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Labour and services to flow freely among five EAC states from 2015
You will now be able to work in any of the East African countries without incurring any extra costs starting from next year.
Currently it is only in Rwanda where people from within the region obtain a work permits without paying a fee.
However during the eighth Northern Corridor Infrastructure Project Summit in Nairobi yesterday, President Uhuru Kenyatta, Uganda’s Yoweri Museveni and Paul Kagame of Rwanda noted that free movement of people within the region had improved trade.
The presidents have therefore directed their ministers in charge of immigration to conclude the Agreement on Total Liberalisation of Free Movement of Labour and Services agreed upon at an earlier meeting.
Others were South Sudan Vice President Jasmes Igga and officials from Burundi, Tanzania and Ethiopia. The summit was a follow-up of another one in Kampala in October.
It also directed the operationalisation of one network area for the region starting from next year to facilitate easy communicate.
“The Summit has further directed removal of all non-tariff barriers and emphasised the need for compliance by all parties,” said a joint communiqué.
Journalists were not allowed to cover the discussions that started late in the afternoon. They were only briefed by a team of ministers led by Kenyan Foreign Affairs Cabinet Secretary Amina Mohammed.
The summit discussed need to facilitate smooth flow of cargo across the borders. The Northern Corridor links East African countries rail, oil pipeline, road and inland water transport. Apart from Kenya, Uganda, Tanzania, Rwanda and Burundi, other countries that are part of the EAC are Ethiopia and South Sudan.
The states also directed the minister of infrastructure of Rwanda to convene an airline industry stakeholders meeting to finalise the 5th freedom traffic rights on Entebbe-Nairobi-Juba-Nairobi by end of this month.
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Why China is important to SA
South Africa sees its ties with China as a partnership which is aligned to the country’s development goals, says Jeff Radebe.
It took many by surprise when China became Africa’s largest trading partner in 2009, surpassing the US. Since then, China’s growing presence in Africa has become a subject of discussion, especially among the foreign press.
Everyone, from analysts to politicians and ordinary people on the street, suddenly had a view on the Chinese.
China’s rapid rise as an influential player in Africa has led many to question the nature of its involvement in the continent. Many questioned the intentions of the Chinese while some even went as far as ridiculing products offered to Africans by China as “fong kong”.
Some became suspicious when the Chinese started to build roads, dams, stadiums and hotels in Africa. They asked, what does China want in return?
Of course, as it invests in Africa, China is taking advantage of the continent’s rich natural resources to meet the growing needs of its people.
By last year, China recorded nearly R2.2 trillion in trade flows in Africa, making it clear that they want to become the most influential foreign power in Africa. China’s total trade with South Africa increased from approximately R190 billion to R270bn last year and is rapidly approaching R300bn.
It is for this reason that President Jacob Zuma’s recent visit to China was viewed with keen interest. The state visit to China by our president reinforced the close ties shared between China and South Africa and highlighted the depth of our relations, not only in the political realm of Brics – the grouping of five major emerging national economies: Brazil, Russia, India, China, and South Africa, but also in business, agriculture, tourism, cultural exchanges, academic co-operation and scientific research.
South Africa doesn’t see its relationship with China as just based on trade, but a partnership rather that is aligned to our development goals. China, on the other hand, regards South Africa as a key partner in advancing its relations with the African continent.
This is seen in the context of investments the Chinese have made in South Africa over the last few years and the value such investments have had on our economy. Our relations with China have reached new heights. In the short space of 15 years. It's hard to believe that bilateral trade volume was approximately R12bn when the diplomatic relationship was first established.
In 2012, the figure reached nearly R660bn, which means a 40-fold increase in the past 15 years. Subsequently, this has made China South Africa’s largest trading partner, largest export market and largest source of imports for the past four years. Between January 2003 and January this year, a total of 38 foreign direct investment projects were recorded representing a total capital investment of R13.33bn, or an average investment of R350.5 million for each project from China.
Chinese investments in South Africa have contributed to job creation. During the period, 11 000 jobs were created.
This year, the Chinese went a step further in investing in our economy when automobile manufacturer First Automobile Works (FAW) invested R1.1bn to build a vehicle assembly plant in Coega in the Eastern Cape, which is expected produce up to 35 000 passenger vehicles in the coming years.
Last year, technology producer Hisense opened a factory in Atlantis, north of Cape Town, employing 300 South Africans in the production of goods for export to the broader African market. Cement producer Jidong Development Group and the China-Africa Development Fund agreed to establish a R1.8bn cement plant in Limpopo, with a projected production rate of one million tons.
As we review the status of our bilateral relations with China, we aim to ensure that the excellent growth path we have defined is strengthened with our focus on the issues of development in South Africa and Africa generally.
South Africa and China are positioning our nations as countries that are open for business. This is crucial to ensuring that we deliver on our domestic imperatives which include economic growth, development and job creation.
We will recall that during President Xi Jinping’s state visit to South Africa earlier this year, the two governments agreed to designate 2014 as the “Year of South Africa” in China, and 2015 as the “Year of China” in South Africa. The “Year of South Africa in China” coincides with South Africa’s celebration of 20 years of Freedom.
The aim of the “Year of South Africa” in China is to profile South Africa’s economic, political and cultural achievements since the end of apartheid. It will also seek to explore more business and developmental opportunities, demonstrate South Africa’s innovations and best practices in areas such as science and technology, fashion, mining, arts, culture, tourism and greater people-to-people interaction.
* Jeff Radebe is Minister in the Presidency.
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Experts recommend formalization of Zambia-Malawi-Mozambique Growth Triangle
Experts have recommended the formalization of the Zambia-Malawi-Mozambique Growth Triangle (ZMM-GT) by member States in the participating region. This was contained in an outcome statement of a two day review meeting held in Maputo, Mozambique from 8-9th December to discuss a way forward for the near defunct initiative.
The meeting observed that the non-binding framework of the ZMM-GT had stagnated progress of the initiative which was operationalised in 2003 with a view to transform the sub-region into a vibrant and dynamic economic growth area through joint ventures and improved infrastructure.
“As a non-binding agreement, it has been difficult to use the 2003 MoU as a basis for mobilising resources from member States, the private sector and development partners. Further, the interim status of the ZMM-GT Secretariat has hampered the coordination with respect to the implementation of the agreed upon action plans” read the outcome statement in part.
The ZMM-GT was initiated by ECA Southern Africa Regional Office and the United Nations Development Programme in 1999. The Growth Triangle has its origin in the South East Asian region, where it was conceptualized in the 1980s as a model to promote dynamic development among three or more countries with different endowments of factors of production and different sources of comparative advantage, to form a sub-region of economic growth.
Notwithstanding a 15 year long existence and conducive conditions in the participating region, the ZMM-GT initiative has made little progress in implementing its projects and achieving its goals.
The above meeting which brought together key stakeholders from the participating region, sought to find a way forward for the ZMM-GT specifically and most important; the finalization and ministerial approval of the Memorandum of Understanding. The key areas included the establishment of the ZMM-GT Permanent Secretariat and putting in place the systems and mechanisms for mobilizing both public and private resources for improving economic infrastructure in the region. The interim secretariat is currently based in Malawi and whose interim nature has been cited as a challenge in implementing the initiative.
The meeting also recommended among others, the involvement of national private sector forums to own and steer the Growth Triangle policies and projects within each national context.
The fundamental tenet of a Growth Triangle is that it is private sector driven, but with substantial public sector support and commitment.
The review meeting was convened by ECA in collaboration the ZMM-GT Secretariat.
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Nairobi, Kenya to host 10th WTO Ministerial Conference
The General Council, on 10 December, agreed that the 10th Ministerial Conference be held in Nairobi, Kenya from 15 to 18 December 2015. The chair, Ambassador Jonathan Fried, warmly thanked and congratulated Foreign Minister Amina Mohamed and the Government of Kenya for their successful offer. He noted that he had previously informed delegations of Turkey’s decision to withdraw its offer to host the Conference in favour of Kenya, and thanked Turkey for its constructive spirit during the whole process.
Statement by Chair of the General Council
At the General Council meeting in October, I reported that a third round of consultations was taking place to ascertain Members’ views with respect to the two potential hosts for the Conference — Turkey and Kenya.
A total of 94 delegations came forward to consult with me or express their views, either in person, or by phone, or through note verbales. Let me add that my understanding is that those delegations that did not express a view are neutral and I have ascertained that this is the case.
On Wednesday last week, I circulated — at the request of Turkey — a communication to all Members, in which the Government of Turkey informed the membership — after relevant consultations with the Minister of Foreign Affairs and International Trade of Kenya — of Turkey’s decision to withdraw its offer to host MC10 in favour of Kenya. This communication was also circulated as WT/GC/166 in the three WTO languages.
