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SADC, EU launch implementation of trade projects
The Southern African Development Community (SADC) and the European Union (EU) have formally launched the implementation of projects valued at 31.6 million Euros.
The projects were launched under the Trade Related Facility (TRF), which was established through a contribution agreement between the EU and SADC in 2014.
The objective of the TRF is to improve the participation of SADC Member States in regional and international trade in order to contribute to sustainable development within the SADC region.
Projects being supported by the TRF mainly focus on customs cooperation, technical barriers to trade, sanitary and phytosanitary measures, rules of origin, trade facilitation, industrial development, trade promotion and development, and trade in services. In addition, there are specific areas that relate to the EPA Window, namely trade defence instruments, trade related adjustment and competition policy.
In his remarks, Minister of Commerce, Industry and Trade of the Kingdom of Swaziland, Jabulani Mabuza, thanked the EU for the tireless support rendered to SADC Member States in the promotion of regional integration and in improving the lives of SADC citizens.
SADC Director of Policy Planning and Resource Mobilisation, Mubita Luwabelwa, expressed SADC's commitment to the implementation of the Trade Related Facility projects in the member states in order to make the TRF a critical instrument to further economic integration across the region.
EU representative John Taylor reiterated the EU financial commitment to supporting projects which promote regional integration.
Taylor thanked the 12 SADC Member States benefiting from the TRF funding for their unwavering cooperation and collaboration.
The SADC member states that have signed and ratified the SADC Protocol on Trade and are benefitting from the TRF are Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Swaziland, Tanzania, Zambia and Zimbabwe.
Ministerial Double Troika
Meanwhile, the Ministerial Double Troika met ahead of the Double Troika Summit and the 37th Ordinary Summit of Heads of State and Government in Tshwane.
The Ministerial Double Troika discussed the security situation in the Kingdom of Lesotho.
The Ministerial Double Troika was attended by the Angola, Botswana, Mozambique, South Africa, United Republic of Tanzania and the Kingdom of Swaziland on Tuesday.
The Ministerial Double Troika received a presentation on the current security situation in the Kingdom of Lesotho.
Among others they reiterated SADC’s support to the new Lesotho government was work towards ensuring a lasting peace, security and stability.
They also expressed concern at the slow progress in the implementation of SADC decisions, and urged the government to submit a clear time-bound roadmap.
The roadmap, according to SADC, must have a clear time-bounds on the implementation of the SADC decisions, in terms of the reforms of the constitutional, parliamentary, judicial, public service and security sector), as well as the recommendations of the SADC Commission of Inquiry.
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Boosting trade and investment in Sub-Saharan Africa
The last 15 years have seen fast economic growth in many Sub-Saharan countries.
However, there is a need to translate these factors into sustained poverty reduction through greater productivity, better job creation and greater shared prosperity – still challenging for many of the region’s economies. The adoption of the Sustainable Development Goals under Agenda 2030 offers an renewed opportunity for developed economies to partner with Sub-Saharan countries to deliver real socioeconomic benefits and greater equality.
A sharp focus on developing and implementing interconnected, sustainable economic policies and governance structures should be a priority for governments in the leading regional economies, with an eye to creating the predictable and stable environments for inward investment that multinationals seek. What are considered to be the main barriers to international investment and how can they be overcome? How can we bring renewed energy to the virtuous and self-perpetuating circle of greater investment, deeper supply chains, trade, productivity and job creation within and with Africa.
One of the drivers of greater prosperity will be stronger intra-regional trade, the development of more productive local businesses in sectors with real growth and job creation potential – agriculture, financial services, renewable energy. Boosting the ease of transacting business across borders in the Sub-Saharan region should enable the creation of localised value chains, retention of human capital, export growth and ultimately greater industrialisation.
The purpose of this Wilton Park roundtable was to identify and develop channels that facilitate greater trade and investment within, between and beyond the borders of the leading Sub-Saharan economies. It aimed to map out areas where developed and emerging states can partner with a range of countries in the region to share best practice in developing trade and investment policy with the long term goal of doubling both in a decade.
Key points
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Despite recent developments in many countries across the region, both hard and soft infrastructure remains an obstacle to competitive trade. The emergence of new funding sources, along with greater competition in the development arena, has opened up new opportunities for driving projects forward.
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More support on compliance with standards should pay dividends in facilitating intra-regional trade, if implemented effectively throughout the region. Capacity building and stronger regional relationships between trading blocs can help in achieving this, but there could also be a specific role for UK institutions with particular expertise in standards formation, implementation and compliance.
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Transformative partnerships between international business and national governments, which consider wider societal development outcomes, can help restore trust in international organisations. Governmental and non-governmental partners can also play a role in facilitating the formation of these partnerships
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Significant opportunities for investment will continue to grow throughout the region over the next decade. Driven by many of the regions emerging challenges, these opportunities encompass urban infrastructure, increased education and skills development, the digital economy and Africa’s growing services sector.
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US assures Africa AGOA pact is here to stay
The United States is determined to deepen trade with sub-Sahara Africa following assurances that the African Growth and Opportunity Act (Agoa) deal is safe under the Trump administration.
While a dark cloud has been hanging over Agoa since Donald Trump became US president over six months ago, a top US trade representative has assured African countries that the US is committed to a stronger and more sustainable relationship with Africa through free, fair and reciprocal trade.
Soon after taking over, Trump sent shockwaves across Africa when he said that Agoa was benefiting corrupt regimes because most imports under the trade pact are petroleum products.
But speaking in Togo during the 16th annual Agoa Forum last week, US Trade Representative Robert Lighthizer said the US is determined to achieve deeper commercial trade engagement with Africa.
“The United States is committed to Africa. We see great potential to grow and deepen our trade relationship, with the goal of establishing a true partnership for the future,” he said.
He added that the US and sub-Sahara Africa can create a better business environment and chart a path toward a stronger and more sustainable trade relationship for the future.
“So let us focus on ways we can achieve deeper commercial engagement now while working towards greater reciprocity in the future to ensure that sustained political support for our trade relationship goes forward,” said Mr Lighthizer.
He added that by lowering barriers and tackling other constraints that impede trade and investment, US-Africa trade is bound to flourish.
The assurance by Mr Lighthizer that Agoa is safe is bound to settle nerves in Africa going by the fact that the Trump administration’s move to put the interests of the US first, has created uncertainty as far as world trade is concerned.
Trans Pacific Partnership
So far, the US has withdrawn from the Trans Pacific Partnership while the future of the North American Free Trade Agreement (Nafta) remains in the balance since Trump threatened to renegotiate several bilateral free trade agreements.
But Mr Lighthizer’s assurance is also coming at a time when East African countries are embroiled in trade disputes with the US over the importation of second hand clothes known as mitumba.
While East African Community member states had agreed to ban mitumba importation by 2019, Kenya reneged on the agreement to safeguard its privileged access to the US market.
Tanzania, Uganda and Rwanda however maintained the import ban to protect their textile industries.
Related tralac Trade Brief: Trade in second-hand clothes: the bigger picture
A report by Geneva-based trade lobby group CUTS International contends that mitumba importation has grown into a multimillion dollar industry that generally has a negative impact on the textile and leather industry of EAC countries.
“There is a negative relationship between a recipient country’s textile production and textiles imports, with a one per cent increase in second hand clothes imports resulting in a 0.61 per cent reduction in apparel production,” says the report.
The Togo forum, which was held under the theme, The United States and Africa: Partnering for prosperity through trade, is seeking to promote stronger economic ties between the US and sub-Saharan African countries that receive enhanced market access under Agoa.
Enacted in 2000, the act allows 39 eligible sub-Saharan Africa countries to export certain goods to the US market duty-free. It was renewed in September 2015 and will expire in 2025.
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US-Sub-Saharan Africa Trade and Economic Cooperation (AGOA) Forum 2017: Opening statement by the AU Commissioner for Trade and Industry
Statement by Ambassador Albert M. Muchanga, African Union Commissioner for Trade and Industry, at the opening ceremony of the 16th AGOA Forum
Lomé, Togo, 8-10 August 2017
I am delighted to be here this morning and participate in the opening ceremony of the United States-Sub Saharan Africa Trade and Economic Cooperation (AGOA) Forum that is convening under the Theme: “The U.S. and Africa: Partnering for Prosperity Through Trade”.
My statement will be brief. I will broadly touch on the challenge that we face to bring to life the theme of this Forum and key areas of capacity building to increase African exports under AGOA as well as harnessing regional and continental integration to expand and harmonize the African market.
Allow me to begin by stating that the AGOA Forum is an important platform for developing trade and investment relations between the United States of America and AGOA-eligible African countries.
We currently face some challenges such as declining exports into the US under AGOA and under-utilization of some preferences.
The theme of this Forum captures the challenge of the moment.
We would like to harness trade to propel countries in our partnership to higher levels of prosperity.
We, however, have to build from a setback of declining exports.
As of 13 June 2017, there were 37 AGOA-eligible countries, with total exports to the US under AGOA estimated at about nine billion United States dollars in 2016.
This was a significant reduction from the high of about US$56 billion recorded in 2011.
This reduction was largely as a result of a drop in our mineral oil exports to the United States.
It should also be noted that since 2011, the annual growth rate of world trade has been below the growth rate of world GDP.
The key questions that we must answer during this Forum are: what are the prospects of expanding and increasing our trade flows under AGOA and how do we achieve this so that the theme of the Forum is fully realized?
With some aspects of globalization in retreat; with some commentators and economists already coming up with the term ‘physical deglobalization’ to describe this retreat, we have a huge task ahead of us in harnessing trade to generate prosperity.
From this challenge, we also face the reality that the ladder of development is not easy to climb.
It has never been easy.
It will never be.
We hence have to harness the will and energy to overcome challenges that exist in our partnership and that is why we are gathered here today and tomorrow to share experiences and come up with common solutions to make our partnership yield desired results.
I, therefore, look forward to this Forum coming up with practical measures to harness trade as a lever of prosperity under AGOA.
On our part, we acknowledge that we need to build capacity to exploit the opportunities offered under AGOA.
Market intelligence, development of quality infrastructure, developing skills to manufacture goods, developing the ability to sustainably supply the US market are some of the capacity building areas.
We welcome steps being taken by the US side aimed at enhancing our utilization of the AGOA market access window.
Your Excellencies,
Ladies and Gentlemen,
Africa will improve her economic prospects by creating a large, harmonized and attractive market.
We are, in this respect, currently building on the successes of our regional economic communities to establish the Continental Free Trade Area by December this year.
The private sector, a key stakeholder in the AGOA process, will be a major player in the development of the CFTA market.
All we ask of the private sector is to give us, through their investments, quality, affordable, competitive and safe products to facilitate intra-African trade and trade with the rest of the world.
We also request the private sector to partner with us in the development of regional value chains in the Continental Free Trade Area to promote industrialization, value addition, economic diversification, competitiveness, structural transformation as well as overall development of our productive capacities.
We also look forward to engaging with cooperating partners like the US in working with you on issues like development of trade and investment hubs aligned to the Continental Free Trade Area and implementation of the WTO Trade Facilitation Agreement; among others.
As I conclude, let me say that I look forward to participating in the various sessions of this Forum.
Let me also state that the partnership for prosperity through trade is not just between the US and AGOA eligible Sub-Saharan countries.
It is also a partnership involving governments and members of society in our respective countries whom we represent.
In this connection, I also look forward to outcomes from this Forum that will contribute to poverty reduction and employment generation in Africa, key measures of our progress towards prosperity.
In Africa, we succeed when we uplift the livings standards of the most disadvantaged members of our societies.
We fail when we overlook their plight, because when we do that, our progress will be much, much slower.
It is the slowest members of our societies who determine our speed in our journey towards prosperity.
Let this Forum, therefore, meet its most pressing challenges, including the expectations of the most disadvantaged members in our societies for decent livelihoods.
I thank you all for your kind attention.
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New customs proposals laid out by the UK Government in new paper on future relationship with the EU
The first of a series of papers on the UK’s future partnership with the EU
A new paper setting out proposals for a future customs relationship with the EU has been unveiled today by the Government in the first of a series of papers on the UK’s future partnership with the EU.
The document highlights the UK’s strong starting position and how we can build on the strong foundation through two broad approaches:
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A highly streamlined customs arrangement between the UK and the EU, with customs requirements that are as frictionless as possible. This would aim to continue some existing arrangements we have with the EU, reduce or remove barriers to trade through new arrangements, and adopt technology-based solutions to make it easier for businesses to comply with customs procedures.
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A new customs partnership with the EU by aligning our approach to the customs border in a way that removes the need for a UK-EU customs border. One potential approach would involve the UK mirroring the EU’s requirements for imports from the rest of the world where the final destination is the EU.
