ATPC DAILY DIGEST 7 SEPTEMBER 2020

Rules of origin, SPS and TBT under African Preferential Trade Arrangements – In order to better understand the opportunities and challenges of using preferential trade arrangements and regional trade agreements (RTAs), the African Trade Policy Center invites you to take a few minutes to complete this questionnaire. For the sake of simplicity, we will refer to these two types of regimes under the same acronym "RTAs" for "regional trade arrangements or agreements". This questionnaire will allow us to understand the types of firms among those that use and those that do not use RTAs. Please click or tap to follow the link : https://docs.google.com/forms/d/1H4I5E9tzHmgGW9DCKQY43TuMzohk6BgLbf5kbO3NA-w/viewform?edit_requested=true. (UNECA)

Key Words: UNECA, Trade Agreements, Rules of Origin

INTERNATIONAL

WTO reform and the crisis of multilateralism: A Developing Country Perspective – The book provides an analysis of the US-led reform proposals on the WTO. First it argues that these proposals seek to deepen the asymmetry of the rulesbased trading system. Second, the proposals seek to erode the gains that developing countries have made in the WTO through years of negotiation and advocacy, especially for their different levels of development to be recognised, through the principle of Special and Differential Treatment (S&DT). Third, the analysis indicates that these far-reaching proposals are part of the “new approaches” or “pathways” delineated by the US and European Union to change the strategic course of the WTO in a way that favours their own interests. Developing countries have responded to the proposals by submitting detailed documentation, mostly refuting and disagreeing with the US-led proposals. Their views are discussed in this book. Developing countries have called for the WTO to be development-oriented and inclusive.

The book critiques the mercantilist and narrow approaches of most of the US-led reform proposals and seeks to build a discourse around an alternative set of concepts or principles to guide the multilateral trading system, drawing on the work of Nobel Prize laureate Amartya Sen. These principles include a) fair trade and equity; b) capacity building and solidarity; c) balanced rules and social justice; and d) inclusiveness and transparency. In its latest Trade and Development Report, the United Nations Conference on Trade and Development takes a much broader view than the narrower remit of this book that only focuses on the multilateral trading system (UNCTAD, 2019). UNCTAD argues that the rules and practices of multilateral trade, investment and the monetary regime need urgent reform. UNCTAD is proposing a new set of principles, the Geneva Principles for a Global Green New Deal. These are a good starting point for the renewal of multilateralism, including a renewal of the rules-based multilateral trading system. It is indeed possible that the multilateral trade debate can be resolved only in a much broader setting, such as the “global green new deal” provides. (South Centre)

Key Words: WTO, Global Trade, Multilateralism

How should we future-proof our supply chains? – Since the start of the COVID-19 crisis, we have seen protectionism intensify. Some emergency moves are clearly temporary. They were put in place by governments to ensure access to the medicines, machines and protective equipment required to contain or treat the virus. In other cases, the aim was to guarantee adequate food supplies for local populations. Yet these new measures and others have been taken against a backdrop of simmering trade tensions between the world’s two largest economies, the US and China, and a growing chorus of voices in the US, Germany and other countries calling to re-shore, nationalize or find alternative sources for key products and industries such as 5G wireless equipment, semiconductors, steel, electrical power gear, mobile cranes, rare earth minerals and other goods. The 164-nation World Trade Organization (WTO), normally the body that would quell trade wars and bolster the global consensus for free trade, has been weakened, perhaps fatally, by a loss of faith in its dispute resolution system and the apparent withdrawal of US support. “In the current alternate universe we’re living in, global trade is collapsing and the WTO and the liberal order itself are in a true existential crisis,” Bloomberg noted in June.As economies around the world emerge, unevenly, from the pandemic, we can expect demand to begin to strengthen. As it does, trade flows, carrier schedules and inventory levels will start to normalize, and supply and demand will find a new equilibrium. But normalization won’t mean a return to normal. The World Bank expects a 5.2% contraction in global GDP in 2020. Advanced economies could shrink by as much as 7%, although they are likely to recover faster than economies in emerging or developing countries, the bank says. Trade, which has accounted for 54% to 60% of global economic activity in recent years, is set to retreat even further. The WTO forecasts a drop in global trade flows of 13% to 32% in 2020. UNCTAD expects trade to decline by 20%. For context, the largest quarterly decline in trade volume during the 2008 financial crisis was 5%. (WeForum)

