Today’s Topics:

"African perspectives on the WTO and prospects for regional trade cooperation" | Trade Winds with Anabel González

The WCO issues its 2019 Illicit Trade Report

WTO issues 2020 edition of its flagship statistical publication

Blockchain and LDC trade during COVID-19

Brexit – Some Implications for Financial Services

General Council agrees guidelines for final stage of WTO DG selection

Free Trade pact could boost Africa’s income by $450bn - Report

China-Africa relations enter new era as easy money dries up

COVID-19: African Union and APO Group in partnership to reach more African news media, as the Union works to prevent deaths, save lives and prevent unnecessary harm to African economies

Morocco Imposes Higher Import Tax on Turkish Textile Products

AU-Led Tripartite Negotiation Begins This Afternoon

AfCFTA to commence operation in January 2021 - Alan Kyerematen

African Development Bank presents findings of the Angola Green Mini-Grid Market Assessment

INTERNATIONAL

The WCO issues its 2019 Illicit Trade Report – The World Customs Organization (WCO) issues its 2019 Illicit Trade Report (ITR), an annual publication which offers a comprehensive study of illicit trade flows through an in-depth analysis of seizure data and case studies voluntarily submitted by Member Customs administrations worldwide.  The information captured in the ITR provides essential insight into the occurrences of illicit trade, thereby assisting Customs administrations in understanding trends and patters and making enlightened decisions to secure cross-border trade. The importance of comprehensive data analysis is indisputably a key component to support effective and efficient Customs enforcement activities.  This year, the analysis provided in this Report is based on data collected from 137 Member administrations and the report consists of six sections: Cultural Heritage; Drugs; Environment; IPR, Health and Safety; Revenue and Security.

For the fourth year in a row, the WCO has partnered with the Center for Advanced Defense Studies (C4ADS), a Washington, D.C.-based non-profit organization dedicated to providing data-driven analysis and evidence-based reporting, thereby enriching readers’ experience with advanced data visualization technologies and enhanced data analysis.   “Even though data collection is still a major challenge, I am pleased to note the progress with regard to our Members’ understanding of the importance of capturing and sharing quality data in order to develop effective enforcement strategies,” said WCO Secretary General Dr. Kunio Mikuriya. He also expressed his gratitude to Customs administrations having reported their seizure data in the WCO CEN database. (WCO)

Key Words: WCO, Trade Policy, COVID-19

WTO issues 2020 edition of its flagship statistical publication – World Trade Statistical Review 2020 looks into the latest trends in global trade, with an in-depth analysis of trade in goods and services and in value-added terms. It points to the major changes in recent years, highlighting the leading traders, the best-performing regions, the most traded goods and services, and the performance of least-developed countries. The publication also looks into the impact of COVID-19 on global trade and the outlook for 2020. In an introduction to the publication, Director-General Roberto Azevêdo says: “The WTO plays a critical role in compiling and analysing trade data. While the ongoing pandemic represents a dramatic break with nearly all recent economic trends, the fact remains that patterns in global trade offer useful insights for what the future may hold.” The report looks into the shifting patterns in global trade across a range of sectors, pinpointing areas that have seen major changes in recent years. These include trade in renewable energy goods, such as solar panels and electric cars, and trade in plastics. It also focuses on the impact of trade tensions in sectors such as iron and steel and the effects of the COVID-19 pandemic in areas such as tourism.

The report's analytical chapters are complemented by 65 tables providing a detailed breakdown of various aspects of merchandise trade and trade in commercial services.  The merchandise trade data in the report was compiled in collaboration with the United Nations Conference on Trade and Development (UNCTAD) while commercial services data was jointly produced with UNCTAD and the International Trade Centre (ITC) in cooperation with the United Nations Statistics Division. The publication can be downloaded here. All charts and tables may be downloaded in Excel format. Printed copies will be available in August. (WTO)

Key Words: WTO, Trade Policy, COVID-19

Blockchain and LDC trade during COVID-19 – With the rise of the COVID-19 pandemic in a deeply interconnected global economy, the socio-economic and public health impacts of the crisis are becoming more apparent. These impacts are revealing the disproportionate effect of the crisis on the least developed countries (LDCs), with consensus being a likely economic downturn that will be more severe for LDCs. Challenges such as disruptions to supply chains beleaguered LDCs pre-COVID, and, in response, governments across the world were creating policy environments favourable to stimulating competitiveness and value addition. The supply challenges for LDCs have now magnified, and efforts will need to continue to stimulate the economies that are most in danger. Mitigating the harmful effects of the current pandemic and accelerating a post-crisis recovery may well depend on how well LDC governments can overcome transaction and confidence frictions in digital commerce. Lockdowns, social distancing measures and the need for virtual engagements mean such government actions are timely.