You will recall that, following Turkey’s communication, I convened an Informal General Council meeting at the level of Heads of Delegation last Friday, 5 December.
Allow me at this point, in my capacity as General Council Chairman and in my personal capacity, to express my deepest gratitude to the Government of Turkey for its offer, and to the entire Delegation of Turkey for its dignified engagement during the whole process and for its constructive spirit throughout. The organization is very much in your debt. I would also like to pay tribute in particular to Ambassador Haluk Ilicak for his personal commitment to the smooth conduct of this process, and for his endless support to the organization as a whole.
As I noted at the Informal HODs meeting last Friday, the offer of the other potential candidate, Kenya, has been favourably received by the membership as a whole since the beginning of the process. Kenya has indeed proved to be attracting consensus throughout my consultations, and it is therefore in that spirit of consensus that I believe that the General Council is now in a position to take a decision on this matter.
Regarding the date of the Conference, during my consultations, several delegations stressed the importance to avoid any overlap with the UNFCCC Conference that will be held in Paris from 30 November to 11 December 2015. As a result, and also in light of my consultations, it appears that the most suitable date for MC10 is the period from 15 to 18 December 2015.
Therefore, unless there is any objection, I would like to propose that the General Council formally agrees that the Tenth Session of the WTO Ministerial Conference be held in Nairobi, Kenya, from 15 to 18 December 2015.
[The General Council so agrees.]
Thank you. Let me warmly thank and congratulate Minister Amina Mohamed and the Government of Kenya for their successful offer. I would also like to express my appreciation to Amb John OTACHI KAKONGE for his personal contribution to the efficient conduct of the process. And I would like to thank most sincerely the whole Membership for participating in this important endeavour with a very constructive spirit.
Kenya’s offer is a clear sign of its commitment towards this organization. As the host of the MC10, I am sure Kenya can count on the support of the whole membership in working together towards a successful Ministerial Conference.
With these words, I would now like to invite Minister Amina Mohamed to address the General Council.
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Senator Isakson Urges South African President To Drop Ban On US Poultry
U.S Senators Johnny Isakson (R-GA) and Chris Coons (D-DE) have issued a joint letter to South African President, Jacob Zuma. This letter warns President Zuma that South Africa’s continued refusal to eliminate unfair duties on American poultry could threaten its continued eligibility for trade benefits available under the African Growth and Opportunity Act (AGOA). AGOA is up for Congressional reauthorisation in 2015.
From the letter:
The antidumping duties South Africa has levied on U.S. poultry have been in place for fourteen years, effectively blocking our companies from accessing your market…We understand that our trade officials recently discussed the ongoing negotiations regarding poultry, as well as other market access issues for other U.S. exports to South Africa. We strongly encourage you to pursue solutions expeditiously that guarantee market access for U.S. poultry.
The letter further states:
As you know, Congress is in the process of considering reauthorization of the African Growth and Opportunity Act (AGOA)…We urge you to ensure that conversations continue to make progress towards eliminating the antidumping duties on U.S. poultry and that this issue is resolved before Congress takes up AGOA reauthorization, which could be early next year. We will need to reconsider the extension of duty preferences under AGOA for South Africa if this situation is not resolved.” While Senator Isakson currently serves as the Ranking Member of the International Trade Subcommittee on the Senate Finance Committee, Senator Coons serves as the Chair of the African Affairs Subcommittee on the Senate Foreign Relations Committee. Both these Subcommittees are expected to have an influence on the reauthorization process of AGOA come 2015.
Additionally, it is important to note the significance of this issue to Georgia. The Georgia Department of Agriculture deems poultry to be Georgia’s largest agricultural commodity. According to the New Georgia Encyclopedia, Georgia produces 24.6 million pounds of chicken and 14 million eggs on an average per day. Moreover, the statewide economic impact of the industry is an estimated $13.5 billion annually. Hence, Senator Isakson’s efforts to ensure more market access for American poultry is of direct significance to Georgia’s economy.
The full text of this joint letter to President Zuma is available here
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African Union encourages concrete action as regional trade integration struggles
African countries should translate their regional integration projects into real action on the ground, especially given today’s rapidly evolving landscape of international trade regulation, African Union (AU) trade ministers said following a 4-5 December conference in Addis Ababa, Ethiopia.
“The time for rhetoric should now be over and that of concrete action should begin in earnest,” said Fatima Haram Acyl, the AU Commissioner for Trade and Industry, while referring to the limited progress made in regional integration so far and the “several milestone[s]” missed for the establishment of an African Economic Community.
The AU’s call for sustained momentum in Africa’s regional integration comes amid reports about delays in the launching of the Tripartite FTA (TFTA), a 26-country trade bloc spanning the continent’s three main Regional Economic Communities, namely the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).
The TFTA negotiations started in 2011 and the free trade bloc, once operational, has been envisaged by the AU as a stepping stone for a planned Continental FTA (CFTA), which they aim to launch in 2017.
Tripartite FTA delayed amid criticism
The launch of the TFTA was expected to take place this month during the Tripartite Summit of Heads of State and Government in Sharm El-Sheikh, Egypt.
However, according to a post by the South African capacity-building organisation TRALAC, an announcement was circulated to official negotiators informing them that the date for the summit is “not convenient” due to “inadequate consultations among SADC Member States coupled with the unavailability of the SADC Chair who is also the Chair of the Tripartite Summit.”
Some observers based in the region speculated that the recent instability within the ZANU-PF ruling party of Zimbabwe’s President Robert Mugabe – who is also the chairman of SADC and the chair of the Tripartite Summit – as well as some unresolved technical issues might have impeded the conclusion of the negotiations this month.
According to the draft report of the senior officials’ meeting that preceded the AU conference, a copy of which has been seen by Bridges Africa, a summit to launch the Tripartite FTA will be held in Egypt during the first quarter of 2015. This summit is seen as a stepping stone for the projected start of the CFTA negotiations around mid-July 2015.
The report notes that, while the TFTA will be launched, there will also be consideration of a “built-in agenda on outstanding issues.”
According to an African Union source, the launch, as planned originally, would have been a step towards introducing an implementation plan covering the finalisation of negotiations on outstanding areas of the agreement, most likely rules of origin, trade remedies, and dispute settlement; the ratification by the member states; and the start of the implementation itself.
Following the postponement, criticisms about the allegedly secretive nature of the process were quickly raised.
“We are ill informed about the progress made, the objectives, and the technical aspects,” commented Gerhard Erasmus, an associate at TRALAC, who attributes part of the problem to that of transparency and public participation.
Mega-regionals: Going the extra mile
The conference participants discussed regional integration in Africa especially against the background of mega-regional trade agreements currently under negotiation in other parts of the globe, notably the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US.
“The emergence of mega FTAs by key players in world trade has underscored the importance of accelerating Africa’s market integration,” said AU official Acyl.
Two main concerns were raised over the implications of mega-regionals for Africa: the risk of preference erosion, and the possibility that such agreements affect international rules and standards, confining African economies to the role of “standard-takers.” (For more information on this topic see the latest edition of Bridges Africa, December 2014)
“The world is moving,” said Treasure Maphanga, Director of Trade and Industry at the African Union Commission, while urging participants to aim higher than the Tripartite FTA in the CFTA negotiations by addressing non-tariff barriers, including standard harmonisation and productive capacity.
Some observers commented that an even more ambitious integration agenda will prove difficult given the already complex nature of the current TFTA negotiations.
Among the difficulties pointed out were the harmonisation of differential rules of origin across the continent, the lowering of trade costs, the strengthening of trade and productive capacities through regulatory reforms, trade facilitation, and infrastructure development.
“There is a lot of excellent work going on to lower barriers and streamline procedures so that you can trade with each other more effectively,” said WTO Director-General Roberto Azevêdo in his intervention, while further commending the importance of the AU Action Plan to this end.
EPAs: Back to square one for Nigeria
During the meeting in Addis Ababa, Nigeria voiced concerns about the EPAs between individual African regional blocs and the EU.
“Nigeria will not sign an Economic Partnership Agreement until it can be sure that the EPA does not threaten the economic integration of Africa or lead to the loss of jobs and investment in Nigeria,” reads the Ministerial draft report.
The country’s position comes amid reports that the Economic Community of West African States (ECOWAS), a 16-country trade bloc including Nigeria, is expected to sign its EPA in the coming days and will subsequently gear its efforts towards ratification.
Earlier this year Nigeria had raised various objections against the EPA, arguing that such an agreement contradicts its industrial development plan.
The AU Ministerial Conference also highlighted the need to better understand the implications of EPAs for regional economic integration.
“The main preoccupation in this regard is to ensure that EPAs do not weaken our regional and continental integration process and retard the growth of intra-African trade,” said Acyl.
West African leaders formally initialled their EPA with the EU in July this year, when they also instructed regional chief negotiators to take action toward the signing and implementation processes. In recent months SADC and the EAC followed with the conclusion of their respective EPA deals.
