ATPC DAILY DIGEST 13 AUGUST 2020
Today’s Topics:
Boeing-Airbus: The tariff saga continues - (hinrich foundation)
Discussing Customs Integrity: the WCO A-CIP Programme Hosts a New Web Series – (WCO)
Facilitating Cross-Border Trade Through a Coordinated African Response to Covid-19 – (UNECA)
African ports need to learn the lessons of Beirut – (African Business)
ECA launches Price Watch Centre for Africa – (UNECA)
Morocco’s Trade Deficit Decreased in First Half of 2020 – (Morocco World News)
As talks progress, Ethiopians debate whether joining the WTO is a good idea – (The Africa Report)
Unveilling locally-made VW vehicles signifies a buoyant economy- (Ghana Web)
New-vehicle export revenue declined by R21bn in H1 2020 – (Engineering News)
IMPORTANT ANNOUNCEMENT
A Guide To Gender Mainstreaming in African Continental Free Trade Area (AfCFTA) National AfCFTA Strategies – As COVID-19 spreads rapidly across the continent, evidence highlighting the disproportionate economic and social impact of the pandemic on women is clear. The vast majority of women’s employment is in the informal sector, which has been worst hit by the economic fallout of COVID-19. Border closures have cut off livelihoods of entire communities that depend on trading carried out by small-scale and informal cross-border traders, who are predominantly women. Women are also disproportionately represented in industries that are more affected by COVID-19, including leather, textiles and apparel. Likewise, the pandemic has put in peril other sectors that women depend on for their livelihoods, including smallholder farming, horticulture, travel, tourism and hospitality. Of particular concern, is the exponential increase in gender-based violence of all types.
Notwithstanding these challenges, there is a unique opportunity in a post-pandemic Africa to put women at the centre of building back more inclusive economies that serve the AU Agenda 2063 and the broader 2030 global agenda that “leaves no one behind”. Extending equal economic participation to women in the AfCFTA requires policy makers to analyse both the opportunities for and potential barriers to inclusive gains. In an effort to enhance the knowledge of policy makers and other key stakeholders on how to advance gender equal outcomes in AfCFTA implementation, the African Trade Policy Centre (ATPC) and the Institute for Economic Development and Planning (IDEP) are organizing a four-week online course entitled “A Guide To Gender Mainstreaming in National AfCFTA Strategies”.
Applicants to the course are expected to have, as a minimum, a bachelor’s degree preferably with a background in trade, economic development and international relations and courses related to statistics, planning, project man-agement and monitoring project evaluation. In addition, two years of work experience will be required. Women candidates are strongly encouraged to apply. Until the registration deadline, participants are accepted to the course on a rolling basis and subject to availability of slots. Applications must be completed exclusively on IDEP online application platform at https://www.unidep.org/?appl (UNECA)
INTERNATIONAL
Africa to occupy second place in terms of FCCU capacity additions by 2024: GlobalData – Data and analytics firm GlobalData expects Africa to occupy the second place in terms of global refinery fluid catalytic cracking units’ (FCCU) capacity additions by 2024 . With total capacity additions of 323 mbd by 2024, the region is expected to contribute around 27 per cent of global FCCU capacity growth. In Africa, Nigeria accounts for the majority of the 247 mbd capacity added. Asia is expected to lead capacity growth of the global refinery fluid catalytic cracking units (FCCU), contributing approximately 45 per cent of global capacity growth by 2024. The region will likely add 542,000 barrels of FCCU capacity per day (mbd) by 2024. GlobalData’s report, ‘Global Refinery Fluid Catalytic Cracking Units (FCCU) Outlook to 2024 – Capacity and Capital Expenditure Outlook with Details of All Operating and Planned Fluid Catalytic Cracking Units’, reveals that the global capacity of FCCU is expected to increase by 1.2 million barrels per day (mmbd), from 21.2 mmbd in 2020 to around 22.4 mmbd in 2024. Of the total capacity additions, 1.0 mmbd is expected to come from new-build planned and announced projects while the remaining 0.2 mmbd is likely to come from the expansions of active projects. Haseeb Ahmed, oil and gas analyst at GlobalData, commented, “Of Asia’s total FCCU capacity additions of 542 mbd by 2024, 151 mbd is likely from active expansion projects while new-build projects are expected to contribute the rest of about 391 mbd by 2024. In the region, China accounts for most of the capacity additions with a combined total of nearly 481 mbd by 2024. (Oil Review Africa)
Key Words: Global Trade, Africa, Renewable Energy
Boeing-Airbus: The tariff saga continues – In a new episode of the Boeing-Airbus illegal subsidies dispute, the US will rotate its retaliatory tariffs on France and Germany to inflict maximum pain. This “carousel of pain” could have insidious impacts, including on the rise of China's civilian aircraft industry. The US on Wednesday announced a refinement to the existing package of retaliatory EU tariffs it had previously put in place as part of the ongoing Boeing-Airbus subsidies dispute. The trade coverage value and tariff levels remain unchanged, but some tariffs were shifted onto France and Germany from Greece and the UK. The action is being taken pursuant to a provision of US trade law which allows the US to tighten the screws on non-complaint trade partners.
