News
tralac’s Daily News Selection
The selection: Monday, 18 July 2016
Featured infographics: South Africa’s economy closes in on Nigeria (Bloomberg), Implementation of WTO Agreement on Trade Facilitation in SADC (tralac)
EAC-EU trade deal signing called off (New Times)
In a sudden twist, comprehensive Economic Partnership Agreement between the EAC and the EU will not be signed today as earlier planned. Officials who spoke to The New Times over the weekend were non-committal on divulging details pertaining to the sudden change of heart that comes after Tanzania recently decided to halt signing, citing the “turmoil” that the EU is experiencing following Britain’s exit. Emmanuel Hategeka, the permanent secretary at the Ministry of Trade and Industry said: “Signing on July 18 on the margins of UNCTAD 14, has been called off by agreement between both parties. In my view, this will allow more time for consultations.” EABC chief executive Lilian Awinja said: “The signing has been called off so whatever issues are contentious should be brought to the table for renegotiation.” [International Trade MEPs back trade deal with six African countries]
Brexit threatens East African cohesion as Kenya mulls go-it-alone trade deal (Bloomberg)
Kenya may abandon 10 years of negotiating a trade deal with the EU as part of the five-nation East African Community and go it alone, to avoid having duties of as much as 30% slapped on its exports from October. "We would like to sign it together; the desire is that we sign it together," Kenyan foreign secretary Amina Mohammed said in an interview in the capital, Nairobi, last week. "If we get to a stage where we can’t do that then we also have the right to make our own sovereign decisions."
Tanzania’s exit from trade pact tests regional integration (Daily Monitor)
Speaking in an interview last week, the permanent secretary at the Ministry of Trade Mr Julius Onen, said Uganda is not about to act as an accomplice to the regional disintegration. “We are not prepared to disintegrate. So we would rather sign it (EPA) altogether as EAC even if it means postponing it.” He added: “Our position has always been to sign it together. On our side (Uganda) we will do anything to keep away from disintegrating.” Now the heat is with the Republic of Kenya, a key regional partner state.
EAC: Reprieve as ban on second-hand clothes put on hold for three years (The East African)
Ronah Serwadda, the acting director at Uganda’s Ministry of East African Affairs said that the presidents agreed that a three-year grace period is necessary to conduct a study to find out whether the region has the capacity to produce its own garments once the ban on second-hand clothes and shoes becomes operational. Rogers Mukwaya, an economic affairs officer at UNECA, said that imposing the ban without improving the production capacity for industries would hand the garments market, currently dominated by North America and Europe for used items, to China and other South East Asia nations whose textiles are cheaper than those produced locally.
Zimbabwe, SA in key trade talks (Sunday Mail)
Government will this week engage South Africa to discuss issues of mutual economic concern, joint ventures, credit lines, markets and Harare’s policy to restrict certain imports as part of efforts to boost local industry. South African businesses are ratcheting up pressure on Tshwane to push for an end to the import controls. South Africa is Zimbabwe’s largest trading partner. Since the promulgation of Statutory Instrument 64 of 2016, the Musina business community on the Zimbabwe-South Africa border has lost more than $10m in potential business. This has seen South Africa’s trade and industry ministry ask for a five-day meeting from 18-22 July. Zimbabwe’s Secretary for Industry and Commerce, Mrs Abigail Shonhiwa, said the meeting between Deputy Minister Chiratidzo Mabuwa and her South African counterpart Mr Mzwandile Masina was meant to find a market for local products and also scout for lines of credit. [Related: Ian Scoones - The rise of the informal trader and a new political economy, Marange diamond audit begins, Small scale gold producers shun Rand]
South Africa: Minister Davies launches one-stop shop to support intra-Africa trade (dti)