The paper also sets out new details on an interim period with the EU. The proposed model, which would mean close association with the EU Customs union for a time-limited period, would ensure that UK businesses only have to adjust once to a new customs relationship. This would minimise disruption and offering business a smooth and orderly transition.
Secretary of State for Exiting the EU David Davis said:
“The approaches we are setting out today will benefit both the EU and UK and avoid a cliff-edge for businesses and individuals on both sides.
The way we approach the movement of goods across our border will be a critical building block for our independent trade policy. An interim period would mean businesses only need to adjust once to the new regime and would allow for a smooth and orderly transition.
The UK is the EU’s biggest trading partner so it is in the interest of both sides that we reach an agreement on our future relationship. The UK starts from a strong position and we are confident we can deliver a result that is good for business here in the UK and across the EU.”
Chancellor of the Exchequer, Philip Hammond said:
“Our proposals are ambitious, and rightly so. They set out arrangements that would allow UK businesses to continue to trade with their European partners in the future, while expanding their markets beyond the EU.
And in the near term they will reassure people and companies that, the day after we leave the EU, they will still be able to go about their business without disruption as we make a smooth transition to our bright future outside the EU and deliver a Brexit that works for Britain.
The leading document crucially sets out that the UK will be guided by what delivers the greatest economic advantage to the UK, and by three key objectives: to ensure trade with the EU is frictionless as possible, to avoid any form of hard-border between Ireland and Northern Ireland and to establish an independent international trade policy.”
International Trade Secretary, Dr Liam Fox said:
“Leaving the Customs Union will allow us to operate a fully independent trade policy in Britain’s national interest which will benefit UK businesses and consumers.
We will seek a new customs arrangement that ensures that trade between the UK and the EU remains as frictionless as possible and allows us to forge new trade relationships with our partners in Europe and around the world.
As we leave the EU and establish an independent trade policy, the Government will prioritise ensuring that the UK and EU businesses and consumers can continue to trade freely with one another as part of a new free trade agreement. In 2016, UK imports and exports from the EU totalled £553 billion alone.”
Click here for more from the UK’s Department for Exiting the European Union.
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Is the world integrating or disintegrating?
The Sixty-Fourth Session of the UNCTAD Trade and Development Board will be held from 11 to 22 September 2017 in Geneva. A high-level dialogue will provide an opportunity to assess the contribution of regional integration to economic growth and fostering stronger and more integrated economies across the globe. Below are some of the key items on the agenda.
High-level dialogue: Is the world integrating or disintegrating?
The Nairobi Maafikiano highlights the importance of regional integration to the promotion of inclusive growth and sustainable development via, inter alia, strengthening regional economic cooperation among developing and developed countries. Regional integration can be an important catalyst to reduce trade barriers, implement policy reforms, decrease trade costs and increase developing country participation in regional and global value chains.
The Trade and Development Board will examine regional integration and identify specific policy mechanisms through which regional integration can be strengthened to increase economic growth, maximize development gains and serve as a positive force in the implementation of the Sustainable Development Goals.
In the wake of two landmark anniversaries for regional integration, namely the fiftieth anniversary of the Association of Southeast Asian Nations and the sixtieth anniversary of the European Union, the meeting will aim at providing an opportunity to assess the contribution of regional integration to economic growth and to building productive capacities. The high-level segment will facilitate the exchange of experience in the field of regional economic integration through the presentation of best practices in regional trade agreements from various geographical regions. The aim will be to arrive at practical policy recommendations on how regional trade agreements can promote inclusive and sustainable development and to design measures that can meet emerging challenges while supporting structural economic transformation.
Interdependence: Inclusive growth – towards a global agenda
Deliberations by the Trade and Development Board will provide an opportunity to review the evolution of the world economy in 2016 and 2017. The review will analyse the factors that are making this recovery the longest and slowest on record, in particular continued slow growth in advanced economies, debt overhang and financial fragility.
The debate will consider recent trends in financial markets and flows and address the vulnerabilities faced by developing countries. It will also address rising inequality as one of the fundamental constrains on the faster growth of the global economy. In particular, the session will examine how inequality and financial instability jointly pose structural limits to inclusive growth, and provide a proposed global agenda to address these constraints.
Development strategies in a globalized world
Sustainable Development Goals 1, 8 and 10 define the inclusive growth agenda within the 2030 Agenda for Sustainable Development. This has begun to receive prominence as part of a perceived need to strengthen the globalization narrative to address the problem of growing inequality. However, the analytical and policy content remains vague, often reduced to addressing the problem of those “left behind” during periods of growth and largely disconnected from the unequalizing systemic forces intrinsic to finance-led (hyper)globalization and its related policy agenda.
The debate will introduce the issues around globalization, inequality and lack of inclusive growth linked to the Sustainable Development Goals. In particular, it will address the following issues: the fourth industrial revolution and inclusive growth; macroeconomic aspects of gender issues and inclusive growth; and globalization and the rise of rentier capitalism. At the end of the debate, a global policy approach to address these issues will be discussed.
As background documentation for the Board’s deliberations on this item, the secretariat will make available the Trade and Development Report, 2017: Beyond Austerity – Towards a Global New Deal.
Contribution of UNCTAD to the implementation of the Programme of Action for the Least Developed Countries
The Board will consider the sixth progress report of the secretariat on UNCTAD-wide implementation activities under the Programme of Action for the Least Developed Countries for the Decade 2011-2020. The report provides a brief assessment of recent economic performance of least developed countries together with the UNCTAD contribution to the implementation of the Programme of Action. It also includes policy conclusions, lessons learned and, to the extent possible, best practices drawn from implementation of the Programme of Action. The report shows that, while the research and policy analysis work of the secretariat contributed to policy dialogue and building consensus at the national, regional and global levels on issues of trade and development interest to least developed countries, its technical cooperation and capacity-building activities have also greatly assisted in building the institutional and human resources capacities of least developed countries.
Building productive capacities in the least developed countries and graduated least developed countries: Lessons learned
There will be a high-level panel discussion on accelerating progress in building productive capacities in least developed countries and other vulnerable economies. The high level panel will examine the state of productive capacity development in least developed countries and other vulnerable developing countries with a view to identifying action-oriented policy recommendations.
Economic development in Africa: Tourism for transformative and inclusive growth
The Board will consider the Economic Development in Africa Report 2017: Tourism for Transformative and Inclusive Growth, which examines the role that tourism can play in Africa’s development process. The report aims at identifying key barriers and impediments to unlocking the potential of tourism in Africa to help structurally transform the continent’s economy and provides policy recommendations on how these barriers and impediments could be addressed. It argues that tourism can be an engine for inclusive growth and economic development and that it can complement development strategies aimed at fostering economic diversification and structural transformation within an appropriate policy context.
The high-level segment will focus on exploiting the potential of tourism for transformative growth in Africa. A panel session will provide an opportunity to discuss how to boost tourism in Africa in light of new insights from recent research and best practices across the sector in Africa and elsewhere, particularly how to strengthen linkages of tourism and reduce leakages out of the domestic economy and how to tap the potential of intra-African tourism, given that it is increasing and offers comparatively stronger linkages than tourism from outside Africa.
Evolution of the international trading system and its trends from a development perspective
Paragraph 38 (m) of the Nairobi Maafikiano, the outcome document of the fourteenth session of the United Nations Conference on Trade and Development, states that UNCTAD should “continue to monitor and assess the evolution of the international trading system and its trends from a development perspective, with particular attention to its potential contribution to the Sustainable Development Goals”. In response to this mandate, under the agenda item the Trade and Development Board will discuss recent trends in international trade in goods and services and trade policy.
The Board will deliberate on trends in trade flows, both in goods and services, and various factors affecting patterns in international trade. The discussion will also cover emerging trends and issues in multilateral and regional trading systems and their interlinkages with national policies.
Investment for development: Investment and the digital economy
A key challenge in today’s global economy is digital development. The digital economy offers many new opportunities for inclusive and sustainable development but also presents serious policy challenges. Policymakers are increasingly confronted with the need to narrow the digital divide and to meet the formidable investment challenges of the 2030 Agenda on Sustainable Development.
The digital economy has important implications for investment. At the same time, investment is crucial for digital development. First, the digital economy has the potential to transform international production and therefore has implications for investment policymaking. Second, digital development in all countries, particularly to facilitate the participation of developing countries in the global digital economy, calls for the development of digital domestic capacity. Targeted investment policies should seek to build connectivity infrastructure, promote digital firms and support digitalization of the wider economy.
The session will present the analysis, findings and proposals of the World Investment Report 2017: Investment and the Digital Economy, which examines this topic in depth. In particular, the report investigates internationalization patterns of digital multinational enterprises, as well as the effect of digitalization on global companies across all industries. It provides insights for policymakers on how the digital economy affects investment policies and how investment policy can support digital development, notably with a view to advancing the Sustainable Development Goals. The report presents an investment policy framework for the digital economy. After a presentation, eminent panellists will present their own perspectives on the topic, followed by an open floor discussion. In addition, the session will provide an opportunity for a briefing by the secretariat on the latest foreign direct investment trends and policy developments.
Establishing development linkages in the extractive sector: Lessons from the field
In many commodity-dependent developing countries, the exploitation of extractive resources has brought in large revenues and created important opportunities for economic growth and sustainable development. According to the UNCTAD State of Commodity Dependence 2016, extractive exports accounted for 93 per cent of total merchandise exports in Chad, 87 per cent in the Congo and 95 per cent in Equatorial Guinea for 2014/15.
However, most commodity-dependent developing countries export their extractive resources as raw materials with little value added and therefore have not been able to transform their extractive sector wealth into economic or sustainable development gains that benefit the rest of the economy. The high dependence on extractive resources makes these countries vulnerable to market price fluctuations. Underdeveloped linkages with the broader economy, as a result of the relative isolation from the rest of the economy and the capital-intensive nature of the extractive sector, leads to the sector’s limited contribution to job creation and economic diversification.
Countries can respond to this challenge by moving away from exports of unrefined or semi-refined commodities to the creation of downstream industries that would spur economic development and diversification. This can be achieved by strengthening linkages of the extractive sector with the broader economy.
The session will discuss ways in which these countries can leverage linkages (production (backward and forward), horizontal, consumption, fiscal and spatial linkages) to transform the extractive sector and make it to contribute to a more inclusive and diversified economy. Discussions will benefit from field experience gained in the implementation of the UNCTAD project on strengthening the capacity of the Economic Community for Central African States to enhance development linkages from the mineral resources sector with the rest of the economy.
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tralac’s Daily News Selection
Concluding today, in Kampala: ATAF, URA, AfDB high-level dialogue on the nexus between tax policy and tax administration
Concept note (pdf): Much of the traditional tax regime for taxing cross-border transactions is based on the taxing of small flows of cross border investment, relatively small numbers of companies engaged in international operations, heavy reliance on fixed assets for production and value creation, relatively small amounts of cross-border portfolio investments by individual and minor concerns with international mobility of tax bases and international tax avoidance. But all this has changed in recent years with the rapid globalisation and digitalisation of the world economy. Effective revenue administrations have to monitor changes in their country’s business and legislative environment and adapt their tax policies and implementation practices accordingly. There is a growing focus on the challenges African faces from multinational corporations who often adapt their business strategies so as package to shift their profits to low tax jurisdictions. These challenges have been exacerbated by the growth in from the digital economy. The corporate income tax base is also being eroded as a result of highly geared financing structures, mismatches between countries domestic tax rules and the abuse of double taxation agreements. [Updates: ATAF on Facebook, ATAF twitter: @ATAFtax]
Concluding today, in Pretoria: Association of African Central Banks. Theme: Monetary integration prospects in Africa - lessons from the experience of the European monetary and financial integration
Concept note (pdf): The main objective of the symposium is to promote exchanges among Central Bank Governors, policy-makers and the academic community on the prospects and challenges of monetary integration in Africa in the light of lessons learned from the experience of Europe, which established the single European monetary area in 1999, with the introduction of the euro as the common currency. It also aims at conducting in-depth reflections on the relevance of such a project in Africa, given the difficulties encountered by the euro area, in particular with the sovereign debt crisis, following which the issue of the exit of some countries from the euro area was raised. During this meeting, discussions should focus on the strategies to be adopted for the establishment of a sustainable monetary area in Africa, but also on sharing the experiences of countries or sub-regions that have already created a single currency in Africa as well as on the prospects of monetary integration in the Sub-regions. The discussions would focus on the following four sub-themes:
(i) President Zuma’s address at symposium of Governors of the Association of African Central Banks: South Africa remains committed to the development of the region and continent. I am very pleased to note that the South African Reserve Bank will assume the Presidency of the Association in the next year. I am sure that the Bank will, in collaboration with the other central banks on the continent, drive some concrete initiatives in support of Agenda 2063 during its Presidency. South Africa will also assume the chair of the SADC this month. We will ensure that the projects to be pursued in SADC are closely aligned with those of the African Union. Furthermore, South Africa will also chair the BRICS forum next year. The BRICS Africa Regional Centre of the New Development Bank will be opening its doors in Johannesburg next month. It is envisaged that this office will contribute to accessing the much needed resources to pursue our developmental goals on the continent. Finally, as the only African country in the G20, South Africa remains committed to ensuring that African interests are well represented in international deliberations and agreements.
