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The selection: Thursday, 13 October 2016
The BRICS trade ministerial meeting takes place today in Goa, as does the BRICS Business Forum. A selection of trade policy commentaries and news updates:
6th Meeting of the BRICS Trade Ministers: Trade Ministers’ Communiqué (PIB)
Ministers recognized the importance of preserving policy space to promote industrialization, industrial upgrading and value addition as a core pillar for structural transformation and sustainable development and BRICS countries integration into the global economy. They agreed to enhance cooperation in this regard. [...]
The Ministers recognised the importance of the Micro, Small and Medium Enterprises (MSME) to the balanced economic development of the BRICS countries. The Ministers acknowledge the role of MSMEs as the engines of export led growth and employment generation given the highest rate of employment per unit of investment in MSMEs; and their crucial role in addressing regional disparity and poverty alleviation. The MSME sector in many of the BRICS economies contribute directly or indirectly to nearly half of their exports, manufacturing output and GDP.
Push for trade pact will polarise BRICS nations, warns South Africa (The Hindu)
An immediate push for a BRICS Free Trade Agreement will polarise heavily-industrialised and lesser-industrialised nations within the five-member grouping, warned South African trade and industry minister Rob Davies. Speaking to The Hindu ahead of the Goa BRICS Summit, Davies said, the bloc comprising Brazil, Russia, India, China and South Africa should instead adopt a practical and gradual approach of identifying opportunities in important sectors such as ‘aircraft manufacturing & maintenance’ to create value chains in the five emerging economies. On the ‘informal’ proposal by China for a BRICS FTA, he said South Africa and the African continent have so far been mainly producers of primary products, but want to retain the policy space for industrialisation to reap the benefits of the ‘Fourth Industrial Revolution’ — meaning, industrialisation using computerisation and other latest technologies.
Referring to certain “structural imbalances” in BRICS trade, he said, for instance, South Africa mainly exports raw materials to China and imports fully-manufactured items from that country. If such a scenario continues, it will not help create value chains that will support industrialisation in South Africa, he said, adding that such imbalances need to be corrected first. “So we can go for cooperation agreements and have business-to-business contacts, and not get enamoured by the title of a highly ambitious agreement that would only cater to the interests of some, but won’t have broader developmental outcomes,” he said, adding that BRICS countries should discuss ways to promote inclusive growth and reduce inequality.
India-SACU trade pact talks needs to be revived: South Africa (PTI)
South Africa’s Minister of Trade and Industry Rob Davies said that both the sides have their sensitivities but the effort should be to expedite the negotiations, which are on a "very slow track". "India has got its sensitivities, we have our sensitivities," Davies told PTI in an interview. Citing an example, he said there are high taxes on wines in India and "we are pretty sensitive about our clothing and textiles. So, I think sensitivities there on both the sides".
South Africa backs India on solar sourcing (The Hindu)
South Africa has backed India’s local sourcing rules in solar equipment manufacturing, while calling for BRICS countries to come up with a joint strategy to work around regulations of the WTO. “BRICS nations need to compare notes on how to re-construct their renewable energy programmes to ensure that the localisation requirements do not technically flout WTO rules,” South Africa’s Trade and Industry Minister Rob Davies told BusinessLine. Without naming the US, Davies said his country will firmly oppose attempts being made by “some of the major countries” to introduce new restrictions on localisation at the WTO. Davies said, “We (India and South Africa) have the freedom in place (to procure locally in case of government purchases) as a result of not being signatories to the Government Procurement Agreement at the WTO. We need to retain that policy space.”
