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ACP Trade Ministers reaffirm strong commitment to multilateral system
Ministers and senior officials responsible for Trade from 79 African, Caribbean and Pacific (ACP) countries reaffirmed their strong and resounding commitment to the multilateral trading system, at the conclusion of the 20th ACP Ministerial Trade Committee meeting held in Brussels on 18-19 October.
The meeting, chaired by the Vice President and Minister of Foreign Affairs of the Cooperative Republic of Guyana Hon. Carl B. Greenidge focussed on enhancing intra-ACP trade, including through a joint approach to commodities and agricultural value chains, as well as examining trade issues between the ACP and EU countries. This was in preparation for joint meetings with the European Commission on 20 October, covering Economic Partnership Agreements (EPAs), trade regime issues, capacity building, and non-cooperative tax jurisdictions amongst others.
Ministers also discussed critical elements related to the 11th Ministerial Conference (MC11) of the World Trade Organisation (WTO) to be held 10-13 December in Buenos Aires, Argentina. The MC11 meeting will bring together more than 160 countries to continue multilateral negotiations on rules for international trade amongst members.
“The rules-based multilateral system must be sustained as it promotes a fairer trading system that increases opportunities for developing countries, including those in the ACP Group of States,” said ACP Secretary General H.E. Dr. Patrick Gomes. “However, this system is under threat today, and the changing dynamics in the WTO negotiations are undoubtedly making the achievement of development-oriented results difficult.”
Ministers heard presentations from the Director General of the WTO, Mr. Roberto Azevedo, the Chair of the WTO Ministerial Conference, Amb. Susana Malcorra of Argentina, as well as the Coordinator of the ACP Group in Geneva, Amb. John Ronald Deep Ford of Guyana. They reported on preparations for MC11, including challenges in terms of the level of ambition and nature of expected results.
During the meeting, ACP ministers urged concrete outcomes at the forthcoming MC11 meeting in Buenos Aires, to send a strong message that the multilateral system works. At the same time, the imperative for outcomes at MC11 be aligned with the globally endorsed Sustainable Development Goals (SDGs), including SDG 14.6 on fisheries to protect the world fishing stocks, and SDG 2 to end hunger by advancing food security through public stockholding.
Ministers called for inclusiveness, consensus and transparency in all WTO decision-making processes, as well as careful framing of any reform evaluation of the WTO to ensure that the interests of all countries are protected. A robust MC11 work programme must be formulated, characterised by strong commitment to development, while recognising differences between developed, developing and least developed countries.
The meeting highlighted the need to more proactively recognise and implement rules that enable recovery and development of small vulnerable economies, which are especially exposed to external shocks, including natural disasters. Representatives also committed to increased integration, unity and solidarity of the ACP Group of States, including taking more joint ACP approaches to trade and development.
These elements are captured in a declaration by the ministers on the 11th WTO Ministerial Conference, where Guyana will act as the spokesperson for the ACP Group.
Joint Statement of the ACP-EC Joint Ministerial Trade Committee
on the 11th WTO Ministerial Conference
During the Joint Ministerial Trade Committee held on 20 October 2017, the ACP and the EU discussed preparations for the 11th WTO Ministerial Conference to be held in Buenos Aires on 10-13 December 2017.
The ACP and the EU exchanged views regarding the current situation in the WTO and reaffirmed the crucial role of the rules-based multilateral trading system, and the importance of enhancing trade for achieving sustainable and inclusive growth and development. They emphasised the contribution of trade to development, and acknowledged the importance of development support to building trade capacity.
The ACP and the EU reaffirmed their commitment to work together with all Members of the WTO to make the 11th WTO Ministerial Conference a success with ambitious and concrete results. They further agreed on the objective of ensuring that the WTO functions as an efficient and effective negotiating forum covering issues of interest to its Members and agreed to work together to ensure that this was reflected in the results of the 11th WTO Ministerial Conference, with development at the centre of negotiating outcomes.
Statement by ACP Secretary General, Dr. Patrick I. Gomes, at the 20th Meeting of the ACP Ministerial Trade Committee, Brussels
It gives me great pleasure to warmly welcome you to ACP House, your house, for the two meetings that are ahead of us – namely the 20th ACP Ministerial Trade Committee and the 15th Joint ACP-EU Ministerial Trade Committee.
It is very encouraging that many Ministers and very senior officials responsible for trade issues, in ACP Member States and regional secretariats, are here with us this afternoon. We will draw on your collective wisdom and guide our deliberations accordingly.
Your presence here despite your respective busy schedules, and for some of you, arduous travel connections, is a welcome demonstration of the seriousness and importance that your countries attach to ACP issues in general, and those critical trade issues for the Global South as a whole. Be assured of the continuing and unwavering commitment of the Secretariat, to support and serve you.
The purpose of your meeting here today and tomorrow is to prepare for the ACP-EU Joint Ministerial Trade Committee (JMTC), which by statute must meet at least once a year.
The JMTC which, as an apex organ within the Cotonou Partnership Agreement, is duly mandated to address any trade related issue of concern or interest to the ACP States, including the ongoing monitoring of Economic Partnership Agreements (EPAs). The JMTC must rigorously address our trade interests, and firmly pursue means to resolve those issues that continue to pose nagging problems.
The 15th Meeting of the JMTC, on Friday morning, will consider issues related to ACP-EU trade relations. These include, as you well know, negotiations and implementation of Economic Partnership Agreements (EPAs), as well as other pertinent issues you shall identify. Implementation of EPAs continues to give rise to protracted challenges. Expected benefits are proving delusive. We hope open and frank dialogue can result in mutual understanding, and assist in surmounting the challenges faced. Hence importance of the JMTC cannot be over-emphasised.
The Senior Trade Officials from capitals, representatives of ACP regional organizations and a selected Group of ACP Geneva Ambassadors met here for the last two days to prepare for today’s meeting. Extensive technical material and pertinent recommendations have been prepared for consideration of our Ministers and to engage our European Partners.
The over-riding task for economic growth and development of our states is heavily dependent upon their enhanced, effective and more qualitative integration into the global trading system. We continue to face inherent structural and infrastructural constraints, and simultaneously, the development promise and prospective trade opportunities of the WTO Doha Round are fraught with uncertainties, while EPA implementations continue to stumble.
This situation requires ACP States to continually innovate and to adapt strategies, policies and measures to capture a larger share of global trade. Basically, our aim is to foster sustained and sustainable economic growth and development, promote employment creation and direct this to ending poverty (SDG 1).
Opportunities are to be seized, arising from the dynamism of economic growth in emerging economies and also through South-South trade. We are trying to grasp these. I wish briefly to illustrate some concrete measures that the ACP Secretariat has been pursuing.
An intra-ACP trade framework has been under consideration by ACP States on various occasions. However, doubts have persisted about how far the conclusion of a free trade agreement would actually succeed in promoting intra-ACP trade, given existing structural and competitiveness constraints, as well the fact that all ACP States have already entered into a range of bilateral, regional and multilateral free trade or economic integration agreements and/or are in various stages of negotiating these. They continue to consume our very limited human and financial resources. Hence we want to adopt a step-wise approach.
In this regard, the ACP requested UNCTAD to assist in carrying out a “Study on the establishment of an intra-ACP framework for enhancement of trade and economic cooperation” and related opportunities. This has started with a mapping of intra-ACP trade opportunities.
The UNCTAD representatives presented the outcome of their work to Senior Officials. Although further work is required, the Senior Officials and Secretariat are recommending the setting up of an ACP-wide trade portal for access and use by governments, business and civil society and other stakeholders. The trade portal will cover manufactures, commodities, services, investment and economic good practices across the South.
These outcomes are related to the ACP-EU Post 2020 agreement, in what our Council of Ministers has carved out under Pillar 1 – a major shift from trade or trade cooperation, to address Trade, Investment, Industrialization and Services in an integrated and interrelated whole. That is our Pillar 1 as we look to Post-2020 negotiations.
The role of the ACP will be catalytic and agenda setting - to facilitate and support the greater integration of our countries in the framework of their various regional processes, such as the Continental Free Trade agreement (CFTA) in Africa, or the Caribbean Single Market and Economy (CSME) in the Caribbean, to cite only these two.
In the area of Economic Partnership Agreements, the Senior Officials received reports from the regional EPA configurations on the progress made in the EPA process. I note some progress but challenges remain.
A common concern from the reports is the need to intensify exchange of experiences among our regions and ensure optimum cross fertilisation between regions.
We need to respond to the legitimate fears which are founded on unquestionable desire to preserve proper policy space to enable better strategic responses to the aspirations of their people in the regions, especially those most in need.
A key challenge continues to be the undermining of cohesive integration arising from the existence of different trade regimes within the same regional economic community. Therefore, there is need to conduct concrete analysis of the result, effect and impact of EPAs, on trade and regional integration as well as on its consequences to the development of ACP States. Senior Officials have also recommended that this type of study be continued.
This is necessary as we look to the future of the ACP-EU partnership, particularly also because BREXIT would have an impact on EPAs for many countries, as the United Kingdom is a significant market, for several of our Member States.
The other main purpose of your meeting is to address the issues before the multilateral trading system of the World Trade Organization, and to adopt a Declaration on the Eleventh WTO Ministerial Conference that will be held in Buenos Aires, Argentina from 10-13 December this year.
Preparations for the Conference face difficulties related to the level of ambition and nature on the results. Knowing the role that the ACP plays in WTO, we have the responsibility to ensure that once again, we fully and vigorously take part in the process and voice the concerns of our Member States.
You more than I are knowledgeable of the changing dynamics in the WTO negotiations that undoubtedly are making the achievement of development-oriented results very difficult. We currently stand on shifting sand, to say the least. If the truth be told, recalling where we started from in Doha and where we are now in 2017, we are so far off course one could be forgiven for thinking that our compass & GPS may have been or is being hacked!!... Is it from Washington, Moscow or Beijing??
Even the language of the negotiations is shifting: from the days of abounding hope for success when we talked about “low-hanging fruit” and “early harvests,” we are now into leaner times of “small packages”, “deliverables” and “outcomes.” Even the Ministerial Declarations are getting leaner and shorter, not because Members have reached agreement on the outstanding issues but because reaching agreement is becoming harder. In the WTO it seems the passage of time hardens positions, making agreement almost impossible.
Recent pronouncements by some major players and the realignments of international trade partnerships are causing consternation within the ACP Group. The risk of marginalization is real and growing.
The ACP Group supports multilateralism that has a space on the table for small, weak and vulnerable economies, as opposed to protectionism which operates to the detriment of development for economically fragile countries.
The ACP group needs to persistently pursue commitment, reaffirmation and agreement to multilateral institutions and negotiations. That is the only way that ACP States can be equitably integrated into the multilateral trading system.
The ACP and the EU intend to send a clear message of solidarity in support of multilateralism. In this regard, the JMTC will be invited to issue an appropriate message at the end of its meeting on Friday.
The other subject areas that your meeting will cover include the implementation of a new approach to commodities, ACP-EU trade regime issues such as the state of play on the BREXIT process, non-tariff measures, commodities and fisheries, EU negotiations with third parties at a bilateral level and mini-lateral level on Trade in Services (TiSA). The agenda also includes the European Commission proposal, to be looked at very carefully, on opening negotiations on a multilateral Investment Court.
On all these topics, the Senior Officials report is rich with recommendations and ministers are invited to critically examine and give direction with appropriate conclusions.
Now to the task must be pursued with vigour and clarity of purpose. Let us draw on the comparative advantage of our collective wisdom and powerful political commitment to secure our common interests and serve all developing countries.
I thank you very much.
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Closing UN’s ‘Africa Week,’ Assembly President says continent’s vision getting close to reality
Addressing the final event of this year’s Africa Week at the United Nations, General Assembly President Miroslav Lajčák on Friday highlighted the continent’s transformative changes driven by the African Union’s development agency.
“First, I want to acknowledge the importance of the New Partnership for Africa’s Development (NEPAD),” Mr. Lajčák told an Assembly plenary meeting, referring to the programme first established in 2001 and then integrated into the African Union’s structure to facilitate and coordinate the implementation of continental and regional priority projects.
“NEPAD was something of a trailblazer […] Since its adoption in 2001, NEPAD has led to transformative change,” Mr. Lajčák said, noting that it predates the UN’s 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063 by more than a decade.
For example, he said, NEPAD’s Comprehensive Africa Agriculture Development Programme has improved agricultural productivity on the continent, changing the lives of many African farmers.
Additionally, NEPAD has led to big strides in the integration of African trade. The finalization of the tripartite free trade agreement this summer among the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community(SADC) and East African Community (EAC) was an important step.
“The continental free trade area is no longer a distant dream. It could very soon be a reality,” he said.
However, faster progress needs to be seen, not only in the two sectors of agriculture and trade, but also in infrastructure, industry, economic diversification and poverty eradication, said Mr. Lajčák.
He went on to stress that no development in Africa can take hold unless it is led from within, noting that there are many exciting developments at the national level, and African countries are also building their capacities for domestic resource mobilization, and tackling illicit financial flows.
Yet, in an increasingly globalized world, the efforts within Africa need to be supported by a revitalized partnership with development partners, including UN bodies and Member States, as well as by investment and financial and technical assistance.
Also the root causes of conflict and suffering must be addressed. “The signing of a trade agreement will mean little to a mother whose young child is very sick from malaria. Similarly, foreign direct investment is not on the mind of someone who is running from a shower of bullets,” he said.
“Africa has a very clear vision” – one which involves all layers of society benefiting from growth and development; one in which malaria or other diseases do not serve as death sentences for hundreds of thousands of people every year; one in which early warning signs of conflict lead more often to successful mediation than to violence; and one in which institutions are strong, women and youth both lead and participate, and good governance is the norm, he said.
“This vision is getting closer to reality,” he concluded.
The plenary featured a debate by UN Member States on NEPAD as well as the decade 2001-2010 to roll back malaria in developing countries, particularly in Africa.
Amid instability, security challenges, New Partnership for Africa’s Development critical to continent’s socioeconomic advancement, General Assembly told
Speakers welcome free trade area, other steps towards regional integration
The New Partnership for Africa’s Development – now fully embedded in the development paradigms of both the United Nations and the African Union – remained the “rallying point” in Africa’s pursuit of growth, the General Assembly heard today, as delegates drew attention to security concerns and other obstacles still facing the continent.
Speakers stressed that the partnership, known as NEPAD, was particularly critical in the areas of social and economic development, with several welcoming the recent facilitation of a Tripartite Free Trade Area agreement aimed at harmonizing three sub‑regional blocs which previously had their own rules and models for trade. Meanwhile, others cited serious challenges facing Africa’s security and stability – ranging from human and drug trafficking to terrorism and the illicit flow of resources away from the continent – and urged development partners to redouble their support for national and regional efforts to combat them.
Ibrahim Assane Mayaki, Chief Executive Officer of NEPAD, speaking on behalf of the African Union, expressed concern that Africa’s inequality gap continued to widen, with negative repercussions for political stability, business, growth and social cohesion. Demographics – especially youth and youth unemployment – was a critical part of the continent’s development, he said, noting that with a median age of 20, Africa must break the generation‑to‑generation poverty cycle that continued to trap many of its people. Indeed, some 440 million people on the continent would be entering the labour market by 2030, meaning that Africa must rapidly expand its efforts in job creation, entrepreneurship development and skills training. NEPAD was engaged in several such initiatives, he said, also describing its work in areas such as infrastructure, Internet connectivity and intra‑continental trade.
Miroslav Lajčák (Slovakia), President of the General Assembly, was among the many voices this morning hailing recent accomplishments in the global integration and regional streamlining of African trade. “The Continental Free Trade Area is no longer a distant dream,” he said, adding that it could very soon become a practical reality. While major hurdles remained across the continent, NEPAD was a strong sign of regional leadership in development, with the African Union, regional economic communities and sub‑regional organizations acting as engine rooms of progress. In an increasingly globalized world, no country or region could move forward alone, and efforts in Africa must be supported by a revitalized partnership for development.
Rwanda’s representative, recalling that the Addis Ababa Action Agenda had established a strong foundation for the implementation of both the 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063, cited notable socio‑economic progress made across Africa since the latter’s adoption in 2015. Meanwhile, the recent Kigali Amendment to the Paris Agreement on Climate Change had reinforced those agendas by setting environmental targets and timeframes. Agriculture was an important path for Africa’s sustainable development, she said, noting that an impactful transformation in that area would require strong coordination between partners in country‑led processes. Among other critical challenges were those related to peace and security, which necessitated stronger efforts in conflict prevention and responses to early warning signs of conflict.
Egypt’s representative, also drawing attention to the peace and security nexus, highlighted Africa’s leadership on those issues and the importance of maintaining its ownership over the development process. “There can be no lasting security without inclusive development,” he said, while “peace, security and the rule of law underpinned by credible systems of democratic governance are prerequisites and indispensable factors and drivers of development.” African countries had taken numerous steps to address security challenges, including establishing the “Group of 5” Sahel force – consisting of Burkina Faso, Chad, Mali, Mauritania and Niger – as well deploying a Multinational Joint Task Force to end the Boko Haram insurgency and the African Union Mission in Somalia (AMISOM).
Libya’s representative, also echoing concerns over security and stability, agreed that Africa would be unable to move forward in its development without addressing those crucial issues. Many countries on the continent, including Libya, regrettably continued to suffer from deteriorating security situations. Calling on Member States to urgently support African countries affected by conflict or emerging from it, he said his country suffered especially from instability resulting from transnational migrant flows, trafficking and other cross‑border issues. “This is not a national or regional problem,” and therefore the responsibility must not fall on transit countries alone, he stressed, noting that origin and destination countries must also work to address the phenomenon’s root causes.
Sudan’s delegate, voicing regret that conflicts and other security issues had adversely affected the prosperity of Africa’s people, said climate change and its impacts on food security were another source of grave concern. African countries and the international community must work together to avoid the destructive impacts of that phenomenon. Echoing support for the continued integration of the 2030 Agenda into the continent’s development plans, he said regional organizations such as the Intergovernmental Authority on Development (IGAD) had an important role to play in that regard. Additionally, he called for a redoubling of efforts to establish a comprehensive, strategic partnership to fight terrorism and ensure political stability in Africa.
Delegates from Asia, Europe and other regions also expressed their support for NEPAD and reiterated their commitment to back development efforts on the African continent. India’s representative, for one, spotlighted trade and diaspora links with Africa – as well as a shared colonial past – and noted that the Africa‑India cooperative relationship included efforts to build capacity, mobilize financial support and share technical expertise. Indeed, trade between his country and Africa had doubled in the last five years, making India the continent’s fourth‑largest trading partner.
Before the Assembly for that discussion was a report of the Secretary‑General titled, “New Partnership for Africa’s Development: fifteenth consolidated progress report on implementation and international support” which outlined progress made in implementing NEPAD, spotlighted national and regional efforts to mainstream the 2030 Agenda and the African Union’s Agenda 2063, listed recent accomplishments under the partnership and recommended more measures aimed at providing African countries with financing, trade, capacity development and technology transfer.
Also before the Assembly was a report of the Secretary‑General titled, “Causes of conflict and the promotion of durable peace and sustainable development in Africa” covering the period from July 2016 to June 2017, which highlighted major developments related to peace and security and their links with sustainable development in Africa.
Also speaking were the representatives of Austria (on behalf of the Group of Friends of Inclusive and Sustainable Industrial Development), Brunei Darussalam (on behalf of the Association of Southeast Asian Nations), Kuwait, Thailand, Israel, the Russian Federation, Morocco, Indonesia, Mozambique, Turkey, Myanmar, Algeria, Ethiopia and the United Republic of Tanzania.