Going forward all EPA texts will now be shared with the African Union Commission for a review, “while the process of ratification and preparations for implementation are on-going,” according to the draft report.
Efforts to renew AGOA on track
Africa’s request for the renewal of the US’ African Growth and Opportunity Act (AGOA), which is set to expire in September 2015 unless Washington lawmakers pass new legislation, “is receiving favourable response,” reported Acyl during the discussions.
However, the AU official added that “we must continue to intensify our lobbying and advocacy efforts in order to materialise the reauthorisation of AGOA as soon as possible and avoid loss of contracts and jobs.”
In this context, AU trade ministers encouraged African countries to increase their trade capacity so as to be able to fully benefit from the scheme.
Addressing the US as the preference giver, they further called for a review of the eligibility criteria to facilitate participation in AGOA by all beneficiary countries.
WTO issues
Regarding the WTO and the recent resolution of the deadlock at the multilateral organisation over the implementation of the decisions reached at last December’s ministerial conference in Bali, Indonesia, Acyl encouraged African countries to continue to speak with a “coherent common” voice within the global trade body.
During the conference, WTO chief Azevêdo referred extensively to the resolution of the impasse over food stocks and trade facilitation and the setting up of the Trade Facilitation Facility.
The Trade Facilitation Facility is aimed at ensuring that developing and least developed countries receive the assistance they need to implement the WTO’s Trade Facilitation Agreement.
A declaration on WTO issues was adopted by the AU Ministers but was not available as this publication went to press.
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Zambia launches e-governance portal
The Government has launched the e-governance statistical data portal which will increase access to quality data for managing and monitoring development results around Africa including tracking of Millennium Development Goals (MDGs).
This was launched in collaboration with the African Development Bank (AfDB).
Its main function is to provide a platform for sharing statistical data on developmental programmes and was installed as a result of AfDB’s desire to step up statistical support to African countries in line with the priorities in its strategic for the period 2013 to 2022.
Transport, Works, Supply and Communications Minister Yamfwa Mukanga said during the launch in Lusaka yesterday that the data portal had been installed at three key ministries namely Finance, Labour and Transport and Communications and at the Bank of Zambia offices (BoZ).
Mr Mukanga said the data portal would provide ideal administrative instruments for making real-time disaggregated data for effective planning and decentralised policy management, fundamental to Government’s mission of reducing poverty and boosting economic growth.
“As the Minister responsible for the management of infrastructure development programmes that the Government embarked on and invested heavily, I believe the development and installation of the data portals is cardinal to monitoring progress on various projects and programmes,” Mr Mukanga said.
It was a cross-beneficiary platform which would benefit academic and research institutions, Government ministries, private sector agencies, financial and economic institutions among many others.
AfDB principal country economist Peter Ramsmussen who hailed Zambia for installing the data portal said the development would improve the quality of data system management in the country.
An economist from the Ministry of Finance Mulele Mulele said the data portal would enhance and promote transparency on the operations of the ministry.
Mr Mulele said there was need for continuous capacity building in the management of the data portals.
He said installing the data portal would address challenges faced by the ministry such as the shortage and utilisation of economic data.
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Durban speed train on track
The KwaZulu-Natal provincial government has thrown its weight behind a plan to build a multibillion-rand monorail between Durban and King Shaka International Airport, with construction expected to start by 2017.
Talks in the city on Tuesday between China Railway International Group and the provincial government also included the long-awaited high-speed train between Durban and Joburg – first mooted in 2007 by former transport MEC Bheki Cele. Officials said on Tuesday they expected the high-speed train project to also “materialise” by 2017.
In 2010, when the plan to build the rail route between the two cities was listed as one of 18 national strategic infrastructure projects by President Jacob Zuma, it was expected to carry a price tag of R530 billion and would cut the six-hour journey between the two cities to just three hours, travelling at 350km/h.
Officials say the memorandum of understanding will be signed off this month. Desmond Golding, head of the Department of Economic Development and Tourism and Environmental Affairs, handed over the memorandum at the Dube Tradeport on Tuesday.
He said it was a culmination of “lengthy and comprehensive” discussions and co-operation between the the company and the provincial government.He said the rail group was taking the document to China for perusal by its lawyers. But he expected the final agreement to be signed off by the province’s leadership within two weeks.
“The monorail is our top priority. This project is entirely dependent on the provincial government. The high-speed train between Durban and Johannesburg is a national project which involves Transnet, the Passenger Rail Agency of South Africa, the Free State, the Gauteng provincial government and, of course, KZN,” he said.
Golding said both projects were accepted as viable and now feasibility studies into costs, land acquisitions and environmental impact studies would get under way for both projects. “We cannot comment on costs. The old, original feasibility study has changed now,” he said.
He said that both the provincial and national governments were looking at funding models.
“We are looking at a mixed bag of funding sources which will include both the private and public sector,” he said.
The railway group built at least half of the rail infrastructure in China, which exceeds 10 000km, and includes a 1 200km high-speed rail line between Beijing and Shanghai which, according to the board chairman, Gan Baixian, was completed in four years.
He said the project in China had resulted in up to 10 000 direct jobs during the construction period.
On Tuesday Baixian, through an interpreter, told The Mercury that a detailed technical proposal to build both the monorail between the international airport and a high-speed train between Durban and Joburg was now “on the table”.
Baixian said that technicians at the company had worked on details of the proposed high-speed train for years, but that the project had not proceeded owing to “some setbacks”.
He said the 45km monorail between the airport and Durban city would act as a pilot project ahead of the major construction programme for the rail route to Gauteng.
“We have a working team who are realistic now. We will work through the steps carefully with the provincial government,” he said.
While Baixian said he was “very familiar” with the current railway line between Durban and Gauteng, he could not confirm whether the speed train would take the same route as the existing infrastructure.
”I don’t think it will,” he said.
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Trade Remedies: Targeting the Renewable Energy Sector
This publication was commissioned for and forms part of the background documentation for an ad hoc expert group, entitled: “Trade Remedies in Green Sectors: the Case of Renewables”, held in Geneva on 3 and 4 April 2014.
The study and the meeting are part of a larger effort by UNCTAD to analyze issues arising at the interface of trade policy and green economy, more specifically renewables, which is shorthand for goods and services used in conjunction with renewable energy sources.
In recent years, trade remedies – anti-dumping and countervailing duties – have increasingly been directed towards renewables – solar panels, wind turbines and biofuels. A priori, this puts these measures at cross purposes with national and international climate and environment policies.
The geopolitics and political economy are more complicated though. The developed as well as the developing countries are using these measures. And while one can argue that a given amount of environmental expenditure would go further in the absence of trade remedies, it is not clear that the amount of public support would remain at the same level.
There can be little doubt that trade remedies are a sensitive area. Trade remedies may have a significant effect on value and job creation throughout the supply chain as a whole. Trade remedies are bound to have competitive implications. Trade remedies against renewables provide a counterpoint to the initiative to reduce tariffs on environmental goods, particularly since some of the most active users of trade remedies participate in the initiative. Trade remedies shatter the alliances among interest groups. On the dispute settlement front, clearly what we see there is disputes on trade remedies that happen to involve renewables rather than disputes about renewables that happen to involve trade remedies. These disputes are about how trade remedies work and in many ways are a continuation of discussion and negotiations that have been going on for the past 12-13 years about issues such as public interest test, lesser duty etc., which suddenly become relevant again in the context of renewables.
The study is far from an exhaustive examination of these issues, of course. In many areas, the analysis is speculative, aimed at raising questions and suggesting areas where policy makers and analysts may need to consider undertaking further analysis. Whether any given governmental measure is consistent with WTO rules is a highly contextual question that may well depend on the exact design features of that particular measure, and its broader context – regulatory, technological and commercial. Thus, nothing in this study should be considered as a judgment that any actual measure of any particular government violates WTO rules.
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What are the actual or potential effects of trade remedies involving renewables?
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What kind of conclusions can be drawn from trade remedies cases since 2008? Are there alternative approaches that might lessen the impact of trade remedies on the deployment of renewable energy?
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What is the impact of trade remedies on jobs and value added?
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Are competitors with different supply chain using trade remedy cases to “raid” each other?
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Can aligning the anti-dumping rules with the competition or anti-trust rules help make sure they only remedy truly anti-competitive behavior - as opposed to undesired competition?
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Are there ways of providing more robust, empirically sound and predictable outcomes in trade remedies investigations and better connect trade law to the “real world”?
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Do trade remedies constitute a problem for the liberalization of trade in environmental goods and services?
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How can countries, individually and collectively, manage the interface between two deeply held goals: “fair international trade” and “GHG control”?
These questions still remain open.