Key Words: Supply Chain, Global Growth, Business

Global food prices rise in August - Global food prices rose for the third consecutive month in August, influenced by generally firmer demand and a weaker U.S. dollar, according to a report released today by the Food and Agriculture Organization of the United Nations. The FAO Food Price Index, which tracks the international prices of the most commonly traded food commodities, averaged 96.1 points in August, up 2.0 percent from the previous month and reaching its highest level since February 2020. The FAO Cereal Price Index rose by 1.9 percent from July, averaging 7.0 percent above its value in August 2019, with coarse grains leading the rise. Sorghum prices rose 8.6 percent - and stood at 33.4 percent above their year-ago level, mostly on the back of strong import demand by China. Maize prices rose 2.2 percent amid concerns that recent crop damages in Iowa would impact supply. International rice prices also rose, underpinned by seasonally tight availabilities and increasing African demand. The FAO Sugar Price Index rose by 6.7 percent from the previous month, reflecting reduced production prospects due to unfavorable weather conditions in the European Union and Thailand, the world's second-largest sugar exporter, as well as strong import demand by China. The FAO Vegetable Oil Price Index increased by 5.9 percent, led by firmer values for palm oil especially, but also soy, sunflower and rapeseed oils. The moves mainly reflect prospective production slowdowns in leading palm oil producing countries amid firm global import demand. (FAO)

Key Words: FAO, COVID-19, Trade

PAN AFRICA

Private sector acquires a taste for African power – Private sector investment in Africa’s power sector is growing in leaps and bounds, as James Gavin reports. Over recent years, private investors have started to scale up their involvement in the sector. Power Africa, an initiative backed by USAID, has more than $54bn of commitments from its more than 140 private sector partners. Private sector engagement is on the rise, energised by initiatives such as the New Deal on Energy for Africa and the US-led Power Africa Initiative. Recent years have seen private sector involvement grow in leaps and bounds, starting out from the generation sector and now migrating into transmission and distribution. Power Africa’s Beyond the Grid initiative has for example seen over 40 private sector partners involved in developing mini-grid and distributed power services and infrastructure in Sub-Saharan Africa’s rural and peri-urban populations.

At country level, outliers such as Kenya have aggressively sought out private investment in the generation sector, and are now pivoting this towards the transmission sector. Nairobi’s robust focus on reforms has paid off. South Africa has also led the way in private power provision. “If you look back 10 years ago, there were under 60 independent power projects,” says Bhavtik Vallabhjee, Head of Power, Utilities and Infrastructure at South Africa’s ABSA Group. “Now we’ve had 112 IPPs, which has been a staggering success story for the country in terms of foreign direct investment. And every single project had a contribution from a foreign developer. That has injected in excess of R200bn [$11.9bn] into the economy.” (The Africa Business)

Key Words: Private Sector, Africa, COVID-19

AGOA Coalition warns Congress: Duty-free imports sought by US apparel makers would vitiate Africa trade– The following letter was sent by the Agoa Action Coalition to the chairman of the U.S. House Ways and Means Subcommittee on Trade Earl Blumenauer (Democrat-Oregon), as well as the chairman of the full committee, Richard Neal (Democrat-Massachusetts) and ranking Committee member Kevin Brady (Republican-Texas), and ranking Trade Subcommittee member Vern Buchanan (Republican-Florida). Extract : We write to convey our deep concern regarding proposed changes to the US Generalized System of Preferences program (GSP) which threaten to vitiate key provisions of the African Growth and Opportunity Act (Agoa), the genuinely bipartisan measure that for the past 20 years has been the cornerstone of US economic engagement with the nations of Africa. If adopted when GSP is renewed, as it needs to be by the end of the year, these changes would cause gratuitous hardship in a region already reeling from the impact of COVID-19. They would, furthermore, severely damage our nation’s standing in the continent as a strategic development and trade partner and would hand global competitors, China in particular, a massive free win. In the name of GSP “modernization”, lobbyists for US apparel importers want Congress to extend to all GSP beneficiary countries duty-free tariff treatment that have, heretofore, been designated for eligible AGOA countries and a few of our neighbors in the Western Hemisphere such as Haiti in order to boost garment sectors in critical need of preferential trade concessions. From its inception, GSP has specifically excluded preferential treatment for textiles and apparel. This has given U.S. policy makers a powerful tool to advance US goals and interests by granting exceptions designed to help selected trading partners to attract investment in their textile and clothing sectors in order to fight destabilizing poverty and grow as markets for US goods and services. (AGOA)

