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After Trans-Pacific Partnership deal reached in Atlanta, focus shifts to ratification
Ministers from 12 Pacific Rim countries concluded a sweeping trade pact this past Monday, following several days of frenzied negotiations in the US city of Atlanta to bring the agreement across the finish line. With the talks on the Trans-Pacific Partnership (TPP) now completed, participating countries are now gearing up to face their next big challenge: building public support and ratifying the pact’s terms in their domestic legislatures.
The Atlanta ministerial meeting, originally set for 30 September through 1 October following several days of chief negotiators’ discussions, was extended repeatedly as officials worked to reach the long-awaited deal, with the talks finally closing in the early morning hours on 5 October.
“After more than five years of intensive negotiations, we have come to an agreement that will support jobs, drive sustainable growth, foster inclusive development, and promote innovation across the Asia-Pacific region,” ministers for the TPP countries said on Monday morning.
The officials affirmed that the final agreement is one that is “ambitious, comprehensive, high standard, and balanced,” arguing that the terms will be a boon to their countries’ respective citizens, which in total number nearly 800 million people.
The 12 countries involved – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam – constitute nearly 40 percent of the global economy, making the sheer size of the agreement the largest of its kind outside the World Trade Organization.
The TPP will also set new rules for these 12 participants in areas ranging from environmental and labour protections to the treatment of state-owned enterprises and e-commerce. It is also set to provide significant market access openings, with the deal set to eliminate or reduce tariffs on approximately 18,000 tariff lines.
While much of the details of the outcome are now coming to light, the full terms of the agreement are not yet public, given that the document now must undergo a legal review, verification, and translation. Officials say that they hope to release the text in the near future, noting that the agreement will have to be public for several weeks or months – depending on the domestic requirements of different participating economies – before being considered for ratification.
Automobiles, biologics, agricultural market access
As the negotiations entered the home stretch in Atlanta, ministers were focused particularly on resolving disagreements on a handful of major issues, which had been blamed for stalling an earlier ministerial meet in the US state of Hawaii in July.
These issues specifically involved automotive rules of origin, sugar and dairy market access, and the data protection period for biologics, with the latter two being the main areas of contention in the final days and hours of negotiation.
The automobiles issue had involved Japan and the three members of the North American Free Trade Agreement (NAFTA), specifically the US, Canada, and Mexico. Part of the failure of the Hawaii meeting in July was attributed to disagreements on this topic, given that the bilateral terms that had been agreed between Tokyo and Washington prior to the gathering had not been approved by Ottawa or Mexico City.
The concern raised by Canada and Mexico had been that the new rules of origin under TPP could give them worse terms than that agreed under NAFTA regarding automobile manufacturing, which their respective industries had strongly warned against given the highly-integrated nature of the North American automobile industry.
The final outcome on rules of origin reportedly requires that 45 percent of imported automobiles and core parts be made in a TPP country to qualify for tariff-free treatment, with other automobile parts subject to a 40 percent requirement. Under NAFTA, these numbers are 62.5 and 60 percent respectively.
Regarding dairy market access, which had been a key issue for New Zealand – home to Fonterra, the major multinational dairy cooperative – the final outcome eliminates tariffs for some dairy products, but not others.
Canada had been one of the TPP members who had been pressed to provide greater market access in these products. This had proven to be a difficult task for the North American country, given its highly protected supply management system for dairy and poultry products.
According to Canadian Trade Minister Ed Fast, “[Ottawa has] been successful in protecting the three key pillars of supply management, being production controls, price controls, income controls.”
Market access for sugar had also been unresolved ahead of the Atlanta talks, with Australia being one of the main countries calling for better terms from its TPP partners – particularly of the US. Australian officials have now confirmed that the final TPP deal will provide their country with an additional quota of 65,000 tonnes base allocations, together with a 23 percent share of additional allocations in the American market.
Figures released by the office of the Australian trade minister confirmed that this would increase the country’s annual sugar exports from 107,000 tonnes to 207,421 tonnes, noting that the US offer “is the largest made to any FTA partner since NAFTA.” Furthermore, the ministry confirmed, the increased quota will put Australia’s access on par with Brazil, the global leader in sugar exports.
In the area of biologics, which are those drugs derived from a biological background rather than a chemical one, the US had been at odds with many of its TPP partners as to how long to keep in place data exclusivity protections on these particular pharmaceuticals. Examples of biologics can include vaccines, anti-toxins, blood or blood products for transfusion, gene therapies, and cellular therapies, according to the US Food and Drug Administration.
While promising in their potential to treat diseases ranging from cancer to rheumatoid arthritis, such drugs are significantly costly, with the Brookings Institution finding that these can cost up to 22 times the price of chemical drugs. Critics of long data exclusivity periods argue that making it easier to develop “biosimilars” – which are “follow-ons” to an original biologic – could substantially reduce such prices.
While US law currently provides for 12 years, various other TPP partners such as Australia and Chile had been pushing for that number to be much lower. Under American data exclusivity protections, according to Brookings’ analysis, biosimilars cannot be approved during the protected period if they rely on the data used for the original biologic, though the drug can be approved if the data was generated independently.
The final compromise will allow for a minimum standard of five years of data protection, together with the option of employing domestically some additional government measures, such as through regulatory and administrative policies or requirements for more clinical trials, which could add to this number of years.
Through the additional measures, US Trade Representative (USTR) Michael Froman noted, “it may take seven or eight years for the various biosimilars to be approved.” The final outcome on this subject, he said, is “strong and balanced” in a way that both incentivises drug development while facilitating access to medicines.
The US trade chief also noted that the TPP is “the first trade agreement in history to ensure a minimum period of protection for biologics,” telling reporters that this could provide a model for the rest of the region.
Parallel deal on currency forum
The issue of how and whether to address the issue of currency manipulation – a longstanding area of concern for some US lawmakers – had been another lingering question over the trade talks, particularly given concerns over the effects that monetary policy decisions by countries such as Japan could have on exchange rates and trade.
Currency had been a particularly hot topic earlier this year during the process of renewing and revising Trade Promotion Authority (TPA), the legislation which governs the way the US Congress approves or rejects negotiated trade deals.
The terms of TPA ultimately did not include an enforceable currency amendment, despite efforts by some lawmakers to attach such language. Officials such as US Treasury Secretary Jack Lew had warned at the time that including such language would both derail TPP and impose limitations on Washington in terms of its own ability to protect its economy.
Rather, the TPA text includes as a principal negotiating objective that US partners in trade deals must “avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain unfair competitive advantage.” Responses should this occur could include “enforceable rules, transparency, reporting, monitoring, cooperative mechanism, or other means to address exchange rate manipulation,” which Washington must work to establish.
In the context of the TPP talks, the US had reportedly put forward earlier this year a proposal for a parallel deal on currency that would bring together TPP members to examine exchange rate changes and related issues.
A joint statement released separately on Monday by TPP finance officials confirmed that the group’s participants “are working to strengthen macroeconomic cooperation, including on exchange rate issues, in appropriate fora.”
“The work to be undertaken reflects our common interest in strengthening cooperation on macroeconomic policies, and will help to further macroeconomic stability in the TPP region as well as help ensure that the benefits of TPP are realised. Keeping in mind the diverse circumstances of the TPP countries, we are currently undertaking a technical review,” the statement confirmed.
Ministers told reporters on Monday that this cooperation will fall under a parallel agreement on how to address currency issues between TPP members, specifically by establishing a forum for discussion on the subject.
According to Australian Trade Minister Andrew Robb, these discussions will involve a “set of principles,” which is what finance officials from TPP countries are currently looking to finalise, with the forum to bring together a “representative group from each country.”
International implications
The TPP deal has been dubbed by many of its proponents – as well as some of its detractors – as being “transformational” not just for the Asia-Pacific region, but also for the global economy.
“Long after the details of this negotiation on things like tons of butter have been regarded as a footnote in history, the bigger picture of what we’ve achieved today will be what remains,” said New Zealand Trade Minister Tim Groser on Monday, praising the result.
“It is inconceivable that the TPP bus will stop at Atlanta. The TPP bus will move on… Our industry structures will change in response to the opportunities of the agreement, and in future years, we can be absolutely certain that the depth of achievement we’ve been able to reach at this point in our collective history will be deepened and broadened and other people will joint this agreement,” Groser told reporters.
Others such as Australian Trade Minister Andrew Robb have also noted that this deal is the “most significant” since the Uruguay Round talks that established the WTO were finalised 20 years ago.
So-called mega-regional deals like the TPP have, however, also sparked the question over whether these agreements sap away energy needed for multilateral negotiations and potentially create overlapping, confusing systems of rules – or if these processes can instead be complementary to one another.
“A proliferation of different rules and standards could be a drag on business, so this is an important area of work,” said WTO Director-General Roberto Azevêdo last week in a speech at the Graduate Institute in Geneva, Switzerland, referring to major regional trade initiatives.
“But of course, we shouldn’t overstate the issue. The multilateral trading system has always coexisted with regional agreements – and proved to be mutually reinforcing,” the WTO chief said, noting also that some issues such as agricultural and fisheries subsidies can only be addressed successfully at the multilateral level.
Whether the afterglow from the TPP’s completion will help lift other major international trade initiatives – such as multilateral trade talks under the WTO, or the bilateral negotiations between the US and EU for a Transatlantic Trade and Investment Partnership (TTIP) – is now a key question from trade watchers and officials.
Azevêdo, for his part, issued a statement congratulating TPP ministers and negotiators on the result, suggesting that the success of the talks shows that “a diverse group of countries can strike a deal on a broad and complex trade agreement if the political will and determination are there.”
The WTO chief added that he hopes this result “will serve as an inspiration for WTO members as we seek to produce substantial outcomes by Nairobi,” referring to the global trade body’s upcoming ministerial conference in the Kenyan capital city.
Regarding the prospects for TTIP, USTR Froman told reporters on Monday that there is “intense engagement” between Washington and Brussels on the trans-Atlantic talks, highlighting the recent stocktaking meeting he held with European Trade Commissioner Cecilia Malmström.
Getting even an outline of a TTIP deal by the end of this year, as G-7 leaders urged in June, is expected to be a very big ask, and the talks overall are widely expected to carry through 2016 at the very least. The next round of TTIP talks are scheduled to be held in Miami, Florida, from 9-23 October.
Critics, proponents weigh in
Building public support is also set to be a major challenge in the coming months, as TPP member governments work to demonstrate the benefits from their negotiating trade-offs, along with quelling any concerns over the potential for job losses in some sectors or what impacts the deal’s new rules may have on domestic public policy objectives.
The TPP has been famously controversial since the negotiations began, drawing the scepticism – and, in some cases, ire – of a broad range of groups who question whether the terms of the deal are not sufficient to ensure environmental and labour protection.
“The TPP’s environment chapter might look nice on the surface but will be hollow on the inside, and history gives us no reason to believe that TPP rules on conservation challenges such as the illegal timber or wildlife trade will ever be enforced,” said Sierra Club Executive Director Michael Brune in response to the news of a deal.
Other environmental groups such as the World Wildlife Fund (WWF) have welcomed the TPP’s environment chapter as being one of the most forward-thinking seen in trade deals to date.
“No major trade agreement before this one has gone so far to address growing pressures on natural resources like overexploited fish, wildlife and forests. Now that the negotiations have closed, we expect to see a strong environment chapter that promotes and enforces both legal and sustainable trade,” said WWF US President and CEO Carter Roberts.
Roberts noted that fulfilling TPP’s potential in this area will depend partly on having the right implementation and compliance procedures in place.
The deals provisions on intellectual property have also come under the microscope from humanitarian groups, such as Médicins Sans Frontières’ (MSF) Access Campaign, who question how these rules may affect access to medicines in developing countries.
“MSF expresses its dismay that TPP countries have agreed to United States government and multinational drug company demands that will raise the price of medicines for millions by unnecessarily extending monopolies and further delaying price-lowering generic competition,” said Judit Rius Sanjan, US Manager and Legal Policy Adviser for the organisation.
Other questions have been raised as to the enforceability of the labour provisions in the pact, particularly regarding Brunei, Malaysia, and Vietnam. In the case of Malaysia, the issue of human trafficking is another one that has been raised by civil society groups.
Officials from all three of those countries affirmed on Monday that they are committed to addressing their labour rights problems, with all referring also to their respective memberships in the International Labour Organization as an indication of that commitment.
Froman, for his part, argued that the TPP will set up the “strongest labour standards of any trade agreement in history,” listing provisions such as right of association and collective bargaining, as well as minimum wages and maximum hours, safe working conditions, and prohibitions on forced and child labour.
“With [Vietnam, Malaysia, and Brunei], we have worked very closely and very collaboratively on specific actions to be taken that will help bring their systems into compliance with international labour standards, and including cooperative efforts around capacity building and other measures,” the US trade official said.
Ratification battles ahead
Though the negotiations may be done, the road ahead for TPP remains a difficult one, given that the deal must be ratified by countries’ domestic legislatures before entry into force.
Passing trade deals in the US Congress, for example, has proven to be a notoriously difficult task, with the last three agreements approved by the legislature – those with South Korea, Colombia, and Panama – only passing after significant political haggling among American lawmakers and following a four-year lag between the completion of the trade deal negotiations and the actual ratification.
Notably, the deal with Seoul had to be partially renegotiated in 2010 in order for Washington to obtain better terms on automobiles and beef, after it became clear that the previous deal was not going to pass Congress.
Renewing and updating the terms of TPA earlier this year again demonstrated the deep-seated divides among US lawmakers and the public over the merits and potential risks of trade deals, with the debate focusing primarily on the Trans-Pacific Partnership.
USTR Froman pledged that his office will immediately begin work with congressional leadership to determine the best next steps in the ratification process, while acknowledging that under the timelines built into TPA, signing and possible congressional approval of the TPP agreement will not be until 2016.
Meanwhile, the response from key US lawmakers who work on trade, particularly in the Senate Finance and House Ways and Means Committees, has so far been mixed, or in some cases openly sceptical, indicating a tough road ahead.
For example, Orrin Hatch, the Utah Republican who chairs the Senate Finance Committee, said on Monday that the final TPP “appears to fall woefully short,” without specifying what elements of the agreement were sources of concern and acknowledging that not all details are available at this time.
Hatch, along with Democratic Senator Ron Wyden of Oregon and Republican Congressman Paul Ryan, was the architect behind the renewed version of Trade Promotion Authority, and had long advocated for the potential benefits that could come from a completed TPP depending on what is included in the final deal.
Ryan, who chairs the House Committee on Ways and Means, gave a more cautious response, saying that he would be “reserving judgement” on the TPP’s terms until the final text is available for review while stressing that only a “good agreement – and one that meets congressional guidelines in the newly enacted Trade Promotion Authority – will be able to pass the House.”
Wyden similarly confirmed that he would weigh in on the deal’s merits once the full details become available, while commending the news on the currency forum, labour rights obligations on countries such as Vietnam and Malaysia – including enforceable commitments by the latter to address human trafficking – as well as commitments on tackling illegal wildlife trade and conservation.
The Oregon senator also referred to the carve-out in the investor-state dispute settlement (ISDS) clause in TPP for tobacco, saying that it would “ensure that countries that are part of [this deal] can regulate tobacco without fearing intimidation and litigation by Big Tobacco.”
Sandy Levin, the top-ranked Democrat on the House Ways and Means Committee who has long raised concerns over the potential design of the trade pact, welcomed progress made in some TPP areas, including the tobacco ISDS carve-out and the labour rights obligations for certain countries, while arguing that the currency forum plan is “entirely unsatisfactory,” among other criticisms.
While the potential for dramatics in the US legislative process has drawn significant attention, passing the deal in other legislatures is also expected to prove difficult.
Canada, for example, will be holding its general election on 19 October, after which a new Parliament will need to take office. Current polling finds that Prime Minister Stephen Harper’s Conservative Party and the two main opposing parties are currently in a dead heat.
Tom Mulcair, the leader of the opposition New Democratic Party (NDP), has said that should his party win the election, they will not be bound by the terms of the TPP. Meanwhile, Liberal Leader Justin Trudeau has not given a formal position on the deal, citing the need to see its final contents.
Passing TPP through Japan’s parliament, known as the Diet, will also be an uphill battle, analysts say, particularly given the long-standing reticence to open up the country’s agricultural market. The Diet is not likely to begin its consideration for ratification until next year.
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Kicking off ‘Africa Week’ at UN, Ban lauds steps taken for continent’s long-term development agenda
Africa Week 2015 kicked off at Headquarters on Monday with Secretary-General Ban Ki-moon commending African Member States of the United Nations for taking an “important step” this year toward the establishment of a Continental Free Trade Area envisioned in the African Union’s Agenda 2063.
“The year 2015 is indeed a critical time for global action,” the UN chief told the High-level Event on the Role of African Regional and Sub-regional Organizations in Achieving Regional Integration.
“The United Nations system is committed to supporting the 10-Year Implementation Plan of the Agenda 2063, including the efforts of the Regional Economic Communities as they strive to further integration,” Mr. Ban said.
In his remarks to start off Africa Week 2015 at UN Headquarters, Mr. Ban also said “operationalizing the 2030 Agenda for Sustainable Development – and Agenda 2063 of the African Union – will be a key to our success in ensuring a life of dignity for all.” This event is the first is a series of high-level discussions and events this week held on the margins of the 193-member General Assembly’s annual consideration of the landmark New Partnership for Africa’s Development (NEPAD), and other vital issues concerning for the continent.
“You can also count on my Special Adviser on African issues, Mr. Maged Abdelaziz, for his continuing commitment working together with all Member States and myself also,” he added.
The UN chief also outlined ways in which he has been addressing peace and security challenges in Africa.
“I have recently convened, in close cooperation with the African Union and key sub-regional organizations, High-level Meetings on the situations in the Central African Republic, Congo, Libya, Mali, Somalia and South Sudan,” he said. “Let us also continue to work together to resolve the pressing refugee and migration crisis.”
In his remarks, the President of the General Assembly said the events of 2015 offer an “unprecedented opportunity” for Africa to reduce poverty, foster sustainable and inclusive economic growth, and to integrate into the global economy.
“These initiatives should not, however, be simply about trade liberalization between African countries,” Mogens Lykketoft cautioned. “Rather they should constitute an important pillar of the continent’s strategy for structural economic transformation. They should focus on harmonizing policies, enhancing infrastructure development and promoting public-private partnerships.”
Mr. Lykketoft said he encourages African leaders to sustain the political will and commitment needed for truly beneficial regional integration, adding that the UN must also assist the African Union and its Regional Economic Communities as they work to put in place policies that support regional integration.
He announced that he will hold a high level thematic debate next April to highlight early successes and to advance a coherent response to the agendas and agreements to which countries have committed.
The Week also aims to identify the kind of support the United Nations could further extend to African regional and sub-regional organizations in the implementation of Agenda 2063, in ways that ensure synergy with the 2030 Agenda for Sustainable Development.
Remarks to High-Level Event marking Africa Week
Secretary-General Ban Ki-moon, UN Headquarters, 12 October 2015
I am pleased to join with you in marking Africa Week 2015. I commend your theme of moving from aspirations to actions – and your focus on integration and unlocking the full potential of trade.
The year 2015 is indeed a critical time for global action.
Operationalizing the 2030 Agenda for Sustainable Development – and Agenda 2063 of the African Union – will be a key to our success in ensuring a life of dignity for all.
The vision and ambition reflected in these landmark and complementary efforts echo the aspirations of African countries and their peoples, and build on the robust economic growth that has been attained even during the global financial crisis.
Much of the potential of the economies of Africa remains untapped, both in terms of its diverse resources and its people.
They seek to build lives with quality education and health care, decent jobs, a clean environment and tolerant, inclusive and democratic societies.
They demand and deserve a future where guns are silenced throughout the continent and poverty and hunger have no place.
The United Nations system is committed to supporting the 10-Year Implementation Plan of the Agenda 2063, including the efforts of the Regional Economic Communities as they strive to further integration.
I salute African member states on the Tripartite Free Trade Area agreement signed in June this year. This is an important step towards the establishment of the Continental Free Trade Area envisioned in Agenda 2063.
