What do practitioners and traders need to know and what can be done to make them work for trade facilitation?

Customs administrations advance and implement cohesive sets of policies, procedures and tools that enhance safety, secure global supply chains, and support effective cross-border trade facilitation and revenue collection. To achieve these objectives, Customs administrations largely rely on the broader complementary functions and guiding approaches of the World Trade Organisation (WTO) and the World Customs Organisation (WCO). The WTO Trade Facilitation Agreement – the first multilateral trade agreement concluded since the establishment of the WTO in 1995 – is aimed at ensuring smooth, predict-able movement of goods across borders. Administratively, the WCO complements the WTO through the development and provision of several international standards, procedures, policies, and tools for use by Customs administrations as they carry out their responsibilities.

This Trade Brief discusses disruptive technologies and the potential use by Customs to advance the trade facilitation agenda within the continent. The aim is to outline what both the practitioners and traders need to know about disruptive technologies and their application in the context of Africa. 

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The digitalisation of the economy requires new ways of thinking about competition, intellectual property, taxation, industrial policy, privacy, cyber security, the labour market, immigration, skills, investment and, of course, trade.

Digital economy^[1] is understood as that part of economic output derived primarily from digital technologies with a business model based on digital goods and services. The main components of the digital economy include fundamental innovations (semiconductors, processors), core technologies (computers, electronic devices) and enabling infrastructures (the internet and telecoms networks), digital and information technology (e.g. digital platforms, mobile applications and payment services). The digital economy encompasses online platforms (e.g. Google, Facebook and Amazon), platform-enabled services (e.g. Uber and Airbnb), trade in electronic transmissions (e.g. online delivery of software, music, e-books, films and video game) and mobile technology and applications including mobile payment services.

The wheels of international trade are powered by the internet. From the smallest informal trade to a major supply agreement, contracts are transacted online; whether via email, e-commerce store, or digital platform. Any formal trade relies on the internet for implementation – financing, documentation and logistics are all digitally driven, and becoming more and more so. Whether it is an emailed order, an online purchase, or merely the financial arrangements behind the transaction, the internet will inevitably be used in conducting international trade.

Digitisation has contributed to a changing trade environment in many ways – facilitating multinational value chains, enabling the rise of the micro-multinational and giving us new tradeable goods and services. It is also blurring the traditional boundaries between goods and services, blurring the boundaries between jurisdictions and bringing into question the way our legal and regulatory infrastructure operates at national, regional and global levels. Digital permeates every aspect of trade – from agriculture to clothing, from manufactured goods to business services.

^[1] There are no universally agreed definitions of digital economy, digital trade and e-commerce. These terms, though distinct, are often used inter-changeably on the same issues. This booklet will refer to commonly used definitions of these terms.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The African Continental Free Trade Area (AfCFTA) is in the process of taking shape. This momentous initiative for Africa holds much promise, not just for the promotion of intra-African trade but more broadly for the integration of financial, labour, and digital markets. Extant online business technologies present opportunities that could accelerate integration in Africa.

This Trade Brief examines how the ever-expanding digital economy offers unique opportunities for African integration. It covers digital marketplaces for e-commerce and digitally-delivered services, which both disrupt existing markets and create entirely new ones, offering opportunities for digital entrepreneurs in Africa. Online business technology such as software as a service (SAAS), cloud services, and multi-sided digital platforms are also covered.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

Information and Communication Technology (ICT) policies are a key driver of ‘digital development’ – the extent of integration of a country or region into the global digital world and digital economy. This is because communication, information flows, trade, business, education, finance, industry and even government are today inextricably founded in the digital world.

The ‘digital divide’ refers to the gulf between developed and developing nations in terms of digital penetration in countries and regions. However, the digital divide does not only refer to the divide between regional aggregates and countries, but to the divide that is found within countries too. Several African countries have ‘dualistic’ economies, characterised by a modernised urban sector and poor and underdeveloped rural sector. This economic dualism extends as well to digital penetration, with urban areas covered by fixed and mobile broadband, while many rural areas have little to no connectivity at all. Today, Africa lags behind the global aggregate in terms of digital development and the digital divide, but its rate of improvement is such that it is converging to global aggregates at an admirable pace.