The “carousel of pain”- The Carousel Retaliation Act of 1999 (proposed as an amendment to section 301 of the Trade Act of 1974) allows the US Trade Representative to periodically review and rotate (hence: carousel) its product retaliation list when a country has failed to fully implement a WTO ruling. The intention is to shift the tariffs to where they will inflict the maximum economic pain at any given time in order to “encourage” the offending party to bring its practices into WTO compliance. Under today’s action, tariffs will be assessed on an as yet unspecified list of products from France and Germany beginning 1 September, while existing retaliatory tariffs on an equivalent amount of trade from Greece and the UK will be dropped. The total amount of trade covered (US$7.5 billion) and the tariff rates applied (15% for aircraft and 25% for all other products) remains unchanged. These tariffs were authorized by the WTO in October 2019.
A sword of Damocles - This so-called “carousel of pain” is even more insidious than it appears at first glance. In addition to any rotating tariffs that actually are applied, it creates damaging uncertainty about what tariffs could be applied. Even product categories or industry sectors that are ultimately left untouched could feel constricted by the ever-present sword of Damocles hanging overhead. The EU has been adamant that carousel retaliation is in fact so damaging that it breaches WTO rules on “equivalence”, but no definitive ruling has been rendered. Although the carousel approach provides a new plot twist in the long storyline of the Boeing-Airbus dispute, the underlying dynamics remain relatively unchanged. (hinrich foundation)
Key Words: Global Trade, Trade Policy, COVID-19
Discussing Customs Integrity: the WCO A-CIP Programme Hosts a New Web Series - The WCO’s Anti-Corruption & Integrity Promotion (A-CIP) Programme is hosting a new web series on various topics relating to Customs and integrity. Guest speakers from WCO Secretariat and Membership are invited to discuss issues concerning the fight against corruption in Customs and provide insights into key WCO integrity tools and instruments, as well as the importance of related areas such as the WTO Trade Facilitation Agreement (TFA). Ricardo Treviño Chapa, WCO Deputy Secretary General, underlined that, within the context of the Covid-19 pandemic, “now more than ever, as the world faces new social and economic challenges, combatting corruption in Customs is critical to maintaining trust in and security of public institutions”. Four episodes of the web series have been released so far, introducing what the WCO does about corruption in Customs; how to talk about corruption in Customs; key WCO integrity-related tools; and who is involved in WCO integrity activities.