Our shared 2030 Agenda for Sustainable Development further reinforces the importance of regional and sub-regional organizations in the planning, execution and review of the Sustainable Development Goals.
Agenda 2030 is a transformational agenda – and realizing it will require a transformation in the way we approach development and how we support countries on their own development path.
We have been working in silos for too long, but we know that no country or organization can achieve these goals alone.
Putting the SDGs into action is an opportunity to foster greater coordination among our international organizations, regional and sub-regional organizations, and governments.
By building on innovative solutions, such as the African Peer Review Mechanism to facilitate knowledge sharing, we can harness synergies.
Over time, the partnership between the United Nations and the African Union has grown ever stronger.
I believe it is absolutely critical to further deepen those ties.
Our joint cooperation is helping to deliver results in conflict prevention; peace-making, peace-keeping and peace-building; humanitarian assistance; the promotion of democracy, human rights, rule of law and good governance; and inclusive development and equitable growth.
For example, the United Nations has provided support to the African Union in the establishment of the African Peace and Security Architecture and the consolidation of the African Governance Architecture.
Through the Regional Coordination Mechanism for Africa, UN agencies are working to enhance our system-wide coordination at the regional and sub-regional levels in support of the African Union and its New Partnership for Africa’s Development programme.
To address peace and security challenges in Africa, I have recently convened, in close cooperation with the African Union and key sub-regional organizations, High-level Meetings on the situations in the Central African Republic, Congo, Libya, Mali, Somalia and South Sudan. Let us also continue to work together to resolve the pressing refugee and migration crisis.
I have full faith that we can transform challenges into opportunities when our toolkit is comprehensive, our approach is holistic and our partnership with the African Union and Regional Commissions is deep.
The UN’s Agenda 2030 and the AU’s Agenda 2063 have provided us with a strong continental and global consensus and a clear roadmap.
Now is the time to put these aspirations into action and to keep the momentum strong by securing an equally transformative climate change agreement in Paris in December.
You can count on me to keep working hand-in-hand with you to achieve peace, security, development and human rights for all Africans. And you can also count on Special Adviser on African issues, Mr. Maged Abdelaziz, for his continuing commitment working together with all Member States and myself also.
Together, let’s build a more sustainable and secure Africa and a better world for all.
Thank you.
» Presentations from the High level Panel Discussion on “Role of Regional and Sub-regional Organizations in achieving Regional Integration: the Continental Free Trade Area within the context of the first 10-year Implementation Plan of Agenda 2063” are available here.
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First African Maritime Conference resolves to request the AU to consider “A Single African Maritime Transport Market” among the Agenda 2063 flagship projects
Understanding the opportunities and challenges and making the African Maritime a reality is a must, if Africa aspires to a better and secured future in the context of Agenda 2063.
The African Shipowners Association (ASA) organised the First African Maritime Conference in Victoria Island, Lagos, Nigeria from 28th to 30th September 2015, under the theme: “African Cargo for African Shipowners”.
The main objectives were discussion about the opportunities and challenges of the sector, reflection on setting up a Pan African Fleet and consideration of a legal framework to regulate the sector.
The Conference gathered over 100 participants coming from various African countries that included Cameroon, Congo, Ghana, Kenya, Mozambique, Nigeria, Sierra Leone, South Africa and Tanzania. They were in addition to key partners such as the African Union that sent a powerful delegation of experts headed by Mr Samuel Kamé-Domguia, Coordinator of 2050 AIM Strategy Taskforce, and Mr Retsole Mabote (Coordinator of Agenda 2063 Technical Team); as well as the International Institute for the Unification of Private Law (UNIDROIT) among others.
In her goodwill message to the Conference, which was read on her behalf by Mr. Samuel Kamé-Domguia, Dr Nkosazana Dlamini Zuma, Chairperson of the African Union Commission who was attending the UN General Assembly in New York at the time, expressed her gratitude for the invitation extended to her and the AU in general. She commended ASA for organizing the meeting and appreciated the potential of the Africa Maritime Domain (AMD) and its eagerness to make it a reality in the near future.
“It is indeed befitting that this conference is convened under the theme: African Cargo for African Shipowners. Agenda 2063 states that Africa’s Blue/ocean economy, which is three times the size of its landmass, shall be a major contributor to continental transformation and growth, through knowledge on marine and aquatic biotechnology, the growth of an Africa-wide shipping industry, the development of sea, river and lake transport and fishing, and exploitation and beneficiation of deep sea mineral and other resources. It also commits us all to use and conserve this natural resource in a sustainable manner, as the heritage of current and future generations,” Dr Dlamini-Zuma added.
Indeed Africa is rich! Rich not only in its potential, but also its citizens and therefore the ADM deserves a closer management to get the best of it.
It is in this regard that during their 22nd Summit held from 30th to 31st January 2014 in Addis Ababa, Ethiopia, the Heads of State and of Government of African Union adopted the 2050 African Integrated Maritime Strategy (2050 AIM Strategy); and subsequently in January 2015 the Agenda 2063 Framework Document which provide a broad framework for the protection and sustainable exploitation of the AMD for wealth creation.
In that connection, and after participating in the launch of the Decade of African Seas and Oceans (2015-2025) and celebrations of the African Day of Seas and Oceans on 25 July 2015 in Addis Ababa, the African Shipowners Association organized this Conference in Lagos for a deeper discussion on how best to advance the AU strategies.
Appreciating the fact that Agenda 2063 allots a special place to the maritime domain and also to the private sector, the participants talked about the critical role they play in the AMD, their opportunities as well as their challenges and how they can contribute in reaching the goals of 2050 AIM Strategy and Agenda 2063.
During the opening ceremony, the background, opportunities and challenges facing the African maritime were presented by Mr Temisan Omatseye, President of the Shipowners Association.
Mrs Funmi Folorunso, Secretary General of the Association and the main coordinator of the event, introduced the theme of the Conference emphasizing why African cargo within African waters must be reserved for African Shipowners.
Following presentations, open discussions took place around African cargo for African shipowners, the legal framework for an African maritime cabotage, The African Maritime Transport Charter, the 2050 AIM Strategy as well as Agenda 2063 and their implementation; and finally the Cape Town Convention and the possible protocol on ships and maritime transport equipments.
The outcomes of the meeting spotlight the necessity for having: A Single African Maritime Transport Market to be adopted among the first-track projects under the First Ten-Year Implementation Plan of Agenda 2063 along the lines of the “Single African Air Transport Market”; an African fleet; an African Cabotage; a Legal framework for African Fleet; facilitating the financing of ships; building ships in Africa; job creation as well as education.
Closing the meeting, Mrs Caroline Masala, Vice President of the African Shipowners Association reiterated the need for Africa to share a part of the 2.5 Trillion USD of revenue being made in the shipping business every year.
The Conference came out with a Resolution intended to be sent to the AUC Leadership as contribution to the upcoming Summit on Africa Maritime.
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Tanzania, Uganda, Kenya spend $1.2b to cushion falling currencies
Kenya, Tanzania and Uganda have used more than $1.2 billion, so far, from their foreign currency reserves since the start of the year to cushion their falling currencies against the dollar.
The declining foreign currency reserves have also seen Kenya ask the International Monetary Fund for more time to settle its debt obligations. The weakening of capital inflows, central bank interventions in the foreign exchange market, and a decline in tourism receipts contributed to the depreciation of the Kenya shilling.
In its latest review of the country, IMF said the government has requested the debt waivers on the basis that its net international reserves have declined, making the country unable to draw money to settle its arrears.
Kenya delayed in paying its external debts for the 2014/15 financial year, to the tune of $64 million. It has since cleared this debt, signalling that the latest reprieve it seeks is for debts accumulated between March and August.
“The external arrears reported between July 2014 and March this year show capacity constraints at the National Treasury’s debt management office and interagency co-ordination problems rather than an underlying inability to service external debt,” the IMF said in a statement.
In an August 31 letter to the IMF, Kenya’s Treasury Cabinet Secretary Henry Rotich asked for a modification of both the end of September and December targets for net international reserves, net domestic assets, and the primary budget balance of the central government.
“With the exception of temporary delays in the repayment of some external obligations, which we have settled, we met all quantitative performance criteria and indicative targets under the programme... we are therefore requesting waivers under both arrangements for this temporary non-observance,” Mr Rotich’s letter reads.
IMF deputy director and acting chair of the review team Min Zhu said that Kenya’s arrears were a result of co-ordination failure among government entities rather than an inability to pay.
“We are pleased that the authorities have adopted corrective measures by strengthening capacity at the National Treasury’s debt management office. We also feel that the introduction of the Treasury single account should be decisively implemented,” said Mr Zhu.
Kenya’s foreign reserves have declined to slightly below the statutory requirement of four months of import cover. As at the end of last week, the reserves stood at $6.18 billion, which is equivalent to 3.94 months of import cover.
By the end of August, the reserves were at $6.392 billion or 4.05 months of import cover, while in July, they stood at $7.43 billion or 4.85 months of import cover.
National Bureau of Statistics data shows that the balance of payments position worsened to a deficit of Ksh47 billion ($456 million) in the second quarter of the year from a surplus of Ksh166 billion ($1.6 billion) in the same quarter in 2014.
Kenya has so far spent $471.9 million of its foreign currency reserves trying to stabilise the shilling, while also spending $164.4 million towards interest payments on the $2.75 billion June 2014 sovereign bond. The country is expected to settle a total of $305.1 million in interest payments this year on its external debts from its reserves.
Uganda is also facing a foreign currency reserve crunch as it seeks to prop up its currency, but Bank of Uganda Deputy Governor Louis Kasekende is confident about the country’s level of foreign exchange reserves.
“The level of our foreign exchange reserves is $2.7 billion, which is equivalent to 4.2 months of future imports of goods and services. This is above the IMF recommended level of three months of import cover,” said Dr Kasekende.
The IMF requires central banks to have foreign exchange reserves that can cover three months of future imports of goods and services. Central banks in the region however have agreed to always have their reserves at above four months of import cover, which level Kenya is currently below.
BoU has so far spent more than $300 million in cushioning its currency. As at end of August, its reserves stood at $2.79 billion, down from $3.04 billion. The reserves have shrunk by 11.14 per cent to date.
Rwanda said that it has enough reserves to curb currency volatility and meet its financial obligations. The country said that as at the end of August, it had reserves worth 4.3 months of imports.
National Bank of Rwanda Governor John Rwangombwa said, “We are in discussions with the IMF to have a stabilising fund. However, we have enough reserves to protect us against any crisis and fight any volatility against the franc.”
The Bank of Tanzania’s monthly reports show that it has spent more than $532.1 million this year in trying to stabilise the Tanzanian shilling.
“The Bank of Tanzania participated in the market, selling $280.3 million in the second quarter of the year compared with $251.8 million in the first quarter, mostly for liquidity management,” the bank said in its latest quarterly report.
The county has also spent an additional $197.4 million in the two months after June from its reserves for currency stabilisation. The Tanzania shilling has fallen by more than 23 per cent against the dollar this year.
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Third Trade Policy Review of Madagascar: Minutes of the meeting
The third Trade Policy Review of Madagascar was held on 14 and 16 July 2015. It allowed for a better understanding of the evolution of its socio-economic, trade and investment policies since its last Review in 2008, and the challenges it is facing.
Madagascar is slowly recovering from a six-year socio-political crisis that has further delayed its economic development. Its economic growth has been weak, despite increased exploitation of Madagascar's mining resources, and poverty has risen sharply. Rebuilding infrastructure, including energy and transport, would accelerate the recovery of the economy. In addition, further improvements in the investment approval process and the business environment through better enforcement of law, and facilitation of access to credit, to construction permits and to property would also help.
Members praised Madagascar for continued progress in Customs reforms. Its Electronic Single Window was operational, and paperless customs clearance procedures are very close to completion. Most border control institutions can now transmit their respective authorizations electronically to Customs. However, noting that the number of these institutions remains too high by international comparison, several Members encouraged Madagascar to restructure its border control, ratify the TFA, and take steps toward notification of its TFA commitment categories.
There is a need to upgrade the legislative and institutional framework on standards, technical regulations, and sanitary and phytosanitary measures, in order to ensure higher quality for local products and boost exports. Madagascar also needed to improve its overall business environment and make it conducive to investment as well.
Opening statement by the representative of Madagascar
H.E. Mr Henri Rabesahala
The very first words of the delegation I am leading today are words of thanks to all attending Members and all those who have shown an active interest in Madagascar and have expressed it through the written questions we have received. Madagascar will do its utmost to be transparent, sincere and responsible both during this review and subsequently, out of respect for this distinguished Organization and for all Members that support our partners in one way or another. Indeed, Madagascar is an Aid for Trade beneficiary and the official development assistance provided by a number of developed and developing WTO Members. Our country is a supplier of services and agricultural, textile and mining products and purchases manufactures, services, hydrocarbons and heavy machinery from most of the Members here today.
Our thanks also go to the WTO Secretariat for in view of the support that it provided us in preparing this review, we have no doubt that it intends to go beyond the establishment of rules governing trade and dispute settlement. We see technical assistance and capacity building as the knock on effects of this review.
In the wake of the Fifth Global Review of Aid for Trade, and on the eve of dramatic changes such as mega deals, the establishment of the Tripartite Free Trade Area, the forthcoming Ministerial Conference in Kenya, and, at the national level, the organization of a round table meeting of Madagascar’s trading partners, we are especially proud to be with you today in order to outline our road map, answer your questions and potentially address any ambiguous situations that might arise from them.
The progress made with the recommendations put to Madagascar at its previous review in 2008 may come as a surprise to some Members, because Madagascar has suffered an unprecedented crisis in terms of length as well as consequences for the economy. It took more than five years of transition, without any actual support from its partners, before constitutional order was restored in 2014. Hence, heavy public investment, in depth transformations and international commitments were simply impossible in light of the sanctions against Madagascar’s leaders during that period.
The 2009 crisis had devastating effects on Madagascar’s relations with its trading partners and its integration in regional and international markets. The country suffered, inter alia, the consequences of cancellation of Madagascar’s participation in several summits and meetings, the suspension of preferences under the AGOA, non-disbursement of the 10th European Development Fund, and postponement of the signing of a number of trade agreements.
The difficulties arising from the country’s situation, compounded by an unfavourable international environment, have had serious consequences for the overall trade environment. These include the low rate of industrial growth, the marked deterioration of infrastructure detracting from the country’s competitiveness, inadequate access to energy, and the effects of the combined introduction of the COMESA common external tariff or the Tripartite FTA along with tariff reductions under the EPAs, which, as regimes, were not always clearly defined and communicated to the private sector. Moreover, services imports have not helped the country to innovate and move back up in the value chain as anticipated, business law reforms are not keeping pace with the rapidly rising needs and expectations of operators, and lastly, trade facilitation has led to a proliferation of imports without any genuine substitution by domestic production, or any significant expansion of exports.
Added to these structural problems are difficulties ensuing from inadequate capacities among public and semi-public trade support bodies, continuing asymmetry of information penalizing the private sector, a relatively large informal sector, absence of innovation among SMEs, difficulties in obtaining access to finance, petty squabbling between various government services, lack of coordination in the provision of trade related technical and financial assistance, and failure to make proper use of trade preferences and flexibilities secured at the bilateral, regional and multilateral levels.
Guided by President Hery Rajaonarimampianina, the two successive Governments nonetheless adopted ambitious positions and took bold decisions on rules and policies. Reforms were initiated to strengthen the rule of law, improve governance in general and public finance management in particular, increase tax and customs revenue, promote market and product diversification, revise the texts regulating a number of sectors, including e commerce, consumer protection and guarantees and public private partnership, and enhance the business environment. A whole series of other reforms are under way.
More broadly, the National Development Plan (PND) focuses on achieving sustainable and inclusive economic revival, promoting social development, bolstering security, protecting the environment, and using diplomatic mechanisms as the lynchpin of trade, tourism and investment policy. Rapid and inclusive results based methods have been adopted under the Implementation Plan (PMO) carried out by the Government.
The crisis did not prevent Madagascar from fulfilling its WTO obligations, particularly in terms of notifications, contributions, and involvement in the WTO’s work. Among other things, it communicated to the WTO its matrix of priority needs with a view to building up national capacity in order to advance acceptance and implementation of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement), embarking on the process of establishing a national trade facilitation committee and categorizing the measures with support from the WTO and the World Bank, identifying non-tariff barriers to trade and taking concrete steps to remove them.
The customs administration has initiated a number of reforms over the past six years in partnership with the SGS and Gasynet, using tools such as ASYCUDA++, revising the Customs Code, and reviewing tariffs and procedures that presented inconsistencies in the past, whilst introducing far reaching changes in strategic human resource planning.
The adoption in 2013 of the Sectoral Programme for Agriculture, Livestock and Fisheries under the New Partnership for Africa’s Development (NEPAD) is a major step forward in the development of productive capacity to vigorously boost exports in these sectors, the aim being to achieve Madagascar’s ambition of becoming the “breadbasket” of the Indian Ocean region. Non-food agricultural products such as ethanol have also benefited from the establishment of an enabling legal framework and the introduction of incentives, in view of their potential for job creation, preserving biodiversity and generating revenue for the public purse. Lastly, the promotion of investment in the above sectors remains a priority in order to increase agricultural and industrial production and develop related trade in services.
At the political level and in the aftermath of five years of deep crisis, Madagascar is learning to preserve peace and consolidate stability, even though some information in circulation may at times give cause for concern to its partners and potential investors. The President’s Office, the National Assembly and the Government are operating normally despite the political and labour unrest typical of any country in a post crisis situation. The State is preparing for negotiations with its technical and financial partners, particularly with a view to a meeting with the IMF in September and a donors’ conference scheduled to take place in Paris this coming November.
Improvements have been made to infrastructure and the investment environment. New target markets have been identified in the tourism sector, and the private sector has invested in quality accommodation facilities. Progressive migration towards DTTV, the launching of 4G connection and optimized use of new development oriented technologies have been put in place. The restructuring of the national water and electricity company JIRAMA is moving ahead with support from Madagascar’s partners, and hydro agricultural production sites are awaiting expressions of interest on the part of investors. International technical cooperation is reaching cruising speed in areas which include enhancing the regulatory framework for public private partnerships (PPP), public private dialogue, raising Madagascar’s Doing Business score, regulating e commerce, improving trade in environmental goods, and promoting trade in services.
In order to find sustainable solutions to its various constraints, Madagascar has opted for more effective integration of trade in national development policy, using existing and future structures at the regional and international levels in support of targeted actions to enhance coordination between the actors involved, better domestic trade performance and visible competitiveness of Malagasy SMEs. Convinced as it is that trade facilitation can also benefit exports, Madagascar intends to make substantial advances in accepting the Protocol, notifying the categories, and developing areas of cooperation with other customs administrations throughout the world. Since it believes that non-tariff barriers have a more negative impact than the tariffs themselves, Madagascar attaches the utmost importance to the work of the SPS and TBT Committees and to domestic implementation of the resolutions, tools and provisions under both Agreements.
Trade extends well beyond the issue of rules, and it encompasses investment, the business climate, the ability of the country to cease being a supplier of raw materials alone or a large assembly plant and to become a major actor in global value chains, an innovative actor that places science and technology at the service of higher value added and the promotion of its services exports. Madagascar has thus decided to enlist the support of other regional and multilateral agencies and institutions in its endeavours to achieve greater wellbeing for its population. Its UNCTAD Investment Policy Review will take place this year. An agreement has been signed with the ITC with a view to implementing a business competitiveness building programme, and our traditional partners are continuing to support us in one or more trade related sectors. We are currently seeking ways to expand the list to other countries that are already lending us trade related technical assistance, so as to broaden this partnership. We thus encourage countries that are actively involved in other areas of cooperation to appear more prominently in Madagascar’s Aid for Trade matrix.
We extend our warmest thanks to all our past, current and future partners. Madagascar does not consider this review as an end in itself. Rather, it marks the beginning of a process of alignment of the actions of bilateral and multilateral partners, with the organization of a round table meeting including all of Madagascar’s resident or non-resident partners, in order to follow up on the review’s recommendations by pooling resources, with Madagascar taking ownership of the process, and harmonizing public policies at sectoral level.