(ii) Address by Dr Andreas Dombret (Deutsche Bundesbank): You may be thinking of specific regional disparities among African countries right now. But also in the euro area, “convergence” was a key word from day one. Even today, although almost all member states in the euro area are experiencing an economic upturn by now, economic cycles are not synchronous. And unemployment rates are highly divergent, standing at over 22% in Greece and below 7% in Ireland. So even 25 years after we initiated a far-reaching treaty of European integration, and after 18 years of sharing a common currency, we are not marching in step. Those asymmetries and structural differences between neighbouring countries are not necessarily a bad thing. But in a monetary union, dissimilar developments have extensive implications for two important challenges:
Second Annual SADC Industrialization Week: Sunninghill Declaration 2017 (Nepad Business Foundation)
Key points of the Sunninghill Declaration: (i) Conventional policy approaches are not always appropriate for rapidly changing conditions. Responsible policy-making requires: considered research and groundwork, taking into account the evolving regional political economy. (ii) There is the need to acknowledge the inequalities that exist within Member States, and particularly between Member States in the SADC region. (iii) Regional protocols, strategies and plans must be implemented at domestic level, subject to the sensitivity to the changing socio-political, economic and technological environments. (iv) It is essential to develop common awareness among the public and private sectors on the main elements of ‘quality infrastructure’ for SADC (and the African context), assessing the net long-term benefits and trade-offs. (v) A dearth of information discourages particularly micro, small and medium enterprises from participation in regional and global value chains. Table of contents: The SADC region prepares for industrialization; Key points of the Sunninghill Declaration; SADC value chain development; Agro-processing; Mining; Pharmaceuticals; SADC’s infrastructure sectors in support of value chain development; Supporting intra-regional and intra-African trade; Annex I. [Note: Additional conference documentation can be downloaded here, after registration]
Annual Review of Country Eligibility for Benefits under AGOA in Calendar Year 2018: documentation posted ahead of 23 August public hearing
(i) South Africa: Joint National Association of Automobile Manufacturers of South Africa, National Association of Automotive Component and Allied Manufacturers submission. On the elimination of barriers to US Trade and Investment (pdf): Other than certain regulatory technical, safety and health provisions, NAAMSA and NAACAM are unaware of any significant barriers to US Trade and Investment. Automotive trade between the United States and South Africa has shown consistent growth with imports into South Africa from the USA growing at a substantially faster rate, in many years, than South African automotive exports to the United States. [Please refer the economic commentary in section 4]. Where there are legitimate concerns on the part of US interests regarding barriers to trade and investment- these can and should be addressed between the respective governments/administrations. It is our understanding that the South African government remains open and willing to consider issues in this regard. NAAMSA and NAACAM are aware of the concern by the US administration and various US businesses about the unfair advantage enjoyed by European companies as a result of the South Africa/European Union Free Trade Agreement. Moreover, the United States has indicated a desire to move to more permanent trade and investment relations with South Africa. NAAMSA and NAACAM herewith reiterate preparedness to participate in discussions with the United States administration, via the South African government, on the possibility of a future bilateral trade agreement between the two countries. The South African government is aware of this. [The importance of AGOA for the SA Automotive Industry]
(ii) AFL-CIO submission on Swaziland (pdf): The Government of Swaziland has not established or made continual progress towards establishing internationally recognized worker rights, as required under 19 USC § 3703(1)(F). The country should remain ineligible for benefits under the African Growth and Opportunity Act. The Government of Swaziland continues to restrict internationally recognized worker rights in both law and practice, including the right to freedom of association and the right to organize and bargain collectively. Efforts at reform have been slow and only partially address the legal barriers that prevent workers for exercising their rights.
(iii) The Secondary Materials and Recycled Textiles Association (pdf): Conclusion and Recommendation: The proposed EAC ban on second hand clothing imports violates the requirements for continuing eligibility for benefits under AGOA. Moreover, the aforementioned negative effect on the second hand clothing industry in the United States from increased duties on imports of used clothing into Kenya, Tanzania, Uganda, and Rwanda, coupled with the anticipated negative economic consequences and dramatic job losses if the proposed ban on imports of used clothing is implemented, further justifies taking action through this annual review. SMART, therefore, requests that the TPSC recommend suspending duty-free access to the United States under AGOA for all currently eligible apparel imports from Kenya, Tanzania, Rwanda, and Uganda until such time as those countries roll back all increased import duties on used clothing and commit not to implement their proposed ban on imports of used clothing.
Zimbabwe: Grain imports reach $201,4m (NewsDay)
Zimbabwe imported grain worth $201,4m in the first half of the year, an indication the nation was still a net importer of agricultural products despite the land redistribution programme, latest trade data from Zimbabwe National Statistics Agency has shown. Data gathered from Zimstat revealed that Zimbabwe was still a net importer of grain, with maize imports leading with $91m. This also comes at a time when the country was boasting of a bumper harvest. In the period under review, the southern African nation imported durum wheat worth $52 million, rice $44 million, soya bean ($13m) and sorghum worth $1,4 million.
Lord Price: Setting the stage for the UK’s post-Brexit trade relations with southern Africa (New Era)
That was the key purpose of my visit to Southern Africa – meeting with trade ministers and representatives from Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland, to discuss how we can work together on an arrangement that replicates the effects of the EPA once the UK has left the EU. I’m pleased that we’re like-minded on this: we agreed that this should be a straightforward task in our mutual interest. As a development-focused trade agreement first and foremost, the EPA provides a high degree of market access. This will continue. More than this, however, the EPA aims to increase development, support regional integration around trade, help develop regional value chains, and ultimately create a stable business climate so UK and African businesses can trade with confidence.
Plans afoot to spearhead Dar, Cairo agreements (Daily News)
Following agreements reached by Presidents John Magufuli and Abdel Al-Sisi of Egypt, the Joint Permanent Commission, which met for the last time 20 years ago, is to meet immediately to push for realisation of the pacts. Among key areas discussed include investments in the health sector such as construction of a pharmaceutical industry; exchange of experts and increase of local students to study in Egypt, tourism and construction of a meat factory.
Tanzania: Ex-CAG stresses effective monitoring of tax exemptions (Daily News)
The Retired Controller and Auditor General, Mr Ludovick Utouh, under his umbrella organisation, WAJIBU, yesterday launched Accountability Report which among others show low implementation of the CAG 2015/16 recommendations and called for close and effective monitoring on tax exemptions as they can be abused. The WAJIBU accountability report dwells on CAG 2015/16 reports, and is based on three areas of central government, local government and public institutions. Speaking at the launch of the report, Mr Utouh who is the WAJIBU Executive Director said for the 2015/16 financial year, the audited reports show that 1.10tr/- tax exemptions were offered which is equal to 1.14 per cent of tax revenue.
What’s the current state of solar equipment import trade in Africa? Updates from Kenya, Nigeria (Solar Magazine)
To enforce proper standards across the value chain, Kenya’s Energy Regulatory Commission specifies certifications and qualification for manufacturers, distributors and contractors, which helps to limit the negative impact of substandard products and substandard services. This has provided a conducive environment for quality imported products to thrive. This narrative on solar equipment import is not uniform across Africa. In Nigeria, arguably one of the largest solar markets in Africa, the market is a little less structured and a little less regulated. Solar power equipment use and deployment in Nigeria does not boost of similar levels of order made possible by Kenya’s ERC. Frameworks for certification and training across the value chain are still being fine-tuned.
East African Centre for Renewable Energy and Energy Efficiency: executive board meeting update
The meeting also took note of the proposal presented by UNIDO on the tentative agenda for conducting a sustainable energy forum for EAC by EACREEE in February 2018. The meeting commended the initiative by UNIDO and requested the formation of a joint organizing committee.
The nature of trade and growth linkages (World Bank)
In this paper, we aim at shedding some light on these issues by focusing on whether the structural features of trade connections affect the trade-growth nexus. That is, the main contribution of this paper lies in providing new cross-country empirical evidence on how the growth effect of openness depends not only on the size of cross-border trade but also on a variety of characteristics of trade relations. Following several recent studies, we analyze the issue empirically with a two-step system-GMM approach that addresses endogeneity and controls for unobserved country-specific factors in order to estimate the growth effect of openness as well as those of other relevant variables. Our sample covers 118 countries during 1960-2010. Overall, two set of results emerge from our analysis.
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Sunninghill Declaration 2017: Private Sector Communiqué of the Second Annual SADC Industrialization Week
Between 30 July and 4 August 2017, delegates from the media; private sector; civil society and public sector from the Southern African Development Community (SADC) Member States met in Sunninghill, Johannesburg (South Africa) during the Second Annual SADC Industrialization Week.
The Sunninghill Declaration has been prepared by Members of the Southern Africa Business Forum (SABF) – a regional public-private sector platform housed at the NEPAD Business Foundation, aimed at amplifying the voice of regional businesses in dialogue with the public sector in SADC Member States (coordinated by the SADC Secretariat).
The SADC Region Prepares for Industrialization
During the conferences and seminars of the second SADC Industrialization Week, 31 July to 4 August 2017, the regional private sector, civil society and research community, international cooperating partners and development finance institutions gathered in Sunninghill, Johannesburg to interact with SADC Member State government representatives. The theme of SADC Industrialization Week 2017 was Partnering with the Private Sector in Developing Industry and Regional Value Chains.
In planning for SADC’s industrialization, encapsulated in the Regional Indicative Strategic Development Plan (RISDP), the SADC Industrialization Strategy and Roadmap, and the SADC Industrialization Action Plan, the fourth Industrialization revolution (Industry 4.0) concepts will no doubt play a significant role.
Industry 4.0 refers to digital transformation, including big data, digital printing and the Internet of Things; all of which will have a profound effect on manufacturing, the future of work, skills requirements and value chains. However, the greater automation and digitization, higher technology and greater connectedness will drive new approaches and innovative business models which must focus on sustainable and efficient use of limited resources and the costeffective production of user-driven products.
While industrialization largely focuses on manufacturing, the role of the services sector and capacities and capabilities in supporting the manufacturing process are important components of economic development. Besides the fact that services such as ICT and transportation are essential for trade, services can contribute to firms becoming more productive. For example, through the use of services (e.g., logistics, management and engineering), time, materials and resources can be more efficiently and effectively used, and coordination across the entire value chain can be improved.
There is therefore a call on governments, development finance institutions, international cooperating partners and private sector (small, medium and large companies, and financiers) to recognise the challenges and opportunities inherent in adopting Industry 4.0. In order to do so, it is necessary to identify new policy challenges and opportunities; preparing a range of ‘futureproofed’ policies and strategies that are more resilient in a time of rapid change and rising uncertainty.
Looking Back
The Esibayeni Declaration of 2016 emerged from Swaziland’s SADC Industrialization Week as the private sector’s outcomes statement from the SABF Conference. The messages from the Esibayeni Declaration can be summarised as follows:
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Hard and soft infrastructure shortcomings must always be addressed together. Hard infrastructure is only as useful as the regulatory environment that surrounds it, and either permits or hampers its utilization.
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Policy certainty, including stability, predictability, consistency and transparency is a prerequisite to attract investment for regional industrialization, regardless of sector or scale. Large companies and SMEs from all sectors demand policy certainty regarding the use of tariffs, fees and levies at borders; mining houses and agro-processors called for stable and predictable export regimes; and infrastructure developers and agro-enterprises raised the need for consistent and transparent land use rights.
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Prioritization and sequencing is the key to successful implementation. Prioritization should take into account geographical links, opportunities for incremental implementation to allow for short-term gains, and industry-specific requirements to support priority value chains.
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Enabling trade through the removal of non-tariff barriers, coordinated border management and a solid regional transit system is a prerequisite for industrialization in all sectors.
Key Points of the Sunninghill Declaration
Reiterating the messages of the Esibayeni Declaration of 2016, the private sector through the Sunninghill Declaration 2017 additionally makes the following assertions and recommendations:
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Conventional policy approaches are not always appropriate for rapidly changing conditions. Responsible policy-making requires:
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Considered research and groundwork,
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Taking into account the evolving regional political economy.