Future episodes will cover topics such as some ways to measure corruption in Customs, insights on the Revised Arusha Declaration, as well as discussions focusing on key factors within the Revised Arusha Declaration. For example, how the Regulatory Framework & Reform and Modernization key factors are connected with the Revised Kyoto Convention and the WTO Trade Facilitation Agreement (TFA) commitments. WCO Members, other international organizations, and representatives of the private sector alike will find those episodes useful and insightful, and that will help generate further discussion around the topic of integrity in Customs. For more information about the web series, WCO A-CIP Programme or WCO integrity-related activities, please visit the WCO A-CIP Programme page, or contact capacity.building@wcoomd.org. (WCO)
Key Words: WCO, Global Trade, Customs Policy
PAN AFRICA
Facilitating Cross-Border Trade Through a Coordinated African Response to Covid-19 – The coronavirus disease pandemic, while above all a public health crisis, has presented the African continent with unprecedented economic challenges. In order to contain cross-border transmission of the virus, countries have introduced various restrictions to cross-border and transit freight transportation. Almost all African countries have now to a differing degree suspended international flights, introduced 14-day quarantine for entrants into the country, and closed land or maritime borders. As demonstrated in table 1, 38 of Africa’s 54 countries have announced land closures in some form, and 17 countries have announced maritime border closures. Under a set of strict regulations, these closures are targeted at reducing the movement of people while allowing exemptions for the movement of emergency and essential freight supplies. Such regulations typically cover mandatory testing, sanitizing trucks, limiting the numbers of crew members on trucks, and designating transit resting areas. Download the Report. (UNECA)
Words: UNECA, Trade, Regional Integration
ECA launches Price Watch Centre for Africa - The United Nations Economic Commission for Africa (ECA) has launched a first-of-its-kind continental tool that offers a unique view of price variations in African countries, regional economic communities and at continental level. During the virtual launch on 11 August 2020, ECA Executive Secretary, Vera Songwe, noted that the role of national statistics offices and national revenue authorities in ensuring that this platform has timely, accurate & up-to-date data will be crucial. She cautioned that the “lack of price data to enable us monitor, analyse and manage economies through informed policy decisions has often led to civil unrests” because when prices of things like food, oil, and energy go up, “people take to the streets.” The initiative intends, therefore, to bring the prices and exchange rates of all African countries into one platform that’s readily accessible to citizens, decision makers and other stakeholders. The platform will involve monthly, quarterly and annual analyses of inflation. The launch was chaired by Ghana’s Vice President, Mahamudu Bawumia, who applauded ECA for the initiative, stating “this one-stop-shop for finding data” will go a long way to “increase ECA’s relevance in Africa.”
“We need data on price movements to gauge how changes in consumer prices alone may be affecting the trends in income distribution, poverty levels and inequalities, including especially among those who live on retirement incomes,” Said Mr. Bawumia. He pointed out that “as we open the doors to continental free trade, price level data will enable across-country comparisons and understanding of regional markets and the competitiveness of producers across Africa.” The vice president urged African governments to invest in ICT infrastructure and digital data collection tools. He called on heads of national statistical offices to “work with the ECA in transforming our continental statistical systems.” In the same vein, Cameroon’s Minister of Economy, Planning and Regional Development - Alamine Ousmane Mey - said “We need to strengthen the relationships between national information and statistics institutions and the ECA” because “without data and without information, we cannot evaluate and monitor public policy” “We are talking about compiling data, which means integrating Africa. I see a bright future for this initiative,” said Mr Mey. In his remarks, South Africa’s Minster of Finance, Tito Titus Mboweni, highlighted the fact that “Data helps political leadership understand the difference between what they might wish to have and what the reality on the gourds is.” (UNECA)
Words: UNECA, Trade, Regional Integration
African ports need to learn the lessons of Beirut – The disastrous explosion in Beirut on 4 August 2020 was caused by hazardous materials stored in the port. How likely is a similar incident in an African port and what would be required to prevent it? Maritime security experts Christian Bueger and Scott Edwards analyse the risks. The disastrous explosion in Beirut on 4 August 2020, which was reported to have taken at least 135 lives at the time of writing, was fuelled by 2,750 tonnes of the highly reactive chemical ammonium nitrate that had been held in the port for nearly seven years. As such, the disaster puts a spotlight on the global trade in hazardous materials and the importance of port security. It also contains some important warnings for African ports. As recorded in shipping industry journal The Arrest News, in 2013 the chemicals arrived onboard the MV Rhosus. Flying the Moldovan flag, the vessel was heading to Biera in Mozambique. En route the ship faced technical problems and entered Beirut port. Upon inspection the vessel was considered unsafe, and not allowed to proceed. The vessel and its cargo were abandoned and efforts to get in touch with the owner and charterers failed. With no one claiming the property, the dangerous chemicals were stored in the port’s warehouses. While the tragedy is still under investigation and all the details are as of yet unknown, the inappropriate storage and handling of the hazardous material played a major role in the event.
