. Emerging economies lost $6.6 trillion in illicit financial flows between 2003 and 2012, he said, pointing out that the result was billions lost in potential tax revenues.
The representative of the European Union mentioned several plans and approaches to support domestic tax recovery. The “Collect More, Spend Better” initiative focused on increased domestic revenue mobilization, closing the tax revenue gap and loopholes, and broadening the tax base.
The representative of Maldives, on behalf of the Alliance of Small Island States, said reforming the international financial and monetary systems was a priority. Small island developing States were highly indebted due to structural factors and required greater global cooperation in fiscal policies.
Ethiopia’s delegate said that structural transformation and economic diversification were central to domestic resource mobilization. Comprehensive national policies allocating resources to economic development projects with a maximum impact on poverty eradication were important.
The representative of the United Kingdom said multinational companies should pay taxes where they generated their profit and revenue. Domestic resource mobilization was a complex and political issue which involved national control of economic policy, he said.
Niger’s delegate pointed out that some countries had limited economic opportunity and required investment from developed countries.
Addressing the delegates’ statements and concerns, Mr. Rosenbloom said developing countries needed specific on-the-ground help. He had witnessed “too many developing countries receive assistance that really had not assisted them at all”. Ms. Perry said the world had come a long way in the past three years in recognizing its tax arrangement problems – they were not organized from the top nor overseen by anyone. Ms. Hurley emphasized that one source of finance did not substitute for another and there was much to build on, especially in terms of enhancing cooperation among key stakeholders. Mr. Ilunga said it was important to take note that citizens in industrialized countries were also victims of tax dodging and emphasized the need to raise awareness of that.
In closing remarks, Mr. Logar said the Addis Ababa Action Agenda had elevated taxation as a key development issue. Multinational companies were making use of international tax arbitrage and aggressive tax planning, which undermined revenue administration efforts and could only be tackled in a collective manner by balancing the flow of information between countries to counter tax avoidance.
Mr. Joon said the meeting had highlighted the contributions of different international organizations in helping developing countries build capacity in tax matters. The call for international tax cooperation to be universal in approach was underlined several times. It would be an important guiding light to the Economic and Social Council and the United Nations Tax Committee in their work over the coming years.
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tralac’s Daily News selection: 12 November 2015
The selection: Thursday, 12 November
Today, in Windhoek: SACU heads of state and government meeting
In Harare, on 26 November: Zimbabwe's 2016 national budget
Featured infographic, @o_merk: What are the main trade links between India and Africa?
Featured conference: Investment treaty reform - reshaping economic governance in the era of sustainable development' (CCSI)
Featured tweets from the CCSI conference:
@CCSI_Columbia: Wamkele Mene of @the_dti notes there were political risks when South Africa terminated BITs, but investors have not been deterred
@toddntucker: Mene: it was harder to convince our own Treasury Dept about ISDS reforms that our foreign negotiating partners
@toddntucker: Mene: SA has cut vague terms like FET from inv law. Replaced with clearer protections from SA constitution like fair admin justice
@SamSzokeBurke: Mene: any future BIT with S Africa will need to incorporate domestic definition of expropriation and not include FET obligation
CCSI's online forum: New Thinking on Investment Treaties
Domestic resource mobilization: where to go after Addis? (UN)
Citing an enormous loss of $100bn to $240bn in uncollected global corporate income tax revenues each year, Oh Joon, President of the United Nations Economic and Social Council stressed the need to curb tax evasion and avoidance and called for stronger international tax cooperation. “Taxation represents a stable and predictable source of finance. Complemented by other sources, it is central to financing development needs and providing public goods and services,” said Mr Oh in his remarks to the joint meeting of ECOSOC and the UN General Assembly’s Second Committee, the world body’s main forum for discussions on economic and financial issues. The joint meeting held under the theme ‘Domestic Resource Mobilization: Where to go after Addis?’ identified resources and challenges to finance sustainable development.
Tanzania: TRA upbeat on 12.3trn/- revenue target (IPPMedia)
On average, TRA has been collecting slightly over 844.6bn/- per month with the highest collections of over 1.06trn/- in September, this year. The TRA Commissioner General, Rished Bade said in Dar es Salaam yesterday that the revenue body had already collected almost 3.78trn/- which is 97.6% of the target for the first quarter of this fiscal year. The amount is slightly over 25 per cent of the 2015/16 revenue target. “Now it’s zero tolerance against tax evaders, there is a lot of political will in President Magufuli’s position on revenue collection,” Bade said while warning evaders that TRA would leave no stone unturned in ensuring that Treasury coffers were stuffed.