Indian Iron Ore miners halt exports on weak prices and higher taxes
Iron ore exports from India have halted as a global price slump and an increase in royalty fees made shipments unviable for miners battling high taxes levied on overseas sales.
“The third-biggest iron-ore exporting nation until three years ago didn’t sell “a single gram” overseas in October and November,” R.K. Sharma, secretary general at mining lobby group Federation of Indian Mineral Industries, said in an interview, without giving specific data. “Miners have sought the scrapping of a 30% export tax levied in 2011 to be able to resume sales,” he said.
“International prices have fallen to rock-bottom and our costs have remained high,” Sharma, whose lobby group tracks data for overseas sales, said by phone. “You lose money on every tonne you export.”
Even as global benchmark prices fell about 49% this year, in August India increased the royalty miners pay to the regional governments to 15% of the sales value from 10%. While the miners could still bear the tax when prices were in the region of $135 a metric tonne until a year ago, the levy became insurmountable as prices tumbled by almost half.
“Our costs are now higher than the prices we will get in the international market,” said A.N. Joshi, vice president for iron ore at Sesa Sterlite Ltd, which was India’s biggest iron ore exporter until its operations in Karnataka state were shut by a court-ordered ban in 2011 and in Goa the next year. “The export tax has to be abolished altogether.”
The benchmark price of ore with 62% iron content at China’s Qingdao port was $69.06 a tonne on Tuesday.
“There’ve been no iron ore exports from our port since the end of August,” said K.K. Sahu, port traffic manager at Paradip, a harbour on the eastern coast and one of the country’s main port for iron ore exports.
Mine closures
Environmental clampdowns by the government and the courts in the past three years led to closing of several mines, extending the crisis. The prolonged bans have prompted customers of Indian iron ore to increase their dependency on Rio Tinto Group, BHP Billiton Ltd and Vale SA. The shuttered mines in India are struggling to reopen even months after the courts eased the curbs.
More than three-quarters of India’s iron ore mines are lying idle, according to a parliament reply by junior mines minister Vishnu Deo Sai on 1 December. Of 776 mines in all, 590 are closed, Sai told lawmakers. All of the 330 mines in Goa are shut, while 112 mines in Odisha out of a total 143 are not operating, he said.
Mine closures have led to record shortages of iron ore and will probably turn India into a net importer of the material in the year to 31 March. Indian steel makers are set to buy as much as 15 million tonnes from overseas this fiscal year, almost triple the quantity imported a year earlier.
India may need to import as much as 45 million tonnes in the next three years, should mining curbs be maintained and demand from steel producers continues to rise, Zhuo Zhang and Kenneth Hoffman, analysts at Bloomberg Intelligence, said in a 20 November report.
Miners in Goa, which was the biggest exporter of low-grade iron ore before the nation’s top court banned mining in 2012, are now free to start mining after renewing leases. At current ore prices there may not be any output at least in the year ending 31 March, said Swaminathan Sridhar, executive director at Goa Mineral Ore Exporters’ Association, an industry trade body.“Even if iron ore mining were to start from tomorrow, there won’t be any exports from Goa as under the current scenario of lower global prices and higher exports taxes from India, shipments are not profitable,” Sridhar said in a phone interview from Panaji, the state’s capital. “The miners are working toward getting their leases renewed, but for any chance of exports from Goa, the taxes have to come down.”
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Burundi ratifies the EAC Monetary Union Protocol
Burundi has joined Rwanda and Tanzania in ratifying the East African Community Monetary Union Protocol. The Protocol aims to harmonize monetary and fiscal policies and establish a common central bank for the East African Community. It is thought that a monetary union, with the absence of currency risk, provides a greater incentive for trade.
The protocol is like a roadmap that will lead to the adoption of the Monetary Union. By ratifying the Protocol, Burundi commits to implementing the activities on the agenda. Some people fear that adjusting to a single monetary and exchange rate policy will prove impossible for Burundi, as it will struggle to meet the benchmarks agreed upon in the protocol. Audace Niyonzima, Director of Research and Statistics in the Burundi Central Bank and chief negotiator during the Protocol negotiations, ensures people that ratification doesn’t mean that Burundi will join the Monetary Union. “There is no risk. Preparations have started, but we’ll evaluate at the time of realization of the Union.”
The first step towards realizing the Monetary Union is harmonizing the currency rate; fixing the exchange rate against the currency of other countries to facilitate the conversion of the Burundian franc into the unique currency for the East African Community.
Niyonzima trusts that Burundi will benefit from the union, but emphasizes the importance of hard work “because we will enter an open system of competition”. There are macro-economic stabilization mechanisms in place to support countries failing to live up to the economic agreements. But, as the bank director days: “Each country is responsible for its own policies. We must prepare ourselves and implement the entire package to maximize the potential benefits. If we fail, we will lose out financially.”
There are various committees to prepare the monetary union. The technical committee will be in charge of the currency rate and the sector committee will follow up on the budget policy, the capital market, and the statistics. These committees will submit their report to the coordination committee consisting of Governors of the Central Banks of each member state who will pass it on to the Ministers of Finance. Eventually, the outcomes will be discussed at the summit of the EAC Heads of States, in April 2015.
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AfDB, Rockefeller Foundation and United Nations Economic Commission for Africa Convene Forum on Africa’s Growth
The Rockefeller Foundation, the African Development Bank (AfDB) and the United Nations Economic Commission for Africa (ECA) on Tuesday, December 9 convened the Africa Forum on Inclusive Economies to discuss greater inclusion as Africa grows economically.
In the last decade, Africa has experienced unprecedented growth for the continent with the influx of multinational corporations creating new market opportunities for millions and making Africa a prime destination for investment and entrepreneurs. But, as this African Renaissance has taken shape, now is the time to ensure that the growth Africa is experiencing is inclusive and ultimately sustainable – taking advantage of all the human capital Africa has to offer by reaching both the bottom and the top of the pyramid.
The forum has brought together key thought leaders and policy-makers from 23 African countries and beyond to closely discuss and propel forward-thinking and action around the theme of “Advancing inclusive economies in Africa”, and to help develop and embed a common understanding on inclusive economies within the African context.
The opening ceremony was officiated by Uhuru Kenyatta, President of the Republic of Kenya, who was joined by Zia Khan, Vice-President of the Rockefeller Foundation; Mamadou Biteye, Managing Director of the Rockefeller Foundation Africa Regional Office; Geraldine Fraser-Moleketi, AfDB Special Envoy for Gender; and Takiywaa Manuh, ECA’s Director, Social Development Division.
As a next step, the Rockefeller Foundation intends to create a $500,000 Inclusive Economies Accelerator Fund for Africa that will provide support for innovations designed to accelerate the development of an inclusive economies agenda. The fund is open to partners’ contributions, and AfDB and Microsoft intend to contribute to the fund.
The objective of the African Forum on Inclusive Economies was threefold:
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Focus new ideas towards the advancement of an inclusive economies approach with key African institutions and influencers;
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Crowd in significant resources towards activities, measures and metrics that will provide practical opportunities for influencers and institutions to adopt best practice options in advancing inclusive business practices; and
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Provide a platform to further enhance thinking and critical debate on the issue of inclusive economies.
Expected outcomes are:
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A common understanding of the current status of inclusivity in Africa.
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Challenges and opportunities that pan-African institutions should embrace in order to advance an inclusive national and regional agenda.
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Broader acceptance of the Africa Social Development Index as a tool for national target setting and measurement of inclusivity.
“The most significant challenge facing Africa is inequality. Our focus should now be on developing a skills base that is reflective of the opportunities emerging from our growing extractive sectors. Let us not forget our greatest asset, our talented youth population, and reap the dividends from them, our growing workforce. African governments should break down regional barriers to trade, as 54 individual countries may face limited opportunities, but through regional bodies barriers to inclusion can be broken,” said Kenyatta.
“Inclusive growth – growth that is truly shared between men and women, rural and urban communities, richer nations and poorer – is the cornerstone of the African Development Bank’s 2013-2022 Strategy, themed ‘At the centre of Africa’s transformation’. Our ongoing task is to turn strategy into action and results, transforming strong African growth into shared African growth,” said AfDB President Donald Kaberuka.
“Inclusive development is a human rights and social justice requirement. Currently, our focus is to support member states and structural economic transformation, and a strategy that can also be pursued for inclusive and sustainable development. These efforts involve the commitment of our member states to create decent job opportunities through industrialization, expansion of the fiscal space for social investments and strengthening the capacity of state institutions to meet social service expenditures that must be checked against delivery,” said Carlos Lopes, ECA Executive Secretary.
“The $500,000 initial seed money for the Inclusive Economies Accelerator Fund for Africa will build on the Foundation’s philanthropic tradition of catalysing funding to surface and support scalable innovations, and will promote inclusivity by actively seeking out grantees that have scalable solutions to achieve both social and economic impact, and support research that can inform efforts to make African economies more inclusive,” said Biteye of the Rockefeller Foundation Africa Regional Office.