Risks for African ports - What, if any, are the lessons for Africa? The very fact that the chemicals were destined for Mozambique raises concerns. Hazardous materials are frequently shipped to African ports. Even when African ports are not the ultimate destination of dangerous substances, containers may be held in transit. Weak management might increase the length of time such materials have to be managed, and the risk they entail. As African ports are increasingly expanded as part of blue economy strategies, these risks need to be taken seriously. Ports in Africa are also faced with another kind of material that can be hazardous: waste. The waste trade is a thriving global economy, with material ranging from electronics (e-waste), plastic, medical, chemical or even radioactive waste shipped across the globe daily. Ports in West and East Africa are the primary destinations of such goods. (African Business)
Words: Africa, Trade, Regional Integration
Afreximbank provides update on Mansa due diligence platform, launches trial for international FIs – Since its launch in 2018, Mansa, the African Export-Import Bank’s (Afreximbank) customer due diligence (CDD) platform, has onboarded nearly 200 African financial institutions (FIs) and corporates. Meanwhile, as barely a handful of international FIs have signed up to use the solution, the bank is now looking to trial the platform with a small selection of banks. The platform aims to create a single source of primary data required for the conduct of customer due diligence on African entities engaged in trade, both FIs and companies. By storing all the information necessary for know your customer (KYC), anti-money laundering (AML) and counter-terrorism evaluations in one place, the aim is to make it cheaper and easier for international FIs to onboard African banks and businesses of all sizes, and so reverse a trend of global banks leaving the continent’s trade finance space. Afreximbank’s director for compliance, Maureen Mba, tells GTR that the onboarding process started in May and is ongoing, and that, to date, Mansa has seen around 190 African FIs and corporates signed up as ‘contributors’ on the platform. These contributors are non-fee paying entities that voluntarily upload information on various aspects of their organisation using standardised KYC/AML templates, which is then published after going through an independent corroboration process. Contributors are likely to be African entities, such as banks, as well as companies, both large and small.
Afreximbank is now also pushing to populate the platform with ‘users’, the other entity on the platform, which pays a subscription fee and is able to see information uploaded by all contributors. These entities are likely to be international FIs in need of information on African banks or companies for their KYC processes. To date, Mba says there are “one or two” such institutions making use of the platform, but that the bank is hoping to boost these numbers by launching a free trial involving a handful of global banks this week. Mansa has been years in the making, and had been slated to get going towards the end of 2019. Having officially launched the platform in July 2018, Afreximbank’s president Benedict Oramah said at a press conference last year that the launch marked the conclusion of the technology build, and that the bank was still working to populate the platform with due diligence information. “Last year [2018] we produced the product called Mansa. But beyond creating the product we needed to have it populated with data. We expect that by the end of the year we will open Mansa up for people to start using it,” Oramah said. (GTR)
Words: Afreximbank, Africa, Regional Integration
NORTH AFRICA
Morocco’s Trade Deficit Decreased in First Half of 2020 – The Moroccan Exchange Office has revealed that Morocco’s trade deficit decreased by 16.2% during the first half of 2020. The deficit translates to more than MAD 85.58 billion ($9.2 billion). The Exchange Office attributes the decrease in Morocco’s trade deficit to the falls in imports and exports by 17.5%, to MAD 206.89 billion ($22.3 billion), and 18.03%, to MAD 121.3 billion ($13.1 billion), respectively. The figures represent a comparison to the first half of 2019. The office’s announcement came as part of its bulletin on foreign trade indicators for Morocco, issued in June. The report noted that quarter-on-quarter, the fall came to 25.1% for imports and 23% for exports. The Exchange Office also revealed that the coverage rate fell slightly, by 0.6 points, to 58.6%. Regarding the drop in goods imports, the Exchange Office linked it to the decline in purchases of almost all products. This includes finished consumer goods, which decreased by MAD 14.03 billion ($1.5 billion), followed by capital goods with a decline of MAD 13.14 billion ($1.4 billion).