COMESA Business Council, Taj Pamodzi Hotels to promote local sourcing from agro-food suppliers (COMESA)
“To date, the active participation of SMEs in national and regional value chain remains very limited in the COMESA region. These businesses continue to face numerous challenges in meeting expected standard requirements,” said CBC’s Chief Executive Officer, Ms. Sandra Uwera during the signing ceremony. “I cannot overemphasize the importance of this collaboration in building the capacity of these SMEs to implement compliant food safety systems.” This collaboration comes ahead of a Local Sourcing for Partnerships project training in Zambia for 80 suppliers on sustainable standard requirements. The Local Sourcing for Partnership Project is an initiative by the CBC with support from the Investment Climate Facility for Africa, USAID- IPAA and the Private sectors who are members of the CBC. The project will be piloted in six countries, namely Zambia, Malawi, Kenya, Ethiopia, Uganda and Rwanda.
What is Africa worth in the international trading system? (Bridges Africa, ICTSD)
What is at stake for LDCs in Nairobi? (Bridges Africa, ICTSD)
United Nations Commission on International Trade Law: update (UN)
Economic Report on Nigeria, Special Edition 2015 (AfDB)
This special edition of the Economic Report on Nigeria aims at serving a dual purpose. First, it serves as an instrument for engaging the new Administration of the Federal Government on the policy imperatives for sustainably transforming the Nigerian economy. Hence, key focus areas for policy imperatives for the Administration are outlined. Second, it aims to review the current challenges facing the economy and provide a menu of policy options on possible way forward. The Report is organized into six sections
Buhari taps private sector for appointment of new Perm Secs, retires 17 others (ThisDay)
Nigeria's new cabinet triggers another wait for policy direction (Bloomberg)
Somalia Economic Update: Transition amid risks (World Bank)
The first in a new series of Somalia Economic Updates, entitled ‘Transition Amid Risks’, warns that the absence of appropriate regulations is responsible for the emergence of the anti-competitive behaviour currently hindering the emergence of new Somali enterprises as well as prospects for smaller and medium sized enterprises. Continued commitment to the reform process will create the opportunity for broader participation in the economy; improved regulatory frameworks will encourage investment, generate better services and create the jobs much needed by Somalia’s youthful population. [Download]
Somalia infrastructure needs assessments and infrastructure action plan: EOI (AfDB)
Kenya army involved in sugar smuggling racket (New Vision)
Kenya's army is involved in a $400-million sugar smuggling racket in Somalia that also funds the Al-Qaeda militants it is supposed to be fighting, a report alleged Thursday. Far from fighting the Al Shabab, Al-Qaeda's East Africa affiliate, the Kenya Defence Forces are, "in garrison mode, sitting in bases while senior commanders are engaged in corrupt business practices," said the investigation by Nairobi's Journalists for Justice rights group. The report is based on months of research conducted in Somalia and Kenya, including interviews with serving Kenyan officers, United Nations officials, Western intelligence sources, sugar traders, porters and drivers. Kenyan army spokesman, Colonel David Obonyo, denied the allegations, insisting Kenyan soldiers were fighting hard as part of the 22,000-strong African Union Mission in Somalia. "We are not involved in sugar or charcoal business," said Obonyo. "How can you sit down with Shebab one minute, and the next you are killing each other?"
Low petrol prices cut Kenya’s import bill first time in 8 years (Business Daily)
A steep drop in global petroleum prices has cut Kenya’s import bill for the first time in eight years, helping to reduce the economy’s exposure to the shilling’s weakening in the past six months. Official data shows that Kenya, which is East Africa’s largest economy, imported Sh177.2 billion worth of fuel and lubricants between January and September, a huge drop from the Sh271.2 billion it took in during the same period last year and saving the economy some Sh94 billion. Oil accounts for about a quarter of Kenya’s annual import bill, underlining the critical role it plays in the exchange market.
A third of public revenue goes to pay off debt, experts say (Daily Nation)
Domestic or external debt, which way Kenya? (The Star)
East Africa regional transport conference concludes today: Matatus eye East Africa region (Daily Nation), Matatu sector has greatly improved (Standard)
Millions of children’s lives at stake as El Niño strengthens, UNICEF ‘wake-up call’ report warns
As a result of a strengthening El Niño, the United Nations Children’s Fund is warning that an estimated 11 million children are at risk from hunger, disease and lack of water in eastern and southern Africa alone, as the weather phenomenon has left droughts and floods in its wake throughout parts of Asia, the Pacific and Latin America. “The consequences could ripple through generations unless affected communities receive support amid crop failures and lack of access to drinking water that are leaving children malnourished and at risk of killer diseases,” said UNICEF in a new report, A Wake UP Call: El Niño’s Impact on Children.