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There is the need to acknowledge the inequalities that exist within Member States, and particularly between Member States in the SADC region.
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Only through genuine deeper regional integration, smaller and weaker economies can overcome their vulnerabilities and limitations by pursuing different strands of specialization along specific regional value-addition chains.
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Regional protocols, strategies and plans must be implemented at domestic level, subject to the sensitivity to the changing socio-political, economic and technological environments.
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Member State governments should work in collaboration with partners – inter alia but not limited to private sector, civil society, universities, centres of excellence, academia, think tanks, media, international cooperating partners, chambers of commerce, business associations, investment agencies, standards organisations and the SADC parliamentary forum – to ensure successful domestic implementation of the SADC regional industrialization and integration programmes in all SADC Member States.
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Different non-state actors have numerous similar challenges, and in this vein, Annex I of this Declaration presents a Joint Position Paper of Issues Affecting Regional Business and Civil Society.
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It is essential to develop common awareness among the public and private sectors on the main elements of ‘quality infrastructure’ for SADC (and the African context), assessing the net long-term benefits and trade-offs.
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This common awareness should include standards of efficiency, safety and resilience, environmental, and social and gender inclusion. Sharing of experiences and good practices among all stakeholders for integrating these concepts throughout the project cycle is encouraged.
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As the expectation is that transport infrastructure (rail, road and ports) will assist to drive development of businesses and processing in the region; so priority must be given to make freight and border rates globally competitive.
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A dearth of information discourages particularly micro, small and medium enterprises (MSMEs) from participation in regional and global value chains.
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An active exchange of information should be facilitated between governments, private sector and their intermediaries (including chambers of commerce, business associations, and investment agencies).
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These information exchanges should include guidelines on accessing finance; cross-border payment systems; international trade and investment opportunities; and progress on trade facilitation reforms for instance, relating to government commitments to the WTO Trade Facilitation Agreement.
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SADC Value Chain Development
SADC has placed industrialization and value chain development at the centre of its regional integration and economic development strategies. Furthermore, SADC Member States have acknowledged the critical role that the private sector plays in industrialization and that effective partnering with private sector will achieve the realization of regional value chains. It is against this background that the theme for the 2017 Industrialization Week was ‘Partnering with the Private Sector in Developing Industry and Regional Value Chains’.
Additional conference documentation can be downloaded here, after registration.
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SADC has a story to tell
It is time the southern African region takes charge of its own narrative and tells the story about its major achievements and challenges.
According to the Southern African Development Community (SADC) Executive Secretary, Dr Stergomena Lawrence Tax, for a long time the region “has been painted by stories of diseases, conflict, hunger and poverty.”
“But as a region, we have moved many steps in the positive direction. Today we are here to send a clear message that we have positive stories to tell,” Dr Tax said while launching the second edition of the SADC Success Stories publication ahead of the 37th SADC Summit which opens 19 August in Pretoria, South Africa.
Since its inception in 1980 as the Southern African Development Coordination Conference (SADCC), SADC has achieved a number of milestones aimed at advancing political and economic freedom.
Major milestone include the launch of the SADC Free Trade Area (FTA) in 2008. By attaining the status of the FTA, consumers in the region are now getting better products at lower prices due to increased production, while producers are benefiting from a tariff-free trade for all goods originating within the region.
On energy development, SADC has facilitated the establishment of the Southern African Power Pool (SAPP), where regional utilities are afforded the platform to sell and buy surplus electricity from each other, thereby helping some countries to meet their growing demand for energy.
Latest SAPP figures show that cooperation through electricity trading among member utilities has seen the region moving from a power deficit situation a few years ago to surplus capacity of around 900 megawatts as of the beginning of 2017.
With respect to political stability, the region has succeeded in consolidating peace and security in the region through various initiatives.
These include peace mediation in countries where there have conflicts such as in Lesotho and Madagascar, as well as sending election observer missions, and providing troops to help SADC countries defend their sovereignty, as in the case of the Democratic Republic of Congo in 1998.
Dr Tax said the regional media plays an important role in the integration agenda through educating and informing SADC citizens about the benefits of belonging to the Shared Community of southern Africa.
She said “thanks to the dreams of our Founding Fathers,” SADC is moving towards deeper regional integration and sustainable development.
“I therefore encourage the media in the region to take pride and continue to disseminate these achievements,” Dr Tax said.
German Ambassador to Botswana and SADC, Ralf Andreas Breth concurred, saying SADC belongs to its citizens, hence it is critical for regional integration to benefit the people.
“Southern Africa is a region of tremendous opportunities, and regional integration has great potential to improve people’s lives in SADC Member States,” he said.
Breth said the SADC Success Stories publication is an innovative way to make SADC achievements visible for the people of the SADC region.
The second volume of the SADC Success Stories was produced by Frayintermedia with support from German.
The first edition of the publication, done by the Southern African Research and Documentation (SARDC), was launched in 2015 and, according to the SADC Secretariat, the publication reached more than one million people.
The SADC Success Stories publication is one of the communication tools aimed at reaching out to SADC citizens to enhance awareness about the achievements and impacts of SADC programmes, actives and projects on communities and lives of the people in the region.
The second volume of the SADC Success Stories covers a variety of achievements including those in various sectors such as agriculture, climate change, infrastructure, peace, tourism and water.
The 37th SADC Summit is scheduled for 19-20 August and is running under the theme “Partnering with the private sector in developing industry and regional value-chains”.
At the summit, South African President Jacob Zuma will assume the rotating SADC chair from King Mswati III of Swaziland.
Prior to the SADC Summit, there will be meetings of senior officials, followed by the Council of Ministers and a Double Troika meeting on 18 August.
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AGOA: Annual Review of Country Eligibility for Benefits in Calendar Year 2018
Federal Register Notice
This notice announces the initiation of the annual review of the eligibility of the sub-Saharan African countries to receive the benefits of the African Growth and Opportunity Act (AGOA). The AGOA Implementation Subcommittee of the Trade Policy Staff Committee is developing recommendations for the President on AGOA country eligibility for calendar year 2018.
The Subcommittee is requesting written public comments for this review and will conduct a public hearing on this matter. The Subcommittee will consider the written comments, written testimony, and oral testimony in developing recommendations for the President. Comments received related to the child labor criteria may also be considered by the Secretary of Labor in the preparation of the Department of Labor’s report on child labor as required under section 504 of the Trade Act of 1974. This notice identifies the eligibility criteria under AGOA that must be considered under AGOA, and lists those sub-Saharan African countries that are currently eligible for the benefits of AGOA and those that were ineligible for such benefits in 2017.
Dates
August 4, 2017: Deadline for filing requests to appear at the August 23, 2017 public hearing, and for filing pre-hearing briefs, statements, or comments on sub-Saharan African countries’ AGOA eligibility.
August 23, 2017: AGOA Implementation Subcommittee of the TPSC will convene a public hearing on AGOA country eligibility.
August 30, 2017: Deadline for filing post-hearing briefs, statements, or comments on this matter.
Background
AGOA (Title I of the Trade and Development Act of 2000, Pub. L. 106-200) (19 U.S.C. 2466a et seq.), as amended, authorizes the President to designate sub-Saharan African countries as beneficiaries eligible for duty-free treatment for certain additional products not included for duty-free treatment under the Generalized System of Preferences (GSP) (Title V of the Trade Act of 1974 (19 U.S.C. 2461 et seq.) (1974 Act), as well as for the preferential treatment for certain textile and apparel articles.
The President may designate a country as a beneficiary sub-Saharan African country eligible for these benefits of AGOA if he determines that the country meets the eligibility criteria set forth in Section 104 of AGOA (19 U.S.C. 3703) section 502 of the 1974 Act (19 U.S.C. 2462).
Section 104 of AGOA includes requirements that the country has established or is making continual progress toward establishing, inter alia: A market-based economy; the rule of law, political pluralism, and the right to due process; the elimination of barriers to U.S. trade and investment; economic policies to reduce poverty; a system to combat corruption and bribery; and the protection of internationally recognized worker rights. In addition, the country may not engage in activities that undermine U.S. national security or foreign policy interests or engage in gross violations of internationally recognized human rights. Please see section 104 of the AGOA and section 502 of the 1874 Act for a complete list of the AGOA eligibility criteria.
Section 502 of the 1974 Act provides for country eligibility criteria under GSP, which is generally reviewed as a result of a petition process. For more information on the GSP criteria and review process, see section 502 of the 1974 Act and the annual Federal Register notice initiating the GSP product and country practices review.
Section 506A of the 1974 Act provides that the President shall monitor and review annually the progress of each sub-Saharan African country in meeting the foregoing eligibility criteria in order to determine whether each beneficiary sub-Saharan African country should continue to be eligible, and whether each sub-Saharan African country that is currently not a beneficiary, should be designated as such a country. If the President determines that a beneficiary sub-Saharan African country is not making continual progress in meeting the eligibility requirements, he must terminate the designation of the country as a beneficiary sub-Saharan African country. The President may also withdraw, suspend, or limit the application of duty-free treatment with respect to specific articles from a country if he determines that it would be more effective in promoting compliance with AGOA-eligibility requirements than terminating the designation of the country as a beneficiary sub-Saharan African country.
For 2017, 38 countries were designated as beneficiary sub-Saharan African countries. These countries, as well as the countries currently designated as ineligible, are listed below. The Subcommittee is seeking public comments in connection with the annual review of sub-Saharan African countries’ eligibility for AGOA’s benefits. The Subcommittee will consider any such comments in developing recommendations to the President related to this review. Comments related to the child labor criteria may also be considered by the Secretary of Labor in making the findings required under section 504 of the 1974 Act.
The following sub-Saharan African countries were designated as beneficiary sub-Saharan African countries in 2017:
Republic of Zambia
The following sub-Saharan African countries were not designated as beneficiary sub-Saharan African countries in 2017:
Republic of Zimbabwe
A selection of documents submitted ahead of the 23 August 2017 hearing are available below.
Joint submission from the National Association of Automobile Manufacturers of South Africa (NAAMSA) and National Association of Automotive Component and Allied Manufacturers (NAACAM)
As a general statement, we would point out that in many respects South Africa complies and, in some cases, exceeds internationally accepted norms and standards in respect of most of the requirements and criteria which forms part of the Review.
Comment on the specific focus of the Review, namely, whether the AGOA beneficiary country, in this case South Africa, has established or is making continual progress towards establishing / implementing a number of socio-political-economic performance criteria is summarised hereunder.
The elimination of barriers to US Trade and Investment
Other than certain regulatory technical, safety and health provisions, NAAMSA and NAACAM are unaware of any significant barriers to US Trade and Investment.
Automotive trade between the United States and South Africa has shown consistent growth with imports into South Africa from the USA growing at a substantially faster rate, in many years, than South African automotive exports to the United States.
Where there are legitimate concerns on the part of US interests regarding barriers to trade and investment – these can and should be addressed between the respective governments / administrations. It is our understanding that the South African government remains open and willing to consider issues in this regard.
NAAMSA and NAACAM are aware of the concern by the US administration and various US businesses about the unfair advantage enjoyed by European companies as a result of the South Africa-European Union Free Trade Agreement. Moreover, the United States has indicated a desire to move to more permanent trade and investment relations with South Africa.
NAAMSA and NAACAM herewith reiterate preparedness to participate in discussions with the United States administration, via the South African government, on the possibility of a future bilateral trade agreement between the two countries. The South African government is aware of this.
Public Comments of Secondary Materials and Recycled Textiles Association
SMART welcomes the opportunity to provide input in this review because SMART has grave concerns regarding the ban on imports of secondhand clothing (also referred to as “used clothing”) which these countries have recently begun to phase in. The Committee will recall that SMART filed a petition for an Out of Cycle review of eligibility benefits of these same countries earlier this year and was granted a hearing on July 13, 2017. At that hearing we presented compelling testimony to the committee supporting our recommended suspension of duty-free access to the United States under AGOA for all currently eligible apparel imports from Tanzania, Rwanda, and Uganda until such time as those countries roll back all increased import duties on used clothing and commit not to implement their proposed ban on imports of used clothing.
Our position on this has not changed since the hearing because this ban on imports would directly and negatively affect the exports of SMART’s member companies to the East African Community (“EAC”). As detailed below, the initial stages of the implementation of this ban are already having an impact on exports of secondhand clothing from the United States to Kenya, Rwanda, Tanzania, and Uganda. Implementation of the ban would expressly violate one of the key obligations of AGOA beneficiaries – to work toward elimination of barriers to U.S. trade and investment. It would also create severe economic hardships for the secondhand clothing industry in the United States, cost jobs in the United States as well as in Kenya, Tanzania, Rwanda, and Uganda, and result in other negative consequences in the United States and EAC.