The challenge - Ongoing assessments of the COVID impact on trade across the LDCs show that the failure of market-oriented, productive-sector interventions to boost sales and product offerings is a major economic risk. Analysis conducted by the Enhanced Integrated Framework (EIF) (assessing dedicated COVID-19 risk management action sheets across the LDCs), shows that this is a cross-cutting global risk that could broadly impact export earnings and the human development indicators in these countries. (trade4devnews)

Key Words: LDCs, Trade Policy, COVID-19

Brexit – Some Implications for Financial Services – Most discussions surrounding trade tend to focus on the trade of goods. Physical items, whether primary or manufactured produ as they are by their personal nature and therefore by the bounds of language, custom, culture and local regulation or licensing, used to be less tradeable, but this has changed as a result of technological, regulatory and market developments. The services sector is increasingly the largest sector of any economy. Services currently account for approximately 70% of the European Union’s (EU) gross domestic product (GDP), and make an equivalent contribution to employment in the EU. Accelerating since the policies implemented under Margret Thatcher in the 1980s, the UK’s economy is even more services focused. In 2018, about 81% of UK’s economic output was made up of services.

As the services sector has grown, so too have opportunities to specialise in specific types of services and to trade these services across several jurisdictions. So, while the UK runs a consistent trade deficit in respect of goods, in services, it runs a surplus both with the EU and the rest of the world. The UK has been able to develop its financial services sector to the point that London has vied with New York as being the foremost financial centre in the world. A big part of the competitiveness of London as a financial centre has to do with the UK’s participation, through EU membership, in the single market. The development of the financial services sub-sector has benefited both the UK and the EU. London and its surrounding areas have become one of the most prosperous regions within the EU. EU countries have benefitted from the “deep capital markets” based in London, themselves a function of the scale and the number of market participants in the financial services sector ecosystem.

The increasingly important role of services and services trade is well recognised in global trade. Services featured in the Uruguay Round of negotiations which culminated in establishment of the World Trade Organisation. The first multilateral agreement on services trade – General Agreement on the Trade in Services (GATS) came into force in 1995. GATS sought to replicate what had already been achieved over many years, starting from 1948, with the General Agreement on Tariffs and Trade (GATT) in respect of goods. (tralacBlog)

Key Words: Brexit, Trade Policy, COVID-19

General Council agrees guidelines for final stage of DG selection – Director-General Azevêdo announced in May that he would be stepping down on 31 August, a year before the expiry of his mandate. General Council Chair David Walker of New Zealand immediately began the process of determining his successor in accordance with the procedures for the appointment of the Director-General that were agreed by the General Council in December 2002 (WT/L/509).  Following consultations with members, it was agreed that the nominating window for DG candidates would run from 8 June to 8 July. In total, eight nominations were received. Each candidate came to Geneva between 15 and 17 July to give presentations to and take questions from the General Council. During July and August, the candidates are engaging in the campaign stage of the process in order to “make themselves known to (WTO) Members”. Following the campaign period, which runs until 7 September, the final phase of the process will commence. During this third phase, the General Council will seek to narrow the field of candidates through consultations led by Amb. Walker. The objective is to choose a candidate by a consensus of all WTO members.