World Intellectual Property Report 2015: breakthrough innovation and economic growth (WIPO)
Relying on an original mapping of patents to fields of innovation, the report finds that Japan, the United States, Germany, France, the United Kingdom and the Republic of Korea accounted for 75% or more of all-time patent filings in the areas of 3D printing, nanotechnology and robotics. Meanwhile, China is the only emerging middle-income country moving closer to this group of advanced, industrialized nations, accounting for more than a quarter of patents worldwide in the area of 3D printing and robotics – the highest share among all countries. In the case of nanotechnology, Chinese applicants make up close to 15% of filings worldwide – the third largest origin of patents. Furthermore, the report underlines the elements of successful innovation ecosystems: government funding for scientific research and support in moving promising technology from the laboratory to the production stage; competitive market forces that encourage firms to innovate, supported by vibrant financial markets and sound regulation; and fluid linkages between public and private innovation actors. [Download]
SA and Namibian Competition Commission sign MOU (GCIS)
Dutch PM Rutte leading biggest-ever trade mission to Africa (NL Times)
Mozambique’s conformity with trade facilitation agreements (SPEED)
In this fifth and final blog in our series we consider steps to be taken for Mozambique’s to acceded to the Bali TFA and reasons why Mozambique may choose not to join the East Africa Free Trade Area. Without the benefit of in-country interviews, this preliminary study could not determine the precise issues Mozambique considers barriers to accession to the Tripartite FTA, but it is possible to propose a few hypotheses. [The author: Daniel Plunkett]
AGOA: US trade deal collapse highlights Swaziland’s troubles (Business Day)
Chinese capital in African contexts: flexible, adaptable yet uncertain (SAIIA)
Thus, in comparison to other foreign (more ‘traditional’) economic actors, most Chinese economic undertakings in Africa have been characterised by a relatively late development. Additionally, the unfolding of Chinese capital also allows raising the following question: Do these forms of economic engagement remain selective and increase territorial fragmentation (in the form of disconnected enclaves) or, on the contrary, do they create or at least facilitate a broader and more inclusive spatial approach allowing backward and forward linkages? [The author: Romain Dittgen]
2015 Report on the Sustainable Development of Chinese Enterprises Overseas (UNDP)
Chinese enterprises are assuming an increasingly prominent role overseas, with Chinese outward direct investment (ODI) rising at an average rate of 36.4% each year since 2000. Yet, while welcome in principle by developing countries, the story about the impact of Chinese companies operating overseas has often been misunderstood. A new report, the 2015 Report on the Sustainable Development of Chinese Enterprises Overseas was launched in Beijing to investigate and counterbalance this narrative, with ground-breaking new evidence.
ECOWAS calls for collective ownership of the Sahel strategy
ECOSOCC Women and Gender Cluster: communique of constitutive meeting
Christine Lagarde: 'Unlocking the promise of Islamic finance'
Gulf Cooperation Council seeks stronger trade ties with Africa
Susan Harris Rimmer: 'We lose more than we gain in moving away from multilateral trade' (The Conversation)
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What is Africa worth in the international trading system?
Despite popular opinion, Africa has been very active on the international trading stage, though results have been disappointing. At the ministerial conference in Bali, Indonesia in 2013, African countries failed to push for their needs. After progress and losses, what is the place of Africa in the multilateral trading system as the continent heads into the WTO ministerial conference in Nairobi, Kenya?
As the world is rushing towards regional and mega-regional trade agreements, it is necessary to review the place and role of the African continent in all of its evolutions. These have already transformed international trade relations and set the next boundaries of the global economic governance system. Africa’s place in the multilateral trading system has often received special attention, even though it has mostly focused on the contextual and factual analysis of the weakness of the continent’s contribution to global commercial transactions or the vagaries of the participation of African states in trade negotiations.
There has been more than enough criticism suggesting that Africa is not making sufficient effort to take part in international trade. On the contrary, African countries merit a spotlight on their significant progress to open up to trade.