» President Kenyatta’s speech – Africa Forum on Inclusive Economies
About The Rockefeller Foundation
For more than 100 years, The Rockefeller Foundation’s mission has been to promote the well-being of humanity throughout the world. Today, The Rockefeller Foundation pursues this mission through dual goals: advancing inclusive economies that expand opportunities for more broadly shared prosperity, and building resilience by helping people, communities and institutions prepare for, withstand, and emerge stronger from acute shocks and chronic stresses. To achieve these goals, The Rockefeller Foundation works at the intersection of four focus areas – advance health, revalue ecosystems, secure livelihoods, and transform cities – to address the root causes of emerging challenges and create systemic change. Together with partners and grantees, The Rockefeller Foundation strives to catalyze and scale transformative innovations, create unlikely partnerships that span sectors, and take risks others cannot – or will not. For more information, please visit www.rockefellerfoundation.org.
About the African Development Bank
The African Development Bank Group (AfDB) is Africa’s premier development finance institution. Founded in 1964, it comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 34 African countries with an external office in Japan, the AfDB contributes to the economic development and the social progress of its 54 regional member states. For more information, please visit www.afdb.org.
The United Nations Economic Commission for Africa was established by the Economic and Social Council (ECOSOC) of the United Nations (UN) in 1958 as one of the UN’s five regional commissions, ECA’s mandate is to promote the economic and social development of its member States, foster intra-regional integration, and promote international cooperation for Africa’s development. Made up of 54 member States, and playing a dual role as a regional arm of the UN and as a key component of the African institutional landscape, ECA is well positioned to make unique contributions to address the Continent’s development challenges.
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Trade balance of developing and developed countries continues to converge, UNCTAD statistics show
UNCTAD Handbook of Statistics 2014 shows that developing and transition economies run large trade surpluses for merchandise and services trade
Developing economies ran a combined merchandise and services trade surplus for 2013 of $177.6 billion, the UNCTAD Handbook of Statistics 2014 reveals, representing a fall of 40 per cent as measured in current prices compared with 2012 and 63 per cent compared with the peak in 2007. Transition economies also ran a trade surplus in 2013 of $128.6 billion. This represented a fall compared with the previous year (21 per cent) and with the peak in 2011 (33 per cent). Developed economies ran a trade deficit of $65.3 billion in 2013, down from almost $400 billion the previous year; a reduction of 84 per cent (current prices).
This overall convergence is being driven by a convergence in merchandise trade. However, trade balances for services of developing and developed countries continue to diverge. As trade in services is becoming more important, it suggests that the overall convergence may not continue indefinitely.
Trade balances varied significantly at the regional level. The overall trade surplus for developing countries was driven by Asia, which operated a surplus of $403.8 billion in 2013. In contrast, developing countries in Africa and the Americas ran aggregate trade deficits of $100.4 billion and $114.8 billion, respectively. Developed countries in Europe ran an overall trade surplus of $630 billion, whereas developed countries in the Americas and Asia ran deficits of $566.4 billion and $130.1 billion, respectively.
The direction of trade balances also varied markedly between merchandise and services trade. In 2013 there was a continuation of patterns seen in previous years in which developing and transition countries ran a trade surplus for merchandise trade ($451.9 billion and $187.2 billion, respectively), while developed countries ran a deficit of $619.2 billion. For trade in services, the opposite was true: developing and transition countries ran trade deficits ($274.3 billion and $58.6 billion, respectively), while developed countries operated a surplus of $553.9 billion. Separating merchandise and trade in services also illustrates that the convergence in overall trade balances between developing and developed countries evident in recent years is being driven by merchandise trade. The opposite is true for services, where the trade imbalance continues to grow.
The UNCTAD Handbook of Statistics 2014 also shows that total world exports in 2013 were valued at $23.6 trillion (up almost 3 per cent from 2012), of which merchandise trade accounted for 80 per cent ($18.8 trillion).
Along with providing detailed statistics on international merchandise and services trade, the 2014 edition also provides investment, commodity prices, maritime transport and other economic and social data, for all individual economies for which data are available. In addition, it includes figures for geographical regions, various economic groupings and world totals. The Handbook aims each year to provide data for the analysis and evaluation of world trade, investment, international financial flows and development. To the extent possible, UNCTAD provides estimates to fill in data gaps in order to furnish the most complete data sets.
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Ban urges Lima conference to agree draft text as basis for 2015 climate deal
Urging the 20th Conference of Parties to the United Nations Framework Convention on Climate Change (UNFCCC) to “act now,” UN officials in Lima, Peru on 9 December 2014 stressed that fully tackling the impacts of man-made climate change requires a transformation – not mere “tinkering” with past agreements and pledges.
UN Secretary-General, Ban Ki-moon delivered a message of “hope and urgency,” calling for increased momentum in global efforts. While Governments were responding in unprecedented ways and businesses and communities worldwide were also stepping up, he warned that “collective action does not match our common responsibilities.”
The Conference, which opened on 1 December and wraps up this Friday, brings together the 196 Parties to the UNFCCC – the parent treaty of the landmark 1997 Kyoto Protocol – in an attempt to hammer out the new universal treaty, which would enter force by 2020. Mr. Ban said he had five requests of all parties.
“First, we must deliver here in Lima a balanced, well-structured, and coherent draft text for the 2015 agreement that provides a clear and solid foundation for negotiations next year in Paris,” he said, stressing the importance of a common understanding on the scope and status of Intended Nationally Determined Contributions (INDCs) and calling particularly on major economies and developed countries, to submit their INDCs by the first quarter of 2015.
He continued, calling for tangible progress in solidifying the climate finance regime, including capitalization of the Green Climate Fund (GCF) and leveraging of private finance, and stressed also the need to prioritize provision of adaptation support and resilience building, particularly for the most vulnerable.
“The GCF must deliver on its promise to balance support for adaptation and mitigation. Work on loss and damage must be accelerated and we must bring the National Adaptation Plans of developing countries to life by agreeing how they should be funded and implemented.”
He also stressed the importance of partnerships, urging Governments to take the lead on building frameworks and to cooperate with a broad range of actors, and he underlined the importance of ratification of the Doha Amendment to the Kyoto Protocol.
“This is not a time for tinkering – it is a time for transformation,” he urged, drawing attention to the link between addressing manmade climate change and building more resilient, prosperous, and healthier societies, which was highlighted in his synthesis report on the post-2015 development agenda.
“Investments in addressing climate change will propel gains in broader development goals. Conversely, investments made in development must be aligned with our climate aims,” he said.
President of the UN General Assembly, Sam Kutesa, echoed the Secretary-General's words, warning that the world was moving towards a “tipping point.”
“Without immediate and concerted efforts, it will be impossible for the present and succeeding generations to achieve sustainable development,” he said.
Stressing the importance of mitigation measures to “step back from the precipice of catastrophic climate change consequences,” he underlined the need for collective, international political will to transform the current economic and social models into low carbon and ultimately climate neutral economies.
Expectations are high and time pressure demand those expectations be fulfilled, so he had scheduled a High Level Event on Climate Change for 29 June next year in New York. Taking place mid-way between COP 20 in Lima and COP 21 in Paris, the event sought to maintain momentum and complement UNFCCC negotiations.
Also pointing to high expectations, Christina Figueres, Executive Secretary of the UNFCCC, said the time had come to leave “incremental change” behind and steer the world toward a “profound and fundamental” transformation.
“Never before have we had such an opportunity, never before have we had such an urgency for transformation,” she said. “Ambitious decisions, leading to ambitious actions on climate change, will transform growth-opening opportunities instead of propagating poverty; safeguarding resources instead of depleting them; and valuing long-term stability over short-term volatility.”
She looked to the gathered ministers to guide negotiators towards a draft agreement that could be taken from Lima to Paris and to assume their “undeniable role as leaders of the urgent present and stewards of our shared future.”
It is not just about reductions in greenhouse gas emissions but also protecting the most vulnerable, alleviating poverty and creating a future with prosperity for all.
“Here in Lima, we must plant the seeds of a new, global construct of high quality growth, based on unparalleled collaboration bridging all previous divides,” she said.
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UK designs new package of support to Southern African trade integration
The United Kingdom continues to support the Common Market for Southern and Eastern Africa (COMESA), and for greater regional trade and economic integration in Africa.
Speaking at the Inter-Governmental Committee Meeting of COMESA session in Lusaka on 5 December, British High Commissioner to Zambia, Mr James Thornton, said:
“I am grateful for this opportunity to underline Britain’s continued support for COMESA and for greater regional trade and economic integration in Africa. Our Prime Minister, David Cameron, has a personal commitment to free trade across the continent.