Madagascar expects a positive outcome to the ongoing Doha Development Agenda negotiations. We are hoping for a wealth of results from the Tenth Ministerial Conference and a stronger development role for the WTO despite a few past disappointments. We are confident regarding the future of trade in the post 2015 system.
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WTO and UNCTAD sign declaration on increased cooperation on trade and development
A joint declaration on increased cooperation between the WTO and the United Nations Conference on Trade and Development (UNCTAD) in the area of trade and development was signed on 12 October 2015 by UNCTAD Secretary-General Mukhisa Kituyi and WTO Director-General Roberto Azevêdo at the WTO’s Headquarters in Geneva.
DG Azevêdo said: “Our organizations share a common goal of helping developing countries, and especially the least-developed countries, integrate into the global economy. This declaration reaffirms and strengthens the collaboration of our two organizations to keep on promoting trade as a tool for development.”
UNCTAD SG Kituyi said: “New momentum is needed if LDCs are to reach a 2% share of world trade by 2020, as called for in the Istanbul Programme of Action. Closer collaboration between UNCTAD and the WTO is an important step in that direction.”
The signing ceremony for the joint declaration took place just before the start of an event on trade and development organized in connection with the WTO's 20th anniversary.
At the event, entitled “Twenty years of supporting the integration of least developed countries into the multilateral trading system”, WTO members discussed what has been achieved so far to help integrate least developed countries (LDCs) into the multilateral trading system and what members can aim to deliver in the future.
In his opening remarks, DG Azevêdo said: “LDC integration into the multilateral trading system is a priority for the WTO – and a priority for me, personally… We need to go further, faster, to support the integration of LDCs into the trading system, and to boost their capacity to trade.”
Secretary-General Kituyi said: “As we celebrate twenty years of achievement, we recognize that many least developed countries are still commodity dependent, which therefore exposes them to the vulnerabilities of the boom and bust cycle.”
The event was chaired by Ambassador Roderick van Schreven (Netherlands), Chairman of the Sub-Committee on LDCs. The discussion took stock of the key developments and decisions taken in favour of LDCs, the institutional support provided to these countries and the trade capacity-building initiatives that have been put in place. The event also looked ahead to how the WTO and the international community can help LDCs overcome the remaining challenges in integrating into the multilateral trading system. This included a discussion of possible measures that could be considered for LDCs at the Tenth WTO Ministerial Conference, to be held in Nairobi in December this year.
There are at present 48 LDCs, as designated by the United Nations, out of which 34 are WTO members and another eight are in the process of acceding to the WTO. The LDC WTO members account for more than one-fifth of the WTO membership.
“20 years of supporting the integration of least-developed countries into the multilateral trading system”
Remarks by Director-General Roberto Azevêdo
Welcome to this special event on LDCs.
This is an important occasion to take stock of the evolution of LDCs in the multilateral trading system since the creation of the WTO 20 years ago.
And of course it is an occasion to look ahead, and consider what more needs to be done.
UNCTAD Joint Declaration
I am delighted to have UNCTAD’s Secretary General Mukhisa Kituyi with us this morning.
Our organizations share a common goal of helping developing countries, and especially the least-developed countries, integrate into the global economy.
And we have taken an important step towards that goal this morning.
Just a few minutes ago we signed a joint declaration between the WTO and UNCTAD.
This declaration reaffirms and strengthens the collaboration of our two secretariats to keep on promoting trade as a tool for development. The text will be available very shortly.
We want to improve the coherence and cooperation in some key areas of work because we are united in our desire to support development.
And of course, LDCs are a vital part of that discussion.
WTO and LDCs
LDC integration into the multilateral trading system is a priority for the WTO – and a priority for me, personally.
In the preamble to our founding agreement, signed in Marrakesh in 1994, members recognised the need for:
“… positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development.”
So now, after 20 years of the WTO, how have we performed against that mission statement?
I think there are significant areas of progress that we can highlight.
Since 1995, seven LDCs have joined the organization and soon we will welcome another LDC, as the terms of Liberia’s membership were agreed just last week.
That will bring the number of LDCs in the WTO to 35 – more than a fifth of our membership.
And increasingly this large, important and growing part of our membership is making its voice heard.
The LDC Group has been very active over the years, gradually enhancing their participation in our different bodies and committees.
This work is supported by a dedicated unit within the Secretariat which serves the LDC Group on a day-to-day basis.
And of course this support for LDCs is reflected in other areas.
WTO agreements and decisions adopted over the last 20 years contain flexibilities and special provisions that take the specific needs of LDCs into account.
Against this background, I think it’s no coincidence that the integration of LDCs into an open and rules-based trading system has been accompanied by higher trade growth in those countries.
Over the past twenty years, LDCs have experienced higher trade growth compared to the rest of the world.
Between 1995 and 2013, exports of goods and services from LDCs grew by an annual average of 12.6 per cent.
This is higher than the average growth for developing economies in the same period, which was of 11.3 per cent. And it is significantly higher than the global average of 7.5 per cent.
And so LDCs’ share of world trade has also been increasing.
In 1995, LDCs accounted for 0.5 per cent of world exports of goods and services.
Now, that share has more than doubled, reaching 1.17 per cent in 2013.
So this is progress.
But clearly it is not enough.
LDCs account for more than 12 per cent of the world’s population, but only for 1.8 per cent of world GDP.
We cannot lose sight of this.
So the WTO has been working hard to bridge these gaps.
Capacity Building
Providing practical support to LDCs to help them build capacity and trading skills is a key pillar of our work.
The WTO runs special training programmes suited to the needs of LDCs and LDC officials, so that they can successfully navigate the system.
In fact, LDCs are involved in about 45 per cent of our technical assistance activities each year.
Another way to help improve understanding of the system is the WTO’s internship programmes.
These programmes bring LDC officials to Geneva and offer on-the-job training. Many officials who have taken part in these schemes are now representing their countries in different WTO bodies, working for their respective missions and capitals.
And of course, we have the Aid for Trade initiative.
Through a wide range of programmes, Aid for Trade helps developing and least-developed countries improve their trading ability and tackle their infrastructure constraints.
This has had real impact on the ground. Research has found that one dollar invested in Aid for Trade results in nearly 8 dollars of exports from developing countries in general – and in 20 dollars of exports for the poorest countries.
Since the initiative was created, Aid-for-Trade commitments to LDCs have almost doubled, reaching 18 billion dollars in 2013.
Another major capacity building initiative – and one which is dedicated exclusively to LDCs – is the Enhanced Integrated Framework.
Since its creation, the EIF has reached out to over 50 beneficiary countries around the world, helping LDCs leverage trade as a tool for growth.
In July, I was pleased to participate in the launch of the programme’s second phase. And this December, the EIF will hold its Pledging Conference for Phase Two in Nairobi – in the margins of our 10th Ministerial Conference.
This will be an important moment in ensuring the success of the EIF’s new phase.
Indeed, as I said at the General Council last week, a successful pledging conference would be a significant outcome of the ministerial conference. So I have strongly urged all existing and potential donors to be ready to lend their support.
Implementing Bali
In addition to strengthening capacity building support, we must implement the decisions agreed in Bali and ensure that their benefits are delivered – especially for LDCs.
Bali was a milestone in WTO history. And it wouldn’t have happened without the LDCs.
The LDC Group played an absolutely pivotal role in the negotiations.
And the outcomes reflect the role that the LDCs played during the negotiations – particularly in the form of the LDC package that ministers agreed there.
The LDC package includes provisions to improve duty-free quota-free market access for LDC goods, advancing the progress made in Hong Kong in 2005.
And to facilitate the utilization of these preferential schemes by LDCs, ministers adopted for the first-time multilateral guidelines on rules of origin.
Bali also provided a potential boost to LDC services trade, through steps to operationalize the LDC Services Waiver.
To date, 15 members have indicated their intention to offer preferences in sectors and modes of supply of export interest to LDCs. So, again, this is progress – but we need to go further.
Cotton issues were also a part of Bali – and we are now seeing significant engagement.
I am now working hard, along with the LDC Coordinator and others, to advance each of these Bali decisions.
In addition, of course, Bali brought us the Trade Facilitation Agreement.
Estimates show that it could cut the cost of trade by up to 15 per cent in developing countries. So implementing the TFA could have a big impact for LDCs, which suffer the most from such prohibitive costs.
And the TFA was a real first. It foresees the provision of real, practical support to help in its implementation, including through the TFA Facility.
Now, the Agreement is pending ratification by members. I’m glad to note that two LDCs – Niger and Lao PDR – have already done so. This is very encouraging, but we need to increase the pace in order that LDCs can start realising the benefits.
Looking ahead
So that is a snapshot of the last 20 years and of where we are today.
Much has been accomplished – but there is also no doubt that we are yet to fully deliver on the promises made.
We need to go further, faster, to support the integration of LDCs into the trading system, and to boost their capacity to trade.
We should ask ourselves:
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How can we do more to support LDCs to trade, and to get the most out of the trading system?
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What further measures would make the most difference?
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And what issues can we deliver in the short term?
We all know that there is a major opportunity to tackle some of these questions this year.
In just a few weeks’ time the WTO will hold its 10th Ministerial Conference in Nairobi, where LDCs are a top priority.
I have spoken to the widest possible range of members, in all formats – here in Geneva and in capitals around the world – and I have a clear sense that everyone wants to deliver for LDCs in Nairobi.
But we have our work cut out. There is little time left, and a lot of hard work still to do.
I hope that we can capitalise on the goodwill towards LDCs and deliver some important outcomes in Nairobi. This means getting some textual proposals on the table as soon as possible, so that detailed negotiations can begin.
I know the LDCs are working hard in that direction – and I want to help this effort in any way I can.
Let’s build on the achievements of the last 20 years, and move forward with real impetus and momentum.
I think that the contributions, ideas and arguments we will hear today will be very important. So let me extend my appreciation to our speakers today.
I wish you a very productive event.
With that, I will give the floor to our friend Mukhisa Kituyi.
Thank you.
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Mauritius plans derivatives platform in bid for African business: minister
Mauritius plans to launch a trading platform to hedge African currencies against the U.S. dollar, part of a bid to expand its role as a financial hub for the continent, the financial services minister said.
The Indian Ocean island is also in talks to boost ties with stock exchanges in Johannesburg and Nairobi to encourage cross-listing of shares and other areas of cooperation, Sudarshan Bhadain told Reuters in an interview.
The international financial services sector in Mauritius has relied heavily on dealings with India, helped by a double taxation avoidance treaty that made the island the biggest route for foreign investment into India.
But that could be hit if talks with India lead to treaty changes, encouraging a shift in focus to Africa where officials see a chance to offer a broader range of financial services and shake off criticism that Mauritius is little more than a “tax haven”.
“I do believe that Mauritius cannot remain a tax-centric jurisdiction,” the minister said at his office in the island’s financial district of Ebene.
“Mauritius has to move to the next level which is bringing real investments which are creating jobs in Mauritius... and for us to be the platform for Africa for the right reasons.”
He said Mauritius had signed a memorandum of understanding with National Stock Exchange of India, aimed at encouraging cross-listing of Indian firms and helping the island become a route for investment to Africa from India and elsewhere.
“One of the aspects is for the creation of a new currency derivatives platform, where African currencies can be hedged against the U.S. dollar,” he said, adding that the launch was expected in 2016. He did not give further details.
REGIONAL HUB
Mauritius was working with South Africa on encouraging cross-listings and was holding talks on the same issue with Kenya, the minister said. He said he had also signed a memorandum with Dubai financial markets to help develop markets in Mauritius.
“In terms of global business, one of the things we are doing is moving more towards front-office activity and regional headquartering,” he said, adding that insurance firms were among those interested in using Mauritius as a base.
Mauritius had held talks with firms such as Axa and Prudential, he said, adding he wanted companies that would put managers in Mauritius and hire staff there rather than firms simply registering operations and having limited presence.
To benefit from the double tax avoidance treaties Mauritius has with African states, companies have to meet a range of requirements, such as having at least two resident directors and using Mauritius accounts for related banking transactions.
But critics say such firms, known as Global Business Company 1s (GBC1s), should face tougher demands to benefit from the treaties, so they can show more clearly that they are not using Mauritius solely to avoid higher taxes elsewhere. GBC1s pay a maximum 3 percent corporate tax and no capital gains tax.
Bhadain said tax treaties had spurred growth in the global business sector in the past 15 years but it was time for a shift. “That has served Mauritius well, but we don’t see that as being the vision for Mauritius for the next 10 to 15 years.”
Some regulations related to the sector could be changed, possibly by the end of the year, he said, although he added that he was working closely with the 138 or so management firms that handle the roughly 10,000 GBC1s registered on the island.
“We see the focus has to change in terms of more tangible, real investments which are taking place in Mauritius,” he said.
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tralac’s Daily News selection: 12 October 2015
The selection: Monday, 12 October
Africa’s trade relations: Old friends, good friends and new friends
This collection of studies, prepared as part of the ongoing collaboration between the Trade Law Centre and the National Agricultural Marketing Council, includes special focus on agricultural trade relationships and related issues such as climate change. Previous books have covered trade matters ranging from South Africa’s trade relationship with the Americas, Asia, as well as African countries. This book looks at all South Africa’s trading partners: new friends, old friends and good friends. [Various downloads available]
Deepening South Africa-India private sector relations (ISS)
The trade sector between India and South Africa needs to be broadened and diversified, and small and medium-sized enterprises can play a greater role to this end. It is important for the Indian and African governments to consider and consult with business on the underlying reasons for not investing in certain instances – despite facilitation measures such as reduced trade barriers. There need to be frank discussions in this area. India’s duty-free, quota-free system, for example, allows 90% of goods to be exported duty-free and quota-free yet not many African countries take advantage of this exemption. Why is this the case? [The authors: Amanda Lucey and Catherine Grant]
States get a seat at Africa table (The Telegraph)
The Narendra Modi government is inviting states to directly lobby with 54 African nations for business opportunities at a week-long conclave this month, the first time that New Delhi has involved state administrations in an international summit. New Delhi has not involved state administrations in an international summit before.
Regional investment policy framework on the cards (Southern Times)
A regional investment policy framework for southern Africa is expected to be finalized by the end of the year. The Trade, Industry, Finance and Investment Directorate at the SADC Secretariat said in its annual report that significant progress has been made to develop a regional investment policy framework. The regional programme on investment has the objective of strengthening the investment environment in southern Africa.
SACU making significant strides (Southern Times)
Speaking at the same event, Namibia’s Finance Minister, Calle Schlettwein said although the SACU countries are generally improving in the World Bank Logistics Performance Index , there is a need for this to be accelerated to improve SACU countries’ rankings by fully endorsing more of the standards and practices of the World Customs Organisation Revised Kyoto Convention (RKC 1999), which are embedded in the just adopted 2013 Bali Trade Facilitation Agreement package.
“For this to happen, in Namibia, we need to strengthen our collaboration with the private sector and our neighbours in the SACU region to develop initiatives that respond to business needs. In fact, we need to jointly as Customs-to-Customs, Customs and other Government Agencies and Customs and Business to robustly push this agenda, even if it calls for additional resources. One such initiative, developed and implemented in collaboration with the private sector and launched in July 2015, is the Namibia Trade Information Portal,” he said.
Now available: Joint outcomes statement by the Commissioners General Forum for Southern Africa (SARS)
EALA enacts EAC Electronic Transactions Bill (EAC)
The Electronic Transaction Bill, 2014 seeks to meet the need of exploiting electronic transactions in the modern day business transactions. The Bill further wants to promote technology neutrality in applying legislation to electronic communications and transactions and to develop a safe, secure and effective environment for the consumer, business and the Governments of the Partner States to conduct and use electronic transactions.
COMESA August inflation at 6,3% (The Herald)
The year on year inflation rate for the COMESA region stood at 6,3% for the month of August 2015 compared to 15,4% recorded during the same period last year. According to the latest Common Market for Eastern and Southern Africa Consumer Price Index, the month on month inflation rate for the region stood at 0,4% in August, down from 0,8% registered in July 2015. It was 1,4 percent in August 2014. [Uganda: High import costs push price index up by 10% (Daily Monitor)]
IGAD Strategy 2016-2020: validation workshop (IGAD)
This five-day workshop is the final touch to the process of the Formulation of the IGAD Regional strategy and Implementation Plan 2016-2010 that started 13 months ago with baseline studies at national level on IGAD priority sectors, according to IGAD Planning and Coordination Programme Manager, Mr. Ahmed Y. Habbane. After looking into in-country situations around thematic areas or priority sectors such as Agriculture, Natural Resources and Environment; Regional Cooperation and Integration; Peace and Security; Social Development; Gender Affairs, “we started with national-level reports by priority sector that we then compressed into a regional document by sector” he continued.
Featured tweet: @FrankMatsaert: Excited to be working with @jonashelth & @DutchMFA in Abuja this week: @TradeMarkEastA giving support to work on West Africa trade corridors
Non-tariff barriers frustrating South African agricultural exports (tralac)
Due to the distance (and associated increasing transportation costs) and increase in private standards in many traditional markets numerous South African agricultural exporters have expressed interest in increasing their footprint into African markets. However, the proliferation of NTBs are frustrating exporters; reducing their competitiveness and making it too costly to enter these markets and/or retain market share. In the majority of African markets standards regimes are characterized by an over-reliance on mandatory inspections and certifications, unique national standards and testing, overlapping responsibilities for regulation and the discriminatory application of technical regulations and standards for imports. NTBs which are most problematic for South African agricultural and food product exports to African markets include: [The author: Willemien Viljoen]
ZRA warns clearing agencies against disrupting the flow of traffic at borders (Lusaka Times)
The Zambia Revenue Authority will not hesitate to institute sanctions against erring clearing agencies found guilty of harassing and disrupting the flow of traffic at entry points. ZRA Commissioner General Berlin Msisika said the Authority was aware of complaints of alleged harassment of members of other clearing agents’ organisations who had no intent of participating in illegal demonstrations or strikes and were being victimised at Nakonde border. The clearing agents at Nakonde border post last week withdrew labour demanding the lift of the suspension slapped on their companies by the ZRA.
Zambia: Cabinet approves Bill to end casualisation in all industries - Shamenda (Lusaka Times)
Zim spends $18 billion on imports in 5yrs (The Chronicle)
Zimbabwe's import bill has risen to about $18bn over the last five years as the influx of cheap foreign-made products continues. The Confederation of Zimbabwe Industries says robust measures are needed to reverse the trend, which threatens the viability of local firms and widens the country’s trade deficit. Since dollarisation in 2009, Zimbabwe has been a net importer of finished clothing, food and automobile products mainly from South Africa, Botswana, Zambia and countries in the Far East. Liquidity constraints amid low domestic industrial capacity utilisation, has worsened the situation.
SA to keep US trade status (Bloomberg)
South Africa will probably retain duty-free access for exports to the US worth as much as $1.7 billion a year under the Africa Growth and Opportunity Act, Trade and Industry Minister, Rob Davies said in an interview, citing a letter he received from the US trade representative. “I am confident that we are on track to keep us in AGOA,” Davies said on Saturday. [ANC sticks to guns on private security (IOL)]
Nigeria’s pan-African aspirations bode well for local market (Business Day)
If GZ Industries succeeds in SA, it may be a catalyst for other Nigerian companies to put a toe in this market in the same way MTN’s success in Nigeria lured other South Africans to that market. It is early days, but hopefully this is a first small step towards changing the often negative SA-Nigeria narrative. [The author: Diana Games]
Dangote’s investments stimulating African economy, say Tanzanian, Nigerian presidents (ThisDay)
The latest inaugurated cement plant is part of the ongoing African expansion drive of the Pan-African conglomerate. Earlier, the company has opened its plants in Cameroon, Zambia and Ethiopia. The inauguration of the Senegal Plant and South Africa plants would follow suit according to the company’s president
Kenya to roll out special trade zones in first quarter of 2016 (Business Daily)
The government plans to roll out Special Economic Zones which will enjoy lower taxes to boost Kenya’s investment profile. Enterprises at the SEZs will enjoy several tax incentives under a tightly monitored set-up to avoid losses of government revenue. The preferential tax terms will include value added tax (VAT) exemption on all supplies of goods and services to enterprises, reduction in corporate tax to 10 per cent from 30 per cent for a period of 10 years of operation and 15 per cent for the next 10 years. The government plans to freeze new investments within its Export Processing Zones before the end of this year as it takes up the SEZs model.