The decision taken on 31 July pertains to the so-called Phase 3 of the DG selection process. Amb. Walker explained to the members that the steps that had been agreed were in keeping with the 2002 Guidelines and with past practice, notably the 2013 process which resulted in the selection of DG Azevêdo. Amb. Walker told WTO members that he, together with the Dispute Settlement Body Chair Dacio Castillo of Honduras and the Trade Policy Review Body Chair Harald Aspelund of Iceland, would meet individually with each WTO member between 7 and 16 September. This first round of consultations would be followed by two more, during which the field of candidates would gradually be reduced from eight to five and down to two for the final round. (WTO)

Key Words: WTO, Trade Policy, Global Trade

PAN AFRICA

"African perspectives on the WTO and prospects for regional trade cooperation" | Trade Winds with Anabel González - Among the challenges confronting the global trade landscape today, Africa aspires to a leadership role in the World Trade Organization (WTO). It is also preparing to leverage the newly minted African Continental Free Trade Area (AfCFTA) to reignite trade and investment in a market with a combined GDP exceeding US$2.5 trillion and a population of 1.3 billion people. Is a new African voice on trade emerging? How does Africa view WTO reform and how could it contribute to strengthening global trade cooperation? How can the AfCFTA help Africa recover from the pandemic.

 Joining this episode of Trade Winds are: Host: Anabel González, Nonresident Senior Fellow
Guests: Dr. Vera Songwe, Executive Secretary, UN Economic Commission for Africa and  Robert Z. Lawrence, Professor of International Trade and Investment, Harvard Kennedy School, and Nonresident Senior Fellow, Peterson Institute for International Economics. If registration for this event is full, please check our events page for a livestream: https://www.piie.com/events. Time Aug 5, 2020 10:30 AM in Eastern Time (US and Canada). (PIIE)

Free Trade pact could boost Africa’s income by $450bn  -  The African Continental Free Trade Area (AfCFTA) is a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion, a new World Bank report has found. If implemented fully, the trade pact could boost regional income by seven percent or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035. The report suggests that achieving these gains will be particularly important given the economic damage caused by the COVID-19 (coronavirus) pandemic, which is expected to cause up to $79 billion in output losses in Africa in 2020. The pandemic has already caused major disruptions to trade across the continent, including in critical goods, such as medical supplies and food. Most of AfCFTA’s income gains are likely to come from measures that cut red tape and simplify customs procedures. Tariff liberalisation accompanied by a reduction in non-tariff barriers—such as quotas and rules of origin—would boost income by 2.4 percent, or about $153 billion. The remainder — $292 billion — would come from trade-facilitation measures that reduce red tape, lower compliance costs for businesses engaged in trade, and make it easier for African businesses to integrate into global supply chains, the report said.

Successful implementation of AfCFTA would help cushion the negative effects of COVID-19 on economic growth by supporting regional trade and value chains through the reduction of trade costs. In the longer term, AfCFTA would provide a path for integration and growth-enhancing reforms for African countries. By replacing the patchwork of regional agreements, streamlining border procedures, and prioritising trade reforms, AfCFTA could help African countries increase their resiliency in the face of future economic shocks. “The African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans,” said Albert Zeufack, the World Bank’s Chief Economist for Africa. “The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But its successful implementation will be key, including careful monitoring of impacts on all workers –women and men, skilled and unskilled—across all countries and sectors, ensuring the agreement’s full benefit.”(Ghana Web)

Key Words: AfCFTA, Regional Integration, World Bank

China-Africa relations enter new era as easy money dries up – While China may hold the cards when it comes to loan refinancing, a fundamental shift towards alternative forms of economic engagement may be required to move the relationship forwards. Although Africa has soaked up billions of dollars in Chinese loans and investment over two decades, African trade with China remains heavily tilted towards precarious resource exports from a small number of commodity-rich economies. The pandemic’s disruption of global supply chains could offer a renewed opportunity for Chinese foreign direct investment into more productive export-oriented sectors of the African economy such as manufacturing and agriculture, says Oqubay.  “Many countries have seen how vulnerable value chains are so the possible outcome of this is in beginning a diversification from Asia to Africa and Latin America. There is also an accelerated momentum that regional value chains will also be strengthened. One of the key weaknesses of trade between China and Africa is that although the volume has increased there’s a major imbalance – it’s mainly machinery and high value-added goods coming from China while African goods are mainly non-value added. On the trade side I think the Chinese government will take additional measures to encourage imports from the continent.” 