American Federation of Labor & Congress of Industrial Organizations (AFL-CIO): Request to testify and pre-hearing brief on the petition to remove Swaziland from the list of AGOA beneficiary countries
The Government of Swaziland has not established or made continual progress towards establishing internationally recognized worker rights, as required under 19 USC § 3703(1)(F). The country should remain ineligible for benefits under the African Growth and Opportunity Act (AGOA).
The Government of Swaziland continues to restrict internationally recognized worker rights in both law and practice, including the right to freedom of association and the right to organize and bargain collectively. Efforts at reform have been slow and only partially address the legal barriers that prevent workers for exercising their rights. Labor activists are targeted for repression and violence. As detailed in our initial petition, the country has been under formal review by the International Labor Organization (ILO) at least 14 times, and has been the subject of two High Level Missions, a process reserved for the most serious breaches. Despite enhanced scrutiny from both the ILO and the removal of AGOA benefits, the Government has not taken meaningful action. This does not represent the establishment of or continual progress towards establishing internationally recognized worker rights.
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tralac’s Daily News Selection
NEPAD’s integration into AU structures and processes: AU issues consultancy request
Dr Francis Mangeni: Customized trade remedies in Africa – the case of the COMESA-EAC-SADC Tripartite Free Trade Area
In addressing these issues, the overarching position taken in this paper is that trade remedies can serve a useful purpose in terms of encouraging countries to agree to ambitious levels of liberalization in RTAs, but every care should be taken to avoid abuse and to limit use to only the deserving cases. This position is backed by the policy and the relevant WTO rules, and by the overall flow of scholarship on the matter, as this paper tries to show. For the Tripartite Free Trade Area, if trade remedies are to be included, they should be flexible and simple to use, as indeed the negotiators instructed in the Terms of Reference establishing the Technical Working Group on Trade Remedies and Dispute Settlement. In addition, there should be concerted efforts by governments and partners to build the capacity of stakeholders especially the private sector and civil society including consumer organisations, as well as of all relevant line ministries that work to promote the public interest. Furthermore, to deal with the monopolistic abuses resulting from trade remedies, national and regional competition policy and law should complement market regulation interventions to ensure fair trading, to ensure efficient markets that support job and wealth creation especially among small economic operators, and to protect society at large.
Dar calls off Kenya trade row meeting (Business Daily)
Tanzanian officials have put off a meeting intended to iron out outstanding trade disputes with Kenya amid concerns Dar es Salaam was maintaining a hardline stance in the spat. Representatives of the two countries, including officials from cross-border trade agencies, were expected to meet from tomorrow in Tanzania, according to an agreement reached on August 3. But Kenya’s principal secretary for trade Chris Kiptoo, who was also scheduled to meet his Tanzania counterpart Adolf Mkenda on Friday, said the meeting was off following a note from Tanzania postponing the meeting to 9 September.
Enhancing the implementation of EAC protocols: mechanisms to support the legislative and oversight role of EALA in the timely implementation of EAC protocols that enhance trade (pdf, KEPSA)
India to restart FTA talks with Mauritius (Mint)
India is set to restart suspended negotiations for a free trade agreement with Mauritius starting October after it renegotiated the two decade-old double-taxation avoidance agreement (DTAA) last year that gives India the right to impose capital gains tax on investments routed via Mauritius. A commerce ministry official speaking on condition of anonymity said both sides have exchanged a request list for goods and services. ‘Tariff lists for goods have also been exchanged. Formal negotiation will begin starting October,’ he said. India’s exports to Mauritius grew 3% to $883m in 2016-17, but declined from $1.9bn in 2014-15. Imports from Mauritius are negligible at $18.4m in 2016-17 after contracting 10% from its previous year. However, Mauritius is the single largest source of FDI to India. FDI inflows from Mauritius to India stood at $15.7bn in 2016-17, constituting 34% of total FDI inflows to India.
Free movement of people in Africa and mitigating security impediments (AU PSC)
Council commended the Regional Economic Communities and Regional Mechanisms and Member States that signed and ratified all relevant AU instruments on free movement of people, and have already adopted mechanisms to facilitate free movement of people in their respective regions and countries, and encouraged others to emulate the example. In this respect, Council urged Member States to address all institutional and regulatory capacity gaps, in order to have a common policy on free movement of people in Africa. Council further commended the AU Commission on the progress made in the on-going efforts to develop the Protocol on Free Movement of Persons, Right of Residence and Right of Establishment in Africa, pursuant to Assembly decision [Assembly/AU/Dec.607 (XXVII)], and urged all Member States to fully participate in this process. In this respect, Council welcomed the consultations between the RECs/RMs and Member States on the draft Implementation Plan of the Draft Protocol and looked forward to the meeting of Experts from Member States to consider the draft Protocol and its draft Implementation Plan, to be held from 30 August to 2 September 2017, in Port Louis, Mauritius.
North-South Corridor: Serenje-Mpika Section - ESIA, RAP summary (pdf, AfDB)
The project road was originally constructed as a bitumen surfaced road in 1970s and is now beyond its design life, notwithstanding the emergency and periodic maintenance interventions. It has received a number of rehabilitation and periodic maintenance since its initial construction, commencing with emergency maintenance between 1995 and World Bank funded periodic maintenance between 1998 and 2000. This intervention provided a limited design life intervention, with focus on partial reconstruction for severally deteriorated sections and double seal treatment for most sections. Follow up maintenance was not fully undertaken, and consequently in 2011 Government of Zambia commissioned two emergency repair works contracts for the section. The Bank is already financing the Chinsali–Nakonde section (approved July 2015) while the appraisal for the Mpika–Chinsalisection is advanced with EU/European Investment Bank support. The Serenje–Mpika (238km) section is complementary to these.
Trade facilitation, transport costs and the price of trucking services in East Africa (ODI)
We examine how the failure to reduce transit times on East Africa’s Northern Corridor contributes to higher prices of trucking services. We combine quantitative and qualitative data from both primary and secondary sources to shed light on the operating nature of the trucking services industry, and establish the potential savings that would emerge from different trade facilitation measures. We find that trade facilitation measures leading to a reduction in transit times have a higher savings potential than measures targeting direct pecuniary costs, such as bribery. At the margin, one additional day required to cover the route from Mombasa to Kampala leads to 6% higher transport prices. In total, we estimate that savings of up to 30% are attainable through a combination of several straightforward trade facilitation measures. [The authors: Andreas Eberhard-Ruiz, Linda Calabrese]
Kenya: Bechtel selected to build Nairobi-Mombasa expressway
The new 294-mile (473km) route will vastly improve the connectivity, efficiency and safety of road transport between Nairobi and the country’s main sea port, Mombasa, and will reduce the journey time from over 10 hours to under four hours. The expressway will serve as a central part of Kenya’s national transport system, helping to promote trade and development in Kenya and further into landlocked Uganda, Rwanda and Burundi. This project will complement the new Standard Gauge Railway to transform the 280-mile (450km) Nairobi-Mombasa corridor into a vibrant and continuous economic zone. It will have four lanes and 19 interchanges. Bechtel will employ over 4,000 people and provide training and capacity building. The project will also include master planning for three special economic zones along the alignment, and will be focused on developing business in coordination with the new SGR and local communities.
The value of face-to-face: search and contracting problems in Nigerian trade (VoxDev)
Being there in person to look for the most recent products and inspect the purchase can be very valuable for traders. However, travel is costly. In the survey data, Nigerian traders reported that the average cost of a trip to China was $2,154, with $1,229 spent on a visa alone. The fact that so many traders choose to travel in spite of the cost, combined with strong patterns in which traders choose to do so, allows us to infer what the value of solving search and contracting problems must be across a variety of product types and source countries. My estimates suggest that search and contracting problems reduce welfare in Nigeria by about 23% across a group of consumer goods that includes apparel, electronics, toiletries, hardware, and homewares, and accounts for one sixth of consumer spending. This is over half the size of welfare losses due to physical and regulatory trade costs combined, comprising a large fraction of the total trade barrier faced by Nigerians for these goods. [The author, Meredith Startz, is a post-doctoral fellow, Economics Department, Princeton]
Nigerian Shippers’ Council demands regulatory powers at ports (Business Post)
The Nigerian Shippers’ Council has requested legal backing to carry out regulatory activities within ports in the country. This, the association explained, would help tackle irregularities at the nation’s ports and usher in sanity. President of NSC, Mr Jonathan Nicol, in a statement to newsmen in Lagos, stressed that the absence of an enabling legal framework was a setback to many efforts of the Federal Government at the ports. ‘We believe that the introduction of a port economic regulator will fight irregularities and usher in sanity,’ he said. ‘If our port environment is not conducive for trade, of course, traders will relocate to a more liberal trade environment within the West and Central Africa regions,’ he warned.
UNDP-Nigeria: Country programme document for Nigeria (2018-2022)
The country programme document emphasizes two UNSDPF result areas: (a) governance, peace and security, and (b) sustainable and inclusive economic growth and development. The overall strategy is to address the governance deficit through: (i) economic sustainability and diversification, focusing on livelihoods and youth employment, (ii) governance, focusing on transparency, access to justice and public service reform, conflict prevention and peace-building; and capacities for the humanitarian response, and (iii) environmental sustainability. The SDGs are integrated throughout the programme and aligned to aspirations 1, 3, 4 and 6 of Agenda 2063. The programme theory of change is based on the following assumptions: [UNDP Executive Board: Second regular session, 5-11 September, advance documentation]
Tanzania: Economic growth drops to 5.7% in first quarter of 2017 (IPPMedia)
Tanzania’s economic growth slowed to 5.7% in the first quarter of 2017 following poor performance in agriculture and other sectors that dominate the economy, the National Bureau of Statistics said in its latest release (pdf). The NBS said in a statement that in the first quarter of 2016, the revised GDP grew by 6.8%. Agriculture which accounts for over 25% to the GDP grew by 2.6% compared with 2.7% recorded in the previous first quarter. It added that the construction sector recorded a growth rate of 8.4 per cent in first quarter of 2017 compared to 8.9 per cent recorded in the corresponding quarter of 2016.
Mauritius: IMF staff completes 2017 Article IV mission
The authorities seek to graduate Mauritius to a high-income economy within the next 10 years on the basis of an ambitious public investment program and improvements to the business climate. Attaining the next level of economic development will require Mauritius to use strong and independent institutions to overcome the variety of policy challenges outlined above. Early signs are promising, with both the pending formation of the National Economic Development Board, and the drafting of the Financial Sector Blueprint, important welcome steps towards harmonizing the policy direction and implementation across sectors. Considering Mauritius’ track record of reinventing its economic model, there are grounds for optimism that the country will successfully manage the reform process. Mauritius has made great strides over the last decade to top the competitiveness rankings in Sub-Saharan Africa, but still lags emerging market peers as lackluster productivity and rapid real wage growth in recent years have reduced cost competitiveness. The recently-adopted Business Facilitation Act is a welcome step to improve Mauritius’ business environment. Broader structural reforms in areas such as the labor market including the promotion of youth and female labor participation in the labor force, higher education and innovation policies will be key drivers of Mauritius’ economic transformation going forward.
Ghana: Government outlines 10 points agenda for industrial transformation (GNA)
Addressing stakeholders at the opening of the Second Edition of the National Policy Summit, President Nana Addo Dankwa Akufo-Addo mentioned the industrial agenda which were anchored on the following areas: building competitive businesses of existing local industries by facilitating access to medium and long term financing at low interest rate and implementing the One District, One Factory initiative designed to bring industrialisation to the doorsteps of the people. The summit, organised by the Ministry of Information which featured the Ministry of Trade and Industry, is on the theme: ‘‘The Industrial Transformation of Ghana’’.
South Africa: ConCourt upholds scrap metal export provisions (Engineering News)
The Constitutional Court has dismissed local scrap metal exporter SA Metal Group’s request for leave to appeal the High Court’s decision to uphold the State’s scrap metal export provisions, known as the price preference system, as well as the International Trade Administration Commission of South Africa’s decision to refuse to issue export permits to the company, in accordance with the price preference system. The ConCourt noted that it had no reasonable prospect of success.