Energy products purchased declined by MAD 12.04 billion ($1.3 billion), semi-finished products by MAD 8.8 billion ($953 million), and raw products by MAD 2.07 billion ($224 million). The office attributes the exports decline to the decrease in sales in almost all sectors. This includes the automotive industry, recording a decrease of 33%, or MAD 28.14 billion ($2.9 billion), textile and leather by 34.9% (MAD 12.31 billion or $1.33 billion), aeronautics by 18.1% (MAD 6.94 billion or $748 million), and agriculture and food processing by 4.3% (MAD 33.15 billion or $3.5 billion). (Morocco World News)
Words: North Africa, Trade, Business
EAST AFRICA
As talks progress, Ethiopians debate whether joining the WTO is a good idea – After eight years of stalemate, Ethiopia resumed its World Trade Organisation (WTO) accession process in January. Ethiopia’s transition to liberalism is fairly recent, having started in the 1990s. And the country’s launch of the process to join the WTO in 2003 is fully in line with this trend. While the previous government was willing to negotiate on trading goods, it was very reluctant to open up the services sector to privatisation and foreign investment. This stalled the negotiations. The current administration is more enthusiastic about implementing a more liberal economic policy. Ethiopia was the fastest-growing economy in 2017 according to the World Bank, yet its debt has been rising sharply, from more than 47% of GDP in 2014 to 61% in 2018. “We have borrowed significantly for infrastructure projects that have really not achieved the expected results,” Ethiopia’s finance minister Eyob Tekalign told parliament in 2019. The development model implemented by former prime minister Meles Zenawi was supposed to pay for the debt through export revenue. It is a difficult plan to implement in a continuing period of political turmoil. It was in this context that Prime Minister Abiy Ahmed came to power in 2018.
Reforms needed - Under constant pressure from the World Bank and the IMF, the Abiy administration has adopted radical reforms to move to a market economy. Included in the new policy is the privatisation of key sectors such as telecoms with Ethio Telecom, air transport with Ethiopian Airlines, banking and logistics. These reforms have enabled it to resume negotiations with the WTO. (The Africa Report)
Key Words: East Africa, Business, WTO
WEST AFRICA
Unveilling locally-made VW vehicles signifies a buoyant economy – On Monday, President Nana Akufo-Addo unveiled the first locally-made Volkswagen (VW) vehicle – which marks the first phase the company’s operations in the country and will see the German carmaker produce three cars daily, with plans to increase production capacity in the second phase. The president noted that the production presents a win-win opportunity for both foreign and local companies engaged in the industry’s value chain, and also puts the country on course to be an automobile hub in West Africa. VW’s investment in Ghana was announced during German Chancellor Angela Merkel’s official visit to Accra in August 2018. During the announcement, the government of Ghana and Volkswagen signed a Memorandum of Understanding to establish a vehicle assembly plant in Ghana. What makes the venture even more intriguing is that global players in the automobile industry are setting their eyes on Ghana as a preferred investment hub to establish assembly plants for assembling brands like VW, Nissan, Toyota and Sino trucks.