“I would like to congratulate the Tripartite on its continuing work to broker agreement on a Free Trade Area. We are disappointed that the preparatory process, for which we have provided substantial financing, could not be concluded in time to hold the Summit in Cairo later this month. But the postponement now gives all parties an opportunity to take stock of progress and to ensure the negotiations conclude in timely fashion with the most developmentally beneficial outcome for the countries of Eastern, Central and Southern Africa.
“We would also like to pay tribute to COMESA for the leadership role that it, and the Secretary General himself, have played in moving towards this historic milestone. I am glad that the UK has been able to support the negotiations to date. We are pleased that other development partners will continue to provide support to the process going forwards.
“The UK continues to provide support directly to COMESA through the Tripartite’s Climate Smart Agriculture programme. We were pleased to be able to bring forward funds to help with the US$2.3 million short fall under the programme for this year.
“Stronger African regional trade can be a critical driver of inclusive growth and development on the continent. It is integral to the agenda for tax, trade and transparency, which our Prime Minister made a central theme of the UK’s Presidency of the G8 last year. Globally, the UK spends around £1 billion each year on aid for trade. Programmes run by our Department for International Development (DFID) are already helping African countries make it easier to trade goods across national borders and leverage finance for development of vital trade infrastructure.
“We are currently designing our new package of support to regional trade and integration in the southern Africa region. We will consult broadly during this design, including with COMESA, in order to understand how the programme can support the implementation of the Tripartite’s agenda in these countries.
“To help with this process, as well as to strengthen our regional engagement more broadly, the our Department for International Development has recently created a new position in Lusaka. The new post will lead specifically on our relationship with the Regional Economic Communities and international cooperating partners working on regional programming.
“In addition to our work with COMESA directly, we continue to have significant aid programmes in a number of Member States. They work on a variety of themes, including the promotion of inclusive economic development.
“I would like to conclude by reinstating Britain’s commitment to COMESA’s trade and integration objectives. We look forward to working closely with COMESA and the rest of the Tripartite, alongside representatives from Member States, civil society and the private sector, in driving this agenda forwards.”
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Non-Tariff Barriers in focus at COMESA Ministers Meeting
COMESA Council of Ministers held their 33rd meeting in Lusaka on 8 December 2014 with a call to address the Non-Tariff Barriers inhibiting intra-COMESA trade
The most frequently reported NTBs, reported through the online system are customs and administrative procedures, transport, clearing and forwarding issues. Currently intra-COMESA trade stands at only 7% and has slowly been rising since the establishment of a Free Trade Area in 2000.
Acting President of Zambia Dr Guy Scott who opened the Ministers meeting cited the Sanitary and Phytosanitary measures imposed by regional states on agriculture and tourism as major bottlenecks to trade.
“I have received complaints from the industry all the time on the non-tariff barriers that they can’t move their products because of Sanitary and Phytosanitary requirements by importing countries”, Dr Scott said.
He added: “It was disappointing to note that some countries had continued to request for the certification of Yellow Fever despite the low prevalence levels of the disease in our countries. This has made the tourism industry to suffer because it restricts movement of people.”
Dr Scott cited Zambia as one of those faced with tremendous difficulties in exporting or importing their products as a result of the NTBs. He called on the secretariat to come up with harmonized rules and regulations that will allow member states to trade freely a scenario, which will result in, reduced cost of doing business.
In their last meeting held in February this year, the Council of Ministers had directed that the COMESA Secretariat undertake an audit and impact assessment of existing NTBs in order to come up with a schedule of their removal.
Article 49 of the COMESA Treaty provides for the elimination of NTBs and prohibits Member States from introducing new ones.
The report presented to the Ministers showed that NTBS have a negative impact on trade flows and were mainly responsible for the high cost of doing business in the region.
The meeting of the Council which was held under the theme of “Consolidating intra-COMESA trade through Micro, Small and Medium Enterprises development” ends Tuesday 9 December 2014. It is expected to come up with a raft of policy decision to be implemented by the Secretariat and Member States including those aimed at eliminating non-tariff barriers.
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EU supports West Africa trade, investment with €40m grants
On 27 November 2014 at the ECOWAS Commission in Abuja, ECOWAS, WAEMU and the European Union, together with implementing partners launched two major programmes. These programmes represent an integrated initiative, which aims at promoting intra- and inter-regional trade, improving the business climate and strengthening the productive capacity of West Africa. Through these initiatives, the objective is to foster economic growth and reduce poverty in the region.
The Support to Regional Economic Integration and Trade Programme is composed of four components. The first two aim at promoting trade integration in West Africa and are being implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) with an EU grant of €10m, and additional contributions from the German Government (BMZ) and the ECOWAS Commission of €1m and €0.5m respectively. Component 3 focuses on Improving and facilitating trade in West Africa and is implemented by the World Bank Group (WBG) through an EU grant of €3.5million. The fourth component aims at deepening the existing customs union of WAEMU Member States and will be directly implemented by the WAEMU Commission with an EU grant of €5million.
The West Africa Competitiveness Support Programme on the other hand has two main components. The first component has the objective to improve the investment and business climate in West Africa and is implemented by the WBG with a total EU grant of €7.7m. The second component aims at supporting the ECOWAS and WAEMU Commissions to implement the regional quality policy which will boost intra-regional and international trade. The project is being implemented by UNIDO with an EU grant of €12million.
At the launch, the President of ECOWAS Commission, His Excellency, Ambassador Kadré Désiré Ouedraogo thanked WAEMU, the EU, as well as other partners such GIZ, WBG and UNIDO, for their continuing support towards economic and trade integration and private sector competitiveness in West Africa. The components of these programmes will contribute towards the implementation of the ECOWAS Common External Tariff (CET) and the Economic Partnership Agreement (EPA). He renewed the political commitment of the region and commended the leadership of the ECOWAS Heads of State and Government in consolidating the ECOWAS Common market through, inter-alia, strengthening the free movement of people and goods, as well as the attainment of quality infrastructure.
On his part, the European Union Ambassador to Nigeria and ECOWAS Mr. Michel Arrion stated that “West Africa has a major opportunity to deepen internal trade and investment ties and also to become a global economic player. Today, our message to the world is that this region is open for business. These two programmes should be seen as an integrated effort to support the process of growth, and are a testimony of ECOWAS commitment to follow this path, and the importance Europe attaches to its relationship with West Africa”.
In his remarks, Mr. Patrick Kormawa, the UNIDO Representative to Nigeria and ECOWAS re-iterated that “creating access to markets remains a significant challenge in the region and the West Africa Quality Support Project will be the instrument of change”. Mr. Andreas Proksch, GIZ Director General of Africa Department, stated in his contribution that “increase in intra- and inter-regional trade will ultimately improve the economic well-being of the citizens of West Africa”. Marie-Francoise Marie-Nelly, Country Director of the World Bank Group, noted that “West African countries have enormous potential to strengthen competitiveness and increase trade and investment flows, which can drive growth, reduce poverty, and deliver jobs in the region”.
The launch event was attended by high profile dignitaries from ECOWAS, EU, WAEMU, BMZ, GIZ, WBG, UNIDO, representatives of the government of West African countries, regional private sector organisations, other stakeholders and ladies and gentlemen of the press.
» Press release: ECOWAS, EU to strengthen cooperation on peace, security, trade and development issues
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Government unveils new plans to support logistics sector
Government has intensified efforts aimed at improving Rwanda’s logistics industry.
Already, the government has signed business deals with sector investors. Government has also announced the construction of logistics hubs at the Mombasa and Dar es Salaam ports and a dry service port (Kigali logistics hub) in Kigali, besides upgrading the air cargo facility at the Kigali International Airport.
Also, plans to construct more facilities to facilitate collection of fresh produce are ongoing.
These efforts are also geared towards boosting the country’s service and logistics industry, reduce the cost of doing trade and support the export sector, according to Francois Kanimba, the Minister for Trade and Industry.
The government has also been discussing with investors from Singapore on how to establish a logistics fund to finance local businesses in the sector.
Industry players say these developments will greatly change the dynamics of cross border trade.
Minister Kanimba said the country currently lacks a world class logistics sector that is capable of handling the growing regional trade volumes.
“That’s why the Kigali dry port is critical… We are confident that the dry port and facilities that will be set up at Mombasa and Dar es Salaam ports are key to reducing operational costs, as well facilitating a quick turn-around,” he said.
He said though the cost of cross-border trade, especially shipping; the country’s logistics service strategy will help address some of these challenges.
“The idea is to improve cargo handling services and also help lower costs incurred by exporters, truckers and freight forwarders to boost intra-regional trade,” the minister told Business Times.
He, however, challenged the private sector to take the lead in all the initiatives proposed by the government.
Leonard Mungarulire, the programme co-ordinator, Ministry of Trade and Industry, said these initiatives aim at ensuring that Rwanda is land-linked to trigger logistics industry growth and competitiveness.