DRC: Current acute food insecurity overview June 2017 - December 2017 (UN)
More than one in ten people living in rural areas of the Democratic Republic of the Congo are hungry due to escalating and prolonged conflict and displacement, United Nations agencies today reported, warning that the situation will worsen unless urgent support comes in time. ‘7.7 million people face acute hunger – a 30% increase over the last year,’ said the UN FAO and the WFP said. In a new report, the UN agencies said that between June last year and June this year, the number of people in ‘emergency’ and ‘crisis’ levels of food insecurity – levels that precede ‘famine’ – rose by 1.8 million, from 5.9 million to 7.7 million. The Integrated Food Security Phase Classification analysis also notes that the humanitarian situation has worsened due to the spread of fall armyworm infestations, and cholera and measles outbreaks. [Ethiopia: FAO warns that drought-stricken herders face massive losses]
Today’s Quick Links: South Africa-based Old Mutual eyes Kenya expansion Anzetse Were: Top economic agenda for incoming Kenyan leaders Rwanda: Why foreign aid should be used to diversify local exports sector Stephen Yeboah: The economic costs of illicit financial flows in Africa’s extractive sector AfDB Policy Brief series – How they did it: China’s financial mechanisms for industrial development (pdf) Caroline Freund: US needs China trade deals, not ‘remedies’ India’s foreign trade, July 2017: merchandise trade and trade in services (pdf) |
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SADC Ministers meet ahead of Summit
Regional integration, trade as well as peace and security are among the issues that are expected to be high on the agenda as a group of Ministers belonging to SADC meet in Pretoria on Tuesday and Wednesday.
The SADC Council of Ministers meeting is a precursor to the SADC Heads of State summit to take place in Tshwane this coming weekend. The meeting of Ministers, which will receive several reports on issues facing the region, prepares critical documents for adoption by the Heads of State summit.
On Tuesday, South Africa took over as chair of the Council, with International Relations and Cooperation Minister Maite Nkoana-Mashabane replacing outgoing chairperson Prince Hlangusemphi Dlamini of Swaziland. South Africa also takes over the chair of SADC for the next year.
The regional body is celebrating 25 years of existence and Minister Nkoana-Mashabane has urged those who are attending the meeting in Tshwane to use the silver jubilee as an opportunity to reflect on “how far we have come in fostering pragmatism and cohesion in our region”.
“In our journey towards regional integration, it is critical that we recognise the relationship and interconnectedness of our regional priorities and the agreed aspirations of the AU’s African Agenda 2063,” Minister Nkoana-Mashabane said.
The theme ‘Partnering with the Private Sector in Developing Industry and Regional Value Chains’, is seen as directly linked to SADC’s programme of industrialisation and economic partnership through partnerships with the private sector.
The Minister said regional leaders at this year’s summit carry a responsibility to ensure that decision taken at these meetings are able to improve the quality of life for the region’s people.
“To this end, we cannot be found to be wanting or to have failed. As such, we must commit appropriate resources and make a concerted effort to cooperatively work together towards the SADC we want,” she said.
Minister Maite Nkoana-Mashabane: Acceptance of Chairpersonship of the SADC Council
It is with great honour and privilege that I welcome you all to the 37th SADC Council of Ministers.
As we may be aware, 2017 also symbolises an important year for our organisation which celebrates twenty five years this year. This silver jubilee celebration accords us an opportunity to reflect on how far we have come in fostering pragmatism and cohesion in our region.
For South Africa, August is Women’s month and every year during this time, we remember the sacrifices and contribution of women in the struggle for a democratic and free nation. At the regional level, women continue to enhance our shared vision of attaining a stable, peaceful, secure and prosperous SADC community.
As Incoming Chair of the Council of Ministers, it is pertinent that I highlight the importance of the SADC Integration Agenda for South Africa and for our neighbourhood. We all remain collectively seized with the responsibility of improving lives of our people.
In our journey towards regional integration it is critical that we recognise the relationship and interconnectedness of our regional priorities and the agreed aspirations of the AU’s African Agenda 2063. Our objectives in SADC are informed by the SADC Common Agenda which in essence, comprises of our agreed blueprints such as the Regional Indicative Strategic Development Plan (2015-2020), the Regional Industrialisation Strategy and Roadmap, the Strategic Indicative Plan of the Organ II and the Regional Infrastructure Development Masterplan.
Guided by our identified priorities as well as the leadership demonstrated by previous Chairs, South Africa’s theme for the Chairship of SADC and the 37th Ordinary SADC Summit of Heads of State and Government is “Partnering with the Private Sector in Developing Industry and Regional Value Chains”. The theme picks up on the already identified importance of industrialisation for the prosperity of the region and seeks to strengthen the region’s capacity to realise industrialisation and economic transformation through partnership with the private sector. In this regard, emphasis would be put on agro-processing, mineral beneficiation and pharmaceutical value chains. As such, our vision for this year is to provide policy direction and an enabling environment for a work programme that prioritises the preparation of high impact cross-border projects that are pragmatic, enhance skills, create jobs and boosts regional trade in high value goods.
As regional leaders, we carry a burden of responsibility to substantially improve the quality of life for the people of our region and to realise sustainable economic development. To this end, we cannot be found to be wanting or to have failed. As such, we must commit appropriate resources and make a concerted effort to cooperatively work together towards the SADC We Want. Further to this, we must, as Member States, support the SADC Secretariat to deliver on its annual work programme and strengthen the Secretariat’s institutional capacity and effectiveness.
Excellencies, we undoubtedly have an extensive agenda ahead of us. Let us accord the work before us the requisite attention and provide the necessary direction on the way forward.
We welcome you once more, and I trust that you will find the arrangements put at your disposal conducive to successful deliberations and to your personal comfort.
I thank you.
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Customized trade remedies in Africa – the case of the COMESA-EAC-SADC Tripartite Free Trade Area
Meaning of trade remedies
Trade remedies have been variously defined, for instance:
“The term trade remedy measures or, simply trade remedies, generally refers to three types of import restrictions authorized under national and international trade laws: antidumping duties, countervailing duties, and safeguards” (Zheng, 2012);
“Trade remedies – or trade defence – are contingent measures enacted to defend local producers in certain circumstances. They take three principal forms: anti-dumping measures, countervailing measures and safeguard measures (Illy, 2012); and
“The term ‘trade remedy laws’ refers to three types of national laws that impose import restrictions under specified circumstances. ‘Safeguard measures’ are temporary trade restrictions, typically tariffs or quotas, which are imposed in response to import surges that injure or threaten ‘serious injury’ to a competing industry in an importing nation. ‘Antidumping duties’ are tariffs in addition to ordinary customs duties that are imposed to counteract certain unfair practices by private firms that injure or threaten to cause ‘material injury’ to a competing industry in an importing nation. ‘Countervailing duties’ are tariffs in addition to ordinary customs duties that are imposed to counteract certain subsidies bestowed on exporters by their governments, when they cause or threaten to cause material injury to a competing industry” (Sykes, 2005).
These are not legal definitions as such, and leave out lots of details, the possibility of price undertakings for instance as one form the measures can take as well as the detailed conditions and parameters; but they can greatly assist to provide a glimpse of the territory. The WTO Agreements contain the comprehensive definitions, as well as the substantive and procedural rules that govern these measures.
Brief history of trade remedies
A practical issue governments usually address in entering trade agreements is the protection of domestic industries against unfair trade practices or significant injury by competition from imported products.
The world’s first modern anti-dumping law was enacted by Canada in 1904, against American steel makers, on the following ground as articulated by the then Finance Minister:
We find today that the high tariff countries have adopted that method of trade which has now come to be known as slaughtering, or perhaps the word more frequently used is dumping; that is to say, that the trust or combine, having obtained command and control of its own market and finding that it will have a surplus of goods, sets out to obtain command of a neighbouring market, and for the purpose of obtaining a neighbouring market will put aside all reasonable considerations with regard to the cost or fair price of the goods; the only principle recognized is that the goods must be sold and the market obtained…. This dumping then, is an evil and we propose to deal with it. (Illy, 2020)
The emotive politics of antidumping measures, as well as the interface with anti-competitive practices, has remained with us over the years. Other countries followed suit; New Zealand (1905), Australia (1906), South Africa (1914), the US (1916) and UK (1921). When the General Agreement on Tariffs and Trade (GATT) was provisionally adopted in 1947, its Article VI contained provisions condemning dumping.
Subsidies countervailing measures also have a long history, also going back to Adam Smith’s insightful discourses in 1776 on state bounties for exports and on mercantilism, and to the 1791 Hamilton Report which explained that unofficial bounties could harm US efforts to build its national industries. The first modern countervailing law was the US Tariff Act of 1897.
Safeguards, on the other hand, came later; the first safeguard law being the US Reciprocal Trade Agreements Program of the Trade Act of 1934. Earlier trade agreements didn’t have safeguard clauses, or “safety valves” or “escape clauses” as they came to be known, and were either terminated or breached in times of crisis resulting from import surges. The US-Mexico Reciprocal Trade Agreement of 1942 had a safeguard clause in its modern form. The GATT 1947 provided for the emergency safeguard as it came to be called.
The GATT 1947 has been renegotiated in a number of rounds, and its latest modification or improvement is GATT 1994 now including three detailed agreements on antidumping, subsidies countervailing and safeguard measures; as part of the WTO Agreement which entered force on 1 January 1995. Negotiations are again underway, and yet to be completed since 2001, under the Doha Development Agenda, to improve the disciplines on dumping and countervailing measures while taking into account the concerns of developing countries; because the practice over the years has shown shortcomings to be addressed.
This background makes the point that trade remedies have been a practice in international trade agreements and in national laws for a long time now; that starting with national laws and bilateral trade agreements, trade remedies were incorporated into the GATT when it was provisionally concluded in 1947 and maintained as the GATT has grown over the years into the multilateral regime on trade in goods covering a total of 164 countries of the world, including 21 of the 26 tripartite member/partner states[1], and that efforts at improvement remain ongoing.
Key issues in considering trade remedies
What then have been the core issues in the discussion on trade remedies? Among others, the core issues have been the following:
What useful purpose do trade remedies serve?
Are trade remedies in their current form as set out in the WTO Agreements appropriate for achieving the intended objectives?
How can abuse of trade remedies best be prevented?
From a reading of the international rules, are trade remedies required, prohibited, or optional in free trade areas?
What flexibility exists for trade remedies in FTAs?
How can developing countries improve their capacity to use trade remedies?
In addressing these issues, the overarching position taken in this article is that trade remedies can serve a useful purpose in terms of encouraging countries to agree to ambitious levels of liberalization in RTAs, but every care should be taken to avoid abuse and to limit use to only the deserving cases. This position is backed by the policy and the relevant WTO rules, and by the overall flow of scholarship on the matter, as this paper tries to show. For the Tripartite Free Trade Area (TFTA), if trade remedies are to be included, they should be flexible and simple to use, as indeed the negotiators (TTNF) instructed in the Terms of Reference establishing the Technical Working Group (TWG) on Trade Remedies and Dispute Settlement. In addition, there should be concerted efforts by governments and partners to build the capacity of stakeholders especially the private sector and civil society including consumer organisations, as well as of all relevant line ministries that work to promote the public interest. Furthermore, to deal with the monopolistic abuses resulting from trade remedies, national and regional competition policy and law should complement market regulation interventions to ensure fair trading, to ensure efficient markets that support job and wealth creation especially among small economic operators, and to protect society at large.
The case for and the case against trade remedies
Regarding the purpose of trade remedies, opponents argue that trade remedies are protectionist tools that benefit some producers or even monopolists while hurting consumers, importers and manufacturers that need cheap inputs; and on the whole constitute bad economic policy by reducing welfare and maintaining inefficient producers through sheer tariff and quota protectionism. Trade remedies therefore serve no useful purpose and should be eliminated from international trade agreements in order to promote efficiency in resource allocation, to promote competition and functioning markets. Some in this group (Sykes, 2005) argue that the place of antidumping and countervailing measures can then be taken up by competition rules to deal with unfair trade practices and by direct challenges under WTO rules on prohibited or actionable subsidies against member states that subsidize exports.
On the other hand, supporters argue that trade remedies provide governments the confidence to agree to trade liberalization, in the knowledge that contingent measures exist to remedy situations which can arise in future where domestic industries would otherwise suffer material or serious injury or threat of it: “contingent protection measures can be seen as strategic tools for governments to reduce the political cost and internal domestic pressure involved in opening domestic markets to international trade” (Denner, 2009). Supporters argue that dumping in particular may make good business sense in that sales abroad can still be profitable when sold below the price in the market of the exporting market, without the intention of killing the competition and then raising the prices (predatory dumping); that a response to a government that subsidizes its exports to make them cheap in the importing market should be a “thank you note” to the embassy of the exporting country; and that the escape clause in terms of possible safeguard measures against import surges can only be prudent, because the clause assists to prevent breach or termination of trade agreements which would be the only resort where there is no provision for safeguard measures. Supporters therefore argue that trade remedies are indispensable (Denner, 2009).
There is a middle ground as well, arguing that trade remedies are bad economic policy but should be maintained for reasons of pragmatism or political expediency; political leaders do not have the will or the wherewithal not to have trade remedies in the agreements they conclude – they would lose office if they didn’t negotiate for or support the application of trade remedies. This school of thought then focuses on how to make the best of trade remedies through improvements to prevent abuse (Zheng, 2012).