Opening Remarks
MIROSLAV LAJČÁK (Slovakia), President of the General Assembly, said that since its adoption, the New Partnership for Africa’s Development (NEPAD) had led to transformative change and big strides in the integration of African trade. The recent finalization of the Tripartite Free Trade Area agreement was an important step that would harmonize three sub‑regional blocs which previously had their own rules and models for trade. “The Continental Free Trade Area is no longer a distant dream,” he said, adding: “It could very soon be a reality”. Nevertheless, major hurdles remained and faster progress was required, not only in agriculture and trade, but also in a wide range of key areas, including infrastructure, industry, economic diversification and poverty eradication.
NEPAD, together with the 2030 Agenda for Sustainable Development and Agenda 2063, should be harmonized and integrated, particularly regarding reporting, follow‑up and review, he said. No development in Africa could take hold unless it was led from within. The adoption of NEPAD was a strong sign of regional leadership in development, which was then reaffirmed through the African Union’s adoption of Agenda 2063. The role of the African Union, regional economic communities and sub‑regional organizations had been indispensable and had acted as the engine rooms of progress in sustainable development, as well as in building African capacities in peace and security. There had also been many exciting developments at the national level, as well as on‑going efforts to integrate the goals and targets of international and regional frameworks into national development plans.
In an increasingly globalized world, no country or region could move forward alone, he stressed. Efforts in Africa must be supported by a revitalized partnership for development, and in that context, there needed to be closer partnerships between Africa and its development partners, including United Nations bodies and Member States. Official development assistance (ODA) and other commitments were crucial to enhance finance, technology transfer and market access, while there must be investment incentives at the national, regional and international levels. “Development in Africa can never be seen as a standalone activity,” he stressed, highlighting that the trade agreement would be hindered without efforts to address the root causes of conflict. “Foreign direct investment is not on the mind of someone who is running from a shower of bullets,” he said.
IHAB MOUSTAFA AWAD MOUSTAFA (Egypt), speaking on behalf of the African Group, said the peace and development nexus was particularly evident in the two reports of the Secretary‑General. “As the world is pursuing the new milestone in the global partnership for development […] it is imperative to continue to place Africa at the centre of United Nations efforts to eradicate poverty,” he said, as well as to address the impacts of climate change and ensure inclusive economic growth and sustainable development. Eradicating poverty remained the greatest development challenge for African countries, where half the world’s poor people lived. Expressing concern over the fact that – two years into the 2030 Agenda’s implementation – global hunger was again on the rise and affected some 815 million people, he said efforts should focus on the necessary means of implementation, including financial resources, technology transfer and capacity‑building. “The scale must be ambitious enough to meet the aspirations of the Sustainable Development Goals,” he stressed, adding that developed countries should fulfil their commitments as laid out in the Addis Ababa Action Agenda, including those related to ODA.
While international support was important, he continued, African ownership of the development process was critical and “is not just a mere concept”. African countries had taken the primary responsibility for their own development, and their experience with the Millennium Development Goals had shown that significant advances had been made with African nations leading the way. Nevertheless, systemic issues had affected the continent’s rates of economic growth and international support was not sufficient to bring about a significant reduction in unemployment and poverty levels, nor in advancing other goals. The challenges facing Africa today traversed peace, security and development, he stressed, noting that “there can be no lasting security without inclusive development” and “peace, security and the rule of law underpinned by credible systems of democratic governance are prerequisites and indispensable factors and drivers of development”. African countries had taken numerous steps to address peace and security challenges at national and regional levels, including establishing the “Group of 5” Sahel force, consisting of Burkina Faso, Chad, Mali, Mauritania and Niger, the Multinational Joint Task Force and the deployment of the African Union Mission in Somalia (AMISOM). Partners must enhance their support for such peace and security activities, as no country or region could resolve those challenges alone.
IBRAHIM ASSANE MAYAKI, Chief Executive Officer of the New Partnership for Africa’s Development Agency, speaking on behalf of the African Union, said NEPAD was embedded in the latter’s Agenda 2063 and served as the “rallying point” in Africa’s pursuit of transformation and growth. NEPAD was especially critical in areas related to social and economic empowerment, he stressed, noting that his Agency was set to become the African Union’s development agency in the context of its recent reform efforts. Key to Africa’s sustainable development was the issue of demographics, especially youth and youth unemployment. Indeed, it was not enough to expand gross domestic product (GDP) levels if such progress was not accompanied by growth and transformative changes in jobs, economic opportunities, access to education and other human development strides. With a median age of 20, Africa must break the generation‑to‑generation poverty cycle that continued to trap many of its people. In that vein, he recalled that the African Union had dedicated 2017 to making progress on the issue of youth unemployment, and noted that some 440 million people on the continent would enter the labour market by 2030.
Outlining the NEPAD Agency’s initiatives in such areas as employment creation and entrepreneurship development, he said Africa needed to rapidly expand its capacity to offer skills and vocational training to its young people and women. The expansion of African trade – including intra‑continental trade – was equally critical, he said, spotlighting the need to accelerate progress on the policy front. Changes were necessary in such areas as customs procedures, visa restrictions and bringing to full ratification the use of the single African Passport, as well as enhancing the form, quality and diversity of transboundary goods and services. Describing other initiatives aimed at improving Africa’s railways and expanding its Internet connectivity, he said the issue of wealth distribution was also a critical one. The continent’s inequality gap continued to widen, which was bad for political stability, business, growth and social cohesion. In that regard, the NEPAD Agency was discussing transformative action within a clear medium‑ to long‑term plan, while also working with African Union member States and other actors to foster a better domestic understanding of inequality.
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Countries commit to strong action on human capital to drive economic growth
At the World Bank Group’s 2017 Annual Meetings, seven countries committed to transformational investments in people either at home or at the global level.
These commitments followed World Bank Group President Jim Yong Kim’s presentation of the Human Capital Project, a new effort to understand the link between investing in people and economic growth, and to accelerate financing for human capital investments.
“This year, for the first time, we are including human capital in our measurement of the wealth of nations,” Dr. Kim said. “Human capital is about 65% of the wealth in high-income countries and only 40% in low income countries. We’re helping low income countries overcome this – and there is a sense of urgency – not only because we’re facing several current human capital crises, but also because accelerations in technology will require countries to urgently invest in their people if they hope to compete in the economy of the future.”
“A force multiplier that creates limitless potential”
During his keynote address, H.E. Paul Kagame, President of the Republic of Rwanda said: “Human capital is without doubt the driver of high-income growth and the foundation of prosperity. Unleashing human freedom and ability is a force multiplier that creates limitless potential. For that reason, I would like to challenge us all to not limit our ambitions to eliminating extreme poverty but to aim for prosperity and well-being for everyone.”
President Kagame also committed to strong action on investments in young children, in the early years of life. Rwanda, which has achieved excellent health results under his leadership, will reduce childhood stunting from its current level of 30% to 15% by 2020, with 6 percent reductions a year thereafter, he said. Stunting, or low height for age, signals chronic malnutrition and is a red flag indicator for downstream losses of human and national economic potential.
Tackling malnutrition is one of the three critical foundational investments a country can make in young children, the others being preschool or early education, and protection of children from harmful environments. At the Summit, in addition to prioritizing early years’ investments, countries also committed to action on access to quality education, skills and jobs, universal health coverage, and the empowerment of women and girls.
“The real face of development: progress in human capital quality”
Finance Minister of Indonesia, Sri Mulyani Indrawati said the real face of development for many countries is the progress in human capital quality. The Government of Indonesia has not only prioritized human capital development by allocating 20 percent of its budget to education and 5 percent to health, but has also delivered tangible results through policies and programs in early childhood education and development and universal health coverage.
Priti Patel, the United Kingdom’s Secretary of State for International Development, emphasized that the world needs to do more to provide opportunity for all individuals to thrive and grow. The UK Government is strongly committed in ensuring inclusiveness in quality education, nutrition, and health and investing in neglected areas such as disability. The country will continue to put women and girls at the heart of its development agenda and aims to improve the nutrition of 50 million people who otherwise would go hungry by 2020.
The Government of Cote d’Ivoire has prioritized human capital development as part of its policy to promote sustainable, inclusive economic growth. Prime Minister Amadou Gon Coulibaly committed to strong action on three critical fronts – reducing childhood stunting from its 2012 level of nearly 30 percent to 20 percent by 2020, promoting gender equality by making it easier for girls to go to school and university, and creating jobs for all working-age youth.
A core issue for the G-20 during Argentina’s presidency
Noting that human capital investments lay the foundation for competitiveness and growth, Luis Caputo, Finance Minister of Argentina said his country has focused on increasing access to healthcare, modernizing education technology and curricula, and supporting financial inclusion. During its G20 presidency, Argentina will make human capital a core issue, promoting policies that prepare workers for both opportunities and risks created by advances in technology.
The Netherlands’ Minister of Foreign Trade and Development Lilianne Ploumen said that when women thrive, everyone wins. To achieve gender equality, the world not only needs technical programs on health and education, but also efforts to promote women’s voice and empowerment. The Netherlands will continue to be committed to women’s sexual and reproductive health, without which human capital cannot be built, she said.
Financing results
Secretary of State for Foreign Affairs Tone Skogen noted that Norway has been firmly committed to investing in health systems and education, having been a key contributor to funds that finance results in these areas. The country will champion replenishment of the Global Partnership for Education and actively supports the idea of an International Financing Facility for Education, she said. Norway also committed to increasing investments in sexual and reproductive health by approximately $85 million over the next four years, and to provide $200 million over the next five years for the production of new vaccines.
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Trade logistics and the 2030 Agenda for Sustainable Development
Can transport and trade logistics make development more socially inclusive and environmentally friendly?
The fifth session of the Multi-year Expert Meeting on Transport, Trade Logistics and Trade Facilitation, taking place on 23-24 October 2017 in Geneva, will address the underlying linkages between, on the one hand, international transport and trade facilitation and, on the other hand, the 2030 Agenda for Sustainable Development and the Sustainable Development Goals.
The 2030 Agenda for Sustainable Development, unprecedented in scale and ambition, and its 17 Sustainable Development Goals and 169 targets, were adopted by the international community in 2015.
Integrated and indivisible, the 2030 Agenda for Sustainable Development aims at balancing the three dimensions of sustainable development, providing a shared vision and shaping collective action in support of an economically viable, socially inclusive and environmentally-friendly development path.
During 2016, the first full year of implementation of the 2030 Agenda for Sustainable Development, the international community changed gears, focusing attention on the implementation and operationalization of the Sustainable Development Goals in line with their targets.
Transport and trade facilitation, the core areas of trade logistics, encompass activities with strategic importance for globalized trade, supply chains and world economic interconnectedness. They are cross-cutting enabling factors deeply rooted in the 2030 Agenda for Sustainable Development and necessary, directly and indirectly, for the achievement of several Goals.
UNCTAD has long recognized the nexus between sustainable development and trade logistics. Attention to the integrated treatment of the economic, social and environmental dimensions of transport and trade facilitation has further heightened over recent years as reflected in successive UNCTAD mandates, namely the Accra Accord, Doha Mandate and Nairobi Maafikiano.
These linkages underscore that sustainable transport and trade facilitation is a prerequisite for effective implementation of the 2030 Agenda. Progress in implementation requires effectively addressing challenges and obstacles to sustainable transport and trade facilitation, which may be institutional, legal, financial, technological or capacity-related.
Challenges in many developing countries often relate to considerations such as transport costs, transparency, governance, cargo transit times and delays, regional connectivity, interisland connections, access to markets, participation in relevant transport and trade networks, capacity-building at the level of executing agencies, infrastructure needs and gaps, energy efficiency, carbon emissions and air pollution, financing requirements and data and statistical capability requirements.
In this context, building the sustainability of trade logistics in developing countries and monitoring and tracking progress is key for the effective implementation of the 2030 Agenda. Transport and trade facilitation solutions need to be sustainable, and effective solutions can then help achieve numerous other objectives by providing the necessary trade logistics services to achieve the Goals that depend on trade and economic development.
Against this background and drawing upon UNCTAD work in the field, this session will discuss selected issues that lie at the interface of trade logistics and the 2030 Agenda for Sustainable Development.
The aim is to discuss ways in which countries, in collaboration with all relevant stakeholders, could join efforts to implement sustainable and resilient transport and trade facilitation solutions in support of the 2030 Agenda for Sustainable Development, aimed at “transforming our world”.
A background note on the theme ‘Trade logistics and the 2030 Agenda for Sustainable Development’ highlights selected issues that lie at the interface of trade logistics and the 2030 Agenda, to help inform discussions at the Expert Meeting and consider ways in which countries, in collaboration with all relevant stakeholders, may join efforts to implement sustainable and resilient transport and trade facilitation solutions in support of the 2030 Agenda.
Given the enabling powers of transport and trade facilitation, planning for sustainable transport and trade facilitation in support of the 2030 Agenda remains a priority.
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tralac’s Daily News Selection
Digital innovation in trade finance: have we reached a tipping point? (Swift)
The Boston Consulting Group published a white paper, to which SWIFT contributed, on digital innovation in the area of trade finance. Trade finance has lagged other financial services in moving from paper to digital. The number of players and stages in the trade transaction flow did not help to standardise processes: up to 20+ entities can be involved in a trade transaction (e.g. importer, exporter, importer’s bank, exporter’s bank, shipper, freight forwarder, customs authorities, etc.). Nor did it help to have to deal with multiple industries and multiple geographies. Extract (pdf):
BCG believes digital trade finance can cut costs by between $2.5bn and $6bn (or 35%) over three to five years, driven by: intelligent automation (e.g., intelligent OCR, artificial intelligence programs); collaborative digitisation (e.g., e-docs and electronic bills of lading); emerging digital solutions (e.g., DLT and smart contracts). In the medium-term, banks must defend their share and capture business from the ‘digital wave’ in trade finance. The only way to be sure of this is to focus on customers’ needs, and support them with innovative, mutually beneficial products, such as products that tap into supply chains. BCG also believes that banks have the opportunity to increase their revenues from trade finance by 10%. Given the labour intensiveness of paper-based documentary trade and historically less information available than large corporates, it is challenging for banks to profitably serve SMEs in trade. As a result, more than 50% of SME trade finance requests are rejected, compared to around 7% for multinational companies. As digitisation reduces the cost to serve, banks will be able to unlock the value of the SME trade finance market. Governing bodies, such as regulators and NGOs, could prove the most significant roadblocks to digital innovation. They must prioritise keeping trade safe, secure and compliant. But they should view digital as an opportunity to improve security and compliance.
Fintechs and the financial side of global value chains: statistical implications (OECD)
Structural changes to the trade finance market occurred during the last decade: Fintechs - financial technology companies - have been established and become successful in segments traditionally occupied by banks; and alternative trade finance solutions, such as supply-chain financing, have emerged. Estimates on global trade finance are scarce and very divergent. Estimates by the WTO (for 2009) suggest that the global trade finance market (including credit insurance) is about 80 percent of global merchandise trade. For 2015, this would roughly be $17 trillion in trade finance flows, with an estimated outstanding stock amount of $6 trillion (assuming an average duration till maturity of 4 months). The estimated outstanding stock of other investment trade credits, based on BOPSY for 2015, is about $1.14 trillion. To ensure that macroeconomic statistics mirror global realities and maintain policy relevance, a stepping-up of trade finance statistics is needed. Current statistical frameworks do not adequately capture the trade finance market. Trade finance instruments currently included in macroeconomic statistics are spread over different functional categories, are combined with other instruments, and often only proxied or imputed in data compilation. No separate breakdown is available on third party supply chain financing, and current data do not capture the great variety of traditional and new SCF instruments.
E-Commerce elements for MC11: communication from China (WTO)
Based on the experiences of some WTO members like China, the facilitating role of free zones and customs warehouses as defined in the Specific Annex D of International Convention on the Simplification and Harmonization of Customs Procedures, or Kyoto Convention of the World Customs Organization, may be explored in depth: (i) Bringing into play the role of free zones and customs warehouses in facilitating the operation of cross-border e-commerce can not only save time for cross-border logistics and delivery to cut costs, improve e-commerce customer experience, and enhance the transaction efficiency of both sellers and buyers, but also make the job of regulatory authorities easier, by reducing the administrative costs and raising the administrative efficiency in the regulation of relevant goods. (ii) It is worth noting that making use of free zones and customs warehouses to facilitate the operation of cross-border e-commerce is without prejudice to the Members’ existing trade policies, the regulatory framework and implementation, namely policies of tariffs and related internal taxes, export tax refund, and licensing of various kinds in relation to import and export.
India rejects WTO push for new global e-commerce rules (LiveMint)
India has rejected fresh efforts by a clutch of countries led by the EU, Japan, Canada and Australia to negotiate new global e-commerce rules under the aegis of the WTO. During an informal meeting at the WTO on Monday, the EU, Canada, Australia, Chile, Korea, Norway and Paraguay, among other countries, circulated a restricted draft ministerial decision to establish “a working party” at the upcoming WTO ministerial meeting in Buenos Aires and authorizing it to “conduct preparations for and carry out negotiations on trade-related aspects of electronic commerce on the basis of proposal by Members”. India fears that new rules could provide unfair market access to foreign companies, hurting the rapidly growing domestic e-commerce platforms. A key demand by the developed countries is to make permanent the current ban on customs duties on global electronic transactions—they were suspended in 1998. [E15Initiative Blog: E-commerce and digital trade for development - negotiations to soft launch at MC11]
EAC embarks on training of One Stop Border Post staff (EAC)
The EAC Secretariat has embarked on the training of officers from all state agencies and players operating on all OSBPS in the region. The first beneficiaries of the training were 30 officers and stakeholders at the Lunga Lunga/Horohoro OSBP on the border between Kenya and Tanzania. Mr Stephen Analo, the Customs Training Expert at the EAC Secretariat, said that the training targets 450 customs officers and cross border stakeholders. The OSBP training programme will be effected over a period of nine months stretching from October 2017 to June 2018.
COMESA: Revised RCTG operations manual adopted
The Council of the Regional Customs Transit Guarantee Scheme has adopted the revised Operations Manual with amendments and decided that it should be circulated to all members before the end of this year. The manual was revised considering operational changes and developments in the sector, information communication technology enhancements and regional developments and authorities’ decisions made over the recent past. The eleventh meeting of the RCTG Council met in Lusaka last week and approved the 2017/2018 RCTG Annual Work programme. They also discussed trade facilitation along the major transport corridors.
Running the Numbers: How African governments model extractive projects (AfDB, OpenOil)
But if this is the theory, how in practice are financial models currently used by governments? Is there sufficient data available to produce robust results? Is the information produced fully utilized to inform decisions? The AfDB and OpenOil’s research (pdf), the first of its kind in Africa, interviewed 50 officials from 19 resource-rich African countries, to assess the current use of financial models and outline a set of actions for governments and development partners to close capacity gaps and maximize impact. The research finds that the use of models is increasing among African governments. However, its use is still not fully integrated into policy processes and, often, models are applied in a once off manner and mostly only at the negotiation stage.
Tanzania: Barrick deal to serve as model, says JPM (The Citizen)
The government and Barrick Gold Corporation yesterday reached a landmark deal that will ensure that economic benefits generated by Acacia Mining’s operations in the country are shared between the two parties on a 50/50 basis. The deal, which will also see the government acquiring a 16% stake in each mine owned by Acacia, puts to rest a tug-of-war that dates back to early this year. Barrick Gold executive chairman John L. Thornton described yesterday’s agreement as “the single most distinctive business model for the 21st century that exists in the world”, adding that it created trust between the two partners. President John Magufuli said the deal enabled him to call Barrick Gold Corporation executives “brothers” because “they are here to stay” for benefit of both the investors and the Tanzanian government and its people.