“The idea is to develop a world-class logistics hub that will ease way of doing business and ensure environment protection,” he said, adding that the project is being implemented with TradeMark East Africa.
“We are developing modern cargo infrastructure that will help remove obstacles to logistics sector,” Mungarulire said.
He assured private operators that projects would not be developed as monopolies that could create unfair competition.
Mungarulire noted that to strengthen the local logistics sector, there is need for a strong logistics and distribution service strategy and supportive strong regulatory frameworks.
He said bonded warehouses would be set up in Rubavu and Rusizi districts to facilitate the growing trade between Rwanda and the DR Congo.
The DR Congo is a huge market for Rwanda.
However, these developments have caused uneasiness among sector players.
“The government liberalised Magerwa to allow the private sector run it; if they are now coming back into the same business, what does that mean?
“The government should partner with the private sector to make it more competitive in the fairest way,” a source told Business Times.
According to Lambert Nyoni, the chief executive officer of Magerwa, government should allow private operators develop their owner facilities based on their capacity and market projections.
Nyoni argued that government facilities could create competition and eat into their revenues, adding that there is need for a strong price regulatory framework.
He said internal customs laws should be streamlined, noting that currently, our regional customs law does not allow transshipments between member states.
Nyoni said cargo designated to other countries is not allowed to be offloaded here, as a result.
Reuben Chia, the general manager of Pan African Logistics, said the projects will help address the unnecessary delays and ease port congestions.
Call for more tax reforms to support the sector
Chia said the new initiatives should come with tax reforms to lure more investors into the logistics industry, arguing that the current tax regime erodes return on investment.
Investing in logistics must go hand in hand with tax incentives, he added
Chia’s company recently signed a deal with government to commit about $10 million and 150 trucks into the logistics industry.
This is a huge boost to government’s efforts to grow the sector.
Amin Lalu, a trade advisor at TradeMark East Africa, called for efficient approaches that help reduce the cost of transport to improve Rwanda’s logistics industry.
“This will help generate more revenues and enhance access to regional and world markets,” he said.
He, however, said the initiatives should be integrated with other regional projects, such as the Northern Corridor railway line project, as well as the air cargo handling to have an impact on cross-border trade.
Rwanda’s cross-border trade strategy seeks to create more jobs and improve income of both the formal and informal sector players as well as help boost the country’s trade balance.
Strategy is closely aligned with the trade policy goal of “growing sustainable and diversified products and services for trading locally, regionally, and internationally, with the aim of creating jobs, increasing incomes, and raising the living standards of Rwandans”.
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Azevêdo says rise in trade restrictions “cause for concern”
Director-General Roberto Azevêdo, in introducing his annual report “Developments in the International Trading Environment” to the Trade Policy Review Body on 8 December, said that “the stock of trade restrictions introduced by WTO members since 2008 continues to rise”. He said that “in a climate of economic uncertainty the continued accumulation of trade-restrictive measures poses a clear risk”. This is what he said:
Good afternoon everyone.
As you know, we like to have balance at the WTO – in all things we do.
So while the Special General Council on 27 November provided us with the excellent news that our negotiating work is back on track, inevitably there was going to be some not-so-good news somewhere else.
You have all seen my annual report on developments in the international trading environment, which was circulated on 24 November.
This report brings news of some real challenges in the international trading environment – challenges which require our attention, and the attention of policy-makers around the world.
The report provides information on trade‑restrictive, as well as trade-facilitating measures, taken by WTO members in the field of trade in goods and services.
It covers the period running from mid-November 2013 to mid-October 2014.
It also covers other relevant trade policy developments, including:
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trade policy reviews conducted in 2014,
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regional trade agreements,
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the Government Procurement Agreement,
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the operation of transparency provisions contained in the various WTO agreements,
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trade finance, and
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dispute settlement.
This meeting gives us the opportunity to look back at all these issues that have emerged over the course of the year and to consider how members might respond.
I will set out some of the key findings of the report in a moment, but first I would like to say a few words on the process of preparing this document.
The information on country-specific measures identified in the section dealing with trade in services and in the four annexes is based on inputs submitted by members and other official and public sources.
Members concerned have had an opportunity to verify the accuracy of this information.
I would like to thank the delegations who have participated in this exercise by providing relevant information on time and by ensuring subsequent verification of reported measures.
These inputs not only help expand the coverage of the report, they are also crucial in ensuring the accuracy of the information contained in the report.
At the same time, it is unfortunate that, as in previous years, many members continue to fail to participate actively in this process.
Just 37% of members responded to the request to submit information on their new trade measures. This is slightly up from 35% in 2013 – but of course it is still far too low.
It is also a matter of concern that even when members participate in this information-gathering process, they often do not provide information on certain types of measures – especially on so-called behind-the-border measures, including general economic support.
There are of course other organizations that monitor developments in the application of trade measures – and the findings in their reports sometimes differ from ours.
We have carefully studied the methodologies used in those reports but remain confident that our work here provides a sound and realistic picture of current trade policy developments around the world.
Finally, let me stress that this report is a constantly evolving product.
As you will have noticed, we have made certain changes in order to present the main findings of the report in a clearer, more accessible way. We have also provided data on how the number of trade-restrictive and trade‑facilitating measures has evolved since the onset of the global financial crisis in 2008.
Let me now turn to the substance of the report.
Rather than simply listing the findings, I would like to draw out what I consider to be the significant policy issues affecting the trading system that have emerged in the current reporting period.
In a climate of global economic uncertainty the continued accumulation of trade-restrictive measures pose a clear risk.
Current prospects for world output and trade are far from favourable.
During the course of the year, lower-than-expected GDP growth has led our economists to downgrade their forecasts for world trade growth to 3.1% in 2014 and 4% in 2015.
These rates are higher than in 2012 and 2013. But they are significantly lower than the average growth rate in the 20 years prior to the global financial crisis of 2008.
Some argue that this slower growth of world trade is now a permanent feature of the global economy.
Against this backdrop, recent trends in trade policy actions of members are a cause for concern.
The report points out that the stock of trade restrictions introduced by WTO members since 2008 continues to rise.
Of the 2,146 trade-restrictive measures introduced since 2008, only 508 have been removed – that’s just 24%.
The total number of trade-restrictive measures still in place now stands at 1,638.
The report also notes that the number of new trade‑restrictive measures introduced during the period under review is quite high, at 168.
The average number of new trade-restrictive measures per month is higher in this period than in any other period since October 2008.
While we have also witnessed a substantial increase in the number of trade‑liberalizing measures, this should not detract from the overall picture.
In addition, there is some evidence that, more recently, the application of trade-restrictive measures is leading to heightened friction between members on trade issues.
Aside from the increase in the number of dispute settlement panels, members have increasingly voiced concerns regarding specific measures taken by other members in WTO subsidiary bodies, such as the Council for Trade in Goods.
In this context, members should strive to show greater restraint in the imposition of new trade‑restrictive measures, eliminate existing trade restrictions, and contribute to enhancing transparency on behind-the-border measures.
A second important policy issue identified in this report is the relationship between regional trade agreements (RTAs) and the multilateral trading system. This is of course not a new issue but the report makes some interesting observations based on recent research.
As of mid-October 2014, the WTO had been notified of 253 regional trade agreements. However, there are also 63 regional trade agreements in force that have not yet been notified to the WTO.
And of course negotiations on new RTAs are under way. In some cases these negotiations are between parties that account for very substantial shares of world trade and GDP.
Given the growth in the number and the changing scope and coverage of RTAs, there is clearly a need for a better understanding of the relationship of these agreements with the multilateral trading system.
Building on recent research undertaken by the WTO Secretariat, the report provides an analysis of the extent to which provisions in RTAs actually go beyond the multilateral rules contained in the WTO Agreement. You may recall that this was also the subject of a seminar held here at the WTO in September on cross-cutting issues in RTAs.
As I have said before, bilateral and regional trade liberalization initiatives are welcome as long as they do not impose additional barriers to trade, and constitute building blocks towards trade liberalization.
However, we cannot expect them to substitute the multilateral trading system.
There are many subjects that by their very nature require a multilateral approach to be dealt with efficiently – such as trade facilitation, agricultural and fisheries subsidies, disciplines on trade remedies, regulation of financial services and telecommunications, and so on. It is a long list.
Also, these initiatives mostly exclude the smallest and most vulnerable countries and do not fully address the gains from trade that can be obtained through global value chains. Therefore, while we welcome RTAs, we cannot ignore their obvious limitations or the need to avoid harmful effects to third parties.
Another issue to be mindful of is the potential complexity that may result from the existence of different sets of rules and regulations developed in these RTAs, which may be burdensome for traders and business.