Ryder agrees that the crisis offers an opportunity. “You have pessimists in China but you also have people who think this is a point where we should be investing more into the rest of the world and accelerating what they are doing. With regard to getting manufacturers to shift out of China, there had not been much of a shift in to Africa as yet – there had been specific countries like Ethiopia, Senegal, Rwanda attracting Chinese investment – but it’s possible there’s a bigger push because of diversification.”  On both trade and debt renegotiations, African governments should “compare notes” with their peers to forge a healthier and more sustainable relationship with China going forwards, says Ryder.  “I think most [African governments] don’t feel they’re in a debt trap but where they are expressing concern is on trade. They want to get more exports into China and are really pushing on that agenda starting in 2018. Some are much more interested in FDI from China than loans from China. They need to really learn the lessons from the past and be cautious on the specific terms and conditions for all those things and exchange notes, just as they need to on loans.” (African Business)

Key Words: AfCFTA, Trade Agreement, China

COVID-19: African Union and APO Group in partnership to reach more African news media, as the Union works to prevent deaths, save lives and prevent unnecessary harm to African economies -  The African Union's Africa Centres for Disease Control and Prevention (Africa CDC) is joining forces with the APO Group (www.apo-opa.com), the leading pan-African communications and business consultancy, to organise regular online press conferences once every month, to provide Africans with vital information on the continental preparedness and response to the COVID-19 pandemic, as per the mandate given to the Africa CDC by all 55 African Heads of State and Government. This support by the APO Group will complement the weekly press briefings that the Africa CDC has been holding every Thursday since March 2020.

The online press conferences will be hosted by Dr John Nkengasong, Director of the Africa CDC. They will deliver, among others, overviews of the epidemiologic situation at a continental level, progress updates on the African Union's Partnership for COVID19 Testing (PACT), capacity building being undertaken with and for AU members states, updates on vaccinations and supplies of COVID19 materials to member states, and other updates including initiatives being rolled out by African Heads of State and Government. As with the weekly AfricaCDC briefings, audiences will also get the chance to hear from a representative of one of the 55 AU member states, under the AfricaCDC initiative to provide country specific information and data and to share experiences across the continent.

"Africa has over 1.3 billion people, and reaching them all with COVID19 information is a major priority of the African Union, as we work to prevent deaths, save lives and prevent unnecessary harm to economies. These online press conferences with APO Group will provide us with a unique way of connecting with many more people all over Africa than we reach through our regular Thursday morning briefings," said Dr Nkengasong. "This is a practical and commendable example of the African private sector supporting African led efforts to fight COVID19. The APO Group's vast online network gives us the confidence that we will be reaching not only the largest possible media audience, but also members of the public all over the continent." (AU)

Key Words: COVID-19, Africa, Business

NORTH AFRICA

Morocco Imposes Higher Import Tax on Turkish Textile Products – Morocco’s imports of Turkish textile and clothing products are set to undergo an import tax of 36% instead of 27%. The new measure, aiming to support the domestic textile industry, went official on Monday, July 27. The tax was part of the amended 2020 Finance Bill, approved by the Moroccan government and Parliament earlier this month. Morocco’s Administration of Customs and Indirect Taxes, affiliated to the Ministry of Economy, announced the new tax rate in a statement on Monday. Morocco’s decision to increase the import tax aims to promote local production, especially during the COVID-19 pandemic. The protectionist measure also hopes to limit imports of textile products, which have strongly competed with domestic products.

Morocco and Turkey signed a Free Trade Agreement in 2004. The agreement took effect two years later, in 2006. Since then, Morocco’s trade balance with Turkey has been largely in deficit. Minister of Industry Moulay Hafid Elalamy revealed that Morocco loses $2 billion annually in its trade deal with Turkey. The Turkish textile industry also caused Morocco a loss of around 44,000 jobs in 2017 alone, Elalamy revealed. At the start of 2020, Rabat and Ankara went into negotiations to review their Free Trade Agreement. “Morocco and Turkey will review the Free Trade Agreement. [Turkey] will work to bring industrial investors and [investors from] other sectors to Morocco,” Elalamy told the press following a high-level meeting with Turkish officials. The countries, however, suspended the negotiations due to the COVID-19 pandemic. (Morocco World News)

