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tralac’s Daily News Selection
The selection: Monday, 11 April 2016
The SACU-Mercosur FTA entered into force on 1 April: a Swazi perspective (Times of Swaziland)
Textile companies of Swaziland which were hard hit by the loss of the lucrative duty free market under African Growth and Opportunity Act of the US Government, have found another preferential market that is ready for textile products. The market was opened on 1 April 2016 when the Preferential Trade Agreement between Mercosur and the Southern African Customs Union entered into force, the Times of Swaziland has reported. [Perspective from Uruguay]
India-Mercosur Preferential Trade Agreement: questions and answers (WTO)
The Committee on Trade and Development discussed, 16 March, a goods agreement between Mercosur and India, which the parties are hoping to expand so that it covers a larger share of trade. The trade agreement, which entered into force in 2009, covers over 450 tariff lines for each party according to a factual presentation prepared by the WTO Secretariat. The deal is described as the first step towards the creation of a free trade area among the parties, consisting of Argentina, Brazil, Paraguay, Uruguay and India. Venezuela, a Mercosur member, is not a party to the agreement. The representative of India said that parties to the agreement have agreed on the need to “significantly increase” the number of tariff lines so that it covers a “sizeable portion” of bilateral trade. The latest exchange of request lists to expand the deal's coverage — undertaken in 2013 — is still under review by all sides, said India and Uruguay speaking on behalf of Mercosur.
Ghana: Exports’ bleak future over govérnment's uncertainty on EPA (GhanaWeb)
Currently, the EU leaders are awaiting their ECOWAS counterparts to complete the signing of an EPA they endorsed two years after negotiations on the agreement closed. However, players in the export trade business believe the uncertainty over government’s stance with signing of the EPA before the deadline could be the final nail in the coffin. Major exporters - Pioneer Food Cannery (PFC), Cosmo Seafood Company, West African Fisheries, Golden Exotics, Volta River Estate, Jei-River Farms, Barry-Callebault, ADM and Cargill - whose main market is the European Union are therefore calling on government to sign the EPA in order not to be hit by a tariff hike of approximately 20% on their goods. It will be recollected that while negotiations for a regional EPA were still on-going, an interim agreement was initialled in December 2007 by Ghana and the EU for goods only to avoid paying these tariffs.
China seeks free trade pact with East Africa region (The East African)
Recently, China wrote to the EAC Secretary-General proposing to negotiate with the EAC partner states a comprehensive free trade agreement (EAC-China FTA). China also requested to undertake a joint feasibility study with the EAC on the proposed FTA, outgoing Secretary-General Richard Sezibera informed the Council of Ministers at a meeting in Arusha. The Council directed the Secretariat to undertake a comprehensive cost-benefit analysis on the implications of negotiating FTAs with third parties. “We are working on the directive of the Council,” EAC spokesperson Richard Owora said. He said they expect to conclude the work by June 30. However, East African Business Council executive director Lillian Awinja cautioned that free trade with China would hinder EAC industrialisation. [Made in China, counterfeited for Nigeria (The Guardian)]
COMESA Transporters and Logistics Services Industries Dialogue: recommendations (CBC)
The following are some of the key outcomes of the meeting (17-18 September, Nairobi): The meeting recognised the strength of political will that has seen the fast tracking of infrastructure corridors along Eastern and Southern Africa. The great need to form a regional sectoral workgroup to increase collaboration amongst the private sector stakeholders for development of common positions and sharing of information and best practices on trade and transport facilitation was acknowledged. Member states are requested to support the request for a Pan African Logistics Information Hub which will be a depository of documentation requited for movement of goods between countries. The facility should be accessible to all corridor users and other stakeholders, ranging from manufacturers, logistics services.