The one-stop shop, which is called Trade Invest Africa will provide support to South African businesses doing business in the rest of Africa as outlined in the Industrial Policy Action Plan. According to Minister Davies, Trade Invest Africa will bring together all support programmes including incentives in order to build strong partnerships with business. Davies said South Africa was following the Development Integration approach in order to strengthen regional integration and create a larger market. [Related: Guidelines for Good Business Practice by SA companies operating in the rest of Africa (pdf), Dianna Games: 'Better late than never as SA plays catch-up in Africa’s markets']
Namibia Economy Watch: the SADC EPA, impact of Brexit (IPPR)
However, the UK remains an important market for Namibian meat and grapes. Some 23% of Namibia’s total meat exports and almost 100% of meat exports to the EU were destined for the UK in 2015, while 21% of fruit exports (grapes) ended up on the UK market accounting for 27% of fruit exports to the EU market. Meat contributed 31% and fruits 12% to Namibia’s total exports to the UK in 2015. The UK is also a major market for Namibia’s charcoal absorbing 22% of Namibia’s total charcoal exports and 50% of charcoal exports to the EU market. Charcoal exports made up 10% of total exports to the UK in 2015 [download (pdf)]
AU sets $1.2 billion self-financing target (New Times)
African Heads of State and Government asked former African Development Bank president, Dr Donald Kaberuka, to work out a self-financing formula practical to member countries. The formula was presented and adopted at a retreat of Heads of State and Government and finance ministers on Saturday. According to Finance and Economic Planning minister Claver Gatete, under the new formula, countries’ contributions will be increased through 0.2% levy on eligible imports which is expected to raise about $1.2bn every year. Beginning 2017, the levy will be collected by tax collection authorities of African countries and channelled through central banks of member countries. By channelling the money through the central bank as opposed to collecting it from the treasury, Gatete said it would prevent defaulting by member countries or delayed payments that have been rampant in the past. The retreat also agreed that each of the four regions should contribute $65m for peacekeeping activities to raise a total of $320m. [AU to cost SA an extra R2.2bn]
Valentine Rugwabiza: 'Britain may have given up on the EU dream, but Africa still wants integration' (The Guardian)
The EU model appeals to African leaders because we’ve seen how centralised decision-making speeds up the pace of development (the AU Commission is currently very decentralised) and that weaker economies don’t hold back stronger states, but if provided with some flexibility, advance at a quicker pace. Having said that, this year’s 27th African Union Summit took place in Rwanda only three weeks after the Brexit vote. Should pro-African leaders be worried that the UK’s EU vote will influence the integration of the African continent? I don’t think so. [The author is Rwanda's Minister of the East African Community]
Related: AU delays Chairperson vote as no clear winner emerges (M&G Africa), Geoffrey Onyeama, Nigeria’s foreign minister: 'AU passport needs legal framework to work' (Naija247), Calestous Juma, Francis Mangeni: 'Africa’s economies are set to get a boost from tighter integration with or without Brexit' (Quartz), AUC/ECA/AfDB Joint Secretariat Support Office: update (UNECA)
Trade misinvoicing in primary commodities in developing countries: the cases of Chile, Côte d'Ivoire, Nigeria, South Africa, Zambia (UNCTAD)
The results from the analysis show substantial levels of trade misinvoicing in all five countries covered by the study, but the patterns vary substantially across countries, products and trading partners. Some interesting patterns and contrasts emerge. At the product level, while trade in copper exhibits pervasive and large amounts of over-invoicing in Chile, the results for Zambia show substantial under-invoicing, as well as considerable over-invoicing in trade with Switzerland and the United Kingdom. Iron ore and gold exports from South Africa exhibit systematic under-invoicing. Relatively little gold appears in South Africa’s export data, although the country's trading partners record substantial amounts of gold imports from South Africa. Exports of oil from Nigeria and silver and platinum from South Africa show mixed results − both under-invoicing and over-invoicing.