Key Words: Africa, Trade, Regional Integration

African Continental Qualifications Framework (ACQF) mapping study reports – The African Continental Qualifications Framework (ACQF) is a vital policy initiative of the African Union, aimed to enhance transparency and portability of qualifications of all sub-systems and levels of education and training, to align with national and regional qualifications frameworks and finally to contribute to CESA 2025 and the continental integration agenda of AfCFTA. The ACQF is in development (2019-2022), in a process supported by the EU, GIZ and ETF. To build on a well-grounded evidence base, the AQCF process started with a continental mapping study exploring the state-of-pay and perspectives of qualifications frameworks and systems. A collection of national and REC reports has emerged, useful for reference and sharing among peer institutions and stakeholders, which you can access here: Angola, Cap Vert, Cameroon, Egypt, Ethiopia, Morocco, Mozambique, Senegal, South Africa, Togo, SADC, EAC, ECOWAS. For some of these countries this is the first ever specific publication on their qualifications frameworks in the international literature (Angola, Cap Vert, Cameroon, Mozambique, Senegal, Togo). The final comparative report will be published end of September 2020. (NEPAD)

Key Words: AfCFTA, NEPAD, Regional Integration

Gender should be central to Africa’s COVID-19 economic recovery initiatives – Unless a gender perspective is embraced in COVID-19 recovery initiatives, the ongoing global health pandemic will amplify existing gender disparities leading to worse outcomes for women in terms of livelihoods and well-being. This was said Thursday by Ms. Thokozile Ruzvidzo, Director of the Gender, Poverty and Social Policy Division at the Economic Commission for Africa (ECA), in remarks made during a Gender is My Agenda Campaign, (GIMAC) online campaign on the gendered effects of the coronavirus pandemic. Ms. Ruzvidzo said COVID-19 recovery policy initiatives need to embrace a gender perspective to lessen deepening vulnerabilities of women, especially cross border traders. “Women in African countries are in general concentrated in necessity-driven entrepreneurship in the services sector, market activities and cross-border trade in the informal economy. It is expected that the knock-on effects of border closures and market restrictions to deal with COVID-19 will be significant,” she said. The ECA Director added that women in the informal economy are more often found in the most vulnerable situations. “Female predominance in informal cross-border trade is often attributed to women's time and mobility constraints, as well as to their limited access to productive resources and support systems, making such activities one of the few options available to them to earn a living,” said Ms. Ruzvidzo. She said the African Continental Free Trade Area (AfCFTA) presents new opportunities for women in Africa which can help in accelerating their economic empowerment in the aftermath of COVID -19 and related recovery efforts. “Although there is no separate chapter on trade and gender in the AfCFTA Agreement, the AfCFTA recognizes the importance of promoting gender equality,” said Ms. Ruzvidzo as she highlighted various articles in the accord like Article 3(e) that specifies that the AfCFTA aims to “promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation”. (UNECA)

Key Words: Africa, AfCFTA, Regional Integration

NORTH AFRICA

Morocco’s trade deficit eases by 18.2% in July – Morocco’s trade deficit in the first seven months this year eased by 18.2% as foreign demand on Moroccan industrial exports curbs imports, the foreign exchange office said. The office also cited a significant drop in energy imports triggered by lower prices in international markets. By July, Morocco’s energy imports slid 31, while equipment purchases dropped 18%. Food imports soared as imports of wheat surged 44% due to Morocco’s feeble domestic harvest after insufficient rainfall. The narrowing of the deficit at first sight sounds good for Morocco’s balance of payments but it unfortunately reveals a drop in foreign demand on Moroccan industry. Car industry exports registered a steep drop of 28.7% to 32.7 billion dirhams, while the aeronautical industry exports contracted 21.2% to 7.63 billion dirhams. Textile exports, for their parts, went down 30% to 16 billion dirhams while the agrifood sector’s exports decreased 4.7% to 36.5 billion dirhams. Morocco, which has the largest phosphates reserves, saw its phosphates and fertilizers exports dwindle 4.2% to 28.8 billion dirhams, notably because of lower prices in international markets. The performance of travel receipts took a free fall diminishing by nearly a half at 23.1 billion dirhams and remittances from Moroccans abroad dropped 3.2% to 36.1 billion dirhams. (The North Africa Post)