Key to the furtherance of digital development is well thought-out and implemented policies. This is the responsibility of the national authorities that oversee the telecommunications industries – usually departments of communication – but other branches of government can impact the sector too, such the tax authority. This trade brief presents some metrics around progress in digital development in Africa, which has been progressing well, before examining some principles and case studies around ICT policy formation and implementation.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

Industrialisation and the emergence of new technologies, such as the Internet, have improved value chain efficiency but also increased the complexity of production linkages. Within the context of Africa, the functioning of value chains tends to be more complex due to the lack of transport (roads, railways, ports, and airports) and other infrastructure. With the rise of the Fourth Industrial Revolution (FIR) and the development of newer technologies, specifically drones, artificial intelligence, big data, mobile devices and 3-D printing, the performance of value chains stands to be improved. These technologies represent both significant opportunities, but also challenges to countries in terms of the educational, financial, and infrastructural developments required for the effective integration of these technologies.

The potential role of drones associated with the rise of digital business in Africa and the accompanying decrease in the production costs may shape this aspiration into reality. Amongst the technologies of the FIR, drones may offer a new tool to the logistics industry and may be game changers for managers in the African value chain. This paper will provide a short definition of drones and Unmanned Aerial Vehicles (UAVs) and will demonstrate how this tool could fit into and work within the African value chain despite the current challenges faced by the region. Furthermore, this paper will demonstrate via three case studies that drone technology could be accessible to African states and could bring benefits to African societies through humanitarian, business, and public services.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

The seventh edition of the ‘Harmonized Commodity Description and Coding System’ of the World Customs Organisation (WCO) becomes operational on 1 January 2022. Since its inception in 1988, the ‘new’ HS has been revised every five years, with the latest edition, HS 2022, being approved by the WCO Council at the end of June 2019. It stands to the credit of the HS, given its extensive scope and application, that courts and tribunals are not overwhelmed by classification disputes.

The HS is best described by examples. In mid-2017, Samsung South Africa applied to the Commissioner of the South African Revenue Service for a tariff determination for its Samsung Galaxy S7 ‘multi-functional device’. Two HS codes (or ‘tariff headings’ for customs purposes) were involved. Following interactions between Samsung and the Commissioner, the Galaxy S7 was recognised as a ‘smart device’ classifiable under subheading 8517.62.90 (‘Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus – Other’). However, after notifying Samsung in November 2017, the Commissioner withdrew the determination and replaced it with a classification under subheading 8517.12.10 (‘Telephone sets, including telephones for cellular networks or for other wireless networks … Designed for use when carried in the hand or on the person’). This reclassification led to Samsung’s appeal to the High Court.

The Court followed a trodden path in identifying the proper classification, turning ultimately to the HS headings and subheadings. The basic question was whether the Samsung Galaxy S7 was a ‘telephone’ as maintained by the Commissioner or the ‘machine’ (or ‘apparatus’) Samsung claimed it to be. The Court was finally not convinced that the functions of the Galaxy S7 ‘straddle between tariff heading 8517.1 (‘Telephone sets, including telephones for cellular networks or for other wireless networks’) and tariff heading 8517.6’ (Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network). In future, therefore, the ever-present smartphone will have its own dedicated six-digit tariff heading, 8517.13.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

Start of trade under the preferential terms of the African Continental Free Trade Area (AfCFTA) was announced on 1 January 2021, whilst negotiations to finalise outstanding issues on Phase 1 topics of good and services are to be concluded in June 2021. The creation of the One African Market for goods is a long-term endeavour; there is a 5-year timeline for non-least developed countries and 10 years for least developed countries to eliminate 90 per cent of tariff lines. For services, progressive liberalisation is envisaged through successive rounds of negotiation’, with substantial liberalisation as the stated threshold. These simple differences in the format and expression of ambition – one numerical and one qualitative, express a fundamental disparity in approach towards the realisation and assessment of liberalisation of trade of goods and services under the AfCFTA.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

Digital labour platforms are applications that run on computers and smart devices and are able to facilitate new online markets for services of diverse types. These platforms disrupt existing markets in the sense that they replace prior ways of doing business, but they also create new modes of market behaviour, make new markets and even create new services.

This Trade Brief recognises the potential importance of digital labour platforms for the developing world, especially Africa, where self-employment and micro entrepreneurial activity is more important than perhaps anywhere else in the world. The brief firstly outlines the dimensions of the global market and then attempts to estimate the size of the actual and the potential digital labour market in Africa. The brief closes with an extended conclusion that covers remaining challenges and policy recommendations.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

At any given moment, international trade is being transacted across Africa. The supermarket buyer emails the supplier she met at a recent trade show to place a sample order. The car manufacturer uses the proprietary supply chain software for their company to obtain more seatbelts for the factory.  The informal cross-border trader WhatsApps her customers for today’s orders. The farmer checks the weather app. A truck driver uses an online map to navigate a new route. A shipper secures warehouse facilities using the online booking system of a logistics firm. A customs agent processes a shipment of goods using ASYCUDA. A migrant mine worker sends money home to his family... and so on.