An illustrative example of recommendations proffered by scholars is the following:
Eventually, WTO Members could instead respond to predatory dumping with competition laws, to illegal subsidies with WTO dispute settlement, and to import surges with safeguards pursuant to a reformed safeguard regime. In the shorter term, WTO provisions do not prevent RTA partners from eliminating trade remedies among themselves (Voon, 2010, p.3).
Some of the scholars provide case studies or examples of reasons for improvement. Gomez, for instance, studied how the importation of stranded wire, rope and cables of iron steel originating from the UK was thwarted by an antidumping duty the International Trade Administration Commission (ITAC) of South Africa investigated and recommended imposition of, though the investigation had shown that only fishing rope was being dumped. The investigation was instigated by SCAW South Africa (Pty), a South African producer of these products and a competitor of the British company (Bridon International Ltd), which was exporting the products to South Africa. When ITAC subsequently recommended the lifting of antidumping measures, after a finding that the injury or threat no longer existed, SCAW brought a case in the South African courts to prevent the lifting of the duties. Gomez, recommended that South Africa could consider vigorously applying its robust competition laws to such cases (Gomez, 2010).
The various views notwithstanding, there has been a large number of national investigations to apply trade remedies by WTO Members: a total of 4,230 initiations of antidumping investigations from 1 January 1995 to 31 December 2012, and 302 subsidies countervailing investigations over the same period; and 255 safeguard investigations from 29 March 1995 to 31 March 2013 (WTO, 2012). But not surprisingly, given the controversy, there has been a large number of disputes heard and decided by the WTO Appellate Body and panels, relating to trade remedies: 98 disputes on subsidies countervailing measures, 96 on antidumping measures, and 43 on safeguard measures (WTO, 2012). Many of the trade remedy measures were found inconsistent with the WTO rules.
The history of trade remedies, the use, and the interpretation put to them by the WTO Appellate Body and the panels show that the trade remedies serve a purpose in multilateral trade liberalization in the context of GATT. The controversy however, as well as the large number of cases at the WTO, show also that trade remedies can be abused and that it is quite a complicated task to apply the rules correctly, more so for member states with capacity constraints. This is why this paper recommends that the TFTA should have trade remedies, but they should be modified or improved to prevent abuse and to suit the conditions of the tripartite member/partner states.
The Tripartite Task Force (secretariat) sent out a questionnaire to member/partner states seeking responses on a number of issues. A total of nine responses were received, namely, from Botswana, Burundi, Comoros, Egypt, Lesotho, Mauritius, Namibia, South Africa and Zimbabwe. The Table below is a compilation of the responses. On the question of whether the Tripartite FTA should have trade remedies, all nine member states responded in the affirmative.
On the question of whether the Tripartite trade remedies should be shorter and simpler, six out of the nine member/partner states responded in the affirmative, namely, Burundi, Comoros, Lesotho, Mauritius, Namibia, and Zimbabwe (though Mauritius preferred to say the trade remedies should be simpler and easy to implement). Three member states responded that they preferred to use the WTO instruments, namely, Botswana, Egypt and South Africa, giving the reason that they needed to respect their WTO obligations.
Member/partner states with trade remedy laws and institutions
Antidumping laws
According to their notifications to the WTO, the following eight tripartite member/partner states have antidumping laws: Egypt, Kenya, Malawi, Mauritius, South Africa, Uganda, Zambia and Zimbabwe. The remaining 18 tripartite member/partner states do not have antidumping laws in place.
Subsidies countervailing laws
Ten tripartite member/partner states have made notifications to the WTO under the Subsidies Agreement. Of these, Burundi, Kenya, Mozambique, Namibia and Zimbabwe have notified that they don’t have subsidies countervailing laws; Swaziland, Uganda and Zambia that they don’t give any subsidies; Mauritius, Namibia and South Africa that they maintain some notifiable subsidies; and Uganda and Zambia that they have laws for taking subsidies countervailing measures.
Safeguard laws
Only three member states, that is, Egypt, South Africa and Zambia have laws for taking safeguard measures as notified to the WTO.
Questionnaire on trade remedies
A questionnaire was administered to government officials from the countries negotiating the Tripartite FTA. On whether the member/partner state has the law for taking safeguard, antidumping, and subsidies countervailing measures, five member/partner states confirmed that they have the law, namely, Botswana, Egypt, Mauritius, South Africa, and Zimbabwe; while Burundi, Comoros, Lesotho and Namibia said they didn’t. However, Mauritius said it didn’t have a safeguard measures law, and Burundi explained that it can use the EAC trade remedy regulations. Botswana said it has recently enacted a law for taking these measures, in July 2013, but the President is yet to assent to it; the law will enter into force when assented to by the President. Then it will be notified to the WTO.
Trade remedy institutions
Only Egypt and South Africa have functioning regulatory and institutional frameworks, that is, investigating authorities. In response to the questionnaire, Zimbabwe indicated that it has a dedicated institution for undertaking investigations for trade remedies. Additional information received is that Mauritius has considered using private investigators, such as retired civil servants.
Assessment of the prevalence of trade remedy laws and institutions in the tripartite
It would then seem a fair assessment that trade remedy laws and institutions are scarce in the tripartite region. Noting that the WTO Agreements require the existence of WTO-compliant and notified national laws and institutions as a pre-requisite for taking trade remedy measures under those Agreements, it can also be a fair assessment that tripartite member/partner states on the whole lack the legal and institutional capacity at the moment to invoke and impose trade remedy measures under the WTO Agreements. In this vein, the next section looks at the actual utilization of WTO trade remedy agreements.
It may be noteworthy that Uganda’s notification to the WTO, referred to and notified the COMESA Treaty provisions on trade remedies, being the only country that has done this. But it can be pointed out in passing that subsequently, the Uganda Law Reform Commission has had a Draft Bill for a detailed WTO-consistent law and regulations for about 10 years, without much success in it being passed by the Parliament into law. Kenya and Mauritius also continue their efforts to have trade remedy laws; while Zambia and Zimbabwe have what Ousseni Illy termed “partial” trade remedy laws (Illy, 2012, p.42), meaning incomplete. It would appear that parliamentary processes, including lack of prioritization for placement on the agenda in light of other pressing national priorities or due to a backlog or due to low familiarity with the subject, can also pause challenges to adoption and use of trade remedy laws.
Empirical facts on utilisation of WTO trade remedy measures
Between 1 January 1995 and 31 December 2012[2], WTO Members initiated a total of 4,230 antidumping investigations. Of this total, South Africa initiated 217 investigations, while Egypt did 71, these being the only two tripartite member states that have ever undertaken antidumping investigations and notified them to the WTO since the establishment of the WTO in 1995.
Over the same period, WTO Member initiated 302 subsidies countervailing investigations. Again, only South Africa and Egypt participated, with 13 and 4 initiations respectively.
Regarding safeguard measures, of a total of 255 investigations over the period of 1995 to 2013, Egypt initiated 9 and South Africa 3 respectively.
These figures show quite clearly that utilization of trade remedy measures by the tripartite member/partner states has been minimal, with only Egypt and South Africa as users; even these two are relatively minimal users compared to the other WTO members. In contrast, the most avid users have been the developed countries and the advanced developing countries. For instance, over the 1995-2012 period, India did 677, US 469, Argentina 303, Brazil 279 and Australia 247 antidumping investigations. The US did 119 safeguard countervailing investigations out of the total of 302. India initiated 69 safeguard investigations out of the total of 255 over the period.
Responses to the questionnaire on trade remedies are also to the effect that, among the nine member/partner states that responded, only Egypt and South Africa have invoked the trade remedy measures under their national laws.
The RECs’ regimes on trade remedies
The COMESA, EAC and SADC have provisions in their respective instruments on antidumping, subsidies countervailing and safeguard measures.
Availability of trade remedy provisions – primary sources
Regarding availability of trade remedy provisions and general structure, the primary sources, that is, the REC instruments, show that:
The main treaties or protocols contain provisions on trade remedies in broad terms;
These provisions are then supplemented in two ways: either by providing that member/partner states can use the relevant applicable WTO Agreements, namely, the Agreement on Antidumping, Countervailing, or Safeguard Measures, in the case of SADC; or through setting out detailed substantive and procedural provisions that are WTO-consistent, in Regulations in the case of COMESA or in an Annex and Regulations in the case of the EAC;
The COMESA and EAC instruments create dedicated regional sub-committees on trade remedies to oversee the implementation of the provisions; but the instruments do not create regional investigating authorities; and
If an example be given of a cooperative investigating authority: under the International Trade Administration Act of South Africa of 2003, the Government established the International Trade Administration Commission (ITAC) also in 2003, in accordance with the requirement under the SACU Treaty of 2002 that member states should have national laws and institutions on trade remedies; ITAC now serves as the investigating authority for the other SACU member states as well, namely, Botswana, Namibia, Lesotho and Swaziland as members of the customs union. SACU investigations are supposed to use detailed WTO-consistent rules (Joubert, 2012).
Regarding the content of the trade remedy provisions of the RECs, it can be noted that the provisions define trade remedies and set out the substantive requirements in the usual standard or conventional terms as in the WTO Agreements, except that Article 61 of the COMESA Treaty provides for a safeguard measure against “serious disturbances occurring in the economy of a member state following the application of the provisions of this chapter”, rather than “serious injury or threat of serious injury” as the WTO Safeguards Agreement says. However, it should be added that the detailed COMESA Regulations on Trade Remedies faithfully clone the WTO Agreements, which it should not be forgotten have not been used yet in the region especially with respect to antidumping and subsidy countervailing measures.
Definitional and substantive requirements
A comparison and contrast of the requirements under the WTO trade remedy rules shows that there are substantial similarities across the three WTO Agreements.
The Appellate Body has noted the similarities:
We note that Article 11.3 is textually identical to Article 21.3 of the SCM Agreement, except that, in Article 21.3, the word “countervailing” is used in place of the word “anti-dumping” and the word “subsidization” is used in place of the word “dumping”. Given the parallel wording of these two articles, we believe that the explanation, in our Report in US – Carbon Steel, of the nature of the sunset review provision in the SCM Agreement also serves, mutatis mutandis, as an apt description of Article 11.3 of the Anti-Dumping Agreement.
The similarities may make a case for having one instrument covering the three remedies, or at least close coordination among the various trade remedies. Considerable similarities exist especially with respect to the procedural requirements for notifications, thorough investigations, and the idea of provisional measures and eventually final measures that are nevertheless subject to possible judicial review, and have to eventually be terminated since they are by nature temporary measures.
For antidumping measures, the main definitional and substantive requirements are as follows:
Dumping occurs when an enterprise sells a product in an importing market at a price below the market value in the market of the country from which the product is exported, with a direct result of causing material injury or threatening material injury to industries producing like or directly competitive products;
The market value can be established using, the price when the product is sold in the export market or in a third market, or using the constructed value, that is, constructed from the production cost and reasonable mark-ups;
The antidumping measures take the form of duties not higher than the margin of dumping or price undertakings to raise the price in order to remove the dumping;
The measures are taken in respect of the particular dumped imported product; and
There are detailed requirements on parameters, duration and reviews, among others.
For subsidies, there are two main approaches. A WTO Member can directly take another to the WTO Dispute Settlement Mechanism to challenge its prohibited or actionable subsidies under the Subsidies Agreement. The second approach is to take subsidies countervailing measures against the subsidized imports if they cause or threaten to cause material injury to a domestic industry producing like or directly competitive products. The countervailing measures, in the form of higher duties or price undertakings, must not be more than necessary to offset the subsidy. There are detailed provisions on parameters, duration and reviews.
For safeguards, there should be an unforeseen surge in imports that causes or threatens to cause serious injury to a domestic industry producing like or directly competitive products. Reports from the WTO Appellate Body and Panels show that it has proved very difficult for safeguard investigations and measures to have complied with the WTO Safeguards Agreement.
One major difference not to be lost sight of is that the injury or threat for taking antidumping and subsidies countervailing measures must be “material”, while the injury or threat for taking safeguard measures must be “serious”. The difference between these two is that “serious” injury is a higher standard than “material” injury. Other differences include the duration of provisional measures and the final measures, the nature of the remedies (instead of higher duties, safeguards may take the form of quotas), provisions for special and differential treatment for developing countries (a threshold of at least 3% of total imports of the product for safeguard measures to be taken by developed countries against a developing country), constructive remedies should be explored for antidumping measures against developing countries, and so on. These differences should be borne in mind in producing a consolidated law or agreement on trade remedies, as indeed has been done in the EAC and COMESA consolidated regulations on trade remedies.