Key Words: North Africa, COVID-19, Trade Agreement

EAST AFRICA

Uganda Harmonizing Cocoa Standards to Facilitate Trade in EAC – Uganda Coffee Development Authority (UCDA) in collaboration with Uganda National Bureau of Standards (UNBS) hosted the national expert technical committee to discuss and draft the East African Standards for Cocoa and related products. The national technical committee is supported under the European Union and East African Community Market Access Upgrade Programme (EU-EAC MARKUP). The main objective for the EU-EAC MARKUP is to contribute to the EAC’s economic development through boosting trade and regional integration with a specific objective of improving EU and regional market access for EAC countries in selected sub-sectors such as coffee, tea, cocoa, horticulture and spices. In Uganda, the MARKUP project priority commodities are cocoa and coffee. “The national technical committee shall formulate working drafts of East African Standards for Cocoa and related products. The drafts shall then be presented to stakeholders for consultations to form Uganda’s position in the harmonization of cocoa and related standards at the EAC Level,” said Ms. Pamela Akwap, UNBS Senior Standards Officer. “The reason for harmonization of standards is to promote uniformity across the EAC. This will make it easy for Uganda to trade in cocoa and related products within the EAC partner states and outside the East Africa region. In addition, the standardization will ensure that cocoa and its products are safe for consumption,” she added. The participants discussed drafts for harmonization of standards on cocoa beans, cocoa powder and cocoa powder mixtures, cocoa butter and chocolates.(Chimp Reports)

Key Words: East Africa, AfCFTA, Trade Agreement

EAC urged to collaborate, drive region's trade - There is need for deeper collaborations between the public and private sector to boost intra-EAC trade and investment, industry players have said, as the region wades through Covid-19 effects on economies. During a consultative CEOs roundtable meeting organized by the East African Business Council (EABC) in collaboration with GIZ, in Arusha, the industry captains noted that the region's economies are interdependent hence need close collaboration. Dubbed 'Creating Perspectives Project', the Thursday forum brought together company chief executives in Arusha, with the aim of deliberating on approaches that the private sector can explore to revamp their businesses amid the pandemic. The business leaders have lauded the Tanzanian government for its commitment towards sustainable economic growth, following the attainment of the middle-income status from the World Bank, this year. The leaders also noted that the decision to keep the economy open, offered the private sector a major relief in terms of business resilience as it also strengthened local supply chains. This happens in the background of a recent report by the African Development Bank (AfDB), indicating that Tanzania’s economy is estimated to grow at 5.5 per cent in 2020, recording the highest growth in the region. During the meeting, EABC CEO, Peter Mathuki called upon businesses to re-purpose their business models to tap into the new emerging opportunities such as e-commerce, digital technology and biotechnology. “Innovation, value addition, embracing our local content and tapping into our regional supply value chains are some of the imperative solutions that will drive us towards economic growth,” he said. Mathuki noted that, as Tanzania shares its borders with eight countries in the region, the move to keep the borders open has sustained intra-regional trade and replenished the region’s food basket. “EAC economies are interdependent and the move to have borders open have seen the supply of staple food and basic necessities across the region maintained,” he said. (The Star)