A continent that has come a long way
Africa’s place in the international trading system has often been simplified to a single statistic: less than 2 percent of international trade. The analyses that support the theory that African countries barely participate in international trade are mostly based on a quantitative approach. However, such a static approach hides the profound, crucial development dynamics as well as the extraordinary progress made by African countries – both for trade and trade negotiations, whether multilateral, regional or bilateral – in a global context that clearly has its pros and cons.
The truth is that Africa is not suffering from an integration deficit as much as from poor integration in international trade. Nearly all the African countries are members of the World Trade Organization (WTO) and with 43 out of the 162 members, African countries represent over a quarter of this organisation’s stakeholders. They have almost all widely liberalised and bound their tariffs, even though for many of them – specifically least developed countries (LDCs) – it is not a requirement. All the African countries and their regional economic communities are participating, simultaneously, in a series of multilateral, regional and bilateral negotiations that welcome international commerce. It is therefore impossible to deny the fact that Africa is widening its availability to the international market.
The issue at hand is rather the continent’s capacity to benefit from the opportunities created by international trade while minimising the negative effects that go hand in hand with liberalisation. Africa’s inability to benefit from opening up to transactions can be explained by its integral position in international trade that offers little in the way of returns and produces little value addition and wealth. Its status is that of a supplier of basic commodities and raw materials in very limited quantities, which restricts it to the bottom of the international value chains. In addition, due to the rushed liberalisation policies that African countries have experienced in the past, their efforts towards industrialisation, valorisation and transformation of raw materials and towards diversification were thwarted by the sudden, forceful competition of imported goods. Many countries continue to suffer from the narrowing of their political space as well as their loss of sovereignty and control of their own economic and trade policy instruments created during this period.
Consequently, saying that Africa is not doing enough to integrate with global trade is wholly unjustified. Between 1995 and now, trade has become a significant issue on the agenda of almost all African states, and its potential for economic growth and combating poverty is recognised by everyone, including the private sector and civil society.
As early as the WTO’s first year of operation, a group of four countries – Nigeria, Egypt, Morocco and Senegal – created the African Group. Being a “legal fiction” in the trading system, as it does not have a legal existence comparable to that of the European Union for example, the precursors of the African Group did not see fit to provide the African continent with a founding act that would formalise it. This Group has therefore remained informal until now and simply helps coordinate the positions of African countries and bring them in line with those of other groups. Today, nearly three-quarters of the activities of diplomatic missions of African countries to Geneva, Switzerland, the site of the WTO, are dedicated to multilateral trade negotiations. This demonstrates the importance that African countries attach to these negotiations, despite their limited resources.
On the continent, the trade agenda is notable for its series of new initiatives all aimed at strengthening economic development and integration by promoting free trade among African nations. One need only mention the Continental free trade area (CFTA) currently under consideration, the Tripartite free trade area (TFTA) in East Africa, or the implementation of the Common external tariff (CET) in West Africa, among others.
Shattered dreams and roadblocks to results
The Doha Round, which was launched in 2001 to correct the imbalances and imperfections of the trade agreements obtained from the Uruguay Round negotiations (1986-1993), raised much hope among developing countries. By committing to restructuring the prescriptive compromise at the core of economic and trade relationships between North and South, the Doha Round was expected to deliver a new product enshrining the central role of development in international trade negotiations. In Doha, all the African countries contributed to building the dream of an open, transparent, fair, non-discriminatory, and regulated trade and financial system.
Now that it is time to take stock, it is obvious that the statements of good intentions did not survive the states’ conflicting interests and the power of financial lobbies, among others. The multilateral trading system was not able to produce inclusive, fair governance, but, whether consciously or not, established exclusive, unequal governance. Indeed, it is probably no coincidence that no African country has ever had the opportunity or the desire to appeal to the WTO’s dispute settlement body (DSB), although there is no shortage of grievances. The example of the cotton issue, which has been unsuccessfully raised by African countries since 2003, is the most iconic case. Brazil referred the United States to the DSB for less than African countries have suffered – and won. The Africans who, for lack of a better choice, have followed the path of negotiation still continue to ask for the cotton issue to be dealt with “ambitiously, expeditiously and specifically.” Their request is likely to fail.
Significantly, the development theme has been slowly eclipsed by the challenges of emergence, thereby justifying the shift in focus from developing countries to emerging countries. The latter are aware of their strength and are currently throwing their weight around the multilateral trading system, in order to influence it based on their interests and counteract developed countries’ traditional stranglehold on the system. This is one of the elements that have led the WTO to the brink of the abyss over the past few years.