Angola posts a trade surplus of $10bn in first half of 2017 (Macauhub)
Angola posted a trade surplus of 1.686 trillion kwanzas ($10bn) in the first half of 2017, with exports amounting to 2.710 trillion and imports amounting to 1.024 trillion kwanzas, according to the National Statistics Institute (INE). In the second quarter Angola exported goods, mainly oil, worth 1.339 trillion kwanzas, a year-on-year increase of 8.6% and a decline of 2.3% over the first quarter and imported goods valued at 0.521 trillion kwanzas, a year-on-year drop of 3.4% and an increase of 3.9% over the first quarter. [Government of Angola appoints technical committee to assess textile industry]
Affordability of Chinese products underpins growth in Ghana-China trade: Imani Ghana analysts (Xinhua)
Anita Nkrumah, a research associate at Imani, told Xinhua after her presentation, Maximizing gains from Ghana’s trade partnerships, that one of the key factors spurring this growth is affordability as majority of Ghanaians fell into the lower income bracket. Although no specific Bilateral Trade Agreement exists between Ghana and China, save the economic cooperation agreements in agriculture, trade, infrastructure and investment, trade volumes have increased to $5.9bn in 2016, from $683m in 2006. “When it comes to trade, imports are demand driven. Products from China are relatively more affordable than products from EU and other markets. And given the low middle income level of the country, Ghanaians will have more preference for imports from China and that may have accounted for high volumes,” she said.
SON warns importers against cloning Nigeria-made products (Vanguard)
Speaking at a one day stakeholders forum on Ease of Business for port operators in the South West, SON’s Director of Enforcement and Monitoring, Bede Obayi, said that the agency had noticed that importers were now cloning imported products, particularly Nigerian cables and presenting them as made in Nigeria. ”We have ensured that Made in Nigeria cables are about the best in the world so people are cloning imported products as if they are made in Nigeria. And almost all the made in Nigeria products are certified by SON, and other certification and standardization agencies. What you find now is that people go to clone their brand and bring them into the country as if they are made in Nigeria and already certified by SON. This is not true because imported products cannot be branded as made in Nigeria.”
Ethiopian Airlines to make Addis Ababa a global aviation hub (Xinhua)
Speaking exclusively to Xinhua, Tewolde Gebremariam, CEO of ET, said the airline is working on boosting lagging facilities such as in-customer service, airport entertainment for transit passengers and Wi-Fi internet connectivity. He also said Africa’s largest air carrier is working on relieving congestion in Addis Ababa International Airport by establishing regional hubs such as in Lome, Togo to service West Africa region and in Lilongwe, Malawi to service southern Africa region. ET is also discussing with the authorities in the DRC to have a hub in Kinshasa for Central Africa region. “The hubs will give us closer connection with customers and expand the low Inter-Africa connectivity” said Gebremariam, adding that increased air connectivity can significantly increase the Inter-Africa trade from the current 15%.
Choppies’ African offensive: Seven countries and still counting (Mmegi)
Before the end of the year, Botswana’s largest fast moving consumer goods company, Choppies Enterprises will enter the Namibian market, the eighth African country for the budget retailer to establish presence. The aggressive expansion drive, which has seen the company opening shop in four countries in the last two years, has not only come at a considerable capital outlay but has also had a drag-on effect on the company’s bottom line. BusinessWeek’s Brian Benza spoke to CEO Ramachandran Ottapathu: “Our capital expenditure budget for the current year to June 2018 is at P300 million. We plan to add 40 new stores to the 217 stores we already have across the region. The bulk of our new stores will be opened in South Africa (13), Zambia (8), Kenya (4), Tanzania (3), Mozambique (3), Zimbabwe (2), Namibia (3).”
EAC textile sector tipped on maximising technology (New Times)
Textile industry players in the region have been challenged to start making garments that require low level technology and skills as the EAC countries prepare to phase-out imported used clothes. Lilian Awinja, the Executive Director of the East African Business Council, said the sector can manufacture apparels such as inner garments, ties, scarfs that require low level technology and skills. “It is a high time that EAC countries embarked on manufacturing apparels such as inner garments, ties, scarfs that require low level technology and skills as the region works on a phase out approach of imported second hand clothes,” said Awinja. Awinja was speaking ahead of the second East African Business and Entrepreneurship Conference and Exhibition (14-16 November, Dar es Salaam). The event is meant to provide a platform to create synergies and linkages between the local cotton and textile industries with local suppliers and the fashion and design industry.
Turkey to focus on energy trade during D-8 presidency (Daily Sabah)
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Running the numbers: making extractives count for Africa
As African resource-rich countries battle with the macroeconomic impact of the dip in global commodity prices, many look back at the 2004-2013 upswing in the commodity cycle and consider whether African countries, and their citizens, made the best out of them.
Asymmetric information between governments and private investors, as well as weaknesses in designing fiscal frameworks are among the reasons why the benefits of extraction might have fallen short of expectations. How can African governments equip themselves to reap a larger slice of rewards when commodity prices start climbing again?
A new study, jointly produced by the African Natural Resources Center of the African Development Bank (AfDB) and OpenOil, a boutique financial advisory firm, starts with the simple premise that no investor would make an investment decision on an extractive project without the support of a comprehensive financial model. Such a model would link the expected production profile, prices, capital and operating expenditure and corporate tax rates to the projected cash flow of the project and its profitability. This allows investors to determine the key factors that will affect the return to investment.
Strikingly, those sitting on the other side of the negotiating table – “governments operating as trustees for natural resources on behalf of their citizens” – have traditionally used these tools far less frequently. Only recently has the importance of financial models in informing governments policy stance come to the fore. This is because of the emphasis, in the global arena, on bolstering negotiation support for developing countries including through dedicated entities such as the African Legal Support Facility.
The use of financial models should go well beyond the negotiation stage however, in order to inform a range of policy decisions across the extractives policy cycle. This starts before negotiations, with the design of fiscal frameworks and model contracts (where models can help estimate the fiscal impact of changes to the tax regime); includes improving fiscal forecast for revenues from extraction (where models can provide a granular assessment of the impact of fluctuations in prices and production, as in this example from Ghana); and carrying out a comparison between projected and realized revenues (“tax gap analysis”) to highlight red flags and risk areas in tax collection.
Financial models along the extractives policy cycle
But if this is the theory, how in practice are financial models currently used by governments? Is there sufficient data available to produce robust results? Is the information produced fully utilized to inform decisions?
The AfDB and OpenOil’s research, the first of its kind in Africa, interviewed 50 officials from 19 resource-rich African countries, to assess the current use of financial models and outline a set of actions for governments and development partners to close capacity gaps and maximize impact. The research finds that the use of models is increasing among African governments. However, its use is still not fully integrated into policy processes and, often, models are applied in a once off manner and mostly only at the negotiation stage.
Garbage in, garbage out: access to data is key. Crucially, results are only as good as the data going into the model. Lack of access to robust data to input in the model is a key weakness noted in the research, especially concerning capital and operating costs of projects. This is especially important as this missing data is also a key vulnerability when it comes to profit shifting and abuse of transfer pricing. If data is weak, then policymakers and modelers need to find alternative sources of data such as market benchmarks, publicly available data (OpenOil’s Aleph search tool of public corporate document can be an important source) and the targeted use of commercial databases.
Communication and business management are important. Models attempt to describe a complex reality and this requires multi-sectoral and multi-disciplinary expertise (typically the mining or petroleum ministry, the Ministry of Finance, the tax agency, but often also other actors such as the presidency, the prime ministers office or the state owned natural resources companies). Moreover, after a model is run, its outputs are only useful if they reach the right decision makers. A model needs to become a catalyst for a cross-cutting government process. About half of the countries sampled in the research have inter-ministerial committees that input into and receive the output of models; however, the other half of respondents do not share outputs of the model outside the agency that produces them, possibly missing important opportunities for intelligence sharing.
Own it and use it: if financial modelling is to be embedded into government processes, it needs to be fully owned by the civil servants who use it regularly. The research found that in nearly three countries out of four, models used were developed through external support (typically a development partner but in some cases the private investors themselves). More concerning for ownership is the fact that only about half of the respondents were deemed to have received adequate training for the use of models, with over 40% judging their training to be insufficient. Furthermore, models are still far from being embedded into routine government processes such as forecasting and, in 80% of cases, models are not run according to a predetermined schedule, but are rather used in an ad hoc manner as the need arises.
Launched at the Inter-Governmental Forum on Mining Minerals, Metals and Sustainable Development on 19 October 2017, the AfDB/OpenOil report calls for further investment by development partners and governments in capacity building for model use across the policy value chain. It also calls for a coordinated approach to improve access to key project data and/or robust data benchmarking. Data gap analysis needs to be a key component of any training programme on the use of models, setting out strategies to overcome the information gaps. Better use of data from published extractive contracts, from global initiatives such as the Extractive Industries Transparency Initiative, and possibly an investment in open access databases with comparators for project costs can go a long way in strengthening the hand of African governments in appropriating a fairer share of benefits from extractive projects. To maximize economies of scale, governments could adopt multi-country and regional initiatives, training officials on common standards and leveraging inter-governmental bodies such as the African Tax Administration Forum, the Collaborative African Budget Reform Initiative or the Macroeconomic and Financial Institute of Southern and Eastern Africa.
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New models for increasing producer benefits through sustainability standards and trade in Africa
The potential for sustainable trade to be a catalyst for socially and environmentally sound development on the African continent is enormous. How can new partnerships and approaches to developing and implementing sustainability standards in Africa drive more benefits to producers?
Despite its enormous size, the dynamism of its inhabitants, and the natural riches of its territory, the African continent accounts for less than two percent of international trade. Given the potential of sustainable trade flows to be a driving force for achieving the Sustainable Development Goals (SDGs), the question of how African producers can benefit from sustainable global value chains (GVCs) is crucial to answer.
The reasons for Africa’s lack of connectivity to global trade are many and complex. The newly-ratified Trade Facilitation Agreement (TFA), aid for trade programmes, and other approaches aim at addressing some of these structural issues. However, for GVCs to contribute effectively to sustainable development, their development has to go hand in hand with responsible business conduct and social and environmental safeguards.
Credible sustainability standards systems are tools for promoting sustainable trade flows. By defining sustainable or responsible performance for a certain production process, sector, or commodity (which can be adapted to local conditions depending on the system) in a transparent and inclusive manner and coupling this to impartial and independent certification or verification, sustainability standards systems are increasingly shaping global trade flows. This article reflects on how the use of sustainability standards in Africa can foster new value chains with the potential to accelerate the continent’s progress towards the SDGs.
Sustainability standards, sustainable value chains, and the SDGs
Complying with standards to gain access to international markets is nothing new for producers and exporters in Africa. In export-oriented industries such as mining or certain agricultural markets such as cocoa, vegetables, and fresh flowers, the use of quality and safety standards are common. Companies operating in African countries are well aware of the need for complying with technical, quality, safety, or management standards (for example HACCP, GlobalGAP, ISO 9000, or ISO14000, etc).
Apart from such standards, voluntary sustainability standards have a wholly different scope; they address a range of production factors ranging from working conditions and labour rights to soil and waste management or biodiversity protection. In doing so, they go beyond mere quality or safety issues. Developed for specific production processes or commodities through transparent standard-setting processes, they address sustainability challenges in a concrete manner. Their criteria and requirements are linked to one or more of the 17 SDGs and often connect to various other international sustainability agendas (such as the Convention on Biodiversity, the New York Declaration on Forests, the Paris Climate Agreement, etc.). This means that the implementation of a credible sustainability standard by a company or producer can contribute to achieving SDG progress within the broader sector or industry, in the country where it is applied, and at the global level.
In contrast to their increasing role in global trade, the uptake of credible sustainability standards in African countries is limited. Exceptions include the West-African cocoa producing countries, where standards systems such as UTZ, Fairtrade, organic, and Rainforest Alliance have a long track record in creating sector-wide changes by providing incentives to producers. Certain standards systems such Fairtrade also have a long-standing presence in various agricultural markets (coffee, tea, and other crops), with Fairtrade certification active in nine African countries. In forestry and timber production, the use of the Forest Stewardship Council (FSC) standard has been growing in Africa, with 7,708,888 hectares of forest area certified in 2017.
Challenges
Despite these inroads, sustainable production verified by independent standard systems is still rare and represents a fraction of Africa’s total production in any sector. Indeed, for a number of reasons, African producers have difficulties in using sustainability standards to their advantage and fully capitalising on the rising demand for sustainably-produced goods and products.
The adoption barriers that prevent the implementation of sustainability standards in Africa are not specific to the continent. They are prominent in many contexts characterised by poor regulatory and governance capacities. One specific challenge relates to the lack of clear property rights, especially land tenure and use. The informal and fragmented nature of smallholder production is another important factor, which in turn complicates access to credit and investment. In this context, the costs for producers to implement sustainable practices and undergo assessment to a standard is high and upfront finance difficult to obtain.
Many efforts, often supported by international cooperation and investment, have sought to overcome such barriers. However, a recurring problem is the lack of clarity on consistent, long-term demand for sustainable certified products, which prevents producers from assessing the potential returns on investment.
For each of these challenges, there are high expectations and limited abilities for sustainability standards to address all of the issues on their own. To be accessible, effective, and impactful, sustainability standards require coherent and concerted support efforts that bring together producers and their communities, policymakers at various levels, and coalitions of private actors (retailers, traders, investors, etc.) committed to achieving sustainability goals. The need for such partnerships is nowhere greater than in Africa.
Transforming African markets through new partnerships
New partnerships – especially partnerships with governments – offer new potential for producers to access international markets while making progress on sustainable development. These partnerships involve building local ownership and capacity to meet the standards, while also ensuring a connection to the demand side in consuming markets and reducing compliance costs through new models.
One ongoing effort is the creation of sustainable cotton value chains in Africa through the Better Cotton Initiative (BCI) and its Better Cotton Standard System (BCSS). The African continent provides around 5 percent of global cotton production, and cotton production is the mainstay of the livelihood of more than 2.5 million Africans. The BCI was established to improve cotton production practices globally and has taken off in three major African cotton producers: Mali, Senegal, and Mozambique. Through strategic partnerships, BCI engages strategic stakeholders in these cotton-producing countries to implement the principles and practices set by its standard. Government extension services are strengthened by the BCI’s support, thus facilitating sustainability improvements and compliance with the BCI standard. Importantly, the BCI and its partners are supported by an increasing number of buyer commitments from large producers and retailers, which ensures export markets and reduces price volatility.
Another example is that of South Africa’s experience with the Marine Stewardship Council (MSC) certification for its hake fishery. This certification played a significant role in allowing the South African hake sector to weather the 2008 financial crisis by ensuring strong value-added export markets for its sustainably-caught fish. The government of South Africa has been a strong partner for the implementation of MSC. Specifically, the government has developed the Government’s Offshore Resource Observer Programme, which contributes scientific data and enforcement capacity to ensure that fish trawling is sustainable, resulting in a “co-management” of the fishery that leverages the strengths and resources of each partner.
Oil palm cultivation in Africa provides another area of collaboration. The African Palm Oil Initiative (APOI), a pan-African multi-stakeholder initiative covering ten West and Central African countries, was established in 2011 through engagement with the Roundtable on Sustainable Palm Oil (RSPO), the leading international palm oil sustainability standard. The programme works to establish principles of national action on sustainable palm oil and goals of implementation at the national level. By working toward local ownership of the sustainability agenda, this initiative works to help growers in Africa strengthen their ability to achieve sustainable palm oil production with support from government, industry, and civil society. While still in its early stages, the APOI is developing the potential to recognise the sustainable production of palm oil at a landscape level, an innovative approach that could make sustainable production more accessible for producers.
Standards and beyond: Can policymakers create positive incentives?
The use of sustainability standards as building blocks for sustainable supply chains is already opening up promising avenues. The above examples are not just good illustrations of how new partnerships are making sustainability standards more accessible to African producers; they also indicate a renewed interest of governments in producing countries to engage with standards systems constructively.
However, to create sustainable trade flows, governments in both import and export markets have a range of unused options at their disposal to provide strong incentives. Policymakers at national, sub-national, or international levels can explore various measures to ensure adopting credible sustainability standards makes economic sense for producers.
Various trade-related instruments already integrate commitments or provide trade benefits linked to sustainability or other international norms. These include the Generalised System of Preferences (GSP) and free trade agreements (FTAs) – which often integrate sustainability aspects, but without effective enforcement. Other instruments, such as EU regulations and directives, have been developed to focus on specific issues such as illegal logging, conflict minerals, and sustainability criteria for biofuels. These targeted instruments have already introduced strong incentives aimed at making supply chains leading into Europe more responsible and sustainable.
Governments could facilitate the trade of sustainable goods further by revising their GSP frameworks or other trade-related benefits (subsidies, development aid, etc.) to go beyond the country level and target the sector, cluster, or individual firm level – using credible standard systems as the basis for an effective co-regulatory approach to provide such incentives. Additionally, aid for trade and other development assistance aimed at helping producers reach credible sustainability standards can help ensure that investments achieve sustainability impacts.
Asides from trade-related measures, stronger demand can be mobilised at national or subnational levels. The implementation of sustainable public procurement has been an impactful way for policymakers to incentivise sustainable GVCs. A more recent development is the rise of multi-stakeholder sectoral “covenants” in countries such as Germany and the Netherlands, whereby governments aim to lock in whole industries towards greater sustainable sourcing. A promising measure, although untested so far, would be to reduce the value-added tax for sustainably-produced products, something which national governments could decide unilaterally to offset the additional costs of sustainable production.
In all of this, it is important to underline that credible sustainability standards provide the most accurate and transparent way to enable differentiation based on sustainable and responsible practices. Under the WTO’s Agreement on Technical Barriers to Trade, governments are asked to take “reasonable measures” to ensure that standards operating within their jurisdiction meet WTO principles and disciplines. Governments should take WTO norms into account when using private sustainability standards in public policy that affects trade and only work with standards that are accessible, transparent, and minimising overly burdensome requirements. To do this, a growing body of information is available to policymakers to understand the differences between different types of sustainability standard systems, including ISEAL’s Codes of Good Practice, the ISEAL Credibility Principles, and the Standards Map of the International Trade Centre.
Just like public regulation, even the most established private standards systems are not perfect. Nevertheless, the best systems are continuously improving. Crucially, they also provide much-needed clarity and consistency in terms of sustainability criteria, and link this to transparent and impartial enforcement through certification or other assurance mechanisms.
To unlock the potential of sustainable trade for African producers and markets, public and private actors will need to collaborate to provide enabling conditions, immediate investments, and long-term incentives. Credible multi-stakeholder sustainability standards offer themselves as points of convergence for such collective efforts.
Joshua Wickerham is Policy and Outreach Manager at the ISEAL Alliance. David D’Hollander is Policy and Outreach Coordinator at the ISEAL Alliance.
This article is published under Bridges Africa, Volume 6 - Number 7, by the ICTSD.
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E-Commerce elements for MC11: Communication from China
Submission to the World Trade Organisation Committee on Trade and Development ahead of the 11th WTO Ministerial Conference to be held on 10-13 December 2017 in Buenos Aires, Argentina
WTO Members, based on the existing mandate, have conducted lively and valuable discussions on e-commerce under the auspices of the General Council and its relevant subsidiary bodies since MC10. Members generally recognize the importance of such discussions under the WTO framework, and acknowledge both the opportunities and challenges incurred from e-commerce for the trade growth and economic progress of Members at different development stages.
On the basis of these discussions, we believe a pragmatic way of the preparations leading up to MC11 is to identify the elements acceptable to Members. These elements may be reflected in the MC11 Work Programme on Electronic Commerce as key building blocks in our work beyond for a high-priority discussion in the Dedicated Session of the General Council or a body to be agreed upon by all Members. We believe that this will help the WTO maintain its relevance and respond to the calls from the business communities. We therefore call upon Members to take a constructive attitude and strive to build consensus related to e-commerce at MC11 and beyond. Those specific elements that may be positively considered are as follows:
1. On the moratorium of customs duties on electronic transmissions
E-commerce has provided the WTO Members with brand new ways of trade and unprecedented business opportunities, particularly for developing Members, the micro, small and medium-sized enterprises (MSMEs) and vulnerable groups. With a view to making full use of the convenience that e-commerce brings, and enabling inclusive development of trade, also having in mind the uncertainty of future technological development as well as its influence, Members may decide to maintain the practice of not imposing customs duties on electronic transmissions until the next session of the Ministerial Conference to be held in 2019.