Key Words: EAC, Regional Integration, Trade

WEST AFRICA

ECOWAS Holds Regional Sensitisation Workshop on the African Continental Free Trade Area (AfCFTA) for the Private Sector – The Economic Community of West African States (ECOWAS) in collaboration with the Organised Private Sector, held a virtual Regional Sensitisation Workshop on the African Continental Free Trade Area (AfCFTA) for the Private Sector on the 2nd of September, 2020. The overall objective of the AfCFTA is to create a single continental market for goods and services, with free movement of business persons and investments, paving the way for accelerating the establishment of the Continental Customs Union. Opening the Workshop on behalf of the President of the ECOWAS Commission H.E Jean-Claude Kassi Brou, the ECOWAS Commissioner for Trade, Customs and Free Movement, Mr. Tei Konzi noted that although the AfCFTA negotiations are Member States-driven, ECOWAS continues to coordinate the position and approaches of the Member States to ensure the Agreement builds on the ECOWAS acquis and takes the regional integration process forward.
According to Commissioner Konzi, the objective of the Workshop is to “improve the understanding of the AfCFTA of the Organised Private Sector in the West African region in order to enable them to better contribute to the negotiations and implementation of the Agreement.” On his part, the ECOWAS Commissioner for Industry and Private Sector Promotion and co-host of the Workshop, Mr. Mamadou Traore, noted that the private sector is a key stakeholder and beneficiary of the AfCFTA. According to Commissioner Traore, to achieve the success and implementation of the AfCFTA, Member States/Regional Economic Communities (RECs) must actively engage with the private sector and allow members of the sector to share their reflections and on-ground experiences. (ECOWAS)

Key Words: ECOWAS, Regional Integration, Trade

Removing impediments to export-led growth in Senegal: Groundnuts, fishing, textiles, fruits, and vegetables - Senegal has a lot going for it: Its stable democracy, great irrigation potential, religious tolerance, and proximity to markets in Europe and North America all suggest the West African country is poised to take off. Yet, economic performance since independence in 1960 has been disappointing. In fact, Senegal’s exports have grown much more slowly than global trade and have become increasingly capital-intensive, while its trade deficit has steadily worsened. To understand this paradox, recent research has focused on the impediments holding back specific industries where Senegal has comparative advantage—fishing and groundnuts, fruits and vegetables, and textiles.

A snapshot of Senegal’s economic growth - In 1960, Senegal’s per capita GDP was about the same as Korea’s, and well above China’s and Botswana’s (Figure 1). Fast-forward to 2015, and Senegal’s per capita GDP is roughly unchanged. Meanwhile, Korea has become a developed country, and China and Botswana have far surpassed Senegal. Consequently, poverty remains pervasive and underemployment in the informal sector is the norm, particularly for women and youth.

What sectors are ripe for Senegal to explore? - The historical evidence is clear that structural transformation and formal employment creation require exports of labor-intensive goods. Our recent research, then, uses the product-space framework to discern export opportunities in Senegal to boost employment, particularly of women and youth, in order to recommend policies to successfully diversify exports into increasingly “complex” products embodying sophisticated capabilities. We adopt an eclectic approach to identifying exports with potential for boosting employment using both the product space and institutional knowledge of the Senegalese economy. (Brookings)

Key Words: WA, Regional Integration, AfCFTA

Pathways to structural transformation of the Ghanaian economy—and some roadblocks – While Ghana’s economic growth over the last decade has been comparatively strong—annual economic growth averaged approximately 6.8 percent for the period 2010-2019—this growth has largely been driven by minerals and crude oil production rather than by the manufacturing sector, which has a higher propensity to create more jobs. Indeed, Ghana’s efforts to encourage structural transformation and build a sophisticated and complex economy continue to be met with significant challenges. One particular bottleneck for Ghanaian firms seeking to increase production and diversify into knowledge-intensive products is inefficiency at ports and transit points within the Economic Community of West African States (ECOWAS) region. Given that research has shown that improved facilitation may reduce cost and increase trade volumes in a way that far outweighs gains from trade reform, enhancements in transit points could be impactful for Ghana’s economy. Enhancing trade facilitation in the region is paramount if Ghana and countries in the subregion can take full advantage of windfalls associated with a fully operational African Continental Free Trade Area (AfCFTA) agreement, and build their manufacturing sectors. (Brookings)