Tanzania: Govt outlines plans for infrastructure overhaul (IPPmedia)
President John Magufuli's administration has unveiled its blueprint for a radical overhaul of the country's infrastructure, including the construction of standard-gauge railway lines, multi-lane roadways, and strategic bridges that could potentially transform Tanzania into a regional transport hub. The government is figuring to finance the projects by borrowing $800 million from international financial markets, and is also considering issuing an infrastructure bond. The Ministry of Finance and Planning released the new development plan this [past] week as part of its draft 2016/17 budget proposals where the government is targeting to spend a total of 29.53 trillion/-.
Dakar-Abidjan Highway: ECOWAS ministerial
The Ministerial meeting, scheduled to take place on 14 April 2016 in Banjul, would involve member states of the Dakar-Abidjan corridor of Senegal, The Gambia, Liberia, Sierra Leone, Guinea, Guinea Bissau and Cote d’Ivoire. The Dakar-Abidjan corridor has a high level of economic importance in the region and will serve to complement the Abidjan-Lagos corridor which is part of a larger African Union project- the Trans-African Highways Network. Technical experts from the roads/infrastructure/works/transport sectors and the Justice ministries from Member states involved in this phase of the project will assess the feasibility, detailed designs, funding options as well as the appropriate legal framework which will govern the development of the highway.
ECOWAS Corridor Development and Management Strategy and Action Plan: EOI from USAID Trade and Investment Hub
The study shall: i) design an ECOWAS Corridor Development and Management Strategy, ii) draft an Action Plan for implementing the strategy over a period of 20 years, iii) through a hierarchy of corridors, identify corridors where Corridor Management Institutions (CMI) can be established, iv) advise on a regional approach to establish CMIs and propose a regional coordination mechanism for all corridors, drawing from lessons learnt in other regions and adapting implementation modalities to West Africa, v) define the viability of identified corridors and corridor projects and establish a short, medium and long-term financing plan, vi) advise how a pilot CMI can be established on selected corridors such as the Tema– Ouagadougou and Abidjan–Bamako Corridors as test cases.
Tanzania's tax paradox: 'When beer is worth more than gold' (IPPMedia)
But according to a new report by the state-run Tanzania Minerals Audit Agency, the total taxes paid by the top companies dealing in gold mining in 2015 was 355.33 billion/-; a measly sum compared to the 476bn/- paid by TBL as tax during the same year. In other words, last year the country’s top beer producer alone paid 34% more tax than the entire large-scale gold mining industry, despite the latter being one of the country’s key economic sectors. Similarly, while the total value of minerals sold by major gold mines in Tanzania last year was worth $1.63bn (3.56 trillion/-), the total tax paid by the mining firms represents less than 10% of their revenues. On the other hand, TBL said in its 2015 annual report that it posted total sales of 1.07 trillion/- last year, with the total taxes paid to the government in 2015 representing 44.5% of its revenues.
Panama Papers: statement by Thabo Mbeki, Chair of HLP on Illicit Financial Flows (UNECA)
Kenya got oil: what next? (World Bank Blogs)
And finally, on the third, implementation, two mechanisms are paramount: designing a sovereign wealth fund, following a rule-based framework to prevent political interference, and managing expectations around oil revenue-sharing at three levels: intra-county (within Turkana); inter-county (Turkana and other counties); and between Turkana and the national government. Are these arguments overly cautious? Perhaps yes, but for a good reason. The figure below provides a tale of three oil producing countries: Malaysia, Republic of Congo, and Angola. [Kenya's oil production goals keep shifting (Daily Nation)]
Nigeria: 2016 Article IV Consultation (IMF)
The large permanent terms-of-trade shock requires a significant macroeconomic adjustment. It is important to initiate urgently an integrated package of policies centred around: (i) a fundamental change in the nature of government; (ii) reducing external imbalances (including real exchange rate realignment); (iii) further safeguarding the resilience and improving the efficiency of the banking sector; and (iv) implementing structural reforms for inclusive growth. The policy measures envisaged in the draft 2016 budget with aggressive revenue mobilization efforts and a shift from recurrent to capital spending are in the right directions, though more is needed. Outward spillovers via regional trade channels: The foreign exchange restrictions are impacting exporters in trading partners such as South Africa, while the growth slowdown is adversely impacting growth in neighbouring countries, mainly through informal trade and rapidly growing cross-border bank channels—for example, it is estimated that a 1% reduction in Nigeria’s growth generates a 0.3% reduction in Benin’s growth. [Related: Selected Issues paper]