2. Facilitating cross-border e-commerce
Along with the rapid development of e-commerce globally, transaction parties located in different customs territories increasingly conclude transactions through electronic means, and then complete payment, logistics and other business processes. E-commerce is now changing the way of trade in goods. In reality, free zones and customs warehouses and other good practices facilitating cross-border e-commerce have played a key role in promoting the development of industries. Members’ successful experiences in this regard may be summarized at MC11 for reference by other Members to promote the latter’s development of e-commerce and better achieve the goals of inclusive growth in accordance with their individual circumstances.
Based on the experiences of some WTO Members like China, the facilitating role of free zones and customs warehouses as defined in the Specific Annex D of International Convention on the Simplification and Harmonization of Customs Procedures, or Kyoto Convention of the World Customs Organization (WCO), may be explored in depth.
The facilitating role of free zones and customs warehouses is first and foremost reflected in that relevant goods are permitted to be stored, unpacked and grouped, collected for repacking, and repacked in the free zones and customs warehouses at the importing destinations; then go through the importing procedures including customs declaration, tariffs and internal tax payment in accordance with the electronically-placed transaction orders, and from free zones and customs warehouses, eventually get transported and delivered to the buyer. Such free zones and customs warehouses may also locate in a third territory other than the importing or exporting one, to offer the same facilitation as mentioned above to relevant goods.
Such facilitation may also include permitting relevant goods to be stored, unpacked and grouped, collected for repacking, and repacked in the free zones and customs warehouses at the exporting source, and complete in due course the exporting procedures including export declaration, export tax rebate and etc.; then in accordance with the electronically-placed transaction orders and upon completion of the importing procedures including customs clearance, tariffs and internal tax payment, get transported and delivered to the importing destination, and finally reach the buyer.
Bringing into play the role of free zones and customs warehouses in facilitating the operation of cross-border e-commerce can not only save time for cross-border logistics and delivery to cut costs, improve e-commerce customer experience, and enhance the transaction efficiency of both sellers and buyers, but also make the job of regulatory authorities easier, by reducing the administrative costs and raising the administrative efficiency in the regulation of relevant goods.
It is worth noting that making use of free zones and customs warehouses to facilitate the operation of cross-border e-commerce is without prejudice to the Members’ existing trade policies, the regulatory framework and implementation, namely policies of tariffs and related internal taxes, export tax refund, and licensing of various kinds in relation to import and export.
With regard to the facilitating functions of free zones and customs warehouses, Members may also share the status of relevant domestic legislations or offer summary-type introductive materials, the content of which may include but not be limited to the definition and categories, establishment and closure, administration and regulation of free zones and customs warehouses, and authorized operations as well as the period of storage therein and etc.
Members may discuss the capacity building of developing Members in the context of policies of free zones and customs warehouses as well as their relationship with the development of ecommerce.
Members may request the WTO Secretariat to assist in understanding and drawing upon the relevant work of the WCO, and build a cooperative relationship with it if necessary.
Members may explore more concrete issues relating to the facilitation of e-commerce based on the stipulation of the Kyoto Convention regarding free zones and customs warehouses, summarize and share more experiences with one another to better serve the objective of promoting inclusive trade and development through e-commerce.
3. Promoting paperless trading
The development of e-commerce has further promoted paperless trading. With improved transaction efficiency, reduced transaction costs and saved resources as its greatest advantage, paperless trading represents the development trend of international trade under the new circumstances.
Members may endeavor to promote paperless trading to the extent possible, and in particular, explore in the implementation of Trade Facilitation Agreement (TFA) effective ways and means to encourage the development of e-commerce, including the possibility of accepting trade administration documents submitted electronically as with the same legal effect of their paper versions, and make trade administration documents available to the public in electronic form.
4. Electronic signature, electronic authentication and electronic contracts
The recognition and standardization of electronic signature, electronic authentication and electronic contracts help promote the rapid development of electronic transactions, and safeguard the security of electronic transactions.
Members may, building on the existing work of United Nations Commission on International Trade Law (UNCITRAL), maintain domestic legislation for electronic signature that would not deny the legal validity of a signature solely on the basis that the signature is in electronic form; permit parties of an electronic transaction to mutually determine the appropriate electronic signature and authentication method, and permit electronic authentication agencies to have the opportunity to prove to the judicial or administrative authorities that their electronic authentication of an electronic transaction complies with legal requirements with respect to electronic authentication; confirm the legality of contracts concluded through electronic signatures from the legal perspective. If the parties enter into a contract in the form of letter or text in electronic data, a confirmation instrument may be required to be signed prior to the forming of a contract. The contract is formed at the time when the confirmation instrument is signed.
Members may also exchange information on policies concerning electronic signature, electronic authentication and electronic contracts, and work towards the mutual recognition of digital certificates and electronic signatures; and encourage the use of digital certificates in the business sector.
5. Transparency
With a view to better understanding each other’s policies related to e-commerce and their changes, and promoting the development of e-commerce as well as the realization of goals concerning inclusive growth, Members may, on top of the existing transparency requirements in the WTO agreement, endeavor to enhance the transparency regarding e-commerce policies, including to publish, or otherwise promptly make publicly available, where publication is not practicable, laws and regulations of general application which pertain to or affect the operation of E-commerce; provide, to the extent possible, the original text of such laws and regulations as well as where they are published to the WTO Secretariat; respond, to the extent possible, to reasonable enquiries from other Members regarding facilitating cross-border e-commerce through enquiry point(s) established and maintained under the Trade Facilitation Agreement or other existing enquiry point(s).
6. Development and co-operation
The WTO work on e-commerce should reflect the concept of inclusive trade, and earnestly help MSMEs and vulnerable groups to better participate in and benefit from international trade and global value chains. Many Members’ experiences of e-commerce development have proven that ecommerce is conducive to development and helps small farmers and MSMEs in remote areas to integrate into the vast domestic and international markets. The e-commerce work at the WTO should take into full account the actual situation of Members at different stages of development, in particular the specific demands of developing and least developed Members, strive to solve the problems of development to their general concern, and enhance the ability of developing Members to benefit from e-commerce, and take the principle of special and differential treatment as an integral part. Considering the WTO’s functions, Members may further explore specific consensus on development and cooperation. Members’ concrete opinions and recommendations are welcome, including the work that can be carried out under the Aid for Trade Program of the WTO.
Recommendations and practical measures may be taken to improve the e-commerce infrastructure, technical conditions and capacity building of developing members regarding cross-border e-commerce. Cooperative activities like information exchange, joint study, promotion events and training may be conducted, including the sharing of experience in helping MSMEs, economically under-developed areas and vulnerable groups to participate in e-commerce.
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Fintechs and the financial side of global value chains – Statistical implications
Document prepared for the Working Party on Financial Statistics to be held on 6 and 7 November 2017 at the OECD Conference Centre
Summary
Structural changes to the trade finance market occurred during the last decade: Fintechs – Financial technology companies – have been established and become successful in segments traditionally occupied by banks; and alternative trade finance solutions, such as supply-chain financing (SCF), have emerged.
Trade finance contributes significantly to the growth and changing pattern of international trade. Trade in intermediate goods has grown rapidly. It has a high level of reliance on new instruments of trade finance. Periods of stress and disruptions of trade finance during the Global Financial Crisis posed systemic risks to world trade leading the March 2009 G-20 summit to commit $250 billion to support trade finance and to call for better data: “…the lack of a comprehensive international dataset for trade finance during the crisis has been a significant and avoidable hurdle for policy-makers to make informed, timely decisions. […] It is recommended that multilateral agencies coordinate and establish a comprehensive and regular collection of trade credit in a systematic fashion.”
Estimates on global trade finance are scarce and very divergent. Estimates by the WTO (for 2009) suggest that the global trade finance market (including credit insurance) is about 80 percent of global merchandise trade. For 2015, this would roughly be $17 trillion in trade finance flows, with an estimated outstanding stock amount of $6 trillion (assuming an average duration till maturity of 4 months). The estimated outstanding stock of other investment trade credits, based on BOPSY for 2015, is about $1.14 trillion.
To ensure that macroeconomic statistics mirror global realities and maintain policy relevance, a stepping-up of trade finance statistics is needed. Current statistical frameworks do not adequately capture the trade finance market. Trade finance instruments currently included in macroeconomic statistics are spread over different functional categories, are combined with other instruments, and often only proxied or imputed in data compilation. No separate breakdown is available on third party supply chain financing, and current data do not capture the great variety of traditional and new SCF instruments. A stand-alone, exclusive (satellite) trade finance dataset to support informed and timely policy decisions may be needed to respond to the call by policy makers, and existing statistical frameworks beyond the international accounts will need to be updated to reflect (new) types of trade finance instruments and providers.
The trade-financing market and relevance for (IMF) surveillance
The reduction of world trade in the 2008-2009 financial crisis was associated with breakdowns in traditional trade finance and disruptions in global supply chains’ finance. The crisis led to adverse feedback loops between the financial system and the real economy. Global Value Chains (GVCs) have become dominant features of world trade. They are complex, interconnected, multi-layered networks of suppliers, buyers, service providers, and customers. GVCs have changed the dynamics of financial stability and thus call for special recognition in surveillance. Macroeconomic effects could include bankruptcies, layoffs, and contraction of trade.
Financial disruptions at the level of a supplier can have ripple effects throughout the entire value chain. Upstream companies are vulnerable to the risks and resilience of small and medium-sized companies (SMEs) in their supply chains, as critical product components are often sourced from SMEs abroad. Constraints on cash flow affect investment and growth. Financial shocks may affect trade financing for SMEs, especially in emerging markets.
For surveillance, better data are needed to track and examine the evolution of the trade finance market, and evaluate ongoing market dynamics. Stability analysis will extend to the new market entrants, the use of securitization markets to raise trade finance capital, and increased competition in the supply chain market. For example, Fintechs could qualify as (money-creating) depository corporations, funding themselves with short-term loans and providing loans to goods suppliers. Further insight into third-party financing would be useful to monitor the role and impact of new players, and the extent to which these companies themselves could become the origins for disruptions in the supply chain market. There are no readily available data covering the trade finance exposures of banks or other financial intermediates.
The changing trade finance environment
Fintechs – new players in the trade finance market
Fintechs are non-bank institutions that use advanced technologies to perform traditional banking activities. Increased regulations for banks have made it less attractive for them to do business in certain jurisdictions with stricter compliance rules regarding transparency, consumer protection, and capital requirements. Providing financial support to SMEs, especially in developing countries, requires specialized risk-assessment and evaluation models that banks are not necessarily willing or able to adopt.
New partnerships between Fintechs and banks have been established. The International Chamber of Commerce (ICC) noted in its Global Survey on Trade Finance 2017 report, that Fintechs count major financial institutions among their shareholders.
Fintechs use big data and cloud-based technology to offer new and established services in trade finance, marketplace lenders, micro-lending, and “robo-investment platforms.” Most of these startups have not yet been subject to the same regulatory scrutiny and constraints as conventional banks.
Regulators are in early stages to catch up with these developments. Blockchain is another emerging game changer. In a nutshell, Blockchain is a digital ledger of trade related financial transactions traceable in real time which is shared among participants with access rights. While traditional trade finance requires each participant to maintain their own administration and databases, Blockchain integrates the information in one digital document. Payments can be monitored by both parties, and the bank can see both the original contract as well as the order placed between companies and can verify both authenticity and state of fulfilment at any given time.
Statistical implications
Currently, there is no comprehensive global dataset covering trade finance statistics and the G-20 called for a comprehensive collection of trade credit data. Statistics currently only separately distinguish trade credits as part of other investment. This instrument is narrowly defined as credit extended directly by the suppliers of goods and services to their customers (BPM6 5.70). Therefore, trade credits do not include financial intermediation (other than the settlement through the banking system). This definition does not cover trade financing provided by third parties/financial intermediaries, such as direct working capital financing by suppliers, and new SCF techniques with financial intermediaries added back to the equation.
The traditional letters of credit category is not considered a financial instrument until documents are received and funds are transferred by banks; at that point this category is included under deposit-taking corporation loans not differentiated as trade finance.
A comprehensive collection should be based on the umbrella term ‘trade finance’ and take into account:
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traditional bank-guaranteed instruments (letter of credits and other documentary collection instruments), which are off-balance sheet;
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other bilateral working capital financing between suppliers and financial intermediaries (such as export-related working capital lending, pre-export finance, supplier credits, receivables discounting, or forfaiting);
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conventional open account trade financing, i.e., directly extended trade finance loans by the supplier to the buyer (currently trade credits in other investment);
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newer open account SCF instruments that include the financing of a supplier by a bank or a nonbank financial intermediary (based on standardized definitions drafted by the GSCFF);
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information about export credit insurance provided by public export credit agencies or private insurance firms to bridge the gap or cover the risk.
A stand-alone comprehensive (satellite) trade finance dataset to support informed and timely decisions can be considered to respond to the call by policy makers. This dataset will also facilitate tracking the dynamics of the trade finance market. The statistical frameworks (BPM6, 2008 SNA, MFSM) would need to be updated to reflect trade financing instruments and SCF providers.
A comprehensive dataset on trade financing could also shed light on the different regional patterns, because the nature of trade finance varies widely from country to country and region to region due to distance from trading partners, product types, and the efficiency of local market practices.
This document was prepared by Cornelia L. Hammer, Real Sector Division at the International Monetary Fund. The IMF is currently drafting a chapter on the financial side of global value chains for the Handbook on Accounting for Global Value Chains by the UN Expert Group on International Trade and Economic Globalization Statistics (EG-ITEGS).
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COMESA adopts revised RCTG Operations Manual
The Council of the Regional Customs Transit Guarantee Scheme (RCTG) has adopted the revised Operations Manual with amendments and decided that it should be circulated to all members before the end of this year.
The manual was revised considering operational changes and developments in the sector, information communication technology enhancements and regional developments and authorities’ decisions made over the recent past.
The eleventh meeting of the RCTG Council met in Lusaka from the 11th to 13th October 2017 and approved the 2017/2018 RCTG Annual Work programme. They also discussed Trade facilitation along the major transport corridors.
The Council decided to increase budget allocation to the RCTG Secretariat from the current 15 to 20% from the reinsurance pool.
Assistant Secretary General for Programmes Ambassador Kipyego Cheluget, who officially opened the meeting, pointed out the encouraging progress made in the operations of the scheme in the Northern and Central Corridor countries and commended all the stakeholders involved in the operations for their commitment and the success achieved.
He urged the meeting to address challenges being experienced in the operations including delays in the acquittal of the RCTG Carnet and the slow pace in fully digitalizing the system.
“I have no doubt that the revised manual will go a long way in enabling Clearing and Freight Forwarding Agents, Sureties and Customs to carry out their duties faster, simpler and cheaper and resolve issues fairly and stakeholders become trusted partners in implementation of the RCTG Carnet,” he added.
A number of COMESA Member States have resorted to using the RCTG to effectively and efficiently move goods across the various corridors.
This has not only reduced premium payments, collateral requirements and documentation but also significantly contributed to the reduction of transit and transport costs and increased efficiency in the removal, movement and clearance of Transits goods in the Corridors.
The COMESA Customs Bond Guarantee Scheme popularly known as the RCTG CARNET is a customs transit regime designed to facilitate the movement of goods under customs seals in the COMESA region and to provide the required customs security and guarantee to the transit countries.
The Scheme was introduced in accordance with the provisions of COMESA Protocol on the Transit Trade and Transit Facilities Annex I, to the COMESA Treaty.
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tralac’s Daily News Selection
From the UN’s Africa Week 2017: remarks by Amina J. Mohammed, United Nations Deputy Secretary-General
Today, regional blocks in South and Central America, Southeast Asia and China play a major role in global economy. For instance, the ASEAN Free Trade Area was established in 1992 to eliminate trade and non-trade barriers and improve the Southeast Asia’s competitiveness. Consequently, intra-ASEAN trade more than doubled between 1995 and 2010, and kept increasing to reach around 24% of global trade last year – and 40% if trade with China is included. We can achieve the same success in Africa.
AfroChampions Initiative: full text of VP Osinbajo’s address
In the last few years, it has become obvious to many African countries that both momentum and common sense are in favour of the private sector leading our economies and championing initiatives that will drive-in traffic, trade and commerce. The role of the public sector is to catalyse, umpire and to incentivise. But whether we like it or not, the private sector in Africa is already building world class brands and trading everywhere and I think that was obvious from the last but one presentation. In manufacturing, the Dangote group is already manufacturing cement in several African countries; in banking, Ecobank, UBA, GTB, Access bank are all doing incredible things across the African continent. In Telecoms – MTN, & broadband infrastructure firm – MainOne, are doing business everywhere on the continent.
But these public sector initiatives need the sense of urgency that the private sector will bring, this is why we certainly believe in the AfroChampions Initiative because we think it is the private sector that will do what is required to bring the urgency and sense of mission to all that we have been trying to do in the African Union. We would like to see greater synergy and collaboration between the AfroChampions and all the organs of the AU involved in economic integration issues, their enthusiasm and energy is perhaps to shorten the arm that the AU needs at this time. [Related: Participants at the inaugural meeting launched two workstreams: CFTA, AfroChampions Charter]
Africa Sustainable Development Report: tracking progress on Agenda 2063 and the Sustainable Development Goals (UNECA)
The report is the first to simultaneously track progress on the 2030 Agenda for Sustainable development and Agenda 2063 (and its first ten-year implementation plan). This is possible due to the substantial convergence at the level of goals, targets and indicators. This is illustrated by a mapping of the links between the global and continental initiatives included at the beginning of each chapter. The report underscores the slow progress towards poverty reduction in Africa despite the accelerated growth enjoyed over the past decade. Noting the disproportionate prevalence of poverty among women and youth, the report highlights the lack of inclusiveness and sustainability of primary-commodity driven growth and reiterates the call for structural transformation anchored by commodity-based industrialization and accelerated reduction in inequality.
Supporting documentation prepared for the 10th Session of the Committee on Regional Cooperation and Integration – Implementation of the Continental Free Trade Area and shared gains (31 October - 2 November, Addis Ababa):
(i) International trade and intra-African trade (pdf). Recommendations and way forward. The forthcoming focus for the EU of its trade relationship with the African, Caribbean and Pacific Group of States will be on the implementation aspects of the economic partnership agreements. Therefore, regions that are implementing such an agreement should develop coherent, African integration oriented strategies to ensure that the transitional period is used effectively to build productive capacities, in which producers in the EU are expected to put pressure on domestic producers. This could be assisted by setting up an economic partnership agreement monitoring and evaluation framework at the continental level, including data gathering and analysis on the implementation of these agreements vis-à-vis regional free trade agreements and CFTA implementation, and providing analysis on the impact of the agreements. It is worth systematically extending the reflections on economic partnership agreements to the African pan-Euro Mediterranean partnership countries to ensure inclusive pan-African integration outcomes.
Noting the possible shift in the coming years with regard to the nature of the trading arrangements between Africa and the United States, lessons should be learned from the experience of the economic partnership agreements. In addition, where potential exists, African countries should aim to seize existing opportunities and reinforce their positions with regard to the United States market by using the flexibilities under the current African Growth and Opportunity Act scheme. In this view, due preparation is needed. The planned workshop will offer an opportunity to share experience and best practices and showcase the existing guidelines for strategic policy formulation regarding the Act.