India’s trade deficit: China still the elephant, but India must deal with Indonesia too (Financial Express)
India will discuss its huge merchandise trade deficit with China at the BRICS summit later this week, but it has also to address elevated trade deficit from an unexpected quarter. While China remains the elephant in the room, analysts say Indonesia has fast emerged as one of the most important countries with which India has a trade deficit, especially after the country’s free trade agreement (FTA) with Indonesia came into effect from October 1, 2010, under the broader Asean FTA framework
Why calls for boycott of ‘Made in China’ goods are bound to fail (IndiaSpend)
India, Brazil to sign pact on cooperation and facilitation investment (New Kerala)
China’s trade struggles add to worries over economic outlook (WSJ)
Samir Saran, Abhijnan Rej: ‘The alphabet soup at Goa’ (The Hindu)
Narendra Modi’s Indian Ocean opportunity (LiveMint)
A better approach would see India making a bigger, unilateral push to improve regional connectivity, including greater financial support for new infrastructure investment, and a new push to reduce trade barriers, beginning with its own. The success of China’s grand One Belt, One Road initiative shows that tangible projects between countries are normally the best basis for new economic cooperation across regions. Here, India has work to do, be it pushing projects like the mooted Myanmar-Bangladesh-India gas pipeline, or providing greater development funding assistance to poorer neighbours. The Indian Ocean has the potential to become the most important source of new global growth over the next 20 years, just as the Pacific rim powered the world’s economy for much of the last 20. This fact alone should justify Modi placing much greater emphasis on it. But if India is to emerge at the heart of a new regional order, it needs to open its wallet first. [The analyst: James Crabtree, @jamescrabtree]
Mauritius and India open new chapter of development, says Finance Minister (GoM)
Mauritius and India will open a new chapter of development following the allocation of Rs 12,7 billion by the Government of India for the 2016-2017 budget for the implementation of infrastructure projects in Mauritius. The Minister of Finance and Economic Development, Mr Pravind Jugnauth, expressed his appreciation with regard to the prompt response of India in disbursing funds for several development projects, following his recent visit to India from 13 to 18 September 2016. Among the projects:
Indonesia: Govt to boost trade promotion to India, Africa, Latin America (Jakarta Post)
President Joko “Jokowi’ Widodo has asked the trade ministry to pool all the promotion funds currently held by 17 government institutions so that promotion activities could be expanded to non-traditional markets such as India, Africa and Latin America. “Carry out trade promotion now. So, when the global economy is recovering, we can boost our exports," he told reporters after he officially opened the 31st Indonesia Trade Expo in Kemayoran, Jakarta, on Wednesday.
David Ndii: ‘Shopping malls, motorways and the new debt treadmill’ (New African)
Between Chinese loans and Eurobonds, Africa has stacked up $110bn in foreign debt over the past decade. This exceeds the amount forgiven to the most indebted countries in the mid-2000s. With several countries running into payments difficulties, is this the new debt crisis?
Kenya: Business leaders read wish list to South Africa’s Zuma (Business Daily)
“African countries have largely been brothers in the political context, but this is not translated into the economic context. The rest of the world is scrambling for Africa, why not us?” posed the Kenya Association of Manufacturers chairwoman Flora Mutahi. [Calls to scrap visas between SA and Uganda, How Zuma indicted the Kenyan passport by refusing to budge on visa rules]
Dar aims to become Africa’s next automotive hub in $200m deal (IPPMedia)
According to Simba Motors managing director Jitesh Ladwa, the first trucks will roll off the assembly line before the end of the year. "We will start on a pilot basis by assembling 20 trucks per month, and after 18 months the major assembly plant will be built, enabling us to scale up our production capacity up to 5,000 cars a year," Ladwa told The Guardian in an interview. He further explained that the project will be implemented as a proposed joint venture between Simba Motors, Foton International Trade Co. Ltd company of China, and a Tanzanian government agency. Reports say Tanzania imports about 4,000 pick-up trucks each year, while the annual demand for the entire Southern African Development Community (SADC) region is 35,000 trucks per year.
Egypt’s trade deficit shrinks 13% year-on-year in July: cars and steel imports down (Ahram)
According to CAPMAS, the value of exports is up 15.5% year-on-year, recording EGP 15.4 billion, with fertilisers increasing 212.3% and crude oil 33.1%. The value of imports slowed 5.3% year-on-year to EGP 46.3 billion, with imports of cars and raw materials of steel down 35.3% and 16.7% respectively.
2016 Global Hunger Index: global, regional, and national trends (IFPRI)
Seven countries still suffer from levels of hunger that are alarming. The majority of those are in Africa south of the Sahara: the Central African Republic, Chad, Madagascar, Sierra Leone, and Zambia. The exceptions are Haiti and the Republic of Yemen. Due to insufficient data, 2016 GHI scores could not be calculated for 13 countries; however, based on available data, as well as the available information from international organizations that specialize in hunger and malnutrition, and the existing literature, 10 of these countries are identified as cause for significant concern: Burundi, the Comoros, the Democratic Republic of the Congo, Eritrea, Libya, Papua New Guinea, Somalia, South Sudan, Sudan, and the Syrian Arab Republic.
Services trade restrictiveness, mark-ups and competition (pdf, OECD)
This report explores the relationship between STRI indices and mark-ups at the firm level, which are taken as a measure of competitive pressure. As such, it contributes to quantifying the costs of services trade restrictions for the sectors and countries included in the STRI database. It focuses on the pro-competitive gains from trade as a major source of economic benefits from unilateral or negotiated liberalisation. Using data from the financial statements of services firms in 42 countries and 19 sectors from the BvD ORBIS database, the study analyses the direction in which services trade and competition policies affect profit margins, and which types of policies matter sector by sector, while taking into account the impact of various country and enterprise characteristics on profitability.
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