Topics publications: Technology and innovation
Trade Briefs
Moving money across borders in the SADC region
Under the Southern African Development Community’s (SADC) Finance and Investment Protocol, Annex 6 provides for cooperation on payment, clearing and settlement systems. The subcommittee responsible for this Annex has successfully implemented a cross-border payments system, and is reportedly working towards addressing regulatory issues and the cost profile with regard to worker remittances.
Despite this (and other) ongoing work, the World Bank still reports that seven of the top twenty most expensive remittance corridors are between countries in the SADC region, and a further two between countries in the region and elsewhere in sub‑Saharan Africa.
Many factors affect cost of remittances – weak infrastructures, a lack of transparency and competition, and financial regulation constraints. This briefing will explore two alternative (to traditional bank transfers and money transfer operators (‘MTOs’) such as Moneygram and Western Union) channels of remittances that rely on existing networks for funds transmittal – mobile money, which uses the mobile phone network, and retailer remittances, which use the networks of retail stores.
These channels not only offer potential competition in the space occupied by banks and traditional MTOs, but potential to reach further – in both a geographical and socio-economic sense – than traditional providers. This trade brief therefore also considers what else SADC could do to play a leadership role in encouraging an environment to better facilitate the cross‑border movement of money through these channels in the region to enhance competition and thereby potentially reduce prices.
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.
Trade Reports
Intellectual Property Rights Promotion and Protection Under the Tripartite Free Trade Area (TFTA): Proposals for an Intellectual Property Protocol
The Agreement establishing a Tripartite Free Trade Area (TFTA) among the member states of COMESA, the EAC and SADC was signed on 10 June 2015 in Egypt during the Third Tripartite Summit of Heads of State and Government. The signing of the Agreement marked the conclusion of phase I of a process that had begun in October 2008 with a meeting of the Tripartite Summit of Heads of State and Government in Kampala, Uganda. According to the Declaration Launching the Negotiations for the Establishment of the TFTA, phase II of the negotiations is meant to cover ‘the built-in agenda in services and trade-related areas’. In the Sharm El Sheikh Declaration, the third Tripartite Summit further elaborated on this mandate by directing the commencement of phase II negotiations in five areas:
- trade in services
- cooperation in trade and development
- competition policy
- intellectual property rights
- cross border investment.
This paper is concerned with the fourth of those areas. Intellectual property (IP) is a technical area that has to date received little attention in the regional integration agendas of tripartite states in spite of the fact that the world is often said to be moving from an industrial to a knowledge-based economy of which intellectual property is a critical component.
Issues concerning intellectual property, development and trade have proven to be controversial in the past due to, among other factors, the perception that strong IP laws can provide an unfair competitive advantage to certain developed countries who themselves used weak IP laws to develop economically. The territorial nature of intellectual property law, which means that every State has a right to design a legal framework appropriate to its level of development, also hinders harmonisation of IP laws. More recently, with advances in technology, issues have arisen with regard to the relationship between IP and access to medicines, IP, climate change and green technology, and IP and development. In addition, the issue of the scope of IP rights has been debated in the context of exceptions to rights under copyright law to cater for special situations such as access for visually impaired persons, educational and research institutions, and libraries and archives. All this means that the area of intellectual property is going to be a sensitive and complex issue in the context of TFTA negotiations.
The aim of this paper is to examine some of the issues related to the intellectual property track of the phase II negotiations in order to propose a few options that the member states may wish to consider as they endeavour to arrive at an outcome that will be supportive of their development objectives. The goal is therefore to explore the options available for states negotiating the TFTA so far as the development of provisions on intellectual property is concerned. In so doing it will be necessary to ask, given the differing capacities of the parties and their diverse legal frameworks, whether the provisions should focus primarily on cooperation with regard to procedural matters or whether parties should be more ambitious and aim to include more substantive, binding provisions?
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.
Trade Briefs
Trade at a Glance: a comparative analysis of the BRICS Countries’ Manufactures’ Trade in Value Added & Global Value Chains
In today’s globalised world, production processes have been split up and different parts of production relocated around the world. Global value chains (GVCs) are now attributed to more than 60 percent of global trade, employing an estimated 16 million people worldwide, with developing countries’ share in global value added trade having grown to 42 percent from just 22 percent in 1990.
While the emerging relevance and importance of GVCs cannot be overemphasised, the challenge has been the statistical bias created by attributing the full commercial value to the last country of origin which can misrepresent the political debate on the origin of the imbalances and lead to misguided, and hence counter-productive, decisions. According to the World Trade Organisation, the challenge is to find the right statistical bridges between the different statistical frameworks and national accounting systems to ensure that international interactions resulting from globalization are properly reflected and to facilitate cross border dialogue between national decision makers.
This paper looks at the recently released new statistical profiles on GVCs for 61 economies and more specifically looking at the BRICS economies of Brazil, Russia, India, China, and South Africa. The objective is to use the available data and provide a comparative analysis of the level of participation in GVC trade. It is important to note that the aim of the analysis is to provide a snapshot of the state of trade in value added (TiVA) based on available data. As this is a snapshot analysis, the ultimate goal is to start the discussion on how developing countries, especially in Africa, can get increasingly involved in the GVC trade.
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.
Trade Reports
ICTs Services Development and Trade: How Africa Can Benefit
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.
We begin by discussing the economics of modern ICTs, where we argue that these technologies and the services they enable are strongly pro-growth and efficiency-raising. We then explain how ICTs have been pro-trade and especially services trade from even before the smartphone, or even the online social network era. We then look at the recent history of ICTs-driven trade and describe the trends over the first decade of the millennium. During this period, communication services trade nearly tripled and information services trade more than quadrupled.