These very same developed countries, exasperated by the impasse the WTO has reached, are the ones creating regional, plurilateral and mega-regional trade agreements to bypass this system and establish new rules that they will later attempt to enforce as universal principles. They only give the WTO the bare minimum needed to keep it alive and to continue to benefit from the advantages granted by the current status quo, in particular when it comes to keeping the possibility of “protecting” themselves or of “subsidising” without having to submit to any legally binding obligations towards developing countries.
Nairobi – Time to act
Despite its recurring setbacks and pitfalls, African countries still want to believe in the WTO. In Bali, in 2013, they showed a unique political commitment to saving the WTO when it had its back to the wall and might have felt the lasting impact of a failure. African countries did not defend any of the topics that they had nevertheless clearly identified and promised to defend during their many consultations. While India, for example, demanded and was granted a tailored agreement, the only ambition of the Africans was to save the WTO. Whether this behaviour is due to naivety or generosity, it now seems as though Africa needs to take responsibility and finally understand that taking part in international trade negotiations is not child’s play. Only through their determination to further their own concerns, through thick and thin, will African countries manage to shift the lines. This calls for strong leadership, better consistency and clear political courage. At the WTO, if a single member country that does not feel included in a consensus refuses to join it, its voice is always heard. If 43 African countries speak together, no one will be able to ignore them.
During the next ministerial in Nairobi, the WTO’s tenth ministerial and the first one to take place on African soil, the ball will be in their court. They will need to reject prevarication and empty, wishful statements. Nairobi must enshrine the come-back of development, leading to concrete actions and a clear, positive pro-development result. It is time Africa spoke up at last.
Cheikh Tidiane Dieye is Executive Director at the Centre africain pour le commerce, l'intégration et le développement (CACID).
This article is published under Bridges Africa, Volume 4 - Number 9, by the ICTSD.
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What is at stake for LDCs in Nairobi?
If the upcoming WTO 10th Ministerial Conference should fail, the biggest losers would be those that have no responsibility for the current deadlock: the LDCs and Africa. They should take the lead in proposing solutions that cannot be refused in order to save Nairobi and the inclusive system.
There is less and less consensus among WTO members on what the on-going negotiations are all about. The only thing WTO members seem to agree on is that it will not be possible to obtain a result in Nairobi that could be presented as the achievement of the Doha Development Agenda (DDA). The main issues (agriculture, NAMA, services and development) do not seem to have gotten much traction. Moreover there is no agreement on how to proceed.
Some major powers have clearly indicated that they are not coming back to the negotiation table on the basis of the DDA. They argue that 15 years without results have shown that it is impossible to come to a consensus based on the current mandate; the world market situation has changed, and both the mandate and the negotiation process must also be changed. As a matter of fact, they have largely abandoned the inclusive multilateral system in favor of exclusive deals, such as megadeals and plurilateral agreements.
Other important players (India and other emerging countries) are starting to boycott any decision in Nairobi, preferring a clash rather than agreeing on de facto abandonment of the DDA.
Most WTO delegations are not in a consensus-seeking mood. There is neither a sense of urgency nor crisis, nor a serious effort to save the inclusive multilateral system through a search for compromise. Some negotiators seem to have already abandoned the inclusive multilateral negotiating system because they have turned to more efficient, exclusive ways of promoting their offensive interests, while others have abandoned it because they have lost any faith that the negotiations can deliver a result that would be acceptable to them.
As we are celebrating the 20th birthday of the WTO, there is a genuine risk of Nairobi failing, which would jeopardise not only the DDA, but also the WTO’s negotiation function leading to a diminished role of the inclusive trading system.
What does this mean for LDCs and what can they do about it?
It is the profound disagreement between the big trading powers regarding the redistribution of rights and obligations among them that is preventing any consensus from being reached, thereby constructing the main obstacle in the path to Nairobi. However, the Least Developed Countries (LDCs) are the ones who will suffer most from this disagreement.
It would be foolish to believe that the LDC package would be effective if the big issues were put aside: the only thing that LDCs could hope for would be some small, but tangible proof that the other WTO members are responsive to their plea for development.
The influence of LDCs on the course of the negotiations is limited: they have little to contribute, and hence, little negotiating power. However, they have never had nor will they ever again have as much political clout as they do now. Everybody agrees in principle that the first WTO ministerial conference in Africa has to deliver something for them. Whether that clout will translate into concrete actions depends largely on the LDCs, themselves.
When the big trading powers are more interested in confrontation than consensus, proposing compromises will be up to those who have the most to lose from a deadlock.