The wheels of international trade are powered by the Internet. From the smallest informal trade to a major supply agreement, contracts are transacted online; whether via email, e-commerce store, or digital platform. Any formal trade relies on the Internet for implementation – financing, documentation and logistics are all digitally driven, and becoming more and more so. Whether it is an emailed order, an online purchase, or merely the financial arrangements behind the transaction, the Internet will inevitably be used in conducting international trade.

This is not the future; it is not some hazy tomorrow that we cannot predict. This is the current reality of trade, even on a continent where connectivity lags and digital literacy is low by international standards. Digitalisation will be an inevitable part of trade in 2020 and beyond.

There are huge opportunities for digitalisation to increase and improve Africa’s trade environment. It is crucial to the success of the African Continental Free Trade Area (AfCFTA) that the reality of today’s digital economy is recognised and reflected. The AfCFTA Agreement itself has a role to play. Although not shaped as the kind of 21st century agreement that would provide a rules-based framework for the digital economy, there are areas, still to be negotiated, that have potential to shape the free trade area in a more digital-friendly way.

More importantly, the AfCFTA is not just a free trade agreement, it is a flagship project of the African Union (AU), situated within Agenda 2063, Africa’s framework for structural transformation. This means that the development of the continental free trade area need not rely only on the text of the AfCFTA Agreement but will be supported by a suite of other Agenda 2063 initiatives. It is through these initiatives that African Union (AU) members have the best chance and the most promising opportunities to create a free trade area that does not stand in the way of the digitisation of the economy and encourages trade and economic development within the digital economy.

The trade-related benefits to be derived from the digitalisation of the economy are well known, but bear repeating. In particular, our work suggests digitalisation can enable e-commerce; reduce transaction costs;  reduce barriers to cross-border trade; automate production, thereby improving efficiency and reducing costs; and improve logistics. In addition, digitalisation is transforming how we trade in services – from offshoring, to cloud services, to online outsourcing – the Internet has made all kinds of new services trade possible. E-commerce and digitalisation particularly offer opportunities for marginalised groups, such as young people, rural citizens and women to more easily engage in the economy – but policies are needed to ensure that access gaps are narrowed.

This volume brings together tralac’s work over the past five years (updated where necessary) on the digital economy, e-commerce, information communication technology and related developments. We present data on the current state of the digital economy in Africa; identify some of the most important interventions for catch up; examine some of the key trade policy issues arising from digitalisation; and offer policy recommendations for making the most of this fundamental economic and social shift.

© 2020 tralac, the Australian Government and the Government of Sweden

All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed herein remain solely those of the author(s).

The pace of development of Information and Communication Technologies (ICTs) has been unlike any industry development hitherto experienced. The nature of the industry is such that it’s ‘futurists’ are shown to be accurate or not within just a few years. The rate of venture capital investment into this sector also outstrips any other, as investors rush to discover and buy into the next Google, Facebook or Uber.

Unlike manufacturing or mining, investment into ICTs can likewise be shown to yield returns relatively quickly. As modern economies shift further and further towards a service production orientation rather than a manufacturing one, new modes develop for service delivery and trade extends far beyond national borders. These developments hold many opportunities for the developing nations of Africa, but ones that need to be seized and acted decisively on.

This paper examines services made possible by new Information and Communication Technologies (ICTs) that are capable of being domestically and internationally traded. The emphasis is on the implications for African economies, as a unique subset of the emerging economy group. This paper is an update of a paper by the same name, published in 2015[1]. In this updated version we have updated data and, in some cases, used alternative data where the original source was no longer available. The content has also been updated to reflect developments since the publishing of the original data. Therefore, in the main body of the paper, the conclusion and the summary, updated developments are included in the analysis to bring the reader fully up to date as at January of 2020.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of tralac.

[1] Stuart, J. (2015). ICTs Services Development and Trade: How Africa Can Benefit. tralac Working Paper. Available https://www.tralac.org/publications/article/8049-icts-services-development-and-trade-how-africa-can-benefit.html