Servicification, trade facilitation: a policy agenda for Africa (pdf, UNCTAD)
African trade policymaking should be framed in terms of trade in tasks where goods and services are considered in a single package. Efforts at boosting trade in industrial and agricultural goods should be revisit to properly integrate the dismantling of binding trade in services. Trade in services reforms should prioritize development of rules for that account for a servicified reality. Further research is needed to fully understand servicification and its implications for all trade stakeholders. The implementation of the TFA should be part of a broader trade facilitation agenda that properly account for infrastructural services and other business environments. Furthermore, there is a need to develop a research and advocacy program which ensure all the political economy constraints are properly understood and the necessary actions are taken to build and sustain a coalition for reform. [The anlysts: Dominique Njinkeu, Sekou Doumbouya]
Related: #UNCTAD14 documents are available here, Uhuru roots for intra-African trade, draws comparison with West (The Star), Letter from 331 Groups of Global Civil Society: UNCTAD’s role and mandate towards UNCTAD14
Sub-Saharan Africa’s economic downturn and its impact on financial development (ODI)
Key messages: (i) Sub-Saharan Africa is experiencing a deterioration in financial markets including a ‘credit crunch’ in the banking sector, reduced availability and increased expense of international finance – which has been made worse by the ‘Brexit’ shock – and increased financial fragility. On-going governance problems are making these issues worse; (ii) Importantly for the region’s long-term growth prospects, scarce banking finance is being used in sectors with little or no transformational effect such as extractives or middle class consumer finance; (iii) This is starving sectors that would transform the economy – such as manufacturing, trade and agri-processing – of the financing they need to grow, reducing the prospects for structural changes that would diversify the economy and create employment; (iv) Policy suggestions include tailored macro prudential policy for sub-Saharan Africa, more robustly directing credit into priority sectors and international cooperation to tackle corruption.
Christine Lagarde: 'Doubling down on development' (IMF)
Consider this: the 48 countries in sub-Saharan Africa together generate only the same amount of electricity as just one advanced economy - Spain. Clearly, if the continent is to realize its potential, better infrastructure is needed. The price tag, however, is significant. UNCTAD estimates that total infrastructure investment needs in developing countries range from $3.3 trillion to $4.5 trillion a year. Striking the right balance between scaling-up spending and maintaining sustainable debt is therefore critical, and our revised debt policies toward low-income countries reflect this trade-off.
UK to finance Egypt trade deals worth up to GBP 500 mln (Ahram)
UK Export Finance, the UK's export credit agency, is committed to funding trade deals with Egypt worth up to GBP 500 million, and has GBP 2.5 billion of financing available for projects in Egypt, according to a British embassy press release on Sunday. The volume of trade between Egypt and the UK is over GBP 1.5 billion, UK ambassador to Egypt John Casson said. British investments represent 40% of Egypt's foreign direct investment inflows. [Towards devaluation?]
Two funding tools to reset Nigeria’s export financing policy (Premium Times)
The CBN’s partnership with NEXIM Bank will unclog what has been a bottleneck for a long time, namely, access to low interest (single digit) rate credit to the non-oil sector and enable companies in this sector connect to international markets for trade and investment. The share of credit to non-oil export-oriented companies shrunk to less than one percent last year. The CBN said inadequate financing was responsible for the drop in non-oil export revenues from $10.53bn in 2014 to $4.39bn in 2015.
Remodeling India’s investment treaty regime (The Wire)
The Netherlands is not the only country that has received a treaty termination notice. India has recently served similar termination notices to as many as 57 countries (including the UK, France, Germany, Spain and Sweden) with whom the initial duration of the treaty has either expired or will expire soon. For the remaining 25 countries (such as China, Finland, Bangladesh and Mexico) with whom the initial duration of the treaty will expire from July 2017 onward, India has requested them to sign joint interpretative statements to clarify ambiguities in treaty texts so as to avoid expansive interpretations by arbitral tribunals. Does the termination of the India-Netherlands BIT mean the end of the protections? The answer is no.
Egypt's Supreme Investment Council: what’s new?
Starting over on tariffs: post-Brexit trade agreement partners for the United Kingdom (PIIE)
Reconstructing Britain’s trade policy after Brexit: launch of UK Trade Policy Observatory (Chatham House)
Global trade plateaus: the 19th Report of the Global Trade Alert (VoxEU)
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