We then present data comparing growth in ICTs services trade post 2005, for a variety of cross-sections of countries and country groupings. Africa’s share in this trade is small, and is less than 25% of the developing country total, which is approximately 20% of the global total. Nevertheless, rates of uptake of this service trade are high for Africa, especially among the West African states.
We follow up the presentation of data trends with an examination of the state of services trade liberalisation. The General Agreement on Trade in Services (GATS) process has stalled, and at the time of writing of this paper it is not clear how effectively it will serve the services trade liberalisation momentum in Africa. Within Africa and its regional economic communities (RECs), services trade liberalisation is on the negotiating agendas of both the continental free trade area (CTFA) as well as the RECs.
We then consider Africa’s readiness for ICTs services trade and their platforms from 3 perspectives: ICTs infrastructure; SMEs, skills and entrepreneurship; and the regulatory environment. The final section of the paper reviews the current predominant trade-related ICTs and their potential for 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.
Trade Reports
The services sector in Africa
Services are playing an increasingly important role in the modern economy, but while economists and policy makers focus on trade in merchandise goods they tend to spend significantly less time examining the services trade. The lack of detailed information as well as the complexities of the embodied services components, such as brand marketing within manufactures, makes it hard to quantify the international trade in services.
In this paper we present a preliminary examination which could be referred to as the standard services profile of African countries and, in particular, services trade for these countries. We note that the paucity of data almost always precludes a bilateral examination, so our examination is limited to the broader profile. The data source is mostly the International Trade Centre (ITC) database, and we have reported on data through to and including 2012 and, where practical, 2013.
As a generalisation, services comprise between 60% and 70% plus of the Gross Domestic Product (GDP) in the developed economies; the Sub-Saharan African share increased in recent years to over 60% in 2013. Most, but not all, of the African economies report an increasing share of services in their economies.
Africa is a net debtor on services trade, with global imports rising from 2.8% in the early years to just over 4% in the latter period, while Africa’s export share is lower and perhaps ever marginally declining. Overall, Africa imports $170 billion in services from the world and exports just $97.4 billion. Egypt is the largest individual trader, although South Africa just verges on Egypt for service imports.
The imbalances are interesting in that some countries such as Morocco and Tunisia export more than they import, while for others, and in particular the oil-exporters of Algeria, Nigeria and Angola, imports are substantially higher than exports. Examining services trade as represented by combined services imports and exports expressed as a percentage of GDP shows that Sub-Saharan Africa is very close to the global average.
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.
Trade Reports
Deriving value from the Global Value Chain (GVC) concept: an approach to regional industrial policies
The need for sustainable structural transformation in Sub-Saharan Africa (SSA) is universally accepted and has more recently been reinforced by several international organisations, various structures within regional economic communities and analytical and policy-oriented literature. A convincing and effective regional industrial policy is one of the cornerstones of the Southern African Development Community’s (SADC) regional integration strategy with member countries committing themselves to its implementation. However, minimal progress has been forthcoming on this front, as is borne out by the 2011 SADC review on this policy.
Since the turn of the century, as a reaction to the phenomenal shifts in the trends of world trade, new analytical tools have been developed to better understand these shifts and improve the quality of information for policy makers regarding the nature of sustainable industrialisation at a country, regional and international level. The framework of the ‘global value chain’ (GVC) has become pivotal to the analysis of industrial policy today. Even though much of the analysis regarding GVC has hardly been specific to regional economic communities, this brief introduction argues that the framework of such analysis can possibly be extremely ‘valuable’ in instituting industrial policies at a regional level.
This working paper begins by assessing the limited extent of present levels of industrialisation in SADC, and by introducing the relationship between industrialisation and growth, further reinforces arguments made earlier regarding the urgent need for cohesive industrial policies in the region. The second part of the contribution looks at the concept of the GVC and its possible applicability in a regional context such as SADC. The paper concludes by suggesting a ‘needs’ analysis regarding the implications of the concept of GVCs to better inform regional policy analysts as to how to begin implementing a viable regional industrial strategy.
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.
Trade Reports
The ability of select sub-Saharan African countries to utilise TRIPs Flexibilities and Competition Law to ensure a sustainable supply of essential medicines: A study of producing and importing countries
The impact of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) on access to essential medicines in the developing world is an issue that has gripped stakeholders for years. The landmark Doha Declaration on TRIPs and Public Health, the 30 August Agreement of the WTO General Council (2003), and most recently, the December 2005 Decision of the TRIPs Council to permanently amend Article 31 of TRIPs, have increased the legal certainty on flexibilities available to developing countries. These developments have been criticised as remaining insufficient to address concerns about drug prices, and consequently, increased access to treatment for the poor. Instead of focusing on the debate above, this paper examines the degree to which countries in eastern and southern African have utilised the flexibilities contained in the 30 August Agreement to increase access to treatment in their countries. Three countries were chosen for their diversity in pharmaceutical manufacturing capacity and developmental status: South Africa, Kenya and Zambia.
The paper further examines the use of competition law and policy as a tool for reducing prices and consequently increasing access to essential medicines and points out the advantages to developing countries of using competition law and policy: first, the TRIPs Agreement accords member countries considerable flexibility in implementing competition law and policy most appropriate for its purposes; second, countries have leeway to define what constitutes anti-competitive behaviour; third, competition law and policy is well suited to implementation by an independent competition authority vested with strong investigative powers; and finally, competition law and policy has been successfully employed by South African activists and stakeholders to reduce the prices of essential medicines.
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.