ECOWAS: Why and when to introduce a single currency (AfDB)
The creation of a single currency in West Africa remains a timely and relevant project, despite post Euro zone crisis uncertainties and the postponement, for the fourth consecutive time, of the introduction of a single currency in member countries of the West African Monetary Zone. To reduce the likelihood of a new postponement which could dent the credibility of this important project, the authorities should prioritize the Big Bang option in 2020, consisting in all ECOWAS member countries adopting the single currency as from 2020. West Africa’s heavyweights, namely Cote d’Ivoire, Ghana, Guinea, Nigeria and Senegal, could assume a leadership role and encourage all stakeholders to take ownership of the project. [The authors: Ferdinand Bakoup, Daniel Ndoye]
Appointment of Marcel Alain De Souza as new ECOWAS President
West Africa Trade and Investment Hub: Chief of Party opportunity (Abt)
Profiling South Africa-China’s agricultural trade relationship (AGBIZ)
Traditionally, South Africa has had a net deficit in terms of the agricultural trade balance. South Africa has imported more agricultural products from China than it exports in 13 of the last 15 years. It is only in the last two years that South Africa has attained a positive trade balance for agriculture with China. Bilateral trade in agricultural products has been relatively small in terms of share of total trade, ranging between 2% and 6% of total trade over the past decade and a half. The share of total trade has, however, averaged 3% between 2012 and 2015. The drop in South Africa’s agricultural imports from China was mainly attributed to the decline in apples (-30%), kidney beans (-70%), glucose and glucose syrup (-17%), animal feed preparations (-33%), sugar confectionary (-12%), and plain weave cotton fabrics (-17%), among others. South Africa’s agricultural exports have increased over the same period by 24% - from $295m 2012 to $366m in 2015. Driving this growth are several products, which include macadamia nuts, grapefruit, peaches, oranges, fine animal hair and grape wines, among others. [The author: Tinashe Kapuya] [FAO Food Price Index]
China goes global with development banks (Bretton Woods Project)
Two of China’s policy banks, the CDB and the C-EXIM, already hold more assets than the combined sum of the assets of the Western-backed multilateral development banks. Table 1 shows that the C-EXIM and the CDB have over $1.8 trillion in assets, whereas the Western-backed banks hold just over $700bn. That said, the CDB’s international holdings are just 30% of total assets, putting the two banks’ international assets at around $0.5 trillion. These banks provide concessional and non-concessional (in the case of the C-EXIM) finance in virtually every corner of the world. China has also pioneered a host of bilateral and regional development funds. These funds combine to add upwards of $100bn in development finance provided by the Chinese in recent years. Table 2 exhibits the major funds that we were able to confirm. [The authors: Rohini Kamal, Kevin P Gallagher]
Kebs faults international standards (Daily Nation)
Kenya on Friday sought to be included in the international standards-setting committee for electrical and electronic items. Kenya Bureau of Standards Managing Director Charles Ongwae said some finished products imported into Kenya are below par as their standards ignore local environmental conditions. The MD urged professionals in electro-technical fields to seek positions in international committee saying Kenya has representatives in four committees but is not represented in four other committees.
Kenya to get Sh6bn Chinese loan amid concern over heavy debt
BRICS Dispute Resolution Shanghai Centre: update
IFPRI's 2016 Global Food Policy Report will be launched tomorrow.
CII's Naushad Forbes: 'We will push for an outward-looking trade policy to boost global access'
US and Turkish agencies team up to target African business
Jubilee Debt Campaign: 'World’s poorest countries rocked by commodity slump, strong dollar'
Kevin Watkins: 'Africa's great opportunity for reform'
Humanitarian response in Africa: the urgency to act (UN)
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