Private investment in Angola has new regulations (MacauHub)
The new regulations for carrying out private investment in Angola stipulates the creation of a “fast lane” to speed up procedures and technical support units in each ministry, according to a presidential order.
Namibia urged to learn from Turkey to boost manufacturing (New Era)
One of the challenges faced by many SME manufacturers in Namibia is having access to intermediate inputs for production. As evident in the trade analysis, Namibia’s imports from Turkey include mostly intermediate inputs for some manufacturing sub-sectors such as the pasta industry, inputs for steel/wire manufacturing and industrial machinery. Therefore, it is beneficial for Namibia to leverage on this trade relationship in order to boost our manufacturing sector. [The author: Maria Lisa Immanuel, senior policy analyst at the Namibia Trade Forum]
Uganda: Dealing with fake agricultural inputs (The IGC)
Technology adoption in African agriculture is very low, holding back productivity and rural income. This study was motivated by common anecdotes about farmers’ bad experiences with fertiliser and seeds. Investing in these items should yield a manifold return, but few farmers incur the expense. Several agriculture sector donors were aware of the issue, but none had tested how widespread it is. The key finding was that the vast majority of fertiliser samples were substandard. Additionally, very few of the allegedly improved seeds showed much success in producing large crops. In short, the agricultural inputs sold at retail level in Uganda are often fake or have at least deteriorated to the point that they seem so.
WTO effect: India may halt export subsidies for raw sugar (The Hindu)
Buckling under pressure from countries such as Australia and Brazil at the WTO, India is considering discontinuing direct export subsidies for raw sugar which are banned under the multilateral trade rules. It may instead give incentives that are compatible with the regime.
At IMF/World Bank meeting, Emefiele canvasses regional integration (ThisDay)
Making a case for the appointment of Africans to top position in the IMF, Emefiele said: “We are concerned that the 2014 diversity targets were not met particularly, the recruitment and promotion of African nationals at senior and managerial positions in the Fund. While we welcome the new diversity benchmarks for 2020, we note that they are short of addressing the representation of the region. We urge the Fund management to expedite action including identifying key milestones to ensure effective implementation of these targets.” [Full text of statement]
Development Committee: communiqué (World Bank/IMF)
We stress the importance of strengthening data quality and coverage, and its availability for policy making and for monitoring and implementing the SDGs. We call on the WBG and the IMF to increase their support to developing countries in building national data capacity and investing in evidence. [Download]
UN, World Bank to launch refugee and reconstruction bonds (Reuters)
China-backed trade pact playing catch-up after U.S.-led TPP deal (Reuters)
Left outside the US-backed Trans-Pacific Partnership trade pact struck last week, China and India approach this week's talks for a huge Asia-wide equivalent with fresh urgency, lest competitor nations steal a march on export access. Beijing is a key driver of the Regional Comprehensive Economic Partnership (RCEP), a proposed 16-nation free-trade area that would be the world's biggest such bloc, encompassing 3.4 billion people.
Peter Drysdale: 'Can China make it to the top of the ladder?' (East Asia Forum)
Vivek Dehejia: 'Trade and national interest' (LiveMint)
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Harold Wolpe Memorial Lecture 2015: ‘Diagnosing African Politics’ by Carlos Lopes
Johannesburg, October 9th 2015
This lecture honoring Harold Wolpe comes at a time when his contribution is more appreciated than ever before. Although his focus was South Africa his provocative contributions surpassed the country. Wolpe was one of the admired conceptualizers of his generation. By inventing a new radicalism he marked South African scholarship, introduced new approaches to the race question and infuriated enough to be classified by some as a pariah. Academics that are activists always walk that path and indulge in their independence of thought.
I am pleased to be invited to deliver this lecture, following on the footsteps of an impressive list of personalities.
When I was ten I saw a telephone for the first time. It was in my native Guinea Bissau where innovations of life took time to say hi. My uncle, who lived in the same street as my family behind the only Hotel in town, called the Grand Hotel, although it only had 20 rooms, was a privileged fellow. He worked at the central post office as a senior staff and therefore could easily justify why he was one of the first to have a telephone. At those times a telephone was one of those bulky thermo-plastic type of machines, with a rotary circle to dial. It had the nine digits but in fact only zero worked. It served to call the operator that make the connection manually.
I was marveled that one could talk without seeing and be heard far way without shouting across. In my innocence I could not relate that instrument with anything but pure joy. However soon after my father was put in jail by the Portuguese Intelligence police; because of his links with terrorism as I was told. These were disturbing news. I still remember that telephone was indeed associated with pure joy, because much later it was through it that we were told he was doing fine, but not much more could be said.
The telephone revolution, in fact the communication revolution is closely associated with politics. I have in one generation move from one level and device to another with a speed that does not have the equivalent in all the previous generations. And this revolution is happening in Africa, in comparative terms, faster, than any other region in the world.
Discussing voice, identity, expression of will to exercise of power is now completely different from ever before, thanks to the fact that the 6 billion cell phones are making us, one big family. Families have good and bad behavior, they enshrine the complexity of the human fabric with its contradictions, assumptions and conquests. Families aspire to have harmony, but by no means automatically get it. That is why they manage their behavior with beliefs, protocols and acquired habits, in one word they regulate.
It is said that the most sophisticated form of regulation is democracy. Let us assess the African record in this regard. The trend towards democratic politics in Africa, as elsewhere in the World, has become ubiquitous. Democracy, however imperfect it may be, has assumed the game in town, defining the basis of politics and power, and a means of allocating scarce values in political communities. African politics in both its historical and contemporary dimensions as Naomi Chazan et al (1999: 6) rightly noted, “constitute the microcosm of political forms and contents, experiences and patterns, trends and prospects”.
In their genealogy, countries differing experiences and encounters have marked their democratic footprint. Political regimes ranging from multi-party system to military dictatorships, one-party rule, political monarchies, and sometimes outright political autocracy and tyranny, are familiar to contemporary Africa.
Countries records have differed in form and content. The configuration of class and social context, coalition building, alignment and re-alignment of political actors, agencies, and political outcomes, contribute to defy any strict characterization of African politics. Indeed, some argue that in terms of politics, we should talk about “Africas” and not “Africa” in a monolithic sense.
There is no doubt that comprehending African politics in its historical and contemporary dimensions has kept African scholars busy. They have created narratives, conceptual and theoretical constructions, deconstructions and reconstructions, polemical and ideological debates, and intellectual projections and advocacy that are vast and sometimes overwhelming. The range of the discourses include dissecting the colonial encounter and its political economy, post-colonial nation building, state-civil society relations, political transitions, social movements in the political process, gender and politics, parties and other political institutions, and more recently, the interface between democracy and development or markets.
Allow me to capture and analyze some of the paradigms and perspectives articulated in diagnosing African politics.
In diagnosing African politics, perspectives and paradigms have been adopted in different historical contexts. Serious intellectual debates were generated amongst African scholars and between them and the Africanists. Three of these paradigms can be teased out in broad categories. The first is what we refer to as the social identity paradigm, the second is the political economy paradigm, and the third is the social movement paradigm.
The first paradigm has different strands. Perhaps, a good starting point is the theory of the two publics articulated by Peter Ekeh (1975), which focuses on how the colonial encounter shaped the nature of politics in Africa, through the bifurcation of individual identities, personalities and public spaces. Colonialism in Ekeh’s view was an ‘epochal event whose supra-individual consequences have lingered in fundamental ways, long after actual colonization and the colonial situation have ceased to exist. Colonialism is to Africa what the industrial revolution and French revolution were to Europe’ (Osaghae, 2003: 3). As such, ‘it is to the colonial experience that any valid conceptualization of the unique nature of African politics must look’ (Ekeh, 1975: 93). According to Ekeh, the problem of corruption, mismanagement, personalization of power, and political autocracy cannot be understood except through a sociological analysis of how the colonial experience reshaped social values through the kind of structures and institutions created, of which the conditions and realities subsist till present.
Colonialism created dual public spaces and dual identities, what Ekeh referred to as the civic and the primordial publics. The civic public is an arena of political amoralism, while the primordial public is the space for public morality and decency. Given the brutality and arbitrariness of colonial governance, the civic public space lacks legitimacy and public support; hence an arena viewed by many with suspicion, antipathy and, possibly, plunder. The primordial space is that of traditional affection – where the people find comfort, acceptance and belonging, hence confers legitimacy and moral values. A bit like a family. As the state remains ‘alien’, people’s perceptions and attitude towards it, including of those who manage state power, remains one of distrust, poor support and often times, vandalism. The crisis of the state and politics in Africa is therefore located in this dualism of public spaces and political construction of legitimacy.
The ethnic dimension of politics is an important strand of African politics. Prominent scholars including Onigu Otite, Okwudiba Nnoli, Eghosa Osaghae Mahmood Mamdani and Archie Mafeje, dwell on this issue extensively. Archie Mafeje (1971, 1991) provides a useful deconstruction of tribalism which hitherto was used by western anthropological researchers in their study of Africa, its politics and society.
The pejorative notion of tribalism which is often used in the study of the ‘other’ or the ‘natives’ by anthropological Africanists distorts Africa’s political and social realities and reinforces stereotypes of inferiority and social backwardness. Tribalism denotes “self-contained, autonomous communities, practicing subsistence economy with no, or limited, external trade” (Mafeje, 1971: 257). More recently ethnicity and ethnic relations replaced the notion of tribal communities in the discourse. Ethnic groups according to Onigu Otite (1990: 17) are categories of people characterized by cultural criteria of symbols including language, value systems and normative behavior and whose members are anchored in a particular territory. They are neither autarkic groups nor are they excluded from constant interactions and reconfiguration. The thrust of the ethnic interpretations of politics in Africa is that the colonial policy of divide and rule – based on the ethnic principle cemented ethnic identities – deepened inter-ethnic competition and exacerbated ethnic conflicts in Africa. Indeed, access to the state and its resources either at the local or national level can be based on ethnic arithmetic, hence the size, social positioning, and political leverage exercised by ethnic groups becoming a driving force of power dynamics in Africa. There is a cesspool of struggles by ethnic identities to capture the state, or at least gain control of its instrumentalities.
Mahmood Mamdani offers a very insightful analysis of social identity politics and the character of the state in his seminal book – Citizens and Subjects. With the concept of decentralized despotism, Mamdani sought to deconstruct the structure and mechanics of the colonial state and how it shaped inter-group relations in Africa. Premised on the logic of indirect rule, the colonial state was a bifurcated state, which existed at two levels – the central state and local state. The local state was the domain of the native authorities and that was where the natives were to be containerized and governed. Ethnic identities and rigidities were the hallmark of the native authority system; every native was defined within the context of a native authority. While civil law governed the central state, customary law was the legal framework for the native authority system. The former was the domain of rights and racialized; the latter was one of tradition and customs and ethicized. But custom in this case, as Mamdani (1996:22) noted, was the language of force, masking the uncustomary powers of the native authorities.
The way this reality permeated the independent states is the subject of many research contributions, but no major controversy. Basically it is admitted that at independence, the bifurcated colonial state was de-racialized, but not democratized. Democratization at independence became synonymous to de-racialization of civil power, rather than detribalization of customary power.
Another important body of contributions to diagnose African politics is the mostly Marxian political economy approach. Scholars like Samir Amin, Walter Rodney, Claude Ake, Bade Onimode, Nzongola-Ntalaja, Peter Anyang’ N’yongo, and Dani Nabudere adopted this approach. For them, the global economic system is the driving force in shaping the context and dynamics of politics in peripheral countries in general, and Africa in particular. Some of these scholars focus on what they term the logic of imperialism, while others put emphasis on internal class formation and its power consequences. Samir Amin for example underscores the fact that we need to understand the nature of accumulation on a world scale within the global capitalist system and its inherent contradictions, before we can unravel the nature of politics in a specific country. African countries are not marginalized in terms of integration into the global capitalist system; rather the pattern of their integration, which he calls ‘mal-integration’, is the prominent issue.
Finally another group of scholars focused on the issue of social movements, and popular forces, including civil society movements. This approach seeks to understand politics and power from ‘below’ and the struggles of the people for improved governance. This approach has been used both in understanding the decolonization process and the recent wave of democratization that swept the continent in late 1980s and 1990s.
The above perspectives and paradigms offer alternative analytical lenses, which are historical, nuanced and rigorous. These approaches are in contradiction to the mainstream perspectives, notably the neo-patrimonial school, which celebrates the pathologies of African politics. It describes African politics as a haven of patron-client relations characterized by corruption, cronyism, informalization of political life and disorderly rules and procedure. Indeed, Africa is seen to work through an inverse logic of political disorder and chaos (Chabal and Daloz, 1999). Its political elites are believed to be capricious and perverse, inclined towards a ‘politics of the belly’ (Bayart, 1993), a euphemism for lawlessness and corruption. In its very extreme, neo-patrimonial theory creates a parallel between African cultural traits and the decadence of African politics. African culture and traditions are viewed as regressive and permissive of immoral political behavior or conduct.
As Thandika Mkandawire (2013:5) notes the neo-patrimonial theory, while describing the styles of the exercise of authority, the mannerisms of certain colorful political leaders or the social practices associated with some states, and the individuals occupying different positions within them, it fails in analytical content, explanatory capacity or predictive value. It does not advance our knowledge or understanding of the nature of politics, economy and society in Africa.
Analyzing African politics is a contested issue. African countries are marked by their diversity. The plurality affects how politics evolve. Ethnic, religious, linguistic, spatial, gender and class dimensions all contribute to a complex picture. For example, the continent has about 2,110 living languages constituting about 30% of the World’s total. With forced amalgamation, there was the indiscriminate drawing of political boundaries by the colonial authorities lumping non-identical groups and communities together in the newly created states. Constructing nation-states and promoting cohesive national politics by groups and communities without identical social and political history, cultural affinity or social contiguity has been a major challenge.
Politics have been fractured, disempowering for the majority, non-inclusive and, at times, violent. Civil society organizations for example, in many instances were ruthlessly suppressed, and dissent regarded as treason.
The trend of politics and political regimes that unfolded on the continent since independence is obviously not monolithic. Some countries kept faith with multi-party democratic politics, although with a mostly dominant one-party-system, while others had it official. After independence many reclined into a cycle of military coups and political dictatorships.
There were two major global and national currents that influenced the nature of politics in African countries: the cold war and the imperative of nation-building. The politics of the cold war promoted ideological proxies and satellite states, especially in Africa. What mattered in those proxy countries was not so much the internal configuration of power and the desires of the polity but external allegiances. Political accountability and citizens’ voices in domestic politics were discounted. The imperative of the nation-building, on the other hand, sought expression in the unitary systems of government, as a means of containing and managing diversity. One-party rule leaders were convinced that in order to contain the fissiparous tendencies of Africa’s plural societies, political unison in a one-party state will be the magic wand. However, this was never to be.
There was a concentration and centralization of power around political leaders or oligarchs. In many countries, political power was highly centralized and managed both institutionally and operationally. Ethnic identity was also well entrenched. While civil society continues to grow exponentially, paradoxically, the political space shrank remarkably.
The struggle for space that could allow political dissent or identity expression to flourish mostly finds one way of venting: ethnicity.
The changes that took place since the late 1980s, with the eclipse of the cold war, soon gained momentum in Africa. Authoritarian regimes gradually gave way to nascent democratic attempts, shifting the nature of the political debate. Elections, political parties, contestation, rights, institutional checks, and governance accountability are now common currencies in Africa. A rich literature has emerged on the democratization process in the continent, both from theoretical and empirical dimensions, comparing regional experiences and country case-studies.
Claude Ake (2000: 9-11) provided a refreshing theoretical interrogation of the liberal democracy paradigm that dominated the views outside but also in Africa. Ake argues that liberal democracy is markedly different from democracy even though it tends to have affinities with it with features like consent of the governed, formal political equality, inalienable human rights, accountability of power to the governed and rule of law. However, they are not one and the same. Indeed, liberal democracy is a negation of the whole concept of democracy. Instead of sovereignty of the people, liberal democracy offers sovereignty of the law (Ake, 2000: 10).
Adebayo Olukoshi (1998: 14) takes a different perspective from Claude Ake and argues that it is possible to see democracy and capitalism as different projects in the history of the modern world without necessarily having any automatic or organic correlation. Persuasively, he contends that “it is not capitalism that is inherently democratic; the hidden and open, sometimes bitter, struggles against repressive tendencies and instincts have been central to the production of some of the reforms that are today the hallmark of liberal democracy”. In other words, liberal democracy arose not necessarily because but in spite of capitalism, and the possibility of its reproduction in other societies including African countries with less developed capitalist system is therefore possible and desirable.
On the interface between democracy and development in Africa, a very robust polemical debate arose in CODESRIA intellectual circles in the 1990s especially between Thandika Mkandawire and Peter Anyang’ Nyong’o. The latter argued that democracy is a sine qua non for development. Citing the experiences of Mauritius and Botswana that achieved some relative economic progress under supposed democratic regimes, Anyang’ Nyong’o tasks African scholars and policy makers to take liberal democracy very seriously as it constitutes a fundamental basis for promoting development. Contrarily, Mkandawire contends that democracy is a worthwhile social value in itself which all countries must aspire to, given the freedom and opportunities that it confers; it should not be conceptually merged with development. Democracy may or may not produce development, and the experience of the Asian tigers which were essentially authoritarian regimes with unprecedented record of economic transformation indicates that development is possible without a full democracy. While democracy is good in itself, it must link concretely to the lives of the citizenry.
The progress recorded in democratic politics in Africa in recent times is not without its challenges and constraints. Relish and legacy of authoritarian practices loom large in many countries. Executive dominance, though in decline, remains ubiquitous as the use of discretionary power threatens the growth of democratic dispensations. Limited institutional growth and restraint also poses a challenge to political accountability. Parliaments, judiciary and opposition political parties – three important democratic institutions – remain suborned in many countries, with little capacity, resources and autonomous space. Institutions of horizontal accountability like the anti-corruption and human rights bodies, or audit departments, do not have the vitality or the capacity for effective controls. Political impunity is still rampant.
Politics is still perceived as a ‘do or die’ affair in which politicians and political parties stake virtually everything in the accumulation and retention of power. This makes elections a discounted value in promoting meaningful change in governance. Often the winner takes all syndrome prevails. Negotiation of political power is associated to access to public resources. However, the rise and flourishing of civil society portends a good omen for democratic politics in Africa. The possibility of accountability from below is increasing by the day as citizens’ demand for rights and opportunities. Civil society claims and agitations, if consistent and sustained, may begin to reshape not only the character of politics but also the nature and essence of the state.
Often African states are more attentive to the criticism they receive from international media or external public opinion than they do with their own constituents. To understand how African states mediate multiple levels of political obligations to their own national agendas, to their regional/continental obligations and the global community especially where there are obvious and sometimes not so obvious conflicts of interest, I will delve into the source of international law which defines such obligations.
Transformations in the domains of war, war crimes, human rights, democratic participation, as well as the environment, have substantially shifted the classical regime of sovereignty towards a more eroded interpretation of sovereignty.
Classic regime of sovereignty refers to a state-centric conception of sovereignty where international law is questioned as a law and considers any legal obligations outside the national realm as entirely optional. Tenants of this view contend that most international “law” that exists today is a compilation of international conventions and treaty agreements mutually convenient to the signatory nations or imposed upon them by more powerful nations (Piaff, 2000). This classical conception of sovereignty apprehends international law as horizontal and voluntary and domestic law as hierarchical and compulsory.