(ii) How African countries are boosting intra-African investment, with a view to sharing best practices among member States (pdf). Equally important will be improving the quality of and access to education, given that this will contribute to increasing the attractiveness of African economies, boost intra-African investment flows and promote associated technology and knowledge transfers. In this regard, it is critical to encourage the participation of women and men in the formal labour market to maximize the expected effects of intra-African investment through targeted and comprehensive strategies for young people and employment, including at the regional level. In the context of the CFTA, this would also allow for greater flexibility and better planning of factor market mobility, an element that could also be incorporated into the ongoing negotiations on the movement of business persons to ensure that Africa generates the jobs necessary for the growing population of young people.
African Governments must further ensure that their investment laws are designed to spur domestic and regional investment. For example, investment laws should list priority investment sectors, including manufacturing, and offer incentives to regional investors. These sectors, rather than commodities, offer greater opportunities for regional integration and more strategic entry points at the higher levels of regional and global value chains. Under conducive investment codes and regulations, imports of goods and services used for investment projects could be exempted from duties and value-added taxes. African companies could also enjoy exemptions from profit taxes and waivers from property taxes for a number of years. Governments should also be financially involved in infrastructure development costs associated with investment projects.
(iii) Status of food security in Africa: recommended policy options (pdf). The recommendations that pertain most to Africa’s food and nutrition security should be focused on the need to support poor smallholder farmers to boost agricultural productivity and withstand future shocks so that they contribute to long term food and nutrition security and to shoring up household access to sufficient and healthy food all the times. The recommendations at the continental/regional level are the following: (a) Promote regional agricultural cooperation involving the free movement of investment, knowledge and technology transfer and commodities within and between regional economic communities. Doing so should be a win-win situation, in which one country can benefit from the existence of high technology, capital surplus and a huge food export market in the other country or countries, which, in turn, will benefit from stable, consistent and relatively cheap food supplies derived from the extra food surplus in the other cooperating country; (b) Eliminate all barriers to intra-African trade in order to realize the full potential to enhance food self-sufficiency at the sub-regional level through the linking of regional food security and social protection efforts with regard to trade; (c) Boost intraregional trade through investment in cross-border infrastructure and the harmonization and coordination of trade policies to create a conducive environment for the realization of CFTA, thereby contributing to rapid regional integration.
(iv) Comprehensive report on developments in Africa’s regional integration in the context of trade, investment, infrastructure, industrialization, land management, food security and agriculture, with a view to influencing policy (pdf); (v) Progress on land policy formulation and implementation in Africa (pdf); (vi) Promotion of Africa’s industrialization through inclusive infrastructure development (pdf)
Global Mobility Report 2017: tracking sector performance (World Bank)
The Global Mobility Report 2017 is the first-ever attempt to examine performance of the transport sector globally, and its capacity to support the mobility of goods and people, in a sustainable way. The GMR is built around three components: (i) four global objectives that define “sustainable mobility”; (ii) quantitative and qualitative targets for those objectives, drawn from international agreements; and (iii) indicators to track country-level progress towards those objectives. It covers all modes of transport, including road, air, waterborne and rail.
Aiming towards a more integrated Africa: leveraging on technology to improve trade flows across the continent (Ziad Hamoui Blog)
This article looks into the use of technology to address some of these challenges. Each of the four applications (Cheetah; What3Words; Bifasor; Borderless e-Portal) addresses one or several of the problem areas already discussed and collectively offer a comprehensive solution to improve trade flows across the continent.
Kenya: Middlemen cut as state unveils key trade portal (The Star)
The Ministry of Trade yesterday launched a one-stop trade portal that provides market place information for both local and international trade. The portal is expected to expand market for local traders and service providers while bringing convenience for buyers who will now access market information like commodity prices at a click of a button. It is also expected to cut out middlemen from the trade chain. Information in the portal is provided my multi-sectional stakeholders including KNBS, Council of Governors, Kebs, KRA, KAM, Kephis, Kenya National Chamber of Commerce, Retail Traders Association among others. Speaking while unveiling the portal, dubbed Kenya trade portal, Cabinet Secretary Trade and Industrialisation Adan Mohamed said it will have information ranging from products available in the country, licensing requirements in the counties, wholesale and retail markets as well as licensed traders who could be targeted by manufacturers for distribution throughout the country.
Kenya: New customs system goes live on 25 October (Business Daily)
The iCMS will replace the Simba system which has been blamed for revenue leaks and delays in customs clearance. TradeMark East Africa that co-financed the iCMS estimates that it would lead to a reduction of cargo clearance time by about 60%. “Other gains include pre-lodgement of more than 80% of customs documents; linkages with the National Single Window System to reduce complexity for traders in obtaining official approvals, and streamlining of processes between Kenya and other revenue authorities in the region” it further said. Kenya currently lacks an integrated customs management system aligned with those used by other EAC states. The iCMS is expected to provide an efficient interface with the customs management systems of the EAC neighbours.
Better roads and automation cut East Africa freight costs (Business Daily)
The cost of transporting a 40 foot container between Mombasa and Kampala, Kenya’s biggest transit trade market, has gone down 34.2% in the last four years on the back of better roads, reduced police checks and efficiency at weighing points, a new report shows. Road freight costs decreased to Sh230,858 ($2,237) in 2016 from Sh350,880 in 2011. Automation at weigh stations greatly enhanced efficiencies, shows the 2016 Logistic Performance Survey launched in Nairobi last week by the Shippers Council of Eastern Africa. Cost from Mombasa to Nairobi for a 40 foot container declined from Sh134,160 in 2011 to an average of Sh90,712 in 2016. The average cost of transporting a 20ft container by sea was Sh186,792 and Sh279,672) for a 40ft container from the UK to Mombasa by sea. On the other hand, it cost Sh213,624 and Sh318,888 for a 20ft and 40ft containers respectively from the UK to Dar es Saalam, Tanzania.
Kenya launches new council to handle full range of trade negotiations (Xinhua)
Kenya on Wednesday launched the National Trade Negotiations Council to handle bilateral, regional and multilateral trade talks. Principal Secretary in the Ministry of Industry, Trade and Cooperatives Chris Kiptoo told a media briefing in Nairobi that the National Committee on World Trade Organization has been providing the institutional framework for trade consultations and negotiations at the national level. “This framework worked well but only catered for the multilateral trade negotiations. The framework did not cover regional and bilateral trade though both processes benefited from the existence of the NCWTO,” Kiptoo said.
Nigeria’s aviation attracted $4bn in 2016; needs $50bn to grow (ThisDay)
For the aviation industry to grow in Nigeria to be in tandem with what is obtained in other parts of the world and for the country to actualise its desire to become a hub in West and Central Africa, the industry needs an injection of $50bn in the next 30 years. This was the projection given by industry expert and CEO of RTC Advisory, Opeyemi Agbaje, during a presentation at the Colloquium 2017, Vision 2050 for Aviation Industry held in Lagos on Tuesday. Agbaje said the Nigerian aviation industry attracted $4bn FDI in 2016, noting that in 2010, the sector attracted $6bn, $7.1bn in 2012; $5.6bn in 2013; $4.6bn in 2014 and $8bn in 2015.
Today’s Quick Links: A bridge to African self-reliance: the big bond East Africa: Cross Border Trade Bulletin, October 2017 |
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With fast-growing youth population, Africa boasts enormous market potential – UN deputy chief
African countries individually represent relatively small markets, but collectively, they represent enormous market potential, the United Nations deputy chief told an Africa Week event in New York on Wednesday.
“The continent’s large and growing population represents enormous market potential, especially with growing urbanization contributing to rapid growth in consumption by households and businesses,” said Deputy Secretary-General Amina J. Mohammed in her keynote address to the event, titled ‘Regional and Economic Integration in Africa: How to Effectively Involve Africa’s Youth across National Borders.’
Yet, despite this potential, she continued, intra-African trade represents only about 13 per cent of Africa’s total trade.
By building on market potential and promoting regional integration, African countries could reduce their dependency on the sale of primary commodities, and shift to value added products – creating employment, reducing inequalities, investing in sustainable infrastructure and ensuring sustainable economic growth.
Establishing a Continental Free Trade Area, as agreed by the African Union in 2012, would be a major step in the right direction.
“Once established, it would be the largest free trade area in the world with 54 member states – a single market of more than one billion people with a young and growing population,” she said.
The transformative changes envisaged in Africa’s development vision, Agenda 2063, can only be realized if they are forged around stronger regional integration, she added.
There are also encouraging success stories elsewhere. Today, regional blocks in South and Central America, Southeast Asia and China play a major role in global economy.
The Association of Southeast Asian Nations (ASEAN) Free Trade Area was established in 1992 to eliminate trade and non-trade barriers and improve the Southeast Asia’s competitiveness. Consequently, intra-ASEAN trade more than doubled between 1995 and 2010, and kept increasing to reach around 24 per cent of global trade last year – and 40 per cent if trade with China is included.
“We can achieve the same success in Africa,” Ms. Mohammed said.
Africa has the fastest growing youth population in the world, with 60 per cent of its population under 24.
Harnessing their capacity requires greater investments in education, especially in science and technology, to ensure a robust labour force capable of meeting the increasingly competitive demands of today’s globalized markets, she said.
Noting that gender inequality is costing sub-Saharan Africa tens of billions a year, she stressed the need to truly integrate women into Africa’s economies towards creating a prosperous and vibrant Africa.
Deputy Secretary-General’s remarks at Africa Week 2017
I am pleased to be with you and I welcome all the representatives of the African Regional Economic Communities to this briefing today.
Over recent decades, Africa has achieved significant progress thanks to the leadership of its Governments, the African Union, the Regional Economic Communities, civil society organisations, the private sector and many other partners.
We have seen advances in reducing poverty, economies have diversified and the middle class is growing.
More children – and especially girls – are in primary school, and child and maternal deaths are down.
More women are serving in Parliaments and African countries are focusing greater attention on prevention.
Africa has also set forth an ambitious vision in the African Union Agenda 2063, which aspires to achieve “an integrated continent, politically united and based on the ideals of Pan-Africanism and the vision of Africa’s renaissance”.
This ambitious vision has been driven forward by Africa’s development program – NEPAD alongside pivotal regional and sub-regional institutions, including the Regional Economic Communities, which have been a driving force both for economic integration and peace and security on the continent.
We are delighted that Agenda 2063 has been developed and is aligned closely to the 2030 Agenda for Sustainable Development.
Implementing these agendas depends in large part on the success of Africa’s Regional Economic Communities as the key building blocks of the African Union.
It is important that Africa can play a full part in today’s globalized world.
This means fair trade opportunities and better access to markets.
It means access to more resources and financing for development and climate action.
It means unlocking the opportunities of innovative finance and private investment.
And it means that donors must uphold their commitments to Official Development Assistance
But it also means South-South Cooperation.
Which brings me to the theme of today’s event – Africa’s regional and economic integration.
We know open and competitive markets can enhance sustainable economic growth and alleviate poverty in Africa.
Individually, African Member States represent relatively small markets with limited opportunities for growth and market-based competition.
But collectively, the continent’s large and growing population represents enormous market potential, especially with growing urbanization contributing to rapid growth in consumption by households and businesses.
Yet, despite this potential, intra-African trade represents only about 13 per cent of Africa’s total trade.
By building on this market potential, and promoting regional integration, African countries could reduce their dependency on the sale of primary commodities, and shift to value added products – creating employment, reducing inequalities, investing in sustainable infrastructure and ensuring sustainable economic growth.
This could also make Africa a much more powerful player in the global economy.
This is the vision enshrined in Agenda 2063.
Establishing a Continental Free Trade Area, as agreed by the African Union in 2012, would be a major step in the right direction.
Once established, it would be the largest free trade area in the world with 54 member states – a single market of over 1 billion people with a young and growing population.
It will boost intra-African trade, help African economies growth faster and more sustainably and provide much-needed opportunity for the continent’s young people.
Africa has the fastest growing youth population in the world.
Sixty per cent of its population is under the age of 24.
This youth bulge represents an important opportunity for sustainable development in Africa.
But Africa’s demographic dividend is not a given.
Properly harnessed, it can deliver a demographic dividend and sustain inclusive growth.
But, without the proper attention, it could also pose a serious risk.
Harnessing their capacity requires greater investments in education, especially in science and technology, to ensure a robust labour force capable of meeting the increasingly competitive demands of today’s globalized markets.
If decent jobs cannot be created at a sufficient pace to accommodate tens of millions of newcomers to the job market every year, we risk the Continent’s youth being left behind.
That is why the African Union has chosen “Harnessing the Demographic Dividend through Investments in Youth” as its theme for this year.
It is also why the AU summit declared 2018-2027 as the “African Decade for Technical, Professional and Entrepreneurial Training and Youth Employment”.
We often refer to Africa as a continent with immense resources.
None are more valuable than its human resources.
Africa’s youth can play a major role in the continent’s prosperity and development if they are equipped with the necessary skills through quality education and vocational training, coupled with capacity building and technology transfer.
Harnessing innovation and technology to develop new solutions to accelerate progress in Africa is essential.
We could start unlocking this potential by bridging the gap between formal education curricula and existing economic realities and the demands of African economies.
By the time a young person graduates from school, we must make sure he or she has the skills required in today’s rapidly evolving job markets.
Let us also help unleashed their entrepreneurial potential to make them job creators not just job seekers.
Young people must also be given opportunities to freely travel the continent to benefit from both job and education opportunities.
This could not only open up young minds to entrepreneurial opportunities, but also foster cultural awareness and the solidarity needed to create an integrated and harmonious Africa.
Success stories elsewhere should encourage us.
Today, regional blocks in South and Central America, Southeast Asia and China play a major role in global economy.
For instance, the ASEAN Free Trade Area was established in 1992 to eliminate trade and non-trade barriers and improve the Southeast Asia’s competitiveness.
Consequently, intra-ASEAN trade more than doubled between 1995 and 2010, and kept increasing to reach around 24 per cent of global trade last year – and 40 per cent if trade with China is included).
We can achieve the same success in Africa.
And, there is no better place than starting with the youth, and especially young women.
We must empower Africa’s women and girls.
Gender inequality is costing sub-Saharan Africa tens of billions a year.
This is an enormous and needless loss of potential and economic growth.
We need to truly integrate women into Africa’s economies using existing women’s funds and platforms.
An inclusive and integrated Africa will be a prosperous and vibrant Africa.
In the same vein, we must promote the continent’s integration.
Continental growth corridors, industrial development policies and cross-border infrastructure investments could provide youth with decent jobs and integrate them into global value chains.
And, the flagship projects of Agenda 2063, including a Continental Free Trade Area, the creation of an African virtual and e-university; the African passport and the free movement of people; and the Pan-African e-network can empower African youth to realize Africa’s transformative vision, as encapsulated in Agenda 2063.
The transformative changes envisaged in Agenda 2063 can only be realized if they are forged around stronger regional integration.
Today’s meeting provides an opportunity for you as Regional Economic Communities to tell us how you are contributing to the joint implementation of Agenda 2063 and 2030 Agenda for Sustainable Development, and how the United Nations can better support your efforts.
I look forward to hearing from all our distinguished experts on how the United Nations system can enhance its cooperation with the Regional Economic Communities and their Member States.
Together, we have embarked on a renewed partnership between the UN and the AU for the next ten years.
Our partnership encompasses the Partnership on Africa’s Integration and Development Agenda, the joint UN-AU framework for enhanced partnership in peace and security signed earlier this year and the forthcoming UN-AU joint framework on the implementation of the 2030 Agenda and Agenda 2063.
Through these collaborations, we will combine our ambitions for sustainable development, economic integration, peace and security, women’s empowerment and investment in young people in Africa.
Working hand-in-hand with Africa will also benefit the world as a whole, advancing common global goals for peace, sustainable development, human rights and human dignity.
Excellencies, Distinguished guests, Ladies and gentlemen,
It is our duty, as highlighted by Agenda 2063, to leave behind “an integrated, united, peaceful, sovereign, independent, confident and self-reliant continent” for the next generations.
You can rest assured of the strong support and commitment of the United Nations to help realize Africa’s transformative vision and Pan-African aspirations, as encapsulated by Agenda 2063.
Thank you.
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An initial appraisal of Africa’s path towards sustainable development
Joint AfDB-AU-ECA-UNDP baseline report urges sustained commitment to reducing poverty and calls for upgrading the continent’s statistical capabilities to ensure and track future progress
A new report launched on 18 October 2017 in New York states that in spite of recent progress, African countries need to sustain efforts to eradicate extreme poverty and gender inequality and also improve their statistical capabilities to implement and track progress towards Africa’s own Agenda 2063 and the Sustainable Development Goals (SDGs).
Jointly published by the African Union Commission (AUC), the United Nations Economic Commission for African (ECA), the African Development Bank (AfDB), and the United Nations Development Programme (UNDP), the 2017 Africa Sustainable Development Report: Tracking Progress on Agenda 2063 and the Sustainable Development Goals, was launched during a high level event hosted by the African Permanent Observer Mission to the United Nations.
In attendance were His Excellency Ambassador Thomas Kwesi Quartey, Deputy Chairperson, AUC; Ms. Vera Songwe, Executive Secretary, ECA; Mr. Abdoulaye Mar Dieye, Assistant Administrator and Regional Director for Africa, UNDP; H.E. Victor Harrison, Commissioner for Economic Affairs, AUC; Mr Desire Vencatachellum, Director, Resource Mobilization and Partnerships, AfDB; and Mr. Eddy Maloka, CEO, Africa Peer Review Mechanism.
The baseline report focuses on the continent’s advances along the six goals of the 2017 HLPF [Goal 1 (End Poverty); Goal 2 – (Zero Hunger); Goal 3 (Good Health and Well-being); Goal 5 (Gender Equality); Goal 9 (Industry, Innovation and Infrastructure); and Goal 14 (Life below water)] and towards the realization the Africa’s regional development framework.
In his opening remarks, UNDP Regional Director for Africa Abdoulaye Mar Dieye said that: “The positive progress that we see needs to be celebrated while accelerating efforts to diversify economies through increased strategic investments in infrastructure and innovation in order to reach our full potential.”
Significant strides and lingering challenges
As the first comprehensive appraisal of its kind since the adoption of Agenda 2063 and the SDGs, the new report acknowledges the region’s significant progress in increasing agricultural value (up by 9 percentage points), improving gender parity in primary and secondary school (despite lingering low levels in tertiary education) and female representation in parliament, reducing child and maternal mortality (though very high compared to other regions) and HIV infection (down by 62% between 2000 and 2015), and increasing mobile network coverage (which has allowed for enhanced financial inclusion).
As the report’s is informed by the theme of the 2017 High-Level Political Forum on Sustainable Development (HLPF) on “Eradicating poverty and promoting prosperity in a changing world”, it brings to attention areas of pressing concerns need to be addressed in order for Africa to fully reach its potential.
Specifically, the authors call to attention the fact that in sub-Saharan Africa, agriculture value is only 62 % of the world average, that only 5% of agricultural land is irrigated (compared with 41 per cent in Asia and 21 per cent globally) and the persistence of conservative and harmful social norms such as child marriage and female genital mutilation.
Speaking to the imperative of leveraging Africa’s youth potential, the AUC Deputy Chairperson Kwesi Quartey observed that: “If you want to reap a dividend you must first start by investing.”
Furthermore the report points to the region’s high rate of road traffic-related deaths (26.6 % much higher than the global average 17.4 % in 2013), its underdeveloped infrastructure, underinvestment on research and development (less than 0.5% of its GDP compared with 2% globally), and the prevalence of unregulated and destructive fishing practices in its 38 coastal States as potential threats to the realization of the sustainable development agenda.
A call to harness the data revolution and upgrade the continent’s statistical capabilities
Informed by the latest harmonized data and a broad range of sources (including the International Labour Organization, the United Nations Conference on Trade and Development, the Statistics Division of the United Nations and the World Bank’s world development indicators), the 2017 Africa Sustainable Development Report builds on the finding of the earlier publications, especially the 2016 MDGs to Agenda 2063/SDGs Transition Report.