Key Words: WA, Regional Integration, AfCFTA

SOUTHERN AFRICA

Pace of reform to determine shape of SA’s capital-equipment export recovery - About 40% of capital equipment exported from South Africa has been affected by the lockdowns and restrictions on movement because of Covid-19, while capital equipment manufacturers have reported 30% to 40% lower turnover during June and July, says industry body and public-private partnership agency South African Capital Equipment Export Council (SACEEC) director and CEO Eric Bruggeman. The capital equipment sector, which comprises equipment used in the agriculture, mining, water, electricity and manufacturing sectors, is expected to take about three years to recover to levels before the pandemic, but can triple in an enabling local environment, he highlights. “Exports enable companies to link to other markets and different growth trajectories, while supporting local manufacturing, labour and commerce. There is significant potential to tap into regional and international trade to bolster the growth of local companies. “However, exporting requires stability in the country of manufacture and a consistent presence of companies in export markets. This is where government’s role is vital – to ensure that the trade environment is conducive to long-term trade, such as enabling the movement of skilled people, goods and finances between South Africa and the countries to which local companies export.” Internal stability is an Achilles’ heel for South African equipment manufacturers, with disruptions to electricity supply and tepid local demand hindering local companies in their efforts to explore or broaden their export markets; sufficient local demand is crucial to long-term export, adds Bruggeman. (Engineering News)

Key Words: SA, Business, COVID-19

Electronic tariff platform goes live in Eswatini – On 1 September 2020, the Eswatini Revenue Authority (SRA) held an inauguration ceremony to announce the official launch of a national electronic tariff platform. At the invitation of the SRA Commissioner General Dumisani E. Masilela, the event was virtually attended by WCO Secretary General Dr. Kunio Mikuriya, SACU Executive Secretary Paulina M. Elago and senior policy makers and managers from the SACU Member States. The ceremony was held in Mbabane, Eswatini where the Minister of Trade Mancoba Khumalo, the Minister of Finance Neal Reckingburg, Co-Chairs and Members of the National Trade Facilitation Committee, representatives of the European Union Delegation in Eswatini and a wide audience of Customs officers and private sector stakeholders were present. In his opening remarks, Honorable Minister Mancoba Khumalo recalled that Eswatini had ratified the WTO Trade Facilitation Agreement as early as 2017 and was committed to the full implementation of the standards enshrined therein. He stressed that the online tariff platform will complement that important endeavour, emphasizing the particular relevance of online tools for the ongoing digitalization of Customs processes. He expressed his sincere appreciation to the WCO for its continued support, and to the European Union for the generous funding provided under the EU-WCO Programme for the Harmonized System in Africa, which were key to the successful implementation of the electronic tariff platform in Eswatini.

Concurring with the previous speaker, Dr. Mikuriya congratulated the SRA on bringing to fruition the important effort of creating a new electronic tool that would provide access to accurate and up-to-date information to trade operators. He recognized that complexities inherent in the regulatory landscape of the international trade and Customs were set to increase further, which called for efficient solutions based on cutting edge technology to ensure that traders had reliable access to all the information needed in order to plan and carry out trade transactions. He welcomed the initiative stressing that it would not only be a visible achievement for stakeholders in Eswatini, but also a very good example for other countries in the region and in Africa as a whole, especially given the progressive implementation of the AfCFTA and considering the WTO TFA requirements. (WCO)

Key Words: AfCFTA, Regional Integration, Economic Growth

Zimbabwe Corn Deliveries Soar on Improved Payments to Farmers – Corn deliveries by Zimbabwean farmers have soared thanks to more speedy payments, boosting supplies of the scarce staple, according to the country’s Grain Marketing Board. Farmers sold 124,985 tons during the first four months of the season compared with 76,400 tons a year earlier as they received payment within two to three days of delivery, Rockie Mutenha, the chief executive officer of the state-run body, said in an interview Thursday.“Farmers are now able to use their money on time before it’s eroded by inflation,” Mutenha said. “We have also increased our collection points to reduce the traveling distance for farmers.”The GMB is paying Z$21,000 ($252) a ton plus a 30% bonus for deliveries made by the end of the month, he said. The southern African nation’s grain stockpile has dwindled amid a prolonged drought, recession and soaring inflation, while a chronic shortage of foreign currency has limited the government’s ability to import food. The World Food Programme estimates 8.6 million Zimbabweans, or 60% of the population, will be food insecure by the end of this year. (Bloomberg)

Key Words: Zimbabwe, Regional Integration, Economic Growth

Centre africain pour la politique commerciale

ATPC DAILY DIGEST 7 SEPTEMBER 2020

ENGAGE WITH US