On the other hand, the new mainstreamed views on sovereignty entrench powers and constraints, rights and duties, in international law that – albeit ultimately formulated by states – go beyond the traditional conception of the proper scope and boundaries of states, and can come into conflict, and sometimes contradiction, with national laws. In this perspective, international law is to be regarded as a law not because of some higher moral code or by sovereign command but because states freely consented to abide by it. In absence of supranational authority, it goes without saying that agreements and norms obtained from consent rather than ultimate authority can be withdrawn should the agreed-upon norm longer fit the national interest. As matter of realpolitik the classic perception of sovereignty supersedes the liberal one when strategic interests and national pride are at stake. The extent to which states exercise their sovereignty is contingent to their overall influence at the global scale.
Even in the areas of human rights, where tremendous progress has been made in enforcing the rule of law, the resurgence of the state-centric conception of sovereignty is very present. For instance some African states have been selective in collaborating with the ICC or international bodies on presumed war crimes, crimes against humanity and ethnic cleansing. The African Union has also voiced the protection of the dignity, sovereignty and integrity of the continent when prosecutions pose a real threat to peace and stability.
International environmental treaties, regimes, and organizations have placed in question elements of state sovereignty, but have not yet locked the drive for national self-determination and its related “reasons of state” into a transparent, effective, and accountable global framework (Held, 2003). Here again, national interest determines the extent to which states ratify and abide to international obligations, as illustrated in the case of climate change or trade negotiations. Commitments from ill-negotiated agreements result, often times, in reversals, especially when explicit sanctions are not defined. In absence of a supranational enforcement mechanism, it goes without saying that agreements and norms obtained from consent rather than ultimate authority can be withdrawn or violated. Beyond one country’s interests, compliance with international obligations is contingent upon a successful dynamic wherein countries assume both regional and global obligations, while internalizing them into domestic law. Such process leads to a reconstruction of national interests and eventually national identities (Koh, 1997).
Let me conclude.
On the quality and content of the democratic process in Africa, while progress is limited and uneven (UNECA, 2009; UNECA ad UNDP, 2013), there is some consensus that the nature of politics is changing in Africa. Citizens’ political participation is on the increase, there is better observance of the rule of law, political freedom is widening, conflicts have largely receded, and with increasing political stability and predictable political environment, steady economic growth has been posted. Executive arrogation of power, which hitherto was a dominant culture of public life is being redefined as other institutions of democracy like the parliament, the judiciary, media and civil society are gradually checking power excesses. Let us agree that Africa’s democracy remains fragile and tenuous and the possibility of many reversals lurks. The Mo Ibrahim Index on African Governance released one week ago says it all: we have progressed until recently but now we are stalling.
Africa remains a continent in transition. A continent in which both domestic and external forces are impacting on the nature of its politics and economy. Diagnosing African politics in its complexity and variety requires therefore social analytical approaches and methodological tools that take cognizance of history, social structure and context, political agency and the institutional framework of political action and policy.
How could I have imagined that a telephone would teach me so much? My latest generation smartphone does not inspire me like the bulky instrument I discovered when I was ten, but it is a giant reminder that politics will never be the same. In Africa, or anywhere else.
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Action urged on climate change, growth slowdown
One week ago, the World Bank Group announced that the number of people living in extreme poverty was projected to dip below 10% of the world’s population in 2015 for the first time.
But as the 2015 Annual Meetings of the World Bank Group and International Monetary Fund came to a close in Lima, Peru, the focus shifted to the obstacles to ending extreme poverty and boosting shared prosperity: climate change, weak global growth, and ongoing crises in fragile states.
In its communiqué, the 25-member Development Committee of the Bank Group and Fund said economic risks have risen for 2015 and 2016. “Prospects of tighter financing conditions, slowing trade, and renewed weakness in commodity prices are weighing on confidence in many developing countries,” it said. The committee called on the Bank Group and IMF to monitor economic risks and vulnerabilities and “enhance their assistance” to countries.
In a speech to the full membership of the Bank Group and Fund, Kim acknowledged the challenging conditions.
“While we remain confident of ending extreme poverty, the final stretch will be extremely difficult because we are in the midst of a period of slow global growth, the end of the commodity super-cycle, pending interest rate hikes, and continued flight of capital out of emerging markets,” said Kim.
“To spur growth, every dollar of public spending should be scrutinized for impact. Every effort must be made to improve productivity,” he said. “And in a period when banks are de-risking, we have to ensure that capital is accessible – especially for small business owners and entrepreneurs who will create jobs.”
The Annual Meetings – the first to be held in Latin America since 1967 – dealt with a wide variety of global issues, as well as some focused on the host region. A series of livestreamed events discussed inequality, the economic slowdown, renewable energy, climate change, and the Bank’s twin goals of ending extreme poverty by 2030 and boosting shared prosperity. The events featured government ministers, development experts, CEOs, and celebrities. The Bank also released economic updates during the week for Latin America and the Caribbean, East Asia and Pacific, Africa, and South Asia.
One pressing global issue that drew particular attention was the global crisis surrounding refugees and migrants. The Development Committee, in the communiqué, said the crisis requires “targeted support” for “countries and regions in turmoil, especially in the Middle East and North Africa, but also in other fragile and conflict states.”
Kim, earlier in the week, agreed: “For all involved, the refugee crisis is an immensely difficult challenge,” he said. “The World Bank Group has been assisting the host communities of the refugees in Lebanon and Jordan for the past few years, and now we’re exploring new ways to increase our help for Syria’s neighbors.”
On Oct. 10, the United Nations, the World Bank Group, and the Islamic Development Bank Group announced a joint initiative to scale up financing in the Middle East and North Africa to help countries hosting significant refugee populations, countries impacted by conflict, as well as countries that have significant investment needs to achieve economic recovery.
“Climate change and natural disasters put hard-earned development gains at risk, particularly for the poor and vulnerable,” said the Development Committee. It asked the Bank Group to help countries assess climate risk, build resilience and “scale up its technical and financial support and mobilize resources.”
Finance ministers of the “Vulnerable Twenty” (V20) countries most at risk from climate change, representing close to 700 million people, said this week that an average of more than 50,000 deaths a year were attributable to climate change, with the number expected to rise exponentially by 2030.
On Oct. 9, following the Climate Ministerial meeting hosted by Peru and France, the Bank Group pledged to boost climate-related financing by as much as a third, to as high as $29 billion annually, with the support of the Bank Group’s member countries.
“The World Bank Group stands ready to scale up its support to meet increasing demand from countries,” Kim said in a press conference Oct. 8.
For their part, countries must “show real ambition” at the climate change conference in Paris in December, he said.
“Political will for urgent action is critical. We believe there are politically credible pathways to deliver $100 billion a year in climate financing for developing countries by 2020,” he said.
“If world leaders do not find a path to low-carbon growth that will keep global warming below an increase of 2 degrees Celsius, there is little hope of ending extreme poverty − and even more broadly, there is little hope of preserving the Earth as we know it for our children and grandchildren,” said Kim.
The Development Committee also addressed a number of other important issues:
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It endorsed the World Bank Group’s role in coordinating with governments, multilateral organizations, the private sector and civil society to mobilize funding for the Sustainable Development Goals (SDGs) – a set of global goals to be achieved by 2030. They were approved last month at the United Nations General Assembly.
“We stress the need to focus on inclusive growth, jobs, infrastructure, human development, and health systems, and to deepen the World Bank Group’s engagement in fragile and conflict states,” said the committee. It also called on the International Finance Corporation and the Multilateral Investment Guarantee Agency to “play a more catalytic role to mobilize private sector investment and finance for development.”
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It urged the Bank Group and IMF to help countries stem “illicit finance and the underlying activities, including tax evasion, corruption, criminal activities, and collusion,” that deprive developing countries of vital resources they need.
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It praised the Global Monitoring Report for tracking the progress of the Millennium Development Goals, which will be replaced by the SDGs. The latest report, released during the Meetings, “shows that changes in global demography will profoundly affect the trajectory of global development during the 2030 Agenda period. With the right policies, demographic change can help growth, both in developing and developed economies.”
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And it stressed the importance of strengthening data quality and coverage in developing countries – and the availability of data for policy-making and for monitoring and implementing the SDGs. It called on the Bank Group and IMF to increase support to developing countries to help them build data capacity and invest in evidence.
Development Committee Communiqué
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The Development Committee met today, October 10, 2015, in Lima.
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Global growth remains weak, and the downside risks for the second half of 2015 and 2016 have risen. A moderate recovery in high-income countries is still continuing, but prospects of tighter financing conditions, slowing trade, and renewed weakness in commodity prices are weighing on confidence in many developing countries. We call on the World Bank Group (WBG) and the International Monetary Fund (IMF) to monitor risks and vulnerabilities closely, to enhance their assistance to countries to support growth and build resilience, and to play their countercyclical role when needed.
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Given the scale of the current refugee and migrant crisis, we call for targeted support, in collaboration with the UN and other partners, in addressing the challenges for countries and regions in turmoil, especially in the Middle East and North Africa, but also in other fragile and conflict states.
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The Sustainable Development Goals (SDGs) chart a new course for development for the next 15 years. The SDGs are universal, integrated, and align with the WBG’s corporate goals. Building on the Billions to Trillions discussion at the last Spring Meetings we endorse the WBG’s role and support for the 2030 Agenda for Sustainable Development. This will involve convening, connecting and coordinating with governments, IMF, MDBs, and the WTO, private sector and civil society to mobilize the financing needed; deliver development solutions at country, regional, and global levels, including through South-South cooperation. We stress the need to focus on inclusive growth, jobs, infrastructure, human development and health systems, and to deepen the WBG’s engagement in fragile and conflict states. Private sector development is crucial to achieving the SDGs. We call on the IFC and MIGA to play a more catalytic role to mobilize private sector investment and finance for development. We welcome the steps the WBG has taken to enhance its effectiveness and delivery to respond to strong demand, through operational reforms and optimizing the use of its balance sheets and external resources. We recognize that the WBG must remain adequately resourced to meet its goals and to contribute to the SDGs and climate agendas.
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IDA remains a critical tool to achieve the WBG’s goals and the SDGs and we look forward to continued strong IDA replenishments and further consideration of options to generate additional IDA financial capacity while ensuring continued focus on the poorest countries.
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We welcome the IMF’s support for the 2030 Agenda, including its decision to increase access to concessional lending facilities, and its work to boost economic resilience and sustain global economic and financial stability.
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We urge the WBG and the IMF to scale up their support to developing countries to improve domestic resource mobilization, public financial management and to curb illicit finance. Illicit finance and the underlying activities, including tax evasion, corruption, criminal activities, collusion, represent a major drain on the resources of developing countries. We welcome their plans to work jointly to build capacity for developing countries, including on international tax issues.
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Climate change and natural disasters put hard-earned development gains at risk, particularly for the poor and vulnerable. Smart policy and investment choices can help transition to economic growth paths that reduce poverty while preserving the environment. We urge the WBG to scale up its technical and financial support and mobilize resources to assist countries in assessing climate risks and opportunities, to address the drivers of climate change, and to build resilience. We look forward to an updated report on Disaster Risk Management in Spring 2016. We call on the WBG to enhance its support for small states in building resilience against and mitigating the impact of natural disasters and climate change, which are among the greatest challenges faced by these countries. We look forward to a successful COP21 meeting in Paris.
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We reaffirm our commitment to gender equality, critical to ending poverty, boosting shared prosperity, and building more inclusive societies. We look forward to the implementation of a new WBG gender strategy aimed at closing persistent gender gaps.
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The Global Monitoring Report has proven its value in tracking progress in achieving the MDGs and we are confident it will play a similar role for the SDGs. The latest GMR shows that changes in global demography will profoundly affect the trajectory of global development during the 2030 Agenda period. With the right policies, demographic change can help growth both in developing and developed economies. We urge the WBG to take demographic challenges into account in its work to support development policies.
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We stress the importance of strengthening data quality and coverage, and its availability for policy making and for monitoring and implementing the SDGs. We call on the WBG and the IMF to increase their support to developing countries in building national data capacity and investing in evidence.
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We welcome the Report of the 2015 Shareholding Review and agree to the shareholding review principles and the Roadmap for its implementation, including further consideration of the WBG’s long term role. We commit to implementing the Roadmap, including agreement on a dynamic formula by the 2016 Annual Meetings, based on the guidance set out in the report. We stress the critical importance of wider reforms to strengthen WBG responsiveness to its members and their voice and representation in its governance. We will continue to promote diversity and inclusion to reflect better the global nature of the WBG.
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Delivering transformative development solutions requires a focus on results, support for implementation, and fiduciary and safeguards policies to manage risks. This will ensure responsiveness to client needs and deliver sustainable development outcomes. We welcome the new procurement framework approved in July 2015 and look forward to successful completion of the review and update of the World Bank’s environmental and social framework.
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The Committee expressed its appreciation to the Government of the Republic of Peru for hosting the Annual Meetings. We thanked Mr. Marek Belka, President of the National Bank of Poland, for his valuable and outstanding leadership and guidance as Chairman of the Committee during the past four years, and welcomed his successor, Mr. Bambang Brodjonegoro, Minister of Finance of Indonesia.
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The next meeting of the Development Committee is scheduled for April 16, 2016, in Washington, D.C.
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South Africa ‘on track’ to keep duty-free export access to U.S.
South Africa will probably retain duty-free access for exports to the U.S. worth as much as $1.7 billion a year under the Africa Growth and Opportunity Act, Trade and Industry Minister, Rob Davies said in an interview, citing a letter he received from the U.S. trade representative.
“I am confident that we are on track to keep us in AGOA,” Davies said on Saturday. “The issues that are going to be central to their decisions on the outer-cycle review are related to the three meats. These were about the importation of 65,000 tons of poultry, the regulations on pork and on beef.”
The U.S. is reviewing South Africa’s status as a full beneficiary of a preferential trade pact that eliminates import levies on more than 7,000 products ranging from textiles to manufactured items. AGOA, as the accord is known, was renewed in June for another 10 years, benefiting 39 African nations.
To remain a beneficiary of AGOA, countries are required to, among other things, eliminate barriers to U.S. trade and investment, operate a market-based economy, protect workers’ rights and implement economic policies to reduce poverty.
U.S. trade officials have threatened to withdraw support for South African funding applications to the International Monetary Fund and World Bank if certain clauses outlined in a proposed security industry regulation bill aren’t reviewed.
“The security bill was not mentioned in that context in the letter from the U.S. trade representative,” Davies said.
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IMFC Statement by Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria
Statement by Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria, at the Thirty-Second Meeting of the International Monetary and Financial Committee, 9-10 October 2015*
Global Economy
We note that global growth continues to be moderate but uneven, while risks remain elevated. The robust economic activity in the USA, return to positive growth trajectory in Japan, and strengthening recovery in the euro area are good news in driving growth prospects in the advanced economies. However, the growth prospects in the medium term will likely be subdued, reflecting lower investment, unfavorable demographics, and weak productivity growth.
Emerging markets and developing countries continue to grow above the global average. We observe that the decline in GDP growth for EMDCs experienced over the past five years reflects general weaknesses in global growth and heightened uncertainties from lower commodity prices and slower growth in China, as well as domestic structural factors. In addition, the global environment is compounded by the geopolitical tensions in parts of Eastern Europe and the Middle East, which could further escalate the risks and increase disruptions in global trade and financial conditions.
The sub-Saharan Africa region continues to show resilience on the back of on-going policy reforms. However, growth is expected to slow reflecting the repercussions of declining commodity prices as well as lower demand from China its largest single trading partner, and the tightening global financial conditions especially for the frontier markets. In particular, oil exporters are expected to experience lower revenues, while countries that leverage, international capital market are expected to have lower infrastructure investments. Policymakers need to find appropriate balance between macroeconomic stability and strong inclusive growth. These include preserving fiscal sustainability, reprioritizing spending and identifying tax policy reforms as well as expand fiscal space to address infrastructure gaps and social spending, allowing exchange rate flexibility to smoothen the adjustment to less favorable external conditions and implementing structural reforms to increase private sector activity and boost confidence.
Supporting growth in sub-Saharan Africa
The prevailing shocks have seen a persistent near-term weakening of sub-Saharan Africa economic growth. Rebuilding policy buffers while maintaining growth-friendly policies is a priority to boost resilience to exogenous shocks. In the medium term, diversification of exports and domestic production are important in sustaining strong inclusive growth. While urging continued support to strengthen regional integration in collaboration with other development partners, it is pertinent for the Fund to support policies for revenue mobilization and structural reforms along country specific needs. In addition, scaling up public investment to close existing infrastructure gaps is a priority and we urge the Fund to continue supporting capacity building to improve public investment efficiency and the quality of public finance statistics.
Fund Surveillance
Boosting surveillance activity is critical in maintaining traction of the Fund’s policy advice. The effort to achieve full implementation of the 2014 Triennial Surveillance Review is encouraging and we expect that it would continue to remain a priority. We welcome the effort to integrate and deepen analysis of risks and spillovers, and observe that the mapping of these items is critical to the revival of the balance sheet analysis. In welcoming more of these efforts, Fund support in closing existing data gaps remains critical. We appreciate the proposed new enhanced General Data Dissemination System (e-GDDS) aimed at addressing the transition to Special Data Dissemination System (SDDS), and urge the Fund to scale up technical assistance to facilitate the attainment of the benchmarks set for the subscribers. On our part, we will endeavor to create more awareness and build capacity to improve data quality.
Structural reforms should continue to be a priority for unleashing growth potential, and we appreciate the ongoing groundwork to strengthen surveillance of structural issues. Efforts to strengthen capacity to drive priority structural reforms are critical in facilitating a successful implementation of the economic diversification and transformation agenda and request the support of the Fund in this regard.
We appreciate the on-going pilot work on macro-financial analysis and look forward to supporting country teams in quantifying financial linkages and identifying build up of systemic risks.
Fund’s Lending
We welcome the recent initiative to enhance the financial safety nets for developing countries as part of the IMF contribution to support development. We also welcome the increased access to PRGT and rebalancing of the concessional and non-concessional financing aimed at boosting access of the poorest and most vulnerable countries to concessional resources. While appreciating the increased access, we urge that the reduction of access limit and norms as a percentage of quotas should be separated from the implementation of the 14th General Review of Quotas. We note the continued application of the PRGT-eligibility as a transparent and rulebased framework to facilitate steady graduation of LICs. However, we urge the Fund to support the transitioning members and middle-income countries with appropriate programs. While urging that low income countries get appropriate programs, the Fund is encouraged to strengthen efforts to increase PRGT resources.
Financing for Development
Achieving the sustainable development goals (SDGs) in developing countries is inextricably tied to adequate financial resources. We welcome the commitments of the international community, including the Fund to the SDGs and funding sustainable development, at the Third International Conference on Financing for Development and look forward to a successful implementation of the Addis Ababa Action Agenda. While supporting the Fund’s initiatives to scale up assistance for national capacity building in areas of domestic revenue mobilization, stemming illicit financial flows, expanding infrastructure investments, strengthening debt management capacity, financial market development, and data dissemination, we look forward to the Fund supporting the remaining HIPC-eligible countries to complete the debt relief process. Further assistance is needed in the review of the debt sustainability framework, and continued strengthening of analytical tools for sovereign debt management.
Diversity and Inclusion
We are concerned that the 2014 diversity targets were not met particularly, the recruitment and promotion of African nationals at senior and managerial positions in the Fund. While we welcome the new diversity benchmarks for 2020, we note that they are short of addressing the representation of the region. We urge the Fund management to expedite action including identifying key milestones to ensure effective implementation of these targets. In addition, we reaffirm our call to make every effort to expand the pool of institutions to include universities in Africa, and urge that this translates into actual hiring of African nationals. It is our position that diversity of views and experiences will go a long way in enriching the Fund’s delivery of services to its membership.
Quota and Voice
We regret the protracted slow progress with the 14th General Review of Quotas and Governance Reforms noting its importance in strengthening legitimacy, credibility and the effectiveness of the Fund. In light of the increasing uncertainty in the global environment, the
Fund must stand ready to deliver necessary financial assistance to its members. We remain committed to a quota-based institution, and therefore the completion of the 2010 reforms is a priority. These reforms represent a viable option to addressing the concerns of emerging markets and developing countries in terms of voice and representation. Against this background, we urge the IMF Executive Board to speed up work on interim steps to make meaningful progress towards the achievement of the 2010 reform agenda and look forward to the completion of the interim work by December 2015.