Covering all countries with relevant data, the baseline publication addresses the gap in the continent’s data collection capacities, which are seen as critical for the evidence-based policy making and tracking of progress towards the Agenda 2063’s 20 goals and 174 targets and Agenda 2030’s 17 goals and 169 targets.
“Six out of every 10 SDG indicators cannot be tracked in Africa due to data constraints. Strengthening our data ecosystem is therefore imperative not only for performance tracking but for informed policymaking,” said ECA Executive Director Vera Songwe.
The report estimates that 1 billion dollars is needed annually to allow 77 of the world’s lowest income countries to establish robust and reliable statistical systems that capable if measuring and sustaining SDGs.
“The increasing demand for data and statistics under the 2030 Agenda and Agenda 2063 is an opportunity for Africa to embark on the data revolution in order to improve statistical capacity in all domains,” the authors indicate.
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10th Session of the Committee on Regional Cooperation and Integration: Implementation of the CFTA and shared gains
The Committee on Regional Cooperation and Integration of the ECA (Economic Commission for Africa) Conference of Ministers meets on a biennial basis to review the work undertaken in the current biennium under subprogramme 2 on regional integration and trade. It also uses the opportunity to review and deliberate on developments in those sectoral areas and make recommendations that are to guide the work under the subprogramme during the next biennium.
Accordingly, at its 10th Session, the Committee is expected to convene in Addis Ababa on 1 and 2 November 2017 to undertake the aforementioned review for the 2016-2017 biennium and deliberate on the envisaged work for the 2018-2019 biennium.
The tenth session has the overarching theme of “Implementation of the Continental Free Trade Area and shared Gains”. It has long been known that a major challenge in Africa is not a lack of good policies or strategies, but a lack of their effective implementation. Crucial to implementation is an understanding of the political economy underpinning economic integration in Africa. The insights from this perspective can help to frame the policy choices and institutional arrangements required for effective implementation.
The tenth session will also host five parallel, pre-session ad hoc Expert Group Meetings on 31 October. These meetings will serve as a platform to discuss with experts the results of studies conducted during the biennium under sub programme 2, with a view to sharing and validating the policy recommendations emanating from these studies with the Committee members.
The five ad hoc Expert Group Meetings will be on the following topics:
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A review of policy options to strengthen agribusiness, agro-industries and regional value chains as pathways to sustainable and inclusive African transformation;
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A review and study of how the promotion of Africa’s industrialization can be strengthened through infrastructure development;
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A look at policy options for boosting intra-African investment through the regional harmonization of investment policies and treaties;
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Trade, gender and human rights as a way to provide a platform for regional economic communities to share experiences about gender mainstreaming and offer a way forward on how they can more effectively support member States in incorporating gender into trade policy;
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Brexit and trade between Africa and the United Kingdom of Great Britain and Northern Ireland from an African perspective.
Issues to be addressed
In 2015, the ninth session of the Committee focused on concrete policy actions and measures required to enhance productive integration for Africa’s structural transformation. It was noted at the ninth session that Africa’s structural transformation had lagged, compared with its improved economic growth performance, and that four interrelated processes defined the structural transformation process taking place on the continent, namely:
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A declining share of agriculture in gross domestic product (GDP) and employment;
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Rural-to-urban migration that stimulates the process of urbanization;
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The rise of a modern industrial and service economy;
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A demographic transition from high birth and death rates (common in undeveloped rural areas) to low rates (associated with improved health standards in urban areas).
Against this backdrop, and building on the previous session, the tenth session has a proposed overarching theme of “Implementation of the Continental Free Trade Area and shared gains”. Trade and regional cooperation and integration are core pillars to ensure that Africa advances in its transformative agenda. At the tenth session, the continued support for both the Action Plan for Boosting Intra-African Trade and the implementation of the CFTA will be reiterated.
Negotiators from States members of the African Union recently participated in the sixth meeting of the CFTA negotiating forum, which was held in Niamey from 5 to 10 June. The forum was followed by meetings of the senior trade officials and the African ministers of trade. Collectively, the participants at those agreed to ambitious modalities for agreements on trade in goods and services in the CFTA. These modalities are aimed at articulating the vision of lowering tariff and non-tariff barriers to boost intra-African trade and contribute to African industrialization and development.
The CFTA, which is expected to be concluded by the end of 2017, will bring together a continent with a combined population of more than 1 billion people and a combined GDP of more than 2.19 trillion, according to the International Monetary Fund. With the CFTA, African leaders aim to create a single continental market for goods and services, the free movement of business persons and investment and expanded intra-African trade. The CFTA is also expected to enhance competitiveness and harness greater innovation at the industry and enterprise levels. Members States agreed to liberalize approximately 90 per cent of their tariff lines during a period of 5 to 13 years. They also agreed to allow for flexibilities through exclusion and sensitive lists to accommodate countries that may face challenges during liberalization. Other sensitive and crucial issues, such as reports of the technical working groups on technical barriers to trade and non-tariff barriers, sanitary and phytosanitary measures rules of origin, trade in services and customs procedures, were submitted and discussed during the negotiating forum.
Structural transformation and regional integration are key success factors for Africa’s “behind the border” agenda (i.e., the CFTA), while infrastructure development is a key enabler of it. A main contention here is that, without a dynamic industrial sector and wellfunctioning infrastructure assets, including transportation, energy, information and communications technology (ICT) facilities, Africa cannot harness the opportunities offered by integrated regional/continental markets under the CFTA. It has been demonstrated that quality infrastructure matters for industrial development and regional integration. Wellfunctioning infrastructure assets contribute to efficiency gains from economies of scale and scope (at the national and regional levels), increased competition and better access to or efficient use of resources, including labour and technology. Good transportation networks open larger markets for manufacturers, which, in turn, incentivize the latter to set up businesses or to increase production. Unfortunately, in Africa to date, numerous infrastructure bottlenecks have prevented the continent from industrializing and seeing more trade among its countries. Infrastructure constraints in Africa not only impede industrialization efforts, but also undermine trade competitiveness with regard to services and industrial goods (i.e., consumer, intermediate and capital and low, medium and high technology) produced on the continent. To maximize the potential of CFTA implementation, while minimizing the risks attached, scaling up infrastructure assets, industrial output and innovation in Africa is an imperative and jointly beneficial to move the continent from deepseated continued scarce resource drains to greater and tangible shared gains.
Major progress points
Since the discussions held at the ninth session, important progress has been made with regard to the CFTA. The COMESA-EAC-SADC Tripartite Free Trade Area, comprising 26 member States, was launched by the Heads of State of the tripartite countries during their summit held in Egypt in June 2015. The African Union Heads of State and Government also launched the CFTA negotiations during their summit in Johannesburg, South Africa, in June 2015 and reaffirmed their earlier decision to have the CFTA established by 2017.
The negotiations are being led by the negotiating forum, made up of African Union member States, with the African Union Commission serving as the secretariat. The continental task force, comprising technical experts from the regional economic communities, ECA, the African Development Bank (AfDB) and the United Nations Conference on Trade and Development (UNCTAD), provides technical expertise to the negotiating forum. Political oversight is provided by African ministers of trade.
CFTA negotiations are moving in the right direction and at the desired pace, with the first phase of the negotiations expected to be concluded by the end of 2017. Following the launch, six meetings of the negotiating forum have had been held as of July 2017, supported by meetings of the continental task force, meetings of the technical working groups, meetings of the committee of senior trade officials and meetings of the African ministers of trade. The remainder of 2017 will see these institutions convening frequently, with a further two meetings of the negotiating forum, given that progress is sought on top of the current momentum.
The final report from the meeting is available here.
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Better roads and automation cut East Africa freight costs
The cost of transporting a 40 foot (ft) container between Mombasa and Kampala, Kenya’s biggest transit trade market, has gone down 34.2 per cent in the last four years on the back of better roads, reduced police checks and efficiency at weighing points, a new report shows.
Road freight costs decreased to Sh230,858 ($2,237) in 2016 from Sh350,880 in 2011.
Automation at weigh stations greatly enhanced efficiencies, shows the 2016 Logistic Performance Survey launched in Nairobi last week by the Shippers Council of Eastern Africa (SCEA).
This comes at a time new rail transport under development in the region is expected to increase competition for road transporters. The standard gauge railway (SGR), which starts its freight services early next year will charge Sh51,650 ($500) to transport a 20ft container between Mombasa and Nairobi and Sh103,300 ($1,000) for a 40ft container.
According to the report, which analysed the performance of trade logistics of the East African Community’s member states with respect the indicators of time, cost and complexity against those of the world’s leading trade hub, road freight cost from Mombasa to Bujumbura decreased to Sh515,277 in 2016 from Sh825,600 in 2011.
Cost from Mombasa to Nairobi for a 40 foot container declined from Sh134,160 in 2011 to an average of Sh90,712 in 2016.
The average cost of transporting a 20ft container by sea was Sh186,792 and Sh279,672) for a 40ft container from the United Kingdom (UK) to Mombasa by sea.
On the other hand, it cost Sh213,624 and Sh318,888 for a 20ft and 40ft containers respectively from the UK to Dar es Saalam, Tanzania.
In rail transport, the survey indicates that charges from Mombasa to Kampala have steadily declined over the last three years from a high of Sh247,680 in 2014 to Sh72,240 in 2016 as a result of steep competition from road freight.
“Capacity and inefficiency challenges of the current railway means that the rail transport will continue to struggle to compare with road freight.
Once the SGR train is fully operational, the challenges to the meter gauge rail will be compounded further,” said SCEA chief executive, Gilbert Langat during the report’s launch.
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tralac’s Daily News Selection
Tomorrow, in Cape Town, a CCR Public Dialogue: Civil society’s region-building role in Southern Africa’s agro-processing sector
Tomorrow, in Accra, the launch of Imani Africa’s new report: Maximising gains from Ghana’s trade partnerships
Statistical brief on selected socio-economic indicators on Africa: six trade data sets (pdf, AfDB) (Intra-exports in 2016; Intra-imports in 2016; Total intra-Africa trade in 2016; External trade: exports in 2016; External trade: imports in 2016; Total external trade: in 2016)
Cecilia Malmström: Trade with African, Caribbean and Pacific countries – putting partnerships into practice (EU)
Today, I am returning from Pretoria in South Africa, where I have been celebrating that it is one year since the entry into force of the EPA between the EU and countries in the Southern African Development Community. On Monday, I got the chance to speak with over 150 civil society organisations at a civil society forum about the experiences of the trade deal so far. Our partnership agreements will stay high on the agenda throughout this week – on Friday, 20 October, I will co-host a high-level roundtable in Brussels, together with my fellow EU Commissioner, Neven Mimica, the trade ministers of Jamaica and Madagascar, and vice-president Van Ballekom of the European Investment Bank. At the event, entitled ‘Partnership in practice: making EU trade work for ACP countries’, we will look at the current trade relationship between the EU and the 79 countries that make up the group of African, Caribbean and Pacific countries. We will consider EU policy tools such as those Economic Partnership Agreements between the EU and ACP regions, as well as the External Investment Plan for Africa, and trade-related development programmes. We will see how they are working at the moment to help ACP countries attract more investment, industrialise, integrate into global value chains, and create jobs in the process. And we will discuss what lessons we can learn about what more the EU and ACP countries can do to facilitate trade and investment. [Related: EU Trade Commissioner Cecilia Malmström’s speech at Wits University: Global Trade: path to shared prosperity]
Time to reset African Union-European Union relations (Crisis Group)
The relationship between the AU and the EU has reached a potential turning point: “It’s now or never”, a senior EU official told Crisis Group. Reforms at the AU coupled with renegotiation of the Cotonou Agreement mean that existing arrangements inevitably will change. There is political will in both commissions to work together, and cooperation and coordination has improved in recent months following a low point in relations during 2016. The Africa-EU summit represents an opportunity to bridge some differences. If seized, a stronger and more mature partnership, based on mutual interests could emerge. Extract (pdf): The 0.2% levy is “very controversial” among some member states. Their objections are threefold. First, the levy contravenes WTO rules and could harm bilateral trade relationships. The WTO and US government have questioned the levy’s legality and some African states are using this as the basis for delaying implementation. The WTO objections are not insurmountable: the AU could establish a continental free trade area or push for a waiver. However, such measures would take considerable time to implement, making the originally proposed January 2018 start date unachievable and the new 2020 deadline a longshot. [African Union: Decision on preparations for the AU-EU Summit, 29-30 November, pdf]
Cheaper visas are more important than lower tariffs for boosting Nigeria-China trade (Quartz Africa)
Startz suggests a number of ways these travel costs could be reduced, including lowering the price of visas, but the simplest of these would be to amend Nigeria and China’s air service agreement—China is by far the largest supplier for consumer goods for Nigerian importers. Air service agreements are international treaties which specify the number of airlines that can fly between countries, as well as how often and where they can go. Currently, the agreement stipulates that only one airline from each country can fly into one city in the other country (Lagos in Nigeria and Guangzhou in China). Previous studies have shown that when restrictive air service agreements are lifted to allow for as many flights as the market will bear, it can bring down flight costs by more than 30%. Startz estimates that such a reduction would lead to an annual economic gain of about $650 million dollars for Nigerian consumers from increased trade alone.
Nigeria: National trade facilitation road map ready (Punch)
The Federal Government on Monday announced that the National Trade Facilitation Road map for Nigeria was ready. The National Trade Facilitation Committee presented the road map to the Federal Ministry of Industry Trade and Investment in Abuja and the document was received by the ministry’s Permanent Secretary, Mr. Edet Akpan. Akpan explained that trade facilitation was critical in reducing cost and time of doing business, according to a statement issued by the ministry in Abuja on Monday. He stated that the free flow of trade constituted a critical element in Nigeria, particularly at a time when the Federal Government was doing everything possible to diversify the economy into non-oil sector. [Related: ‘Implementation of export strategy key to harnessing trade deals’]
Nigeria’s Fifth Trade Policy Review (13 and 15 June): minutes of the meeting, documentation
Building the capacities of selected LDCs to upgrade and diversify their fish exports: Maputo workshop. The principal objectives of the regional training and capacity building workshop (17-19 October) include:(i) to seek ways and means of upgrading and diversifying fish exports in the African region; (ii) to upgrade the technical knowledge and expertise in beneficiary countries including to overcome challenges posed by international standards on fish exports. [Nepad workshop: Enhancing information sharing and linkages for fisheries and aquaculture development in Central Africa]
Trade and investment in fish and fish products between South Africa and the rest of SADC: implications for food and nutrition security (PLAAS)
Imports and exports of fish in South Africa are driven by import substitution, shortfalls in local production, and meeting growing local and regional demand. Most South African fish and food processors prefer to export, rather than establish plants in other African countries, mainly due to factors of economic efficiency and the challenges of doing business in these countries. Currently, however, increasing volumes of fish are being imported into South Africa to meet demand from the African migrant community. While self-sufficiency and food sovereignty are acknowledged priorities for SADC, imports to meet local shortfalls and specific demand ought to be acceptable options for ensuring fish food availability and affordability. The reduction or removal of tariffs, through regional free trade agreements, promotes increased intra-regional trade. Overall, imports and exports provide for demand-led exchange of fish between SADC states, which promotes increased availability and affordability of fish; thereby contributing towards food and nutrition security. However, despite regional free trade agreements that have stipulated the removal of both technical and non-technical barriers, most small-scale traders still experience problems in conducting cross-border trade. Extract from the conclusion (pdf):
Structural and institutional weaknesses and inefficiencies at most South African and other SADC member state borders result in traders having low confidence in formal border systems, thereby encouraging and reinforcing informal systems and channels. This represents loss of revenue for states, and loss of data captured through documenting and recording the volumes and product forms of imports and exports. Agreed regional standards for importing and exporting fish and fish products is another area in need of urgent attention and resolution. Given the traditional and cultural differences and habits that food represents to consumers, this is a difficult aspect of regional and multi-lateral trade agreements; however it is necessary to resolve it. Improving border infrastructure, processes and institutions and developing common principles for minimum quality and standards through shared understanding and agreements could greatly increase traders’ confidence in formal border systems and enhance the contribution of cross-border trade to food and nutrition security. [The authors: Mafaniso Hara, Stephen Greenberg, Anne Marie Thow, Sloans Chimatiro, Andries du Toit]
SADC Industrial Energy Efficiency Programme: technical stakeholders workshop (19-20 October, Maputo)
The focus on the Industrial sector is critical as the region has developed an Industrialization Strategy and Roadmap (2015-2063) to spur development and growth in the SADC countries. Energy efficiency is considered to be an important instrument to make industrialization competitive by reducing costs of production and help alleviate the power deficit. The overall objective of the workshop is to consult SADC MS and other stakeholders on the design and development of the SIEEP. The process and findings of the Scoping and Assessment on the status of the energy efficiency in the industrial sector in the SADC region will be presented.
Related: Download the presentations from the SACREEE/IRENA African Energy Corridor workshop (April, Windhoek). Profiled presentation, by Johnson Maviya (SAPP): Meeting growing power demands through Southern African regional integration (pdf)
SACU achieves progress in the development of its Compliance Management Strategy (WCO)
The SACU Compliance Management Strategy will be instrumental to positioning any compliance management programme in the region, such as the SACU Preferred Trader programme. During the working sessions, lessons were drawn from the work done to date at member states level on compliance management to inform the process of developing the regional level strategy to ensure that it corresponds to the context of the SACU region.The first draft of the SACU Customs Compliance Management Strategy is currently undergoing national consultations, and the final draft of the strategy is targeted to be concluded early November 2017, before submission for the WCO-SACU Connect Steering Committee consideration and approval.
South Africa’s bulk exports decline 7.3% in September (Business Day)
South Africa’s bulk export volumes fell by 7.3% year on year in September to 13.8-million tonnes after a 7.2% drop in August to 11.7-million tonnes, after surging by 34.5% in July to 15.6-million tonnes, according to Transnet National Ports Authority. This brought the increase for the first nine months to 5.1% year on year, showing that mining and agricultural bulk exports are boosting the South African economy.
4 takeaways from the IMB’s latest global piracy report (ICC)
A total of 121 incidents of piracy and armed robbery against ships were reported in the first nine months of 2017, according to the International Chamber of Commerce’s International Maritime Bureau’s latest quarterly report on maritime piracy. The flagship global report notes that, while piracy rates were down compared to the same period in 2016, there is continuing concern over attacks in the Gulf of Guinea and in South East Asia. No incidents were reported off the coast of Somalia in this quarter, though the successful attacks from earlier in the year suggest that pirates in the area retain the capacity to target merchant shipping at distances from the coastline. Here are four main takeaways from the report:
Today’s Quick Links: Betting on Africa to feed the world: text of Dr Akinwumi Adesina’s Norman Borlaug Lecture South Africa: New incentive scheme to boost agro-processing and exports South Africa forecasts lower stonefruit exports for 2017-18 Western Cape: update on agriculture and agri-processing jobs Egypt’s agricultural exports rose 13.9% in first 9 months of 2017 Zimbabwe bans fruit, vegetable imports as forex crunch deepens Botswana, Ethiopia sign several trade deals In case North Sudan joins the EAC fold… NAFTA renegotiations: USTR Robert Lighthizer’s closing statement Mauritius: China–Africa Civil Aviation Academy poised to boost national and regional aviation sector 2017 Housing Finance in Africa Yearbook India-Brazil-South Africa Dialogue Forum: communique (pdf) |
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Global trade: Path to shared prosperity
Speech by EU Trade Commissioner Cecilia Malmström at Wits University – Johannesburg, South Africa, 17 October 2017
I am thrilled to be here at these historic grounds and in this university, where so many brave students and teachers stood up against apartheid and for equal rights.
Being a former university professor myself, I always enjoy visiting universities, but this is very special.