Key Words: FTA, North Africa, Textile Industry

EAST AFRICA

AU-Led Tripartite Negotiation Begins This Afternoon –  A new round of tripartite negotiation between Ethiopia, Sudan and Egypt on the Grand Ethiopian Renaissance Dam (GERD) have resumed yesterday, according to Ministry of Water, Irrigation, and Energy.  The negotiation led by the African Union have been suspended for some two weeks after it had convened for 11 days till the end of July 13, 2020. The meeting was supposed to continue a week ago, but was delayed by a week due to a request by the government of Sudan, the ministry said. According to the ministry, the negotiation will continue for the coming one week, beginning this afternoon. This week’s negotiations is expected to deliberate on the direction set by the leaders of the three countries as per the document presented to them after the previous 11 days negotiation. The ministry has also reiterated Ethiopia’s commitment to work for the successful completion of the negotiation in a way that benefits all parties in an equitable and reasonable manner.  (ENA)

Key Words: East Africa, Business, Regional Integration

WEST AFRICA

AfCFTA to commence operation in January 2021 - Alan Kyerematen – The African Continental Free Trade Area (AfCFTA) whose Secretariat is hosted by Ghana in Accra, is to commence operation by January 2021.AfCFTA was created by the African Union (AU) to facilitate and boost trade among member states of the Union. The Minister of Trade and Industry, Alan John Kojo Kyerematen made this known when members of the Committee on Foreign Affairs of Parliament paid a visit to the AfCFTA Secretariat. Mr Alan Kyerematen said, "originally the AfCFTA was scheduled to be officially commissioned on 31st March 2020 for the commencement of trading among member states under the agreement on 1st July 2020 but the arrangements were rescheduled following the outbreak of COVID-19." The Minister said, "African Council of Ministers of Trade who will have oversight responsibility for the AfCFTA will hold a meeting in August 2020, to be followed by a meeting of African Heads of State in December 2020 to approve outstanding work on rules of origin and market access offer before AfCFTA commences operation in January 2021."

The Minister said as part of Ghana's obligation to host the Secretariat of AfCFTA, the country is required to provide a fully furnished office space in a secured and easily accessible location for the Secretary General of AfCFTA and also provide a fully furnished permanent residence for him (the Secretary General of AfCFTA). In addition, Ghana is required to grant diplomatic immunity to staff of AfCFTA and their dependents. In bidding for the offer to host the Secretariat, the Minister said Ghana was required to offer US$ 10 million as settling in grant facilitate the setting up of the AfCFTA Secretariat. The Minister said the AfCFTA is a tremendous opportunity for Ghana and all AU member states. (Ghana Web)

Key Words: ECOWAS, Regional Trade, AfCFTA

SOUTHERN AFRICA

African Development Bank presents findings of the Angola Green Mini-Grid Market Assessment– The African Development Bank hosted a webinar to present the findings and recommendations of the Angola Green Mini-Grid Market Assessment report, implemented through the Sustainable Energy Fund for Africa. The assessment was conducted with the technical assistance of Carbon Trust, in collaboration with the Government of Angola, and in consultation with key stakeholders such as development partners and private sector representatives. The report assesses key enabling factors required for large scale mini-grid development, as well as the overall potential of the mini-grid market in Angola, in alignment with the country’s energy sector development strategy. The report estimates that 9.9 million people, representing 32% of Angola’s total population, and 47% of the non-electrified population, could be best served by mini-grid solutions. It also highlighted the regulatory gaps that exist in the mini-grid market, including insufficient incentives for private sector participation. Overall, the assessment recommends that addressing the gaps could unlock an estimated demand for mini-grids of approximately $252.5 million in Angola, based on the average annual electricity expenditure per capita, in rural areas.

The webinar held on 23 July 2020, provided a platform for over 100 participants to discuss opportunities and challenges relating to the development of green mini-grids in Angola, as well as enhanced coordination and partnerships towards the advancement of sustainable expansion of clean energy in the Southern African country. Among participants were representatives of the government, from the Ministry of Energy and Water, the Ministry of Culture, Tourism and Environment, and the Ministry of Economy and Planning.  Development partners, private sector actors, and national and regional associations in the sector also took part. In his opening remarks, the African Development Bank Country Manager for Angola, Joseph Ribeiro, noted that the energy sector plays a vital role in national efforts towards poverty reduction and sustainable socio-economic development, as per the country’s economic diversification agenda.(AfDB)

Key Words: Angola, AfDB, Regional Trade