Conclusion
Rebuilding the momentum of global economic growth within a policy framework that accommodates country specific needs remains a priority. We will continue to strengthen our engagement with the Fund in improving capacity for macroeconomic management, and building firm foundations for sustainable and strong inclusive growth.
* On behalf of Angola, Botswana, Burundi, Eritrea, Ethiopia, The Gambia, Kenya, Lesotho, Liberia, Malawi, Mozambique, Namibia, Nigeria, Sierra Leone, Somalia, South Africa, Republic of South Sudan, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe.
» Communiqué: Thirty-Second Meeting of the International Monetary and Financial Committee (IMFC)
Region set to realize e-business as EALA enacts EAC Electronic Transactions Bill
EALA on 8 October 2015 passed the EAC Electronic Transactions Bill 2014 paving way for the business and corporate world to transact business using digital means.
Debater after debater supported the Bill saying it would grow the economies of Partner States and the region. The Bill had a number of clauses revised and or inserted to reflect relevancy and consistency.
The Electronic Transaction Bill, 2014 seeks to meet the need of exploiting electronic transactions in the modern day business transactions. The Bill further wants to promote technology neutrality in applying legislation to electronic communications and transactions and to develop a safe, secure and effective environment for the consumer, business and the Governments of the Partner States to conduct and use electronic transactions.
Debate on the Bill was adjourned at the 1st Meeting of the 4th Session of the 3rd Assembly held in August 2015 in Kampala, Uganda to pave way for stakeholders to make additional input.
The adjournment came after a request for deferment of the debate by the Chair of Council of Ministers, Hon Dr. Abdallah Saadaala was approved. The Chair of Council of Ministers reiterated total support of the Bill but added there was need for more time for the consolidation of further inputs and comments by stakeholders.
At the same time, consultations have been called to allow for enrichment of the Report of the Committee of Communication, Trade and Investment.
In his ruling then, Speaker, Rt Hon Daniel F Kidega directed that the Bill whose initiator is Hon Dr James Ndahiro, be brought back to the Order paper during the Nairobi Sitting.
On Wednesday this week, the debate was adjourned a second time to avail the Committee time to look through the comments received from the Monetary Affairs Committee (MAC). When debate resumed on 8 October, several members rose up in support of the Bill. Hon. Nancy Abisai, Hon. Fredrick Ngezebuhoro, Hon. Mike Sebalu, Hon. Shyrose Bhanji, Hon. Zein Abubakar and Hon. Susan Nakawuki gave a firm nod to the Bill.
Others were Hon. Patricia Hajabakiga, Hon. Martin Ngoga, Hon. Sarah Bonaya, Hon. Leonce Ndarubagiye, Hon. Valerie Nyirahabineza and Hon. Adam Kimbisa. Also supporting the Bill were Hon. Joseph Kiangoi, Hon. Twaha Issa Taslima, Hon. Abdullah Mwinyi, Hon. AbuBakr Ogle, Hon. Bernard Mulengani, Hon Peter Mathuki and Hon. Chris Opoka.
The Members urged Partner States to embrace the Electronic Transactions Bill and harmonize their laws to the regional law to create a proper environment for all possible users and beneficiaries of ICT in the region and beyond.
The debate was preceded by tabling of the revised report of the Committee on Communication, Trade and Industry on the public hearings of the Electronic Transactions Bill, 2014 by the chairperson, Hon Mukasa Mbidde.
The Chair of Council of Ministers, Hon Dr. Abdulla Saadaala reiterated the support of the Bill, saying all Partner States were of the same frame of mind when it comes to the tangible benefits of electronic transactions.
» Download: East African Community Electronic Transaction Bill, 2014 (PDF, 5.96 MB)
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Intergovernmental Group of Twenty-Four (G24) on International Monetary Affairs and Development: Communiqué
Communiqué of the Ministers of the Intergovernmental Group of Twenty-Four, held in Lima, Peru on October 8, 2015
1. We, the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development, held our ninety-fourth meeting in Lima, Peru on October 8, 2015 with Alain Bifani, Director-General of the Ministry of Finance of Lebanon in the Chair; Mauricio Cárdenas, Minister of Finance and Public Credit of Colombia as First Vice-Chair; and Sufian Ahmed, Minister of Finance and Economic Development of Ethiopia as Second Vice-Chair.
Global Economy and Implications for Emerging Markets and Developing Countries
2. Growth in the global economy is weaker than expected at the time of our last meeting. Emerging markets and developing countries (EMDCs) remain the key drivers of global growth, although some are experiencing a slowdown. Downside risks have risen for many of our countries, including tightening financial conditions, reduced capital flows, and persistent low commodity prices. In this context, we call for effective and well-sequenced policy that is adequately communicated to guard against potential financial instability risks, including those coming from normalization of U.S. monetary policy. We stress the importance of a more inclusive SDR basket and look forward to the completion of the work of the International Monetary Fund (IMF) on the method of valuation in view of recent changes in the economic weights in global trade and financial flows.
3. In the context of uncertainty and increased volatility, we must continue to build strong foundations for growth while addressing unemployment, poverty, and inequality. Strengthened global financial safety nets should be a priority in order to ensure the availability of adequate liquidity support in times of need, and we call on the international financial institutions (IFIs) to step up their efforts in this regard. We recognize the important role of regional, bilateral, and multilateral arrangements that can provide complementary precautionary financing to help countries face potential shocks.
4. EMDCs are disproportionately affected by the influx of refugees and internally displaced populations, including as a result of terrorism and conflicts. We call for strong and timely support by the international community in alleviating their impact, and for enhanced support, including through concessional financing from the IFIs. More broadly, we continue to call on the IMF and the World Bank Group (WBG) to strengthen their support for fragile and conflict-affected countries.
Financing the 2030 Sustainable Development Agenda
5. We welcome the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), which focus strongly on eradicating poverty in all its forms and dimensions and achieving sustainable development in its three dimensions – economic, social, and environmental – in a balanced and integrated manner. We also welcome the Addis Ababa Action Agenda on financing for development. Building the foundations for strong, inclusive, and sustainable growth by investing in people, promoting effective public institutions, investing in sustainable infrastructure, and putting in place solid economic policy frameworks and fundamentals will be crucial to achieving the SDGs.
6. We stress the importance of country ownership and leadership in the implementation of the SDGs, but the agenda must be underpinned by credible means of implementation and a revitalized global partnership for sustainable development. Mobilizing sustained and predictable financing from various sources will be essential to the achievement of our development goals. To this end, we call for scaled-up support from the IFIs, accompanied by peer learning. We recognize the initiatives by the IMF and WBG to support the implementation and financing of the 2030 Agenda, in line with country priorities. We urge their management to define a clear action plan to help countries in the implementation of such complex agenda. We also call for strengthened efforts by the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) to catalyze private financing.
7. We underscore the vital need to increase the quantity and quality of investments in infrastructure to support growth, contribute to poverty reduction, and promote environmental resilience. Efforts by both the public and private sector, at the country and international levels, are necessary given large infrastructure deficits and financing requirements. We call on the multilateral development banks (MDBs) to strengthen their roles in supporting infrastructure development and financing, including at regional levels. We also call on the IFIs to support developing countries to have greater access to external infrastructure financing while maintaining debt sustainability. We look forward to the operationalization of the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB).
8. To enhance the ability of MDBs to finance infrastructure investments and support development, we call on MDBs to ensure adequate capitalization and to optimize their balance sheets, while maintaining financial integrity. In this context, we also call for further work and dialogue to ensure that methodologies employed by credit rating agencies to gauge the MDBs’ financial strength, which is the basis of their credit ratings, take into account the specific characteristics of the MDBs and appropriately assess their risks.
9. Concessional resources will continue to be an important source of financing for development in the low income countries. Fulfillment of existing commitments from advanced economies and ensuring the best development impact of official development assistance (ODA) must remain key priorities. We note the proposal by the WBG to leverage existing International Development Association’s (IDA) resources but we stress that it is critical to preserve its regular replenishments and concessionality as core elements of IDA. This measure should not negatively impact the voice and participation of developing countries in the WBG’s governance. Increasing the participation of developing countries in policy setting will help ensure development impact informed by experience of the use of IDA resources. We also welcome the review of IDA’s non-concessional borrowing policy for low income countries, with a view to increasing flexibility in their access to financial markets. We look forward to the review of the IMF/WB framework for Debt Sustainability Assessments. We also urge the international community to work with small and climate vulnerable developing countries in finding solutions for improving their debt sustainability, including by enhancing their access to concessional financing.
10. We are concerned about the adverse impacts of Illicit Financial Flows (IFFs) and harmful tax avoidances, especially by multi-national firms, on the sustainability of public finances, particularly in African countries. We consider policies that combat IFFs as vital to raising revenues and supporting the attainment of the SDGs, consistent with agreement in the Addis Ababa Action Agenda. This is made even more urgent in the context of uncertainty with respect to future ODA flows and the investments necessary to support the post-2015 agenda. We welcome the proposed work on illicit flows by the WBG and the IMF as well as their commitment to assist countries to build capabilities in developing domestic policies and practices that reduce such flows. International tax cooperation is an important complement to our domestic resource mobilization efforts. We call for the participation of developing countries on an equal footing in the implementation of G20/OECD Base Erosion and Profit Shifting Project and Automatic Exchange of Information initiative. We welcome the commitment of the IMF and the WBG to deepen the dialogue with developing countries and help increase their voice on international taxation issues. We also welcome the U.N. Tax Committee’s efforts to encourage dialogue among tax authorities worldwide. Asset recovery and repatriation of funds to countries of origin also represent an important component of global cooperation.
11. We are concerned about the unintended consequences of anti-money laundering and combating of financing terrorism standards on the de-risking behavior of banks and loss of correspondent banking relationships in many developing countries. We call on the IMF, the World Bank, and the Financial Stability Board to develop appropriate guidance on how to properly implement the risk-based approach rather than seeking to avoid money laundering and financing terrorism risks by wholesale termination of entire classes of customers through de-risking, which contributes to financial exclusion.
12. In order to address incentives for holdout behavior that seriously undermines sovereign debt restructuring processes, we recognize as positive steps the sustained progress with regards to the contractual provisions for debt issuance as well as the recent passage by the U.N. General Assembly of the resolution on the Basic Principles on Sovereign Debt Restructuring Processes. We also encourage sovereign issuers to include enhanced Collective Action Clauses and the modified pari passu clauses.
13. We look forward to the outcomes of U.N. Framework Convention on Climate Change’s 21st Conference of the Parties (COP21). We stress the importance of incorporating environmental sustainability into growth and development strategies, while respecting the principle of common but differentiated responsibilities.
Governance and Reform of International Financial Institutions
14. We reiterate our deep disappointment with the lack of progress in implementing the IMF quota and governance reforms agreed to in 2010 and strongly urge the U.S. to complete ratification. This remains an impediment to IMF credibility, legitimacy, and effectiveness and has considerably delayed forward-looking commitments, namely, a new quota formula and the 15th General Review of Quotas. Implementing the 2010 reforms remains our key priority. Nevertheless, we believe that a decision to de-link quota reform from the Board reform amendment, which is the element of the 2010 reforms that requires ratification by the U.S. Congress, would be the preferred option in the interim, as it increases IMF resources and also realigns quotas to reflect the increased economic weight of EMDCs. The alternative option, interim ad hoc increases, can, if properly designed, achieve meaningful progress towards the shifts in representation under the 2010 reforms, although it would increase IMF quota resources only marginally. It is important that any interim measures be designed so as not to lower incentives to complete the 14th General Review of Quotas.
15. We strongly urge the initiation of the 15th General Review of Quotas, including a new quota formula, without further delays, with a view to meet the December 2015 deadline, as mandated under the Articles of Agreement. We urge that quota reforms at the IMF protect the quota share of low income countries. We reiterate our longstanding call for a third Chair for Sub-Saharan Africa on the IMF Executive Board, provided this does not come at the expense of other EMDCs’ Chairs.
16. We note the 2015 Shareholding Review of the World Bank, including the proposed roadmap. We call for a timely agreement on a dynamic formula for future shareholding realignment and stress that any such formula must meaningfully increase the voting power of developing countries and move towards equitable voting power, while protecting the voting power of the smallest poor countries. Through the shareholding review, we also call for the strengthening of the WBG’s responsiveness to the developing countries and the increase of the developing countries’ voice and representation in the Bank’s Executive Board.
17. We note the ongoing work on the review of the World Bank’s safeguard framework. We underscore that the framework should give a greater role to the use of country systems and effectively address the concerns of the borrower countries. Additionally, the consultations should consider the implementability of standards and their implications in terms of cost and time. We call on the Bank to allocate the resources necessary to assist in building countries’ capacity to implement the forthcoming safeguards framework. We welcome the Bank’s new procurement guidelines and call on the WB to build capacities in client countries to support implementation of the guidelines.
18. Finally, we reiterate our call for concrete efforts towards greater representation by nationals from under-represented regions and countries in the form of recruitment and career progression to achieve balanced regional representation in the WBG and the IMF. We reiterate the importance of staff diversity and gender balance at all levels, including diversity of educational institutions and background as well as experiences.
Other Matters
19. We thank Lebanon for its Chairmanship of the Group and welcome Colombia as the incoming Chair. We also welcome Sri Lanka as the Second Vice-Chair. The next meeting of the G-24 Ministers is expected to take place on April 14, 2016 in Washington, D.C.
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SADC: Regional investment policy framework on the cards
A regional investment policy framework for southern Africa is expected to be finalized by the end of the year. The Trade, Industry, Finance and Investment (TIFI) Directorate at the SADC Secretariat said in its annual report that significant progress has been made to develop a regional investment policy framework. The regional programme on investment has the objective of strengthening the investment environment in southern Africa.
“The investment policy framework is aimed at harmonizing investment policies and regimes in order to improve the investment climate in the region, working with selected four pillars of tax incentives, infrastructure investment, foreign direct investment restriction and legal protection,” TIFI said, adding that “this exercise is expected to be completed by 31 December 2015.”
The SADC Investment Policy Framework is being developed under the Regional Economic Integration Support (REIS) Programme funded by the European Union. The Secretariat has facilitated the development process of the SADC Investment Policy Framework, which has included the following activities:
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Taking stock of Member State investment policy programmes using diagnostic questionnaires;
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Member State input through questionnaire responses and the drafting of analytical reports that practical recommendations for implementation; and
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Development of common guidelines, together with analytical reports, on the four pillars of tax incentives, infrastructure development, FDI restriction and legal protection.
The SADC region has huge investment opportunities ranging from sectors such as mining, tourism, energy to infrastructure development and agriculture.
The mineral sector alone contributes about 55 percent of the world diamond production while the platinum group of metals contribute about 72 percent.
The region also has an abundance of arable land and vast water watercourses such as the Congo and Zambezi, with the Inga Dam situated on the Congo River. With regard to energy resources, the region has the capacity to produce enough energy for itself as well as export.
According to the African Development Bank, the total hydropower potential in SADC countries is estimated at about 1,080 terawatt hours per year (TWh/year) but capacity being utilised at present is just under 31 TWh/year.
A terawatt is equal to one million megawatts.
Regional payment system reaches R1 trillion mark
In a related matter, more than R1 trillion (about US$79 million) has been traded on a regional electronic payment system that aims to promote the smooth settlement and clearance of payment in southern Africa.
The SADC Integrated Regional Electronic Settlement System (SIRESS) was established in July 2013 and piloted in four countries – Lesotho, Namibia, South Africa and Swaziland. The system has since been expanded to five more SADC Member States – Malawi, Mauritius, Tanzania, Zambia and Zimbabwe.
Therefore, a total of nine countries are now participating in SIRESS, with more expected to so soon. SIRESS is a SADC electronic payment system developed by Member States to settle regional transactions among banks within the SADC countries.
Where transactions previously took two to three days to clear, now they are cleared within 24 hours and fees previously paid to non-SADC clearing banks are saved.
The main benefits of the system is its efficiency and reduction in costs because previously the transactions would go through a correspondent bank.
Therefore, the cutting out of the intermediary – often a United States or European correspondent bank – means money stays in the region.
The establishment of SIRESS has thus facilitated the cross border transactions that are essential for boosting intra-regional trade among the SADC Member States.
Since its launch in 2013, volume of transactions traded on the system has significantly increased, and have reached the R1 trillion mark as of April 2015.
The development of SIRESS is in line with the SADC Protocol on Finance and Investment which aims to improve the regional investment climate through enhanced cooperation among member states on payment, clearing and settlement systems in order to facilitate trade integration. To accelerate the implementation of this objective, the SADC Committee of Central Bank Governors (CCBG) was in May 2009 given the approval to spearhead the initiation of the SADC payment integration system project. In addition to the CCBG, which focuses activities from a regulatory perspective, the SADC Bankers Association (BA) was also established in 1998 to coordinate activities of commercial banks in the SADC region in developing the financial market infrastructure and regional clearing house operations to support the utilization of SIRESS.
The implementation target is to have all SADC countries participating in SIRESS by 2016.
The current settlement currency is the South African Rand, and the payment system is housed at the South African Reserve Bank. However, as the system grows to include other countries, a permanent location will soon be identified.
This article was first published in Southern Africa Today, August 2015 (sardc.net)
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“Vulnerable Twenty” ministers call for more action and investment in climate resiliency and low-emissions development
Led by the Philippines, the V20 group say they represent a significant number of nations most vulnerable to climate change – low and middle income, least developed, arid, isthmus, landlocked, mountainous and small island developing countries from Africa, Asia, the Caribbean, Latin America and the Pacific.
In a communiqué marking the first meeting of their finance ministers, the V20 group said because of climate change, they are already facing an average of more than 50,000 deaths a year, with the number expected to rise exponentially by 2030.
And they say they face escalating annual losses of at least 2.5 percent of their GDP potential per year.
Speaking at the launch, on the sidelines of the Annual Meetings of the World Bank Group and the IMF in Lima, Peru, Cesar Purisima, Finance Minister of the Philippines said costs would rise without concerted action.
“In the absence of an effective global response, annual economic losses due to climate change are projected to exceed US$400 billion by 2030 for the V20, with impacts far surpassing our local or regional capabilities,” he noted. “Here in Lima, we unite for what we believe is the fundamental human rights issue threatening our very own existence today. Global climate action gives us hope that we can still see a future free from the most devastating effects of climate change.”
Afghanistan, Bangladesh, Barbados, Bhutan, Costa Rica, Ethiopia, Ghana, Kenya, Kiribati, Madagascar, Maldives, Nepal, Philippines, Rwanda, Saint Lucia, Tanzania, Timor-Leste, Tuvalu, Vanuatu and Vietnam are all members of the V20.
“The world needs stronger voices from developing countries to draw more attention to their great needs for investment in fighting the impacts from climate change,” said World Bank Group President Jim Yong Kim. “This new group of 20 countries, led by the Philippines, will play an important role in pushing for greater investment in climate resiliency and low carbon growth at home and internationally.”
And speaking at the launch, the Bank Group’s Managing Director Sri Mulyani Indrawati also supported the V20’s aims to share its lessons and experiences on the ground.
She said countries could learn for instance from the Philippines with its initiatives to mainstream climate change into the budget process – so public funds are prioritized for vulnerability and risks to the community, while aiming to create a policy environment to spur private sector investment.
The Philippines government is also at the forefront of countries that are mapping out proactive disaster risk financing strategies. With the technical support of the Global Facility for Disaster Risk and Reduction (GFDRR) and the World Bank, the Philippines government recently approved a new National Disaster Risk Reduction and Management plan that streamlines disbursement procedures in emergencies so that rapid response and recovery operations can be undertaken more quickly.
The plan also facilitates longer term, sustainable investments and policy reforms.
Another V20 member, Bangladesh, is also breaking ground with the Urban Resilience Project, an initiative driven by a three-year process helped by the GFDRR and the World Bank to build consensus among national decision-makers and technical experts on how to tackle the complex issue of urban disaster vulnerability. The $173 US million fund will provide state-of-the-art emergency management systems and equipment, and improve building construction planning and oversight in the country’s major cities, Dhaka and Sylhet.