I come here as Commissioner for Trade of the European Union. The Commission is the body in the EU which proposes laws, supervises that they are followed and who acts in the interest of all 28 Member States. In trade, it is the Commission that negotiates trade agreements and represents the whole European Union in organisations such as the WTO.
Trade policy in Europe – and elsewhere – has been the subject of intensive debate, and even attack, over the last few years. Many blame trade for the negative aspects of globalisation. Trade agreements, in their view, are secret deals that only benefit multinational companies, undermining social standards and environmental laws. There is a frustration among many in our societies who feel that they have not been benefitting from globalisation. Trade sometimes becomes an easy scapegoat.
This is simply not correct. Globalisation has in many ways been a good thing – connecting people, spreading technology and innovation, new forms of media and knowledge. It has connected people and made the world much smaller. Globalisation is there whether you like it or not – but we can shape it. This, we do with global rules, through multilateral organisations and international cooperation.
Trade has helped millions of people out of poverty. It has created jobs and growth across the world. It has helped entrepreneurs to get new chances, given opportunities to small businesses, eliminated bureaucracy, spread ideas and innovation, and increased people-to-people contacts.
It is true that not everybody has benefitted equally from all of this. However, that has more to do with tax systems, social systems and income distribution schemes rather that trade in itself.
But the recent debate has shown that we need to change the way we do trade policy. People want to be involved, and that is a good thing. The European Union is the world’s biggest trader – the biggest exporter, the biggest importer, the biggest investor. We have a responsibility for how we conduct that trade. So, in the beginning of my mandate as Commissioner we developed a strategic document – “Trade for All”.
It says that trade should be efficient, deal with real issues that are important for companies as well as consumers. Trade policy should be transparent – we publish as much as we can of the documents related to our negotiations, and we include civil society and stake holders in the discussions.
Trade should be value-based, and we must make sure that we do not compromise on our standards when it comes to environment and food safety. We must also include references to sustainable development and labour rights in our agreements and make sure that international key conventions in these fields are followed.
This, we try to do in bilateral and regional agreements as well as promote these ideas globally in the WTO and elsewhere.
When others question the need for global trade and multilateralism, we must stand up. The United Nations and the WTO are important and valuable organisations that we need to strengthen, but whose rule books we also need to upgrade. We have already achieved global agreement on the Sustainable Development Goals and the Paris climate agenda. Those are indeed good examples of how we can shape globalisation.
However, many areas are not covered by such cooperation. The digital economy – how can we make sure it benefits developed and developing countries alike?
How can we tackle negative aspects of the global economy such as tax evasion, corruption, resource extraction, illicit financial flows and harmful state subsidies?
Needless to say, not all such matters can be solved in trade agreements. That said, a balanced, progressive trade and investment agenda must pursue open markets but also cover issues such as human rights, working conditions, food safety as well as fair and sustainable trading practices. We must seek to promote gender equality and good governance.
Some of this work we pursue through the WTO. I just returned from a ministerial meeting with almost 40 countries in Marrakech, Morocco.
We were there to prepare the December Ministerial meeting in Buenos Aires where all 164 WTO member states will gather to try to strengthen global rules and move the multilateral trade agenda forward. Like always, we will focus on developing countries – for instance, we have put forward proposals on limitation of fisheries subsidies, rules on stockholding and domestic support in agriculture. We also hope that we can move forward on proposals on e-commerce, as well as transparency requirements as regards small and medium-sized companies.
Together with other countries, we are also working to establish a multilateral investment court – a global court that could take over the more than 3400 bilateral investment protection treaties that exist globally. It would be based on principles of transparency and making sure that investors can seek compensation if they are discriminated, but never at the expense of governments’ right to regulate to protect their citizens.
At the WTO, we have also adopted a global agreement on trade facilitation, something that facilitates trade through better customs cooperation.
We also try to move forward with two so-called plurilateral initiatives, one on facilitating trade and services, TISA, and one on facilitating the trade of environmentally-friendly goods, EGA. Both of these negotiations are now on hold, given the lack of engagement from the Trump administration.
In the EU, we have recently agreed on tougher legislation on conflict minerals. It forces companies to show due diligence for the whole value chain when they deal with products in areas of conflict – areas where we know that certain minerals are used to finance terrible violations of human rights, for example around the Great Lakes.
In New York, a couple of weeks ago, in connection to the General Assembly of the United Nations, the EU, together with Argentina and Mongolia, launched a global alliance to end trade with products that can be used for torture and executions. Now, 58 countries have signed up from all continents and we hope for more to join.
All these are examples of how we can make trade more value-based and accountable, thereby shaping globalisation.
On behalf of our member states, the European Union also pursues a very active bilateral trade agenda. We have just seen our free trade agreement with Canada enter into force, and we have an agreement in principle with Japan. We are moving full speed ahead with Mexico and the countries of Mercosur. We hope both of these agreements can be concluded by the end of this year. We will soon put our agreements with Singapore and Vietnam to the EU member states for voting, and we hope to start negotiations with Chile, New Zealand and Australia later this fall.
We also have regional agreements, so-called Economic Partnership Agreements or EPAs, with many African countries. I will come back to those.
Our free trade agreements include openings in market access but also chapters on rules of origin, geographical indications, cooperation on energy, and intellectual property rights. They all include a chapter on trade and sustainable development, in accordance with international conventions such as those of the ILO. We also agree that civil society should be involved in the implementation of all free trade agreements.
Lately, in line with this policy, we have had dialogues on, for instance…
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Non-discrimination in workplaces of South Korea
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Projects in Guatemala on conventions on freedom of association, collective bargaining, etcetera
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How to implement the convention on international trade in endangered species in Colombia
One year ago, I was in Kasane, Botswana to sign an Economic Partnership Agreement, or EPA, between the EU and six countries of the Southern African Development Community, SADC – South Africa, Botswana, Namibia, Mozambique, Lesotho and Swaziland. It entered into force last October, so I am here these days to celebrate its first anniversary. We are discussing with business, civil society and representatives of governments on how it has worked so far. The EPA is about creating a predictable set of rules – a stable framework to support trade and investment.
The EU opens its market much more that the six African countries – it is an asymmetrical agreement, allowing for protection in sensitive areas. It is also development-focused, with a budget to assist countries in creating the right infrastructure to be able to trade. It also promotes regional integration, in no way in contradicting the integration efforts already underway on the African continent.
A first evaluation shows an increase in exports from South Africa, notably in agricultural/food exports. But there is much more to do to really reap the benefits, and this is what we have been discussing here during these past few days.
In addition, through the EPA, South Africa has succeeded in improving its market access to the EU compared to before. For example – a full liberalization of the fisheries sector, with the possibility to export duty-free to the EU. And South Africa now has better access for its wine, sugar, fruit, juices, flowers, jams, ethanol, and dairy products.
The EU is also the largest foreign direct investor in South Africa, accounting for almost 80% of the country’s total foreign direct investment, creating more than half a million direct and indirect jobs.
Just take the case of citrus. Some 40% of total South African production is exported to the EU, and it keeps growing. It is estimated that some 100 000 people are employed in the citrus sector here.
Progress has continued despite differences in health standards, notably with regards to citrus black spot infections. Through hard and difficult work at both regulatory and implementation levels, we have managed to set up a system which delivers the necessary assurances that our imports are in conformity with EU rules. The EU is the only place in the world that is free from citrus black spot.
This work has been beneficial for South African citrus exporters and for European consumers who can get access to South African oranges.
I know how important inclusive growth is in South Africa. We give specific attention to sensitive sectors which are vulnerable to external trade and competition.
The EPA includes economic assistance to projects focusing on economic partnership and inclusion, employment creation and small enterprises.
Investments can play an important role as a catalyst for economic growth and development. To attract responsible and sustainable investments to Africa has become a political imperative to boost economic growth.
The EU is discussing with the African Union, in view of our upcoming summit in November, a set of investment principles. They would guide the decision-making process to create an investment-friendly environment that captures the needs and concerns of all stakeholders.
In addition, the European Investment Plan intends to provide, for the first time, an integrated approach to boost investment in Africa and the EU neighbourhood. It aims to mobilise additional private and public resources for sustainable projects based on three pillars:
The proposed European Fund for Sustainable Development, with a value of 4.1 billion euros, would provide a new guarantee, expected to leverage 44 billion euros of investment in Africa and the EU neighbourhood until 2020.
Technical assistance would also be provided to help authorities to improve the regulatory and policy environment, and to help partners develop bankable projects.
It also aims to improve the investment climate in partner countries by building on country and regional political dialogue including all our instruments of cooperation.
But no country can expect responsible and long-term investment without providing a sufficient degree of certainty and protection. In this respect, the trend in Africa in the larger sense is not positive. Foreign investors need to have predictability and not be penalised. Excessive use of local content legislation, for instance, increases the cost of doing business.
We all want to create jobs. In Europe, we still have high levels of unemployment in many places. So Europe and this region depend on each other, for instance in the automotive sector. With the EPAs, trade will be easier if we use the tools right. We need to be sure that there is no discrimination, since both sides would suffer as we import and export parts to each other.
Between the EU and South Africa, we have a true partnership. We cooperate in a wide range of areas. Our cooperation makes the difference between unregulated trade and a fair, level playing field. In our strategic partnership, we have shown the world that progress and fairness is possible. So let us keep working together, and let us keep in mind that we can still do so much more. We can always do better.
Thank you so much for inviting me here. I am looking forward to a good discussion.
More information on Commissioner Malmström’s visit to South Africa is available here.
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New report identifies impact of funding on Africa’s infrastructure development
The Infrastructure Consortium for Africa’s (ICA) latest annual report, Infrastructure Financing Trends in Africa 2016, shows that commitments to Africa’s infrastructure development totalled $62.5bn in 2016, declining from $78.9bn in 2015.
Introducing the eighth edition of the ICA’s annual publication about infrastructure financing trends, which identifies how resources are being mobilised to make an impact on Africa’s infrastructure development while also identifying new opportunities for resource mobilisation, the ICA’s Co-ordinator, Mohamed Hassan, says:
“I am delighted to present the latest ICA report, which examines current financial commitments and disbursements in support of Africa’s infrastructure development, while also identifying new opportunities for resource mobilisation.
For the first time, the report examines how new resources are being mobilised at a country level. This will provide better insight into jurisdictions where political and regulatory structures, alongside institutional capacity, have created enabling environments that attract investment.”
Other key findings from the 2016 report include:
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The total amount of identifiable infrastructure allocations by African national government budgets came to $26.3bn in 2016, up 9.6% from $24bn in 2015;
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Chinese funding of Africa’s infrastructure development has fluctuated substantially over recent years, with the 2016 figure of $6.4bn following a high of $20.9bn in 2015 and a low of $3.1bn in 2014. Between 2011 and 2016, Chinese investment has averaged $12bn
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In total, ICA members* reported commitments of $18.6bn, down 6% from $19.8bn in 2015. Excluding the exceptional $7bn contribution from the Power Africa initiative in 2013, commitments from ICA members have remained broadly consistent for the past five years at an average of $18.9bn;
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Members of the Arab Co-ordination Group (ACG) committed $5.5bn in 2016 to Africa’s infrastructure development, a steady increase on 2015 ($4.4bn) and 2014 ($3.5bn);
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The value of projects with private sector participation reaching financial close in 2016 was $3.6bn, of which $2.6bn was private capital. This is a significant decrease on the private capital recorded in 2015 ($7.4bn) and 2014 ($5.1bn);
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Commitments to the water sector increased substantially from $7.5bn in 2015 to $10.5bn in 2016. Commitments to the transport sector fell sharply in 2016 to $24.5bn, compared with $32.4bn in 2015. Financing of energy projects in Africa fell to $20bn in 2016, from the record high of $33.5bn in 2015. ICT sector commitments stood at $1.6bn in 2016, less than the $2.4bn reported in 2015;
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Of the $62.5bn committed to Africa’s infrastructure development in 2016, West Africa received $16.3bn of commitments, followed by East Africa with $13.1bn and North Africa with $12.9bn. Southern Africa (excluding South Africa) and Central Africa received $6.5bn and $6.3bn, respectively, while South Africa received $5.9bn.
Disbursements by ICA members* in 2016 totalled $13.4bn, the highest yet reported and up by 6% from $12.6bn in 2015. Disbursements have now remained quite consistent for the last five years, at an average of $12.6bn. Energy sector disbursements by ICA members totalled $6.1bn in 2016. Transport sector disbursements totalled $3.7bn and water sector disbursements $2.5bn.
The report includes views, gauged through the Fifth African Investment Survey, on a range of issues affecting the private sector. Survey respondents represented infrastructure sector stakeholders from project developers to equity investors, lenders, contractors and providers of professional services.
Mohamed Hassan concludes: “Identifying emerging trends that will bring new types of funding and new investors in Africa’s infrastructure development must be considered an important task. This report will help stakeholders grasp the opportunities available to mobilise greater resources for Africa’s infrastructure development, so that the ICA’s vision that all Africans should have access to reliable and sustainable infrastructure services can be realised.”
Download: Infrastructure Financing Trends in Africa 2016 (PDF, 16.5 MB)
* The ICA is a tripartite relationship between bilateral donors, multilateral agencies and African institutions. All G8 countries (Canada, France, Germany, Italy, Japan, Russia, United Kingdom and the United States) are members of the ICA. The World Bank, International Finance Corporation (IFC), European Commission (EC) and European Investment Bank (EIB) are members of the ICA while, on the African side, membership is led by the African Development Bank (AfDB) and the Development Bank of Southern Africa (DBSA). The Republic of South Africa is the first G20 non-G8 member of the ICA, and the first African country member.
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Africa’s economic performance improves in 2017
Africa’s economic outlook improved in 2017 compared with 2016 and is expected to gain momentum in 2018. GDP growth in 2017 is expected at 3.0% up from 2.2 in 2016 and projected to expand to 3.7% in 2018, the African development Bank said in an updated forecast released in Abidjan on Thursday, 12 October 2017.
“The changes in previous forecasts released in the African Economic Outlook in May 2017 followed the release of new data by some key countries – Nigeria, Algeria, and Egypt – which account for some 50% of the continent’s GDP and which revised their 2017 and 2018 forecasts downwards,” said Abebe Shimeles, acting Director, Macroeconomics Policy, Forecasting and Research.
However, the continent’s averages compare favorably with Global economic growth projections of 3.5% and 3.6% GDP growth in 2017 and 2018, respectively.
The new set of data attributes Africa’s economic rebound mainly to:
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Recovery in the global economy and bottoming out of the commodity price bust that had set in since 2014. “Economic diversification and drive for structural transformation need to proceed with urgency and intensity in order to avoid the repeat of boom-bust cycle in the wake of commodity price volatilities,” the African Economic Outlook already warned in May 2017.
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Steady Domestic demand and public investments in infrastructure also helped sustain growth in many countries, the forecast said, adding that beyond accumulation of physical capital, productivity of those investments is important for sustainable growth and must remain an area of policy focus.
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Fiscal and current account deficits are expected to narrow due to strong export performance and higher government revenues but African governments must resist the temptation to “catch-up” on the spending that was suspended in the last two years as this will exuberate deficits.
In regional terms, East Africa remains the fastest growing region, with an estimated growth of 5.1% in 2016 projected to grow by 5.4% and 5.8% in 2017 and 2018 respectively. Growth in the Eastern Africa region is mainly driven by strong domestic demand and high public infrastructure spending.
North Africa recorded the second highest growth rate of 3.1% in 2016 buoyed by the recovery in Egypt, with output growth of 4.3% and Algeria at 3.3%. The northern region is expected to grow by 3.1% and 3.6% in 2017 and 2018 respectively, with expected pick up of growth in Morocco of 4.5% in 2017 and 3.9% in 2018. The Bank warns, however, that continued political uncertainties and reduced oil production in Libya continue to drag growth in the North Africa region. Libya is projected to stay in the negative growth territory in 2017 and 2018 with a growth of -4.9% and -3.9% respectively.
Growth in Southern Africa remained tepid at 0.9% in 2016, down from 1.6% in 2015. Projected improvements in the performance of South Africa from 0.3% in 2016 to 1.2% and 1.3% in 2017 and 2018 is expected to boost the Southern Africa regional growth to 2.0% to 2.3% in 2017 and 2018 respectively attributed to increased mining output following moderate rise in commodity prices.
Similarly, Central and West Africa regions, dominated by oil producers, growth was severely constrained at 0.5% and 0.4%, respectively in 2016. In West Africa, the economic recession in Nigeria completely offset the strong gains made in Sierra Leone, Togo, Cote d’Ivoire and Senegal, the latter two being the region’s fastest growing economies. Nigeria accounts for 72.4% of the region’s overall GDP but contracted by -1.5% in 2016 against an average expansion of 6% for the other four economies, which collectively account for about 10% of regional GDP.
West Africa is expected to record improvements in growth to 2.5% and 4% in 2017 and 2018 respectively mainly attributed to improvements in oil production in Nigeria and rising global commodity prices. Central Africa on the other hand was mainly slowed down by poor performance in Equatorial Guinea and Chad which contracted by -7.3% and -6.4%, respectively followed by Republic of Congo which shrunk by -2.4%. Central Africa republic is expected to record improvements in growth in 2017 and 2018 of 1.6% and 3.1% in the two respective years, the report says.
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Fifth Trade Policy Review of Nigeria: Minutes of the Meeting
The fifth Trade Policy Review of Nigeria was held on 13 and 15 June 2017. The Review offered a very useful opportunity for WTO Members to deepen their understanding of the trade policies and practices of Nigeria, and to collectively appreciate the challenges it currently faces in sustaining and improving its economic prosperity.
At its last TPR, Members had commended Nigeria on its robust and broad-based economic growth, and had recognized its efforts towards the diversification of its economy and its regulatory reforms. Six years on, Nigeria had become the 26th largest economy in the world and the biggest in Africa. Indeed, its economy had grown by almost 90% as a result of the 2014 rebasing exercise. According to the authorities, this exercise had consisted of the re-estimation of contributions from certain sectors such as telecommunications, entertainment, and retail which had previously not been captured or had been underreported; it had also been estimated that the informal sector accounted for 44% of GDP.
Nigeria was the leading oil exporter in the continent, with the largest gas reserves. Nevertheless, since the third quarter of 2014, the sharp decline in oil prices had posed major challenges to the economy, whose rate of growth had significantly slowed down to 2.7% in 2015. The Nigerian economy had gone further into recession in 2016 with a growth rate of -1.5%. Overall, the economic slowdown and the various measures taken to address it had more significantly reduced exports than imports, and the importance of trade for Nigeria had decreased as a percentage of its GDP from 52.8% in 2011 to 21.1% in 2015. According to the Secretariat report, other factors contributing to slower economic growth were related to the business environment, such as unreliable and expensive electricity supply, and governance issues, including in the oil sector.
In April 2017, the Government had embarked on the 2017-2020 Economic Recovery and Growth Plan (ERGP). This ERGP aimed at sustained inclusive growth through a structural economic transformation of Nigeria with an emphasis on the improvement of both the public and private sector efficiency.
Members wished to know more about the ERGP and its main components, including Nigeria’s plans for developing its digital economy and e-commerce.
On Nigeria’s trade regime, most of the concerns raised by Members during the last TPR remained to be addressed; they were also reflected in the questions posed by Members in the current review. For instance, Members, during the previous and current TPRs, had raised concerns about the lack of transparency in the implementation of laws and regulations on, inter alia, customs rules and procedures; and about the large number of important pieces of legislation still at the draft stage or pending adoption by the National Assembly. Moreover, Members had also highlighted during the previous TPR that certain measures taken by Nigeria had not been compatible with its WTO commitments, such as import prohibitions and restrictions and the local content requirement under the Nigerian Content Development Act, which had discriminated against foreign suppliers of goods and services in the oil and gas sector.