The car-making business is a high-tech industry that will bring with it skills and jobs to the country, and that should make the economy much more resilient. The firm’s Ghana Chief Executive Officer, Jeffrey Oppong Peprah, noted that cars assembled here come at a very low cost since they are over 10 percent lower in term of cost than imported ones. This will afford the Ghanaian middle-class an opportunity to own brand-new vehicles at cost-effective prices, and the country can also serve as a hub to export such vehicles to ECOWAS member-countries with the hope of seizing on the opportunity that AfCFTA will present when it takes off in January 2021. All in all, it represents the confidence the business community has in the Ghanaian economy which is a good sign since we have been labouring hard these past years to attract foreign direct investment in the economy. This move will undoubtedly promote import substitution and enhance Ghanaian exports, particularly within the framework of the African Continental Free Trade Area. Toyota is scheduled to start the assembly of vehicles in Tema during the last quarter of this year. (Ghana Web)
Key Words: AfCFTA, Regional Integration, West Africa
Collective support for new approaches as Burkina Faso starts work under the WCO A-CIP Programme - In January 2020, the Burkina Faso Customs Administration joined the WCO's Anti-Corruption & Integrity Promotion (A-CIP) Programme for Customs, funded by Norad. With the support of officials from the A-CIP Programme and through the mobilization of a local coordination team, the Directorate General of Customs of Burkina Faso has just initiated the Scoping Phase of the Programme by carrying out several preparatory and launching actions within the unprecedented context of the Covid-19 crisis. Carried out remotely because of the constraints imposed by the health crisis, both partners were required to adapt their working and intervention methods by relying on teleworking technologies, expertise and strong remote project management skills. The first activities consisted in agreeing on a remote collaboration approach and in developing a support kit, activity sheets and work tools.
In order to officially launch the Programme, a videoconference brought together on July 29, 2020, Mr. Elie Kalkoumdo, Director General of Customs of Burkina Faso and Ms. Andrea Hampton, Manager of the A-CIP Programme, as well as the steering team made up of administration’s contact points and members of the A-CIP team. The meeting was an opportunity to discuss the stakes, agree on the expected results and specify the working methods to be favored. The Director General recalled the strong commitment of the State of Burkina Faso, the government, the Ministry of Finance as well as the customs administration, as shown during the official presentation of the Customs Strategic Plan (2017-2021), in which the promotion of integrity plays an important role. At the end of the meeting, the Director General shared his vision, his expectations and his commitment: “I sense enthusiasm from all internal and external players when they talk about the positive impact of our approach to fighting corruption and promoting integrity. The A-CIP Programme improves and strengthens the scope of our actions initiated to date. If I am clearly the bearer of the integrity file as Head of the customs administration in Burkina Faso, I note through our exchanges that we are all ready to support each other, as integrity is first and foremost a collective responsibility”. (WCO)
Key Words: WCO, Trade, West Africa
SOUTHERN AFRICA
New-vehicle export revenue declined by R21bn in H1 2020 – The decline in new-vehicle exports from South Africa to Asia mainly reflects a drop in exports to Japan, the domestic automotive industry’s third largest vehicle export destination. The impact of Covid-19 on Japan’s automotive industry has been relatively mild, with the new-vehicle market declining by only 8.9% for the first half of 2020 compared with the same period last year, says Lamprecht. June 2020 new-vehicle sales in Japan reflected 6% growth compared with June 2019, which is encouraging news for South African vehicle exporters to the country, he notes. Despite the 40% decline in vehicle exports into the rest of Africa for the first half of the year, the continent remains a priority focus for the domestic automotive industry, adds Lamprecht. “South African-built bakkies, in particular, continue to be the popular choice of mobility for new-vehicle buyers on the continent. “In the order of 85% of the 6 934 vehicles exported into Africa during the first half of 2020 comprised bakkies, with Kenya, Zimbabwe, Ghana, and Nigeria topping the list of the 30 export destinations into the continent,” says Lamprecht. “Large infrastructure projects linking African countries and increasing intra-African trade could be the platforms to launch the continent into a new era of prosperity. Investment in infrastructure tends to increase business confidence, and simultaneously lowers transaction costs by making it easier for businesses to move people, goods and services. “In this regard, the implementation of the African Continental Free Trade Area (AfCFTA) could mark the beginning of a promising decade for Africa. Unfortunately, due to Covid-19, the implementation of the AfCFTA, which aims to create the world's largest free trade bloc, has been postponed from July, 2020 to 2021.”
The decline of vehicle exports to North America mainly relates to a decline in the new-vehicle market by 23.1% compared with the first half 2019. The US was the domestic automotive industry’s top vehicle export destination for several years, but as the same BMW and Mercedes-Benz models have been manufactured in both South Africa and the US since 2018, the market has substantially dropped in size. (Engineering News)
Key Words: SA, trade, Regional Integration