In Mozambique, the Bank Group has been working to leverage funds to help bring in reforms with innovations on the ground in key sectors like transport, cities and water, to mainstream climate resilience.
The World Bank Group – through the Climate Investment Funds’ Pilot Program for Climate Resilience (PPCR) – has been piloting ways to integrate climate risk and resilience into core development planning. In the Caribbean, funding from PPCR as well as IDA, the Bank’s fund for the poorest, has been aiming to help vulnerable states go beyond disaster response to address climate resilience.
Among some of the most disaster-prone countries in the world, the V20 nations provide a real-time test bed for climate investments. Their hope is to share experiences and best practices, as well as to mobilize both public and private finance to tackle the challenges that lie ahead with a changing climate.
To find out more about the V20 Forum, visit their official website.
Introduction
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We, the Finance Ministers of the Vulnerable Twenty (V20) Group, in our inaugural meeting this 8th day of October 2015 in Lima, Peru, chaired by the Philippines’ Finance Secretary, Cesar Purisima, hereby set forth our common and collective challenges, aspirations, and proposed actions in this Communiqué.
Inception
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As called for by the Climate Vulnerable Forum (CVF) in its 2013-15 Costa Rica Action Plan, we agreed to form the V20 and discussed the role, objectives and activities of the group moving forward, and agreed to the creation of this new mechanism as a platform for leaders and countries highly vulnerable to climate change around the globe to highlight shared interests and contribute substantively to discussions on finance and other means of implementation, particularly to foster a significant increase in investment in climate resiliency and low emissions development.
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On this day, we established the V20 to serve as a new high-level mechanism for dialogue and action to concentrate attention on economic and financial responses to climate change through the dedicated cooperative efforts of economies systemically vulnerable to this global phenomenon.
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We believe urgent and ambitious global climate action is now a fundamental human right. Everyone, especially those living in the most vulnerable areas of the planet, has a right to breathe clean air, to drink clean water, and to live in prosperity on a secure and sustainable planet. Ineffective action on climate change deprives us of such rights.
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Climate change is the defining challenge of our time. Overcoming it is a matter of survival for people on all continents and vulnerable communities everywhere. Standing on those frontiers most fragile to decades of inadequately checked human-induced climate change, we call out with a plea for humanity to unite. Together, we fight for a new hope.
Who We Are
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Representing a significant number of nations most vulnerable to climate change, we are low-and middle-income, least developed, arid, isthmus, landlocked, mountainous, and small island-developing countries from Africa, Asia, the Caribbean, Latin America, and the Pacific. Home to close to 700 million people – or approximately one in ten alive today – our twenty nations are hugely diverse in ecology, biodiversity, culture, geography, language, population and territorial extent.
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We are united in our shared vulnerability and exposure to a changing climate. Likewise, we share the commonality of an equally marginal contribution to warming – at less than 2% of current greenhouse gas emissions – and means to directly address the monumental challenges of global climate change, recalling that nearly half our people live in extreme forms of poverty, which the international community has pledged to eliminate by 2030 with the global Sustainable Development Goals.
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Climate shocks already exceed our regional/national capabilities at approximately half our target level of global warming of not more than 1.5°C above pre-industrial temperatures. In light of insufficient measures to arrest dangers, the V20 already face:
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an average of more than 50,000 deaths per year since 2010, a number expected to increase exponentially by 2030;
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escalating annual losses of at least 2.5% of our GDP potential per year, estimated at US$45 billion since 2010, a number expected to increase to close to US$400 billion in the next 20 years;
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more than half the economic impact of climate change by 2030 and over 80% of its health impact for V20 and other low-emitting developing countries;
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doubling in the number of extremely hot days and hot nights in the last 50 years as the planet warmed appreciably;
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countless extreme events which include typhoons with wind speeds that are around 10% stronger than they were in the 1970s translating into more than a 30% increase in destructiveness;
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sea level rise that will partially or completely submerge the island nations of Kiribati, Maldives, and Tuvalu, displacing at least 500,000 people;
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the displacement of up to 40 million people due to the inundation of low elevation land resulting from climate change driven sea-level rise;
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the threat of increasingly devastating and more frequent disasters, such as storms, flooding and drought.
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We note the progress already made by V20 countries in promoting and undertaking climate action that serves as a foundation for future V20 work but draw attention to significant human, technological, institutional, risk-based and other special constraints facing vulnerable developing countries.
Our Call to Action
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In this critical year, the minimum deliverable for the UN Climate Change Conference at Paris (UNFCCCCOP21) is an agreement entirely consistent with the non-negotiable survival of our kind. Given this and the extent to which climate change has set back the lives of our people, denied human rights, and devastated our homes and entire nations, we recognize climate action as a foremost humanitarian priority for the international community.
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To concretize our own support for this international priority, we, the V20, commit to act collectively and decisively to promote the mobilization of public and private climate finance from wide ranging sources, including international, regional and domestic mobilization; share and exchange best practices on economic and financial aspects of climate action; develop and implement new, improved and innovative approaches; and engage in advocacy and other joint actions.
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In a major first step, we agree to study the creation of a sovereign V20 Climate Risk Pooling Mechanism to distribute economic and financial risks, to improve recovery after climate-induced extreme weather events and disasters, and to enhance security of jobs, livelihoods, businesses and investors. This trans-regional public-private mechanism modeled on similar pre-existing regional facilities, featuring index-based risk transferal and other innovative insurance tools, would specifically address acute and chronic hydro-meteorological hazards, as affected by climate change. It would also improve spatial and temporal risk distribution resulting in highly accessible, dependable and cost-efficient insurance while incentivizing, through risk-determined pricing, upscaled adaptation measures.
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We support innovative revenue generating fiscal and financial measures to finance climate action. A possible example is financial transaction tax and how the same can generate additional resources sourced from capital markets, while serving as a stabilizing financial measure.
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We also call for improved access to international climate change finance from all sources – public or private – towards adaptation and mitigation action. This can be done through streamlining processes, with special considerations to the capacities and realities of vulnerable developing countries, and supporting institutional readiness and administrative capabilities to access available climate finance.
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We will strive to develop or improve financial accounting models and methodologies and cost-benefit analysis to enhance accounting of climate change costs and effects and improve valuation of climate risks and co-benefits of climate action, among others. This will build on public and private sector initiatives on environment and natural resource accounting and valuation.
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We agree on the annexed V20 Action Plan focused on attaining a significant increase in climate investment in our countries through the voluntary country-owned, country-driven, and country-led design and application of financial innovations, in collaboration with our country partners, international financial institutions, and development banks while leveraging finance in all its forms, expertise, and technology from international resources.
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In pursuit of our vision of the world economy as a driving force for a resolution to the climate crisis, we plan to act as one to help lead the world towards a climate resilient future by inspiring strengthened efforts by all. We acknowledge that expanding our inherently limited contributions could nevertheless help to lessen the gap between life and death, prosperity and suffering, existence and annihilation: Every action will count just as every life does.
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We look for a new international partnership with development partners, business and public-private arrangements to support the realization of V20 ambitions. We invite international financial institutions, international development actors and other relevant international institutions, including the WBG, the IMF, regional development banks, the UN Secretariat, UNDP and others to work collaboratively in delivering enhanced capacity and other assistance, including capacity building and technical assistance, to facilitate the efforts of V20 members as we work to achieve these objectives and initiatives here outlined.
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We strongly welcome the increased climate focus and momentum for action by international financial institutions, bilateral and multilateral institutions, international organizations, the G7 and G20, and business, civil society and faith groups, among others. This includes the G20 commitment to phasing out inefficient fossil fuel subsidies and the launch of the Green Climate Fund.
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We expect the realization of internationally recognized commitments on climate change finance, in particular the US$100 billion per year from 2020 joint mobilization target of developed countries to support developing countries in responding to climate change in the context of meaningful mitigation actions and transparency on implementation. We urge a rapid acceleration of progress towards an equal [50:50] balance of resources for adaptation compared with mitigation [by 2020 at the latest]. In light of the scale of the challenges faced and the manifest inadequacy of current efforts to tackle climate change, we also seek further contributions in finance, capacity building, technology transfer and development, and fair share emission reductions, aimed at delivering climate justice for all humankind including robust climate security for those vulnerable groups so heavily exposed both now and tomorrow, especially our women and children, the poor and future generations.
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We have established an assigned V20 Working Group to define milestones and commence implementation of our Action Plan ahead of COP21 in Paris based on national circumstances. In guiding the Working Group’s efforts, we recognize the primacy and urgency of building climate resilient countries and the importance of safeguarding workplace health and productivity in light of increasingly adverse thermal conditions brought about by climate change.
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We will operate on a voluntary basis in cooperation and in partnership, as well as in recognition of common but differentiated responsibilities and of limits on our achievements in the absence of international support. We will promote learning, coordination and complementarities of efforts. We will meet biannually in the margins of the WBG/IMF Spring and Annual meetings and will monitor follow-up.
Related News
tralac’s Daily News selection: 9 October 2015
The selection: Friday, 9 October
SARS convenes regional forum on illicit financial flows (SAnews)
"Today's session is to formalise the establishment of the forum of Commissioners General in the region in which we take the agenda of development of our economies especially in revenue collection, strengthen our customs activities, stop illicit trade coming in and deal with drug trafficking, money laundering and all those nefarious activities but equally put a task team that is going to formalise the establishment of a forum of Commissioners General in the region," Commissioner Moyane told SAnews on Thursday. This as SARS convened a second forum of commissioners from 11 countries including Angola, Swaziland, Lesotho, Zambia and South Africa to unpack core tax and customs issues especially linked to illicit financial flows.
Botswana: BURS seeks to widen tax base (Mmegi)
According to Morris, a shortfall in SACU receipts is attributed to the appreciation of the Botswana Pula against the South African Rand. BURS annual revenue collections grew from P11.8 billion to P37.5 billion in 2014-2015 period representing an annual average increase of about P25.7 billion in nine years, which translates to 28.6 percent. During the period of April 1, 2015, BURS collected tax revenues amounting to P15 billion against a target of P15.3 billion.
Namibia: Pension billions repatriated (The Namibian)
The state pension fund has been instructed to recall part of its N$90 billion investments abroad to re-invest locally as government looks to boost its depleted cash reserves. Finance minister Calle Schlettwein confirmed that government had directed GIPF to recall between N$5 billion and N$10 billion invested in South Africa. He said the money is supposed to improve the country's reserves and that it has nothing to do with the government's cash flow problems.
Wealth funds from Oslo to Riyadh raid coffers to offset oil (Bloomberg)
The halving of oil to less than $50 a barrel has the potential to alter one of the most powerful economic and political forces of the past half century: the rise of the petrostate. These countries led a surge in state investments in the U.S. and Europe that now totals about $7.3 trillion globally, according to the Sovereign Wealth Fund Institute.
Angola: Government grants concession of eucalyptus forests to Angola Sovereign Fund (MacauHub)
The move is based on the “high economic potential of the eucalyptus plantations” located in those three provinces, which are still the responsibility of the Ministries of Agriculture, Transport and Industry. An audit by Deloitte showed that on 31 December 2014, 37% of the fund’s investment portfolio was applied in Europe, investments in Africa had a weight of 34%, North America 18%, and the remaining 11% was applied elsewhere
An Africa Mining Vision Compact with private sector leaders (ECOMOF)
To ensure successful implementation of the AMV, an explicit agreement between AU member States and private sector leaders in the extractive industries is necessary. This agreement which we are proposing, is to be in the form of an AMV Compact between AU member States and private sector leaders in Africa, fashioned along the same lines of the UN Global Compact. The AMV Compact would draw a set of standards that would serve as a benchmark for companies and governments to assess performance, resulting in robust policies that cover a range of principles. For the dialogue with private sector leaders to be continuous and meaningful, it is crucial to establish an Africa-wide network of Chambers of Mines and Mining Associations. [The author: Mrs Fatima Haram ACYL, Commissioner for Trade & Industry] [ECOMOF 2015 www]
West Africa Gateway: latest newsletter
Sound laws on oil and gas deals crucial for Kenya to gain from natural resources (Business Daily)
AU Department of Trade and Industry: stakeholders strategic retreat
The semi-annual 3rd Stakeholders Strategic Retreat, organized under the theme of “Financing for Industrial Development: a new era" was held at the Hilton Hotel in Nairobi, Kenya. The meeting was aimed at redefining the strategic pathway towards a better cooperation with Member States, RECs, partners and stakeholders. Participants at the meeting discussed regional experiences including challenges with the resources mobilization for the implementation of the Plan of Action of the Accelerated Industrial Development for Africa (AIDA).
Tripartite Agreement could boost intra-regional trade by one third (UNECA), The African Ministerial Conference on Technical and Vocational Skills Development: update (New Times)
Manufacturers Association of Nigeria: speech by Thabo Mbeki (TBF)
Then there is the important matter of the access of African manufactures to the international markets. In this regard the only issue I would like to raise is the matter of the Economic Partnership Agreements with the EU, a matter which is of great concern throughout Africa. As I understand it, all our regions which were involved in the negotiations with the EU on the EPAs have now signed these Agreements. Nevertheless the question remains – have the African concerns relating to the impact of these EPAs on our industrialisation processes been addressed? My own response to that question is – no!
WTO and LDCs: 20 years of supporting the integration of LDCs into the multilateral trading system (WTO)
This Secretariat Note has been written as part of WTO’s 20th Anniversary Event dedicated to LDCs titled “Twenty Years of Supporting the Integration of Least Developed Countries into the Multilateral Trading System” scheduled for 12 October 2015. This study traces the 20-year relationship between the WTO and LDCs, in particular the key developments and decisions taken in favour of LDCs, the institutional support provided and the trade capacity-building initiatives put in place.
Zimbabwe: Second Review Under the Staff-Monitor Program-Press Release and Staff Report (IMF)
The program is on track. Four of the five quantitative targets for end-June 2015, and all the structural benchmarks for the second review were met. Although a recently contracted $200 million non-concessional loan breached the quantitative target on non-concessional borrowing, it avoided the accumulation of additional external arrears. [Creditors approve Zim debt clearance plan (NewsDay)]
Parliament backs Rwanda's readmission to ECCAS (New Times)
Parliament has adopted a draft law authorising the ratification of the agreement between the Economic Community of Central African States and Rwanda on the readmission of the latter in the regional grouping after a nine-year absence. A founding member of ECCAS in 1983, Rwanda pulled out of the bloc in 2008 to concentrate on its membership to the EAC and Comesa, she added. “We should not be asking ourselves if we are in East Africa or Central Africa; we are in Africa. Classification depends on who classifies. Regional integration and cooperation should be an avenue leading us into the United States of Africa and that’s what Rwanda believes in,” Louise Mushikiwabo, the minister for foreign affairs, said.
Opening Kenya’s trade and development frontiers (World Bank)
The governments of Kenya and South Sudan and other stakeholders recently inaugurated a new project that will upgrade a critical trade route connecting the two countries. Through the East Africa Transport, Trade and Development Facilitation Project, a 309km trek of land will be rehabilitated, creating a safe route for goods and people along Lokichar – Nadapal/Nakodok part of Eldoret-Nadapal/Nakodok road in the north-west region of Kenya. The $500 million World Bank Group credit will also support other activities designed to improve the livelihoods for those living in the region, and increasing regional competitiveness.
Africa’s largest infrastructure projects to be discussed at Beijing's APIF (African Review)
Tanzania: 'Foreigners to own property' (The Citizen)
A review of laws on fixed assets ownership in the country could soon see foreigners enabled to buy apartments in structures constructed by the National Housing Corporation, President Jakaya Kikwete revealed on Wednesday. He said the government was considering reviewing the existing laws, particularly those that bar foreigners from making such purchases. [NHC housing project to turn Dar into Dubai, Manhattan of Africa]
Time tactics on the Grand Ethiopian Renaissance Dam (Ahram Weekly)
“Ethiopia is repeatedly relying on time tactics. They seem to work perfectly for it,” said Maasoum Marzouk, former assistant foreign minister, describing the current status of the tripartite negotiations on the Grand Ethiopian Renaissance Dam (GERD). On Sunday, Sudan and Ethiopia requested that Egypt postpone the 9th round of this week’s tripartite meeting, scheduled for 4-5 October, to later in the month.
The financial system we need (UNEP)
A new UNEP report released at the International Monetary Fund/World Bank Annual Meetings shows how to harness the assets of the world's financial system for sustainability - the key findings include: momentum is building and is largely driven by developing and emerging nations including Bangladesh, Brazil, China, Kenya, and Peru, with developed country champions including France and the UK.
G24: communique on international monetary affairs and development (IMF)
We note the 2015 Shareholding Review of the World Bank, including the proposed roadmap. We call for a timely agreement on a dynamic formula for future shareholding realignment and stress that any such formula must meaningfully increase the voting power of developing countries and move towards equitable voting power, while protecting the voting power of the smallest poor countries. Through the shareholding review, we also call for the strengthening of the WBG’s responsiveness to the developing countries and the increase of the developing countries’ voice and representation in the Bank’s Executive Board.
V20: communique on climate change (World Bank)
Led by the Philippines, the V20 group say they represent a significant number of nations most vulnerable to climate change – low and middle income, least developed, arid, isthmus, landlocked, mountainous and small island developing countries from Africa, Asia, the Caribbean, Latin America and the Pacific.
Namibia needs US$33 billion to tackle climate change (New Era)
On Tuesday Cabinet approved Namibia’s plan – called the Intended National Determined Contribution – which would be put before the United Nations Framework Convention on Climate Change as part of preparations for the December conference. Namibia’s INDC submission reiterates the need for the Green Climate Fund saying it “is of vital importance that the Green Climate Fund be capitalised rapidly in order to provide the much needed funds to developing countries to enable them to meet their intended targeted contribution.”
Botswana Renewable Energy Agency: consultancy services
Arab countries in transition: economic outlook and key challenges (IMF), Egypt: Behind the pack (Ahram)
Mantashe: We won’t be dictated to by US (IOL)
The ANC has given its clearest indication yet that the battle with the US over the highly contested Private Security Industry Regulation Amendment Bill could push the country away from traditional international financial institutions to the Brics bank. ANC leaders yesterday made it clear that the US demand that the government amend certain aspects of the bill were unreasonable and that there was likely not to be any compromise on the matter. [More harm than good in new laws (editorial comment, Business Day)]
A grouping well linked to Asia (IOL)
The Pacific Alliance is probably the most important alliance that South Africans may not have heard of. The new economic bloc of Latin American countries comprising Mexico, Peru, Chile and Colombia has exceeded expectations in its four years of existence and, when taken together, is now considered the eighth-largest economy in the world and the seventh-largest exporter.
BRICS in danger of collapsing as members fail to cohere (Business Day)
Ugandan company partners with Starbucks to market Uganda coffee (Daily Monitor)
Food prices are staying lower for longer periods (FAO)
Botswana woos South Korea, Angola investors (StarAfrica)
Mozambican leader chairs crisis meeting on Lesotho (StarAfrica)
Namibia joins call to put tourism at top of AU agenda (New Era)
This week in the news
Catch up on tralac’s daily news selections for the past week:
The selection: Thursday, 8 October 2015
The selection: Wednesday, 7 October 2015
The selection: Tuesday, 6 October 2015
The selection: Monday, 5 October 2015
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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 300 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome. Richard Humphries (Email: This email address is being protected from spambots. You need JavaScript enabled to view it.; Twitter: @richardhumphri1)
Related News
DG Azevêdo: WTO members have identified a road to success in Nairobi
Director-General Roberto Azevêdo addressed all WTO members on 8 October at a meeting of the General Council in Geneva. He looked ahead to the prospects of success at the WTO’s 10th Ministerial Conference which will be held in Nairobi from 15-18 December this year, and reported on recent discussions in Geneva and other discussions, including among G20 trade ministers in Istanbul.
He reported that some areas of negotiations still seemed more likely to yield outcomes in Nairobi than others. These include: development issues with a particular focus on least-developed countries (LDCs); export competition in agriculture; and a set of possible outcomes to improve transparency in a number of areas. He said that work should be intensified on these issues, but also that this did not preclude identifying other outcomes wherever members thought they could be achieved.