Since the 2011 review, the prohibition lists had been enlarged and Members were interested in the reasons behind Nigeria’s policy to maintain two import prohibition lists, as well as Nigeria’s import ban on 41 categories of goods for which access to foreign exchange from the Central Bank of Nigeria (CBN) had not been allowed since 2015; and its various other restrictions on imports.
As a member of ECOWAS, Nigeria had been applying the five-band Common External Tariff (CET) since April 2015, although with a certain flexibility. Nigeria’s average applied MFN tariff rate had increased to 12.7% in 2017 up from 11.9% in 2011. Its bound tariff rates averaged 117.3% and the tariff binding coverage remained low at 19.2% of total lines. Even though the average applied tariff rate was low, the bound rates were high and the binding coverage was low; this left ample margins for tariff changes, thus rendering the tariff regime less predictable. Moreover, a myriad of additional duties and taxes were charged on imports that were of export interest to some Members. These concerns had already been expressed at the time of the previous review.
Other developments in trade policy instruments highlighted in the advance questions included: notification requirements, local content requirements, investment incentives, SPS measures, technical barriers to trade, customs valuation, government procurement, and the protection of intellectual property rights.
Regarding sectoral policies, during the period under review, Nigeria had adopted the Agricultural Transformation Agenda (ATA) and the Agricultural Promotion Policy (2016-2020) with a view to transform agriculture from a development-oriented to an agribusiness-focused industry based on integrated value chains. Members wished to learn more about the different price support policies and incentives that were available to farmers to increase domestic production of certain commodities. Regarding oil and gas, Members had welcomed Nigeria’s recent efforts to remove subsidies on fossil fuels but wished to have further clarifications regarding the proposed new legal framework for the sector and for the investment regime in general.
Opening statement by the representative of Nigeria
H.E. Ambassador Chiedu Osakwe, Trade Advisor, Ministry of Trade Industry and Investment of Nigeria
The moment of this Trade Policy Review for Nigeria is very timely and this is by pure coincidence. We are not here for a ritual that happens every six to seven years, nor are we here defensively. The reason is that we are here to engage and to signal that there must be no ambiguity about the direction in which Nigeria is headed. We, the Nigerians, are approaching this Trade Policy Review as Acceding Governments approach the domestic economic and trade policy reforms associated with the WTO accession process. I keep saying in a previous life to acceding governments and to article twelve Members that they don’t actually know how lucky they are. They don’t know how lucky they are that there is a system here in the WTO that makes them go through a process of domestic reforms. They come out better, they come out stronger, more resilient. And I’m glad to see my friend the Ambassador of Montenegro. I hope that when you take the floor you will confirm everything that I have said, including Russia, including China and including the thirty-something Governments that have gone through the accession process. Countries that have not gone through the accession process in the WTO do not know how unfortunate they are and you can attribute this quotation to me “reforms make you stronger, they don’t make you weaker”.
Development – getting it going – and transforming out of poverty and development to more sophisticated levels will involve those developing country citizens in the diaspora and the Africans in the diaspora to go home and put the experiences and the intelligence and what they have acquired to good use. Salvation will not come from the outside. This is not a nativist comment. It is about the importance of expertise, specialization and experience, putting it to good use to where we should put it. The real struggle is not actually here or at the bank or at the fund. The real struggle, the crucible, of what needs to be changed and done and undoing the bad things that have been done in terms of unsound policies are in our countries. I think we need to be upfront about it. We do want to use this opportunity to communicate this into trade policy direction. Nigeria is also hopeful that WTO Members in this Trade Policy Review Board will use this exercise as an opportunity to support, not to criticize or impugn or undermine or treat with triviality, but to support Nigeria’s serious and far-reaching domestic policy reforms which are on-going. Nigeria sees this Fifth Trade Policy Review exercise as one of the effective instruments for building a stronger win-win partnership with its trading partners and a platform for modernizing and updating Nigeria’s trade integration in a fast-paced 21st Century economy that is actually global.
These reforms in Nigeria are far-reaching, I can tell you that. It is a daily struggle, it is a daily march. You won’t get this from Harvard business school believe me, you only get this where it is happening. They are work in progress. The macroeconomic setting is the Economic Recovery and Growth Plan (ERGP) launched on 5th April 2017 by President Buhari. Details are in the Government of Nigeria report. The plan sets the foundation for the transformation, diversification and competitiveness of the Nigerian economy, and let’s be clear, on the basis of a market economy, driven by the private sector and with public-private partnerships, where they are necessary, particularly in the areas of infrastructure and public utilities. There are five parts in the plan. I am not going to elaborate on this because these parts are elaborated both in the Nigerian Government report and in the expert and high-quality Secretariat report. There are agricultural and transformation for food security. We need to use the opportunity of the Nigerian TPR to say that food security is critical. Let’s not leave any doubt about that. Economies that are not able to feed their own people don’t qualify as sovereign entities. Dealing with food security is not something that should be trivialised so agriculture and food security are number one. In our countries you don’t want to be in a situation you had prior to the French revolution where the great empress said well if they don’t have bread why don’t you give them cake. The cake isn’t there, the bread isn’t there. It’s a question of the gruel for the basic feed. Secondly, energy sufficiency in power and petroleum products; transportation infrastructure; industrialization, and we can talk about this ad nauseam, especially with focus on SMEs, and, of course, stabilizing the macroeconomic environment.
I just want to spotlight a few areas. Under President Buhari’s Administration there are important lessons that we have learned. I’ve only been assigned to work with the Government in the past twelve months but there are important lessons that we have learnt. I think that it may be of use to other Members here in the TPR to know the areas that we are working on:
- Coherence in economic policy making
We have learnt an important lesson on coherence. If there is a coordination deficit in domestic economic policy-making, there is a very high risk for growth and development. The absence of coordination, the deficit in coherence between fiscal, monetary and structural reform, in which we put trade policy, has carried a huge cost for the Nigerian economy which has now been remedied. Part of the questions that we have to answer here are questions that have arisen as the result of a right-hand left-hand problem. But the reforms to address this are underway. They are systematic and institutional. The Government is introducing systematically institutional coherence into fiscal, monetary and structural reform policies. The purpose of this is to restore market confidence and to generate robust and sustained growth, and take account of WTO consistency questions and then be mindful of the effects of what Nigeria does, and this is part of the message that we will take back, the message that you, Juan Carlos, gave. You have reminded the Nigerian delegation that Nigeria is the 26th largest economy in the world and that is not a boast to be pinned on anyone’s shoulders. That’s a message about responsibility. When you are that big, you carry a lot of obligations. So, we will be mindful about the effects of our policies domestically but also in the region in ECOWAS, in the continent and in the larger global economy. Now, the coherence objective is being implemented in the Economic Management Team (EMT) chaired by Nigeria’s very cerebral Vice President, Professor Yemi Osinbajo, who is currently also the acting President of Nigeria and with the Ministers involved in economic policy making. These economic management team meetings take place every week. Some of my friends and colleagues here are part of that economic team as technical advisers. Me, as the technical adviser on trade to the EMT, Sadiku was technical adviser on investment to the EMT, and my brother, Yemi Kale, is technical adviser in his capacity as Nigeria’s Statistician General. So we give them advice. We are out of the politics but we tell them you can’t do this, you can do this, this is good, do more of this, and so that is how it works and that is how we are trying to bring coherence into the Government. Back to my accession experience, I wish acceding Governments knew how lucky they were to have the WTO help them and show coherence.
- Trade Policy and Negotiations: how do you use it and so that is not just a glib expression at meeting rooms of the WTO?
I’ve done trade for too long. Perhaps for far too long. It is very cerebral, it can become academic and it can be out there in stratosphere. People sometimes are not able to download trade policy and negotiations and actually understand how it works in generating growth, but we mutter the chant, the refrain and the song: trade is an engine for growth, trade and investment are inseparable. But how does it really work? What we are doing in Nigeria is that the ERGP identifies trade policy as an engine for competitiveness and growth. The Statistician General has helped the Economic Management Team and the broader constituency understand that over thirteen million jobs, in terms of the entirety of trade, wholesale trade in Nigeria, are dependent on trade. Specifically for imports and exports, 1.2 million jobs are dependent on trade. 19% of Nigeria’s GDP is accounted for by trade second only to agriculture at 26%. So, there is a greater understanding that trade is not just for the outsiders. It’s not out there in the stratosphere. It is something that is real, that creates jobs and expands opportunities. Related to this is that Nigeria is engaged in several negotiations. Some on the threshold, others are being opened and the objective is to use them for market access expansion for growth in the economy.
I should report to you that on the 10th of May, the Nigerian Cabinet, that is the President and its Ministers, approved the establishment of a new institution – the “Nigerian Office for Trade Negotiations” (NOTN). We have never had it before. It is going to be modelled on some of the trade offices that you see in the most sophisticated economies. It shall be headed by an Ambassador with a title of Trade Adviser to the President and the Chief Negotiator for Nigeria. That office is in the process of being set-up. And so, Nigeria will be consulting several of you who have good experience here as this office is being set-up. A couple of words that may be of interest to you with regard to negotiations. In Africa, there are the negotiations for the Continental Free Trade Area for the continent, the CFTA. The purpose is simple: to create an integrated market for goods and services on the continent. The objective, the timeline is to complete it this year. The CFTA was actually declared in 2012, actually launched in Johannesburg in 2015 but the actual negotiations began in 2016. I was in Niamey a couple of days ago (Niger), Nigeria has just been elected to chair the negotiating forum for the continental free trade area for Africa. It is serious business. We have just agreed to modalities for trade in goods and services. In the 277 questions that we got from you the Members, we know that a couple of questions are on the CFTA and we can take that up in the conversation. But it is serious business, so the African mammoth is beginning to turn its attention to the reality and the mechanics, and the toughness of trade negotiations and to use it as an engine for growth. And I say this one because Nigeria is leading the process, and secondly because I think that the support of the WTO Members would be needed.
The final element on trade: we know the range of Members’ concerns since the last review; Juan Carlos mentioned a couple of them, including the items on the import prohibition list, we shall address them. But the measures that are being taken by the Government are to reduce that list. That list is being reduced and we have the facts and the figures and the details. Part of what was on that list was if you have an exogenous shock in which you lose 60% of your export receipts, something really massive has to give. You don’t have an ideal foreign exchange policy. I don’t know about ideal foreign exchange policies. But this is less than ideal, because there was a shock. But it is being addressed and there are, to use the language of the IMF, several UMPs (unconventional monetary policies) but gradually they are being unwound.
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Ease of Doing Business and Trade Facilitation
Is the WTO Trade Facilitation agreement just for conference rooms? Is it just a star that we wear on our shoulders that we were able to deliver this? Does it matter?
The Presidential initiative on the Ease of Doing Business is the signature statement and test of President Buhari’s Administration to tackle the institutional and systemic challenges of doing business in Nigeria. With Cabinet Ministers and Agency Heads, the Administration is determined that it shall not be business as usual in Nigeria. The Presidential Enabling Business Environment Council is chaired by the Vice President Professor Osinbajo and Dr. Oduwole who is Secretary of the PEBEC, who is not here but her representative from the office of the Vice-President is here pushing very hard on it. The Secretariat of the enabling business environment is housed in the Nigerian Investment Promotion Commission, headed by Ms Yewande Sadiku, who is here with us today. They are reform champions. They have been recruited, they have been told that their job is to be reform champions, not to be bureaucrats and not to push papers and take three, four, five, six months to reply a letter, but to act as if they really cared for what they are working for and to make it count. There is real work that is underway and there are five aspects to the ease of doing business: transparency; default approvals. And so now, if you go to register your business in Nigeria, no one can string you around on a rope “it hasn’t been approved, it hasn’t been approved, it hasn’t been approved”, and we have someone here from the Office of the Vice President. If it is not approved in seven days it stands approved and then it is the problem of the government agency to explain why they didn’t do it. And I should say we are getting a lot of help from the Georgians, the former Georgian Prime Minister is a consultant for Nigeria, because the Georgians did some really smashing work on Trade Facilitation and Ease of doing business. So, he is advising the Government on that. One Government, and then we are dealing with the questions of entry and exit into Nigeria; and, there will be expedited Port Operations. All these reforms were institutionalized. Nigeria is also using very aggressively executive orders. Executive Order number 01 was signed by the acting President, Professor Osinbajo on the Ease of Doing Business. There shall be sanctions, punishment for Nigerian civil servants who don’t implement what they are supposed to do, based on the executive order. Let us shed stereotypes. This is the key. Let us shed the stereotype about Nigeria being a hard place to do business. Once upon a time it was. Now it isn’t. One of the most difficult things to deal with is stereotypes because they can hang around for ever. They really can hang around for ever. So, part of what we are hoping will be the message that comes out of this Trade Policy Review is for you to help communicate the message to dispense with the stereotype and say that the Nigerian situation is significantly improving across a range of areas and this is all evidence based. As you know, we also ratified and are an original member of the TFA. We have notified the category A commitments, the category B & C Commitments were recently communicated, notified to the WTO Secretariat in the past couple of days and are now being processed by the Secretariat for circulation to the Members.
- Industrial Policy that has made a massive resurgence in the developed economies
If you can’t make things, if you can’t make stuff, tables, chairs, frying pans, electric bulbs, if you can’t create value, you can’t employ people. So, there is a place for Industrial Policy. We have been watching very carefully the resurgence of Industrial Policy in the most sophisticated economies in the world. But it has to be the right Industrial Policy. It has to be the Industrial Policy that is geared or linked to innovation, creativity and enterprise, where there is ease of entry into the market and ease of exit for those that fail.
Last May 30th, the “Nigerian Industrial Policy and Competitiveness Advisory Council” was inaugurated by the acting Vice President, with a huge component from the Nigerian private sector. Also, to underscore this industrial policy, you would have seen in the Government of Nigeria report and also in the Secretariat report, the six industrial zones that have been created. So you know exactly what we are doing. We are doing this by the book. Nigeria is working with the former chief economist of the World Bank to move on these six industrial zones. There have been questions that have been asked and I have seen all of them in the 200, approximately 300 questions we have. Listen, let us be clear about this, in a country like Nigeria, 180 million people, you have the classical problem of economics that manifests itself, namely, you have infinite demand and you have a finite supply of resources. Something has to give. You can’t do everything all at the same time and satisfy everyone. But even in the most sophisticated economies that is also not the situation. And so, the Nigerian Government is working to implement these six industrial zones because the problem of infinite demands and finite resources has to be resolved somehow. This is the reason for the digital economy.
- The digital economy: why should we not evade it?
The 21st Century is defined by the digital economy. We harbour no illusions about its challenges and complexities, but we are committed to working to harvest its opportunities. Nigeria believes that being defensive or evasive about the digital economy, frankly is foolish. It is not an option. A Smart Nigeria Digital Economy Project is under advanced policy development. The key policy components have been identified in the questions from Members already answered. They range across a 100% broadband coverage of Nigeria; e-commerce development by supporting the operators in the real sector; using technology to create a platform for the integration of Small and Medium Enterprises into supply change; development of digital payment infrastructures; capacity-building and training of software engineers and coders; e-government; digitizing data across sectors; cyber security. A lot of this work is underway. But it is a very exciting work. This is an area where the youth in Nigeria ran ahead of the Government. Before the Government could say Jack Robinson Nigerian coders and software developers were being poached by the developed business counterparts. The great man Mark Zuckerberg came to Nigeria last year. No one invited him, Nigeria was very happy to have him, but he wasn’t invited, not that that made him any less welcome, he was most welcome. He actually came to see what was happening on the Nigerian digital scene. It is accelerating. And you know the reason for this. This is just one sentence. It is a paradox. The youth simply in wanting to circumvent the challenges and the complexities of the Nigerian economy, and operating in Nigeria at the time, simply went into the digital stratosphere and they are operating at world class levels. Employment there is huge. Market opportunities are being expanded. And so now the Government, President Buhari, is doing the right thing by supporting them and creating an environment for them. Our message here is the digital economy matters. It is very important. It is a source of growth. And to that we add another message. Here in the WTO we need to modernize and update our agenda for negotiations. And this is why you find that Nigeria is championing this agenda in the WTO. As a member of the Friends of E-Commerce for Development (FEDs), we are co-sponsoring proposals including with Singapore and many other friends to move ahead on this. Nigeria is positive and is looking very positively at the proposal by the European Union on online transactions, and we shall revert to that as soon as possible. The digital agenda should not be held hostage to other issues. Just to be clear about it. Nigeria will push harder, not just at home but here in the WTO on what we consider to be at the forefront of the development agenda. And that is the internet economy and associated areas of work.
- Investment Policy
Trade and investment are two sides of the same coin. They are inseparable in policy and practice. Fire away, machine gun her, the lady has lots of bullet proof vests, Ms Sadiku, on what she is doing in the agency with regard to investment: formidable. She will be working very closely with the Nigerian office for trade negotiations. That is being set up. Nigeria is working to focus its investment promotion efforts not only to encourage wealthy Nigerians to invest in direct opportunities in their own country, but to target FDI from countries with which they actively trade.
- Domestic Resource Mobilization (tax policy)
Our finance Minister, I mean a real class act: Kemi Adeosun, at I think the two last meetings of the Economic Management Team, she put out data to show that the tax-to-GDP ratio in Nigeria is 6%. It is the worst amongst all developing countries: India, South Africa, the average is about 24, 25, 26% and other countries do much higher. You need to know that we understand, the Nigerians understand also what they have to deal with. The tax-to-GDP ratio in Nigeria is very low at 6%. So, there is a programme, there is a policy, I fail to remember when it is coming into effect but we have enough brain power there that they will give you the details. Amnesty will be granted to those who are not currently paying tax but when that amnesty period is over, there are lots of wealthy Nigerians that will have to start paying taxes. I was in a meeting that had been convened by my friend Madam Sadiku and she had invited Africa’s richest man Aliko Dangote. She convened that meeting because in her former life as a banker, Dangote was her client. So, I went to this meeting and Dangote was saying to a group of us: there are Nigerians with 200 aircrafts, very few paid taxes and if they paid their taxes and if those aircrafts, in a sense, were turned into productive assets, the economy would get a boost.
Conclusion
Let me conclude because I know I have been long in this but then it is too long to have this interval of six to seven years. I am not criticizing anyone. I think that the intervals should be shorter. Let me conclude by saying this: the context in Nigeria is one of reform, change and transformation. This is why Nigeria very much welcomes the engagement by Members which we consider very positive as reflected in the 270 questions from 24 Members. Nigeria kindly asks you please that you sustain this engagement and dialogue. And so we ask that you keep the questions and comments coming, even well after this exercise. It will strengthen the Nigerian economy and it will ensure our competitiveness. In Nigeria, President Buhari’s Government is strongly committed to building a modern welfare-enhancing economy that is integrated into the regional, continental and global economy. There are policy shifts that Nigeria delayed for far-too long, which are now being corrected, at this time, through policy reforms, restructuring and institutional adjustments.
Nigeria seeks a win-win situation with all its WTO partners. The Government is implementing bold policy changes and measures to ensure that it shall not be stuck in the past.
On 18 November 1960 (that is one month basically after independence), Nigeria committed to the rules-based global economy by acceding to the GATT ‘47. In 1995, we became an original Member of the WTO. This year, as you know, we are original Members of the TFA and the Amendment to the TRIPS Agreement.
So we want to see a WTO that is constantly updating, implementing its results from Hong Kong to Bali to Nairobi. This is an indispensable Organization. If it did not exist, economies would band together to create it.
We want to see a WTO that is forging ahead, in where trade would serve a development agenda: spurs growth, creates jobs, reduces poverty and, to quote the WTO Director-General, “does more than trade, contributes to peace, security and solidarity amongst countries”. This is Nigeria’s message at its Trade Policy Review. Work with Nigeria and you will not be disappointed. It is Africa’s largest economy, it is pulling out all the stops at the moment and pumping on all pistons.