Possible strategy for Nairobi and beyond
LDCs fundamental interests are twofold: 1) LDCs should receive some tangible proof that the other WTO members are responsive to their issues. The general climate of the negotiations, however, does not currently allow for solutions to the issues. Limited, but economically relevant small steps in the right direction are necessary and achievable. 2) LDCs should ensure that, the unresolved development issues continue to be a major objective of inclusive trade negotiations, even if the DDA should fail.
Both objectives are today in jeopardy, but still attainable. LDCs can and must contribute proactively to attaining them proactively by refusing to give in to the prevailing negative mood.
The LDC package
Members seem more interested in defining the impossible rather than the possible within the LDC package. It seems that delegations are focusing on placebos (such as best endeavours and aid for trade) rather than real commitments. LDCs have now presented their legitimate requests and expect a response from partners who have not yet entered into serious discussions. It is up to LDCs to propose tentative steps towards a response to their concerns, steps that their partners could not refuse in good faith. Such proposals are possible for practically all LDC requests:
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Cotton: a solution to the issue of subsidies is not within reach. Asking for substantial reductions in US cotton subsidies is not practical. However, it is possible to ask the major players on the international cotton market to take small, but specific steps towards a solution to the issues faced by LDC/African cotton growers. The US can be asked to limit its subsidies to the amounts calculated by their own budget committee when they approved the farm bill; China can provide DFQF market access to LDC cotton and accept some level of disciplines for the management of its stocks; India can limit the maximum amount of cotton subsidies it has been providing to its cotton growers. While this does not solve the cotton issue, it would send a clear signal that WTO members are willing to make a gesture towards a solution.
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Duty-Free Quota-Free market access: 100 percent DFQF appears to be an unachievable goal for Nairobi. However, all major trading powers can respond to specific and economically relevant requests to increase the number of products that benefit from DFQF marker access. It is up to the LDCs to make specific and targeted requests for tariff lines that are currently excluded in the various DFQF and GSP schemes.
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RoO: the realistic LDC proposal on principles to be adopted by the Ministers does not seem to be attainable as a binding commitment. The alternative, however, cannot simply be yet another best endeavor clause. A compromise (in which the principles are adopted as best practices with a commitment by each member country to propose and implement specific measures they are willing and able to undertake to come closer to those best practices within a given time frame and a credible monitoring system) may very well be a useful and realistic outcome for Nairobi.
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Services waiver: it is expected that further notifications under the services waiver will be forthcoming for Nairobi and that there would be a credible package of concessions in this area that Ministers could include in their declarations/decisions. A ministerial commitment to engage in bilateral discussions with LDCs about facilitation of internal procedures (visa, certifications, etc.), which often negate the market access that is theoretically granted, could be introduced into any declaration and would be a useful additional step.
The post-Nairobi process
What may be even more important for the LDCs than the content of the LDC package is ensuring that the unresolved issues are addressed and that the inclusive negotiation process within the WTO is preserved. Simply saying that the negotiations will continue is not credible. To reinvigorate a credible process, the Ministers must face reality:
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15 years of negotiation without any consensus provides a powerful argument to those who claim that the DDA is doomed;
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Negotiations that do not reflect the rapid evolution in world trade over the past 15 years both in terms of the content of trade (value chains, services), the distribution of trade (emerging countries) and the architecture of trade (megadeals, plurilaterals) are simply unappealing. That said, replacing non-resolved but still valid issues with new issues is not a viable solution either.
In Nairobi, Ministers should therefore define a credible way forward, which brings all parties back to the negotiation table. Restoring the negotiation function of the WTO requires:
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Basic agreement on how to handle the fact that some developing countries have become major trading powers, thereby proving that they do not need same the Special and Differential Treatment as poorer developing countries, while still acknowledging that they have the characteristics of developing countries;
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Agreement that the unresolved 20th century issues have to be addressed, but that 21st century issues cannot be ignored without making the negotiations irrelevant for some WTO members;
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Agreement on the principles that should be observed by all members to ensure that megadeals and plurilaterals outside the WTO do not undermine the inclusive MTS. Facilitating the insertion of plurilaterals into the MTS, provided that they fulfill certain criteria and ensuring that megadeals do follow the basic WTO principles thereby avoiding that they undermine the achievements obtained at the multilateral level should be possible;
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Proposals for a more efficient future negotiation process by closer association and involvement of Ministers and high officials, among other measures.
Nicolas Imboden is Executive Director of the IDEAS Centre.
This article is published under Bridges Africa, Volume 4 - Number 9, by the ICTSD.