We must continue to deepen our understanding in this area to ensure that RTAs and the multilateral system can move forward together, complementing each other, and in the most effective way possible.
Therefore I think we should welcome the initial steps that we have taken in this report and commit to taking this work further in 2015.
Moving on, the third policy issue is that, although improvements were made in some areas of our work in the WTO, compliance with various transparency mechanisms remains unsatisfactory. Again, this is not a new issue.
Section 4 of the report contains a detailed overview of how members have complied with the various notification requirements contained in the WTO Agreement.
Let me just cite a few examples to illustrate the seriousness of the problem that we face in this area of our work.
With respect to the Agreement on Agriculture, the report notes that compliance with notification obligations in the areas of domestic support and export subsidies generally remains below 50%.
In the case of the Subsidies and Countervailing Measures Agreement, the report notes that the percentage of members that do not submit notifications on subsidies has risen from 27% in 1995 to 44% in 2013.
Regarding state-trading enterprises, the percentage of members that do not make any notification has increased from 37% in 1995 to 66% in 2012.
In light of this, I think there is an urgent need to improve compliance with the transparency provisions in the WTO Agreement.
These provisions are essential to ensure that members have the necessary information to understand each other’s trade policies, to ensure that WTO agreements are properly implemented, and to avoid unnecessary trade disputes.
So these are some key points which I think we should take away from this report.
And, in closing, I would just like to leave you with three thoughts as we look towards our work in 2015.
First, I think we would all agree that one of the key reasons that we value the multilateral trading system is because it is a proven bulwark against protectionism. We saw this in the response to the financial crisis, where the mistakes of the past were not repeated.
But preserving the system takes effort and commitment.
And therefore I think we must ensure that the policy issues raised in this report receive the full and urgent attention that they deserve.
Second, we must deliver on the commitments we made at the Special General Council on 27 November to implement all of the Bali decisions and to develop a work programme on the remaining Doha Development Agenda issues.
If we see this work through, we could provide a much-needed boost to economic growth and productivity – at the same time as immeasurably strengthening the multilateral system.
Third, we must also recognize that our experience in 2014 has made it clear that we need to find ways to operate more efficiently.
We have shown that we can deliver. Now we need to figure out how to deliver more and how to deliver faster.
So, thank you Madam Chairperson; this concludes my statement.
But, before I leave, I would like to thank delegations once again for their contributions to this report, and of course the Secretariat for their work in preparing it.
I would like also to thank delegations in advance for their contributions and ideas this afternoon. We will take careful note of your comments, and will take them into account as we prepare for the monitoring work next year.
Finally, I want to inform delegations that I will be sending out the usual request for information for the next monitoring reports in the first half of March.
I would like to encourage you all to participate in the monitoring exercise and cooperate with the Secretariat as much as possible.
I think we should aim to deliver a higher level of transparency and accuracy of information in 2015.
Thank you.
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AGOA: The US-Africa trade dilemma
Has the African Growth and Opportunity Act run its course?
It may seem counter-intuitive to imagine that Africa could make contractual demands on the United States. Yet, there is evidence that in recent times Africa has become more assertive with a newfound confidence. In fact, it appears the continent is at a point in history where it no longer needs the begging bowl whenever its leaders visit Western capitals.
This sense of confidence was on full display when Africa’s leaders converged on Washington DC for the US-Africa Leaders’ Summit in August 2014. Kenya’s President Uhuru Kenyatta, representing the views of the 50 African leaders, clearly projected the new face of Africa’s diplomatic acumen by asserting that “it is good to see the US is waking up to the realities of the potentials of Africa just as China did a long time ago.”
Unlike in the past when such a summit would have provided a forum for lectures to Africa on democracy and human rights, this time around it was about mutual partnerships, deals, trade and investments. “We want to build genuine partnerships that create jobs and opportunities for all our peoples and that unleash the next era of African growth,” President Barack Obama said.
For the US, creating “genuine partnerships” with Africa is coming rather late. In fact, according to analysts, the US is now in a sprint to catch up to others exploiting Africa’s economic potential. With China deeply entrenched in the continent, Europe trying to safeguard its interests and India and Japan making major inroads, the US stands to be an outsider in a continent poised to become one of the leaders in global economic growth in the coming years. Already Africa is home to most of the world’s fastest growing economies.
“Africa offers immense opportunities in terms of abundant natural resources, new technologies, investments, access to potential markets, and new types of consumers. Although the US has been relatively slow to react to these dynamics, hosting the summit was a sign that it can no longer stay on the sidelines,” said Emmanuel Nnadozie, the Executive Secretary of the African Capacity Building Foundation based in Harare, Zimbabwe.
One way the US is seeking to deepen its interests in Africa is by encouraging its multi-billion dollar companies to invest in the continent. Indeed, during the summit, new deals worth $14 billion in areas like clean energy, aviation, banking and construction were signed between various African nations and US multinationals. The US government also committed to providing $7 billion in new financing to promote trade and investment with the continent.
The American deals, however, offer little cheer to a continent that seeks immediate impact in job creation, poverty eradication, markets for its produce and direct contribution to the economy. This is because it will take years for the benefits of the deals to be felt. On this basis, some African leaders contend that the Africa Growth and Opportunity Act (AGOA – a US law enacted in 2000 under which Africa can export certain goods to the US duty-free) is the best option in deepening trade between the continent and the US.
America Promise
The problem, however, is that Africa abhors the uncertainties of the treaty, and its limiting structures. “We want to deepen our engagement with AGOA but this can only be achieved if we eliminate the uncertainties and if it is broadened,” observed Kenya’s Industrialisation Cabinet Secretary Adan Mohammed.
The need to eliminate uncertainties and enhance the treaty was one of the key demands African leaders tabled at the summit. Though AGOA has been described as the cornerstone of US trade policy with Africa – increasing non-oil exports from Africa to $53.8 billion from US $8.1 billion over 10 years – its impact and benefits have been minimal. Apart from oil, textiles, manufacturing and artifacts, very few other sectors have benefited from the treaty that allows duty-free entry into the US market for some 6,000 products.
Worse still, just a handful of countries dominate trade under AGOA. In 2011, for instance, all exports from Africa to the US totalled $79 billion. Notably, almost 80% came from just three countries – Nigeria (47%), Angola (19%) and South Africa (13%). US exports were similarly concentrated, with those same three countries receiving 68% of the $20.3 billion that came into the continent in 2011. “The utilization of AGOA privileges has been sub-optimal, with only seven out of 39 African countries being able to meaningfully take advantage of the opportunity availed by the treaty,” noted Erastus Mwencha, deputy chairperson of the African Union Commission.
US Trade Representative Michael Froman admitted that the discrepancies have not sufficiently projected US commitment to a trade partnership with Africa. “Despite the concrete benefits that AGOA has brought to both of our continents, it is clear that more can and must be done,” Mr. Froman observed. For instance, the insignificant non-oil AGOA trade that increased marginally from $1.4 billion in 2001 to $5 billion in 2013 is a justification that the treaty requires structural adjustments. “While we are seeing countries starting to branch out and use AGOA for more products, there is still much room to grow in non-oil, manufactured and value-added products,” he added.
For this to happen, President Obama and the US Congress must be willing to bite the bullet. First, the US government has few options but to extend the AGOA treaty when it expires in September 2015. More importantly, African leaders are calling for a long-term extension to eliminate the uncertainties that shroud the treaty. They argue that it is only by extending the treaty by a minimum of 15 years that investors will feel comfortable investing in the continent because they will have ample time to recoup their investments.
The AGOA Dilemma
According to Heman Boodia, vice president of New Wide Garments Ethiopia, the kneejerk extension of AGOA for only five years has made it nearly impossible for investors to plan for the long term. “It takes at least two years for investors in the textile industry to get returns. That is why we need the AGOA extended for at least 15 years,” he said, adding that failure by the US Congress to extend the treaty could be catastrophic to the continent in terms of job losses. New Wide, which has operations in Lesotho and Kenya, employs about 13,000 people.
In 2012, apparel accounted for 17% of non-oil AGOA exports. It is also the most diversified sector in terms of the number of beneficiary countries. In Kenya alone, the garment and apparel industry within the export processing zones employs about 40,000 people.
While extending the treaty will safeguard these jobs and create many more, there is a feeling in the continent that AGOA requires significant changes to open up the US market to more non-oil and non-apparel exports.
One sector that is in desperate need of new markets is the food and agriculture sector. But accessing the US agriculture market under AGOA is extremely difficult. Apart from the issue of standards, the US is determined to protect its farmers through subsidies. Currently, the value of agricultural exports to the US stands at $520.8 million. According to Mr. Mwencha, the US can help Africa’s agricultural sector by allowing duty-free access of produce currently excluded from AGOA, such as sugar, tobacco and cotton.
This article appears in the December 2014 edition of Africa Renewal, published by the United Nations.