“Through the various consultations over recent weeks I think members have identified a road to success in Nairobi. Clearly there are many obstacles along the way, but none in my view are insurmountable.
“I think we have a general sense of what may be on the table in terms of substantive deliverables – though it is not a closed package, or a sure package. And I think we should recognize that agreement on the elements we are talking about would represent real progress. They would have a major economic and developmental impact, even though we must strive to do much more in the future. So now we need to firm these up with textual proposals that can be advanced through the negotiating groups.”
The Director-General also asked members to look beyond Nairobi. Pointing to differences in members' positions on the future of the Doha Development Agenda (DDA), he said:
“Clearly these views will be extremely difficult to reconcile. However, I think we cannot disregard important commonalities when thinking about the way ahead. For example, I think we all agree that: i) we want to deliver something in Nairobi and that it should be meaningful; ii) whatever we deliver will not be agreed to be the end of negotiations on the DDA issues and; iii) we are still ready to keep pursuing the core issues of the DDA and their development dimension after Nairobi – although there is no agreement on how to do this, whether under the DDA framework or whether under a reformulated architecture. The question is whether we can – or whether we want – to capture these and other possible commonalities in a consensual text in Nairobi.”
He continued: “I would suggest that we start working on the basis that we will have a Ministerial Declaration that would take stock of the decisions taken at the 10th Ministerial Conference and that gives us guidance on our future work.”
The meeting saw a debate on these issues, with a range of views being expressed. The Director-General concluded the conversation by suggesting there was a need for further consultations with members on the substance of any potential Ministerial Declaration and the process of producing such a document.
These consultations will begin in the coming days. Negotiations on the potential deliverables for Nairobi will also continue, mainly through the formal negotiating groups and other relevant committees. In addition, the Director-General will be consulting ministers at forthcoming meetings of the African Union, the African, Caribbean, Pacific Group of States and a meeting of Arab Trade Ministers.
Report by the Chairman of the Trade Negotiations Committee
I’d like to add a warm welcome to those who are joining us today at their first General Council meeting. You chose an interesting time to arrive!
To those of you who are leaving, I wish you all the best and thank you for your contribution to our work.
At the last General Council meeting, on the 28th of July, I reported that limited progress had been made on developing a work programme by the July deadline.
I then convened a TNC meeting on the 31st of July to take stock of progress and to discuss the way forward.
That meeting ended with an unequivocal and united message from members that we must now focus our efforts towards delivering outcomes in Nairobi.
With that in mind, we restarted our work in September with renewed impetus.
I held a Room W meeting with heads of delegations on the 17th of September to report in detail on the consultations to date.
I gave my assessment of the situation at that point. I said that progress on some key issues, like domestic support, and market access in agriculture, NAMA and services was looking very difficult.
While continuing our work on those efforts, I said that it was time for us to start working more intensely on issues where there appeared to be more convergence and which might be potential deliverables for MC10.
These included – but were not necessarily limited to:
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development issues with a particular focus on LDCs,
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export competition in agriculture,
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and a set of possible outcomes to improve transparency in a number of areas.
A range of consultations have taken place since that last Room W meeting which have further pointed things in this direction, even though it is not the preferred outcome for many of you.
I have continued my consultations in a variety of configurations. I held numerous bilateral meetings with ministers where possible – for example in the margins of the Public Forum, the G20, or the UN Sustainable Development Summit in New York.
In addition, on the 29th of September I convened a meeting focused on advancing LDC issues.
And on the 1st of October I held a meeting to start discussing how we approach our work after Nairobi.
I have also taken part, by invitation, in a number of meetings convened by members, including meetings in Istanbul with a small group of ministers, and then with G20 trade ministers at the invitation of the Government of Turkey.
I think it would be helpful to give a short overview of each of these meetings, before drawing some conclusions about where things stand today.
Report on recent consultations
I will start with the meeting on LDC issues which was held on the 29th of September.
Given the emerging view in favour of delivering an LDC package in Nairobi, I asked the Group Coordinator, Ambassador Shameem Ahsan of Bangladesh, to give an indication of what their forthcoming proposals might contain.
He gave a helpful overview of the potential issues, which included:
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Some elements of S&D treatment,
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All issues of interest to LDCs in Agriculture, including domestic support,
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Action on Non-Tariff Barriers, including a horizontal mechanism,
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Binding DFQF market access through scheduling,
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A reflection of flexibility that has already been agreed upon in various decisions, guidelines and Ministerial declarations in trade in services,
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Adoption of simplified procedures for taking anti-dumping action for use by LDCs and increasing the threshold on non-application of anti-dumping duties for LDCs,
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And strengthening of technical assistance.
There was not a detailed discussion of these issues in the meeting. Rather, reflecting the proximity of MC10, there was a desire to move to discussing textual proposals as soon as possible.
We also briefly reviewed progress on implementation of the Bali issues. I won’t say too much about this now as the General Council Chair will cover these issues under agenda item 2. However I did want to mention Rules of Origin – and the submission from the LDC Group on this issue – as this falls under the TNC.
I am pleased to say that I have appointed Steffen Smidt, who you all know in his role as LDC Facilitator, to take forward this proposal on my behalf, as TNC Chair – so he will be a Friend of the Chair. I thank Steffen for his continued commitment to LDC issues and wish him luck in this important role, where he will have my full support.
While I am talking about LDC issues I would like, very quickly, to mention a few other points.
First, I was delighted that the terms of Liberia’s WTO membership were agreed earlier this week. I congratulate the Government of Liberia on this achievement – and all those in Geneva who have been involved in making this happen. I very much look forward to formally agreeing this accession in Nairobi.
Second, I would like to remind members that we are holding an LDC event on Monday at 10am in Room W, looking at 20 years of supporting the integration of LDCs in to the multilateral trading system. That will be an important opportunity to discuss what has been achieved on this front since the WTO was created – and, perhaps more significantly, what we can aim to deliver in the future.
Third, preparations are underway for the Pledging Conference to support Phase Two of the EIF. I will be chairing the event, which will be held in Nairobi on the 14th of December. A successful pledging conference would be a significant outcome of the ministerial and I strongly urge all existing and potential donors to be ready to lend their support.
Now, continuing with my report of recent consultations, I held a meeting last Thursday, the 1st of October.
My preference was in fact to call another Room W meeting, but with the Public Forum still ongoing and in full swing most rooms in the house were occupied. The Forum is an important outreach event and a symbol of our openness as an organization, so I did not want to disrupt proceedings. Instead I convened a session in my own meeting room so we were quite crowded in, with some 48 delegations attending.
This meeting was a chance to update members on the state of play. We also discussed the question of how we can intensify our work, including on the specific outcome documents for Nairobi, and how we will continue our work after Nairobi.
A range of views were expressed. I floated an idea at the meeting on a possible way forward. In concluding the meeting I promised to bring that idea to the General Council today – so I will come back to this point in a moment.
Indeed, the post-Nairobi issue has become a feature of many of my consultations over recent weeks, and I will come back also to this point in a moment.
I want to turn now to meetings convened by members.
On the 28th of September and the 1st of October, I was invited to participate in a meeting hosted by Australia. It included representatives from Brazil, China, the EU, India, Japan and the US.
The Chairs of the General Council, the Special Session of the Agriculture Committee and the NAMA Negotiating Group also joined the meeting.
In both meetings, discussions revolved around our possible outcomes for Nairobi. In particular, participants discussed the possibility of agreeing on a subset of DDA issues in Nairobi, combined with a statement on our post-Nairobi work.
On the Nairobi package itself, participants mentioned again, export competition, a development and LDC package, and some transparency provisions. They all agreed, however, that there would be challenges in negotiating these issues. These were promising issues, but not “sure outcomes”. Participants did not discuss the details of the difficulties that they thought they might face.
Again, a key issue discussed was our post-Nairobi work. Here, the views were quite divergent. Some wanted to continue our work and reaffirm the Doha architecture and constructs. Others said they would be prepared to engage on issues we have been negotiating under Doha, but were not willing to pursue them under the current DDA framework.
Participants also acknowledged that it would be difficult to find common language on the post-Nairobi work, but no-one disagreed with the importance of trying to work out a common message on the future, which would form part of the overall Nairobi outcome.
Participants explored their commonalities in terms of guidance for our future work. If members deliver the package that has been outlined for Nairobi, centred around development, transparency, and export competition, no-one disagreed that it would be a meaningful outcome.
Participants also argued that such a package would not mean that it would successfully address the DDA single undertaking.
After Nairobi, participants would be willing to think about how to make progress on issues that might not have been fully addressed by MC10.
I must say this was a very preliminary conversation. Some participants noted they had no instructions on these issues. It was clear that, even if there were some commonalities about our future work, important differences still existed.
Finally, participants went through the different possibilities in terms of the nature of the outcome documents. Again, I will come back to this point in a moment.
Those same participants accepted Australia’s invitation and met at the Ministerial level in the margins of the G20 trade ministers meeting in Istanbul earlier this week. This time, Ambassador Amina Mohamed, as Chair of MC10, joined the meeting as well.
The conversation focused on what issues participants thought could be dealt with in Nairobi and what the approach should be to post-Nairobi work. So as you can see, it is a repetition of the familiar conversation – focusing these two points.
Participants were asked to say whether they were prepared to proceed on a package of issues which would be DDA minus, along the lines of what I have already outlined. And they were asked if they were willing to evaluate whether and how we should start working on a final Nairobi document.
The conclusion that I took from that meeting was that participants were willing to work on both fronts. This is encouraging.
In addition to the arguments made in previous meetings, some other elements emerged more clearly this time. Some participants said that reassurance regarding post-Nairobi was needed for a successful outcome in Nairobi. No-one seemed to fundamentally disagree with this. Some stressed the importance of a balanced outcome even in the context of a package containing some issues only.
Some noted that the post-Nairobi agenda should be open to issues that are relevant to all members, and some made the point clearly that the DDA issues must remain the primary focus and cannot be forgotten. No-one disagreed that development should stay central to our conversations after Nairobi and that principles like S&D treatment and less-than-full reciprocity should be kept in our post-Nairobi work.
Differences still remained on the role of the DDA framework in the post-Nairobi agenda. In spite of that, there was no apparent disagreement on the desirability of a consensual document, a Ministerial Declaration, as part of the outcomes for MC10.
I told participants that I would bring these discussions to the General Council, as I am doing now.
I also stressed the importance of not leaving the discussion about our future work to the last minute, so as to avoid the risk of having a chaotic process in Nairobi.
I was reassured by the participants. All of them expressed willingness to engage in negotiations in Geneva along the lines of what I described here, and they underscored the need of discussing these issues with the wider membership, which we are doing here.
On Tuesday I attended the G20 trade ministers meeting in Istanbul. Again Cabinet Secretary Amina Mohamed also joined the meeting.
I set out the shape of the potential deliverables that had been discussed in Geneva and posed the two key questions:
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First: was there a willingness to proceed on the basis of a package of specific issues which is DDA-minus – and therefore should we intensify our work on the more promising issues that I outlined earlier, without prejudice to the other items we were already negotiating?
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And second: should we start work on a final Nairobi document immediately, without prejudice to the outcome of this exercise, either in terms of substance or format?
I was pleased with the response.
There was strong support to begin working – in the negotiating groups – more intensively on a package of specific substantive outcomes for Nairobi, with a focus on areas where outcomes seem to be more likely to be successfully concluded.
Again, however, it was clear that work on these issues should not preclude work on other areas where some members felt consensus may still be achievable.
I cautioned ministers that there was still a great deal of intensive work ahead if we were to narrow the gaps between positions and reach outcomes, even on the specific issues identified as part of the potential package.
Ministers also gave their backing to a parallel discussion on the path of future work on unresolved Doha issues after Nairobi.
No-one disagreed with the continuing central importance of development to this work – nor that core DDA issues which remain unresolved, such as agriculture, industrial goods and services, will continue to be an important part of the post-Nairobi discussion.
Overall I think a very clear, high-level political message emerged from this meeting that the political will exists, among these important players, to make Nairobi a success.
Post-Nairobi
So, drawing on all of these meetings and consultations, let me now focus on the issue of our post-Nairobi work in a bit more detail.
While there is a potential package on the table, it seems that, whatever we deliver in Nairobi, it will not be viable or credible, to announce it as an agreed conclusion of the DDA single undertaking. This seems to be a consensual view.
In this scenario, the unavoidable question is: what to do with the DDA issues that are not properly addressed in the Nairobi package?
At this point, there are divergent views on what happens after Nairobi. Many say that if there is no consensus to end the Doha Round then it will simply continue – you would need consensus to end it – and that we should state this clearly. Others say that if we do not deliver Doha by Nairobi then that will be it – even without a formal statement affirming the demise of the DDA.
Clearly these views will be extremely difficult to reconcile.
However, I think we cannot disregard important commonalities when thinking about the way ahead.
For example, I think we all agree that:
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We want to deliver something in Nairobi and that it should be meaningful.
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Whatever we deliver will not be agreed to be the end of negotiations on the DDA issues.
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We are still ready to keep pursuing the core issues of the DDA and their development dimension after Nairobi – although there is no agreement on how to do this: whether under the DDA framework, or whether under a reformulated architecture.
The question is whether we can – or whether we want – to capture these and other possible commonalities in a consensual text in Nairobi.
We have a number of options in terms of the type of document that could result from the Ministerial. It could be:
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a Ministerial Declaration, which is the usual type of document that you get from these meetings;
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a non-consensual Chairperson’s statement, which is something we have done before;
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or a hybrid of some sort – for example it could be partly consensual text and partly non-consensual text.
So those are the potential options.
Then we arrive again at the question of how such a document can be produced – how do we get there?
This is not a small challenge and it is important that we need to think now about the process that would allow us to find convergence on a satisfactory solution.
I would suggest that we start working on the basis that we will have a Ministerial Declaration that would take stock of the decisions taken at MC10 and that gives us guidance on our future work.
Of course, this would be without prejudice to what outcome we will have in Nairobi, but it is important to start somewhere and to aim for the highest possible result.
My proposal to you therefore is to start a process that will lead us to text based negotiations on an MC10 Ministerial Declaration.
There are still different views on what this process would look like and I will be informally consulting you about this.
Whatever this process is – and as I say, I don’t know what it will look like – we should bear some things in mind:
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It must be progressive (for example, right now we still don’t know what the Nairobi package will look like);
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It must be a bottom-up, transparent and inclusive process;
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It will not deal with substance – that will happen in the negotiating groups;
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My instinct is that it should probably start with a focus on the post-Nairobi elements of the declaration.
These are just my preliminary views. As I have indicated, I will be holding consultations to hear your own views.
Conclusion
Through the various consultations over recent weeks I think members have identified a road to success in Nairobi. Clearly there are many obstacles along the way, but none in my view are insurmountable.
We have very little time remaining.
I think we have a general sense of what may be on the table in terms of substantive deliverables (though it is not a closed package, or a sure package) – and I think we should recognize that agreement on the elements we are talking about would represent real progress. They would have a major economic and developmental impact, even though we must strive to do much more in the future. So now we need to firm these up with textual proposals that can be advanced through the negotiating groups.
But it is now very clear that the post-Nairobi conversation must take place at the same time. These two elements need to move in parallel. Otherwise the differences we already see today could compromise any chance of success on the substantive issues.
So this is where we are today Mr Chairman. I hope it provides food for thought.
Thank you.
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Reflecting efforts to boost intra-regional trade and investment, 26 African countries have recently agreed to establish a Tripartite Free Trade Area (TFTA) by January 2016. The TFTA agreement comprises the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC). With a total population of 638 million people and a total Gross Domestic Product (GDP) of USD 1.2 trillion, the TFTA will create Africa’s largest free trade area.
In one of the first papers to quantify the potential benefits from the TFTA, UNECA economists Andrew Mold and Rodgers Mukwaya suggest the TFTA could boost intra-regional trade by USD 8.5 billion. Particularly interesting is the fact that the economic sectors most likely to benefit are the industrial sectors – such as processed foods, light manufacturing and heavy manufacturing, providing an important impulse to regional industrialisation. The authors also speculate that, if the elimination of tariffs is accompanied by measures to remove non-tariff barriers and infrastructural deficits, the potential gains could be much larger.
The TFTA is estimated to increase regional welfare by US$2.4 billion, with South African consumers being among the main beneficiaries. Other principal beneficiaries include Angola, D.R. Congo, Tanzania and Egypt.
The paper also addresses concerns that industrial production in the TFTA may concentrate in the countries with the highest productivity levels – namely, Egypt and South Africa. The simulation results suggest that these fears are exaggerated, with little evidence of concentration of industries in the larger countries, with only marginal changes in industrial output in the largest countries in the region – in South Africa and Egypt output increases by 0.21 percent and 0.06 percent, respectively.
Why are the changes in output on average so modest? Even after the elimination of tariffs on intra-TFTA trade, the simulation results suggest that the level of intra-regional trade will still be relatively low (barely 12 percent of total trade). And because, with the exception of commodity-exporting activities, traded output in many sectors is still a relatively small share of total output, it implies that the tariff changes on intra-TFTA trade alone have a relatively limited potential to change the overall pattern of trade. This in itself should allay fears of a dramatic concentration of industrial activity through the elimination of tariffs on TFTA trade. But it also highlights the fact that more would need to be done to incentivise both industrialisation and intra-TFTA trade beyond the removal of tariff barriers.
In this sense, it is important to note that the results are dependent on the full implementation of the free-trade area, and contingent on resolving outstanding issues such as regional-wide rules of origin. Issues like this need to be resolved if the TFTA is to reach its full potential. Nonetheless, Mold and Mukwaya's research shows that the TFTA provides an excellent opportunity for countries in the region to increase intra-regional trade, and create a more attractive market for both greater foreign and domestic investment. It is an opportunity which deserves to be seized.
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Of the 48 countries designated by the United Nations (UN) as Least Developed Countries (LDCs), 34 are World Trade Organization (WTO) Members and a further eight are in the process of acceding to the WTO. The LDC WTO Members account for more than one fifth of the WTO Membership and therefore represent an important constituency in the WTO.
Considerable progress has been made in integrating LDCs into the multilateral trading system (MTS) over the last 20 years. The establishment of the WTO has supported LDCs to become more active players in the system, resulting in provisions aimed at increasing the trade opportunities for these countries. As a result, the participation of LDCs in global trade has seen gradual improvement over the last 20 years. LDCs increased their share in world trade of goods and services from 0.59% in 1995, to 0.80% in 2005, to 1.23% in 2013.
The increased trade opportunities have also been complemented by enhanced flexibilities for LDCs in implementing WTO rules and disciplines as well as in undertaking commitments. Members have shown willingness to respond to concerns and needs of LDCs to beneficially integrate them into the MTS. The special situation of LDCs and its commensurate recognition in the negotiations has thus been one of the defining features of the MTS; and special provisions are continually being introduced to assist LDCs in their development efforts.
This Secretariat Note has been written as part of WTO’s 20th Anniversary Event dedicated to LDCs titled “Twenty Years of Supporting the Integration of Least Developed Countries into the Multilateral Trading System” scheduled for 12 October 2015. This study traces the 20-year relationship between the WTO and LDCs, in particular the key developments and decisions taken in favour of LDCs, the institutional support provided and the trade capacity-building initiatives put in place.
This Note focuses on the measures taken in favour of LDCs following the establishment of the WTO, though the evolution of the MTS has seen special consideration for LDCs, even prior to the establishment of the WTO in 1995. The importance of development in the MTS advanced in 1964 when a dedicated chapter on trade and development was added to the GATT as Part IV, which spelled out the principle of non-reciprocity in the MTS. The principle of non-reciprocity, and Part IV more generally, created a stronger basis for developing countries to seek flexibilities in trade negotiations and special action with respect to their trade interests.
One of the key achievements of the GATT period was the adoption of the “Enabling Clause” during the Tokyo Round in 1979. This decision, titled “Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries”, made a first mention of LDCs in a legal instrument under the GATT period. The Enabling Clause formed an important basis of subsequent special and differential treatment (S&D) for developing countries in the MTS. It, inter alia, facilitated specific preferences for LDCs among developing countries.