Procedural requirements
The detailed regulations under the COMESA and EAC instruments reproduce the detailed procedural requirements set out in the three WTO Agreements on trade remedies. The SADC Trade Protocol says it doesn’t prevent the member states from using the WTO Agreements. The main procedural requirements are notification of the initiation of the investigation, and of the taking of provisional and final measures; but above all the undertaking of a thorough public investigation involving interested parties to establish that the trade remedy measures can be taken – proof of the act of dumping or benefit of a subsidy or a surge in imports; proof of injury or a threat of it (material in the case of dumping and subsidization and serious in the case of safeguards); proof of a causal link; and establishment of the parameters or the extent of the measures to be taken to ensure they do not exceed the margin of dumping or subsidy, or the duties and quotas necessary to prevent serious injury from a surge of imports. Regarding the form that safeguard measures can take, the Appellate Body has been of the following view:
In our view, the text of Article XIX:1(a) of the GATT 1994, read in its ordinary meaning and in its context, demonstrates that safeguard measures were intended by the drafters of the GATT to be matters out of the ordinary, to be matters of urgency, to be, in short, “emergency actions”. And, such “emergency actions” are to be invoked only in situations when, as a result of obligations incurred under the GATT 1994, an importing Member finds itself confronted with developments it had not “foreseen” or “expected” when it incurred that obligation. The remedy that Article XIX:1(a) allows in this situation is temporarily to “suspend the obligation in whole or in part or to withdraw or modify the concession”. Thus, Article XIX is clearly an extraordinary remedy.
The overarching preliminary legal and institutional requirement is that the country should have WTO-consistent national laws under which the trade remedies can be invoked and imposed, and institutions to undertake the investigations for and administration of the trade remedies; which should have been notified to the WTO. Except for Egypt and SACU countries, the tripartite member/partner states, for not having both the laws and the investigating authorities, may not qualify to use WTO Agreements on trade remedies on this critical ground.
Special and differential treatment
The WTO Agreements provide for some special and differential treatment for developing countries. Safeguard measures should not be taken against imports of a product from a developing country if less than 3% of total imports of that product, or unless total imports of the product from developing countries exceed 9% of total imports. Constructive remedies should be considered when taking antidumping measures against imports from developing countries. Developing countries in addition benefit from longer time frames for the application of trade remedies.
In the tripartite, building on this idea, if there are to be trade remedies, some consideration could be given to having a high threshold below which no such measures should be taken against imports from other tripartite member/partner states.
The level of and constraints to utilisation of REC regimes on trade remedies
No EAC partner state has used the EAC trade remedy provisions; and neither has any SADC member state invoked the SADC trade remedy provisions.
It can be noted that Egypt and South Africa have been the only users of trade remedy measures in the tripartite region, but they have invoked and applied their domestic laws, and not the COMESA, EAC or SADC trade remedy provisions. The national laws have been formulated for consistence with the WTO Agreements as the thrusting motivation, rather than consistence with the REC regimes.
In COMESA, Kenya has used a safeguard measure on sugar imports since 2002, which was due to expire in 2014 but was since extended to 2017, but the initiation of the safeguard measure was not under the detailed COMESA Trade Remedy Regulations; rather the measure was initiated under Article 61 of the Treaty which simply provides that a member state may take safeguard measures to last for up to one year after informing the Secretary General and the other member states, but the measure may be extended by the COMESA Council of Ministers if satisfied that the member state has taken necessary measures to overcome the imbalances for which the measure was taken. The extensions of the Kenya safeguard measure have been on the basis of recommendations from comprehensive reports prepared by the Secretariat confirming adherence to the conditions, which the Secretariat has produced after on-the-spot verifications and interviewing all relevant stakeholders in Kenya, and on the basis of the conditions set by the Council.
Kenya invoked Article 61 again for a safeguard on wheat flour in 2002, which ended in 2008. This safeguard, however, allowed for limited imports at zero duty from Egypt and Mauritius.
Zambia and Malawi each unsuccessfully attempted to invoke Article 61 for safeguard measures for wheat flour, because the studies commissioned concluded that there was no justification for taking the safeguard measures.
Mauritius, in November 2001 replaced the existing 0% duty rate on imports of Kapci paints from Egypt with a rate of 40%, under a bilateral arrangement between the two member states, instead of invoking Article 61 of the COMESA Treaty, which governs the invocation of safeguard measures. The grounds Mauritius advanced were that there was a surge of imports between 1997 and 2000, and some industry players had made representations against implementation of the 0% duty rate on 1 November 2000 when Mauritius started implementing the COMESA FTA. In a judgment delivered on 31 August 2013 in the case of Polytol Paints v The Government of Mauritius, Reference No.1 of 2012, the COMESA Court of Justice ruled that this was not consistent with the COMESA Treaty and ordered a refund of the customs duties paid by the importing company. The Court explained that bilateral trade arrangements between COMESA member states should aim to promote the objectives under the Treaty and not to reverse the progress achieved, inconsistently with the Treaty.
Some relevant literature on REC trade remedy regimes
A number of works have undertaken an analysis of the trade remedy provisions of the three RECs. The TradeMark Southern Africa (TMSA) training module on trade remedies[3] provides both a comprehensive analysis of the WTO rules and the REC provisions. It is suggested that the following two papers, in addition to the others cited in this paper, are fairly comprehensive on the matter of the REC regimes of trade remedies. Denner (2009) provides an exquisite analysis of the REC provisions in his publication on trade remedies and safeguards in southern and eastern Africa; as well of course as Ousseni Illy (2012) in his publication on the experience, challenges and prospects for trade remedies in Africa.
Some of the key points made in the literature are the following.
Except for Egypt and South Africa, tripartite member/partner states have not really utilized existing WTO or REC trade remedies in pursuing their development goals, and seeking to stave off the de-industrialization that resulted from the extensive trade liberalization especially since the 1980s. As Africa re-industrialises or booms[4], trade remedies against the rest of the world may just become as critical as they now are for the emerging powers (China, India, Brazil, Argentina and South Africa).
The constraints tripartite member/partner states face in this regard include the following: inexistence of national legal and institutional frameworks, high cost and lack of expertise, local producers’ weakness or lack of awareness or poor organization, and fear of repercussions from their donors who might get upset if trade remedies were applied against imports from their countries.
Another possible reason could be that until recently, most countries have enjoyed quite high bound tariff rates, which have provided the possibility of increasing applied rates up to the bound levels as measures to protect domestic industries. However, with the increase in bilateral and pluri-lateral FTAs that Africa’s countries are entering with partners, and in light of the waves of multilateral trade liberalization, this room for manoeuvre has been rapidly disappearing.
Ways should be found to address these constraints, including long term capacity building, legal reforms, establishment of regional committees and possibly investigating authorities, designation of trade or revenue ministries as the competent and investigating authorities, and use of private investigators who may be retired civil servants or other resource persons. In the TFTA, the secretariat could have a function of closely assisting the member/partner states in dealing with trade remedies.
If the tripartite is to have trade remedies, there could be merit in making appropriate modifications in the FTA rules on trade remedies, just as this has been the practice in other FTAs. This point is taken up in the next section on good practices in other FTAs. It is worth recalling again that the existing WTO-consistent REC regimes have hardly been used.
Good practices in other FTAs
The WTO Committee on Regional Trade Agreements established in 1996 has a mandate to examine regional trade agreements, including FTAs and customs unions that are notified to the WTO, as well as services liberalization agreements. The committee has been active, and has studied trends in the formulation of regional trade agreements. One such trend studied, has been how issues of trade remedies are addressed in RTAs.
Modification of WTO rules on trade remedies among RTA members
Sagara Nozomi back in 2002 already attempted to analyse the work of the committee in this area and the disputes decided by the WTO Appellate Body and Panels, and made the following findings. RTAs were taking different approaches, some provided for trade remedies in accordance with WTO rules, others eliminated them, while others modified or tightened the disciplines beyond the WTO rules to reduce use and abuse. On the whole, European (EU, EEA, EFTA), American (Canadian and Mercosur though NAFTA provides for trade remedies among the parties), and Oceania RTAs were making modifications or eliminating trade remedies. These mixed findings were cleaned up in a subsequent study in 2009 by Tania Voon, cited below.
Sagara concluded that provisions in RTAs that eliminated trade remedies were not found inconsistent with WTO rules; however, there were disputes regarding the correct procedures to be followed when a global safeguard measure was applied while excluding imports from members of the RTA. A framework for provisional safeguard measures can sooth the liberalization process in RTAs if import surges are anticipated. Antidumping and subsidies countervailing measures can be abolished in RTAs in light of substitutes such as competition policies and also given that GATT Article 24 calls for the elimination of restrictive regulations of commerce among members of a free trade area or customs union.
The numbers
In his survey of more than 150 RTAs around November 2009, Tania Voon made the following findings:
25 RTAs did not mention the WTO trade remedy Agreements or made no significant modifications;
28 RTAs provided for bilateral safeguards but in accordance with WTO rules;
66 RTAs made procedural changes to WTO rules and provided additional rules on bilateral safeguard measures; and
8 RTAs restricted the application of antidumping measures, 4 the application of subsidies countervailing measures, and 30 the application of global safeguard measures of which 4 prohibited both global and bilateral safeguards. (Voon, 2010, p. 37-9)
This analysis would appear to suggest, in terms of preponderance of numbers, that practice is tending towards making modification to WTO rules (66 RTAs) or even restriction of trade remedies (8+4+30); in contrast to those that maintain WTO rules (25) or provide for bilateral safeguards in accordance with WTO rules (28). Before moving on to the WTO law on these different approaches, the next section deals with the drafting techniques carrying those approaches.
Text for the different approaches
RTAs that maintain the WTO trade remedies either remain silent on the matter, or contain a provision to the effect that the RTA does not affect the rights and obligations of the parties under the WTO Agreement, or explicitly require member states to use WTO Agreements on trade remedies, or reproduce the WTO provisions.
RTAs that modify the WTO Agreements on trade remedies can contain explicit provisions that omit some of the requirements in the WTO Agreements, for instance, omitting the requirement for “unforeseen circumstances” in the RTA as a pre-condition for taking a safeguard measure (it has been argued that any negotiator of a trade agreement should expect that trade liberalization will result in increased imports and increased trade, and therefore should be deemed to have foreseen import surges, except perhaps the “serious” injury to domestic industries for which there should be a remedy even if the import surges were foreseen); abridging the time frames; limiting the actual measures to tariffs only and excluding quotas and price undertakings (the idea of the tariff-only approach is to promote transparency and tariffication as a means towards predictability and better planning of production costs, and to reduce rent seeking and political interference); and providing for high thresholds below which the measures should not be taken in order not to reduce trade as a result of generous use of trade remedies. It is absolutely important to highlight that such modifications would only apply among the members of the RTA under that agreement; but not to non-members of the RTA that are WTO Members. Any trade remedy measures against non-members of the RTA that are WTO members would need to be in accordance with the WTO Agreements.
Provisions that tighten the disciplines could additionally take the form of limiting the trade remedies to listed products or limiting the measures to products on which tariff phase outs have not reached zero (that is, during the transition period), requiring consultations before application of the measures, or providing for enhanced notification requirements as additional hoops to clear before the trade remedy can be invoked and applied.
RTAs that restrict the trade remedies may explicitly state that no trade remedy measures may be taken against imports from members of the RTAs, or provide for harmonized and common behind-the-border measures, or provide for free factor movement, or provide that trade remedies may only be taken “when no mutually acceptable alternative course of action has been determined by the Member States”, or link the abolition of trade remedies with competition rules: for instance,
“A Party shall not apply anti-dumping measures as provided for under the WTO Agreement on Implementation of Article VI of the GATT 1994 in relation to goods of a Party. The Parties recognize that the effective implementation of competition rules may address economic causes leading to dumping”.
Regarding safeguards, NAFTA for instance provides that,
Any Party taking an emergency action under Article XIX or any such agreement shall exclude imports of a good from each other Party from the action unless:
Imports from a Party, considered individually, account for a substantial share of total imports; and
Imports from a Party, considered individually, or in exceptional circumstances imports from Parties considered collectively, contribute importantly to the serious injury, or threat thereof, caused by imports.
The TFTA negotiations therefore have a range of options; it would of course be best to take the one that makes the most sense and taking the practice in other RTAs into account.
Does GATT Article 24 provide for elimination of trade remedies in RTAs?
This has been a vexed legal question. It has arisen in disputes at the WTO when a country has excluded members of the FTA or customs union it belongs to from the application of a safeguard measure, pleading the FTA or customs union as the defence or excuse; notably the US pleading NAFTA as a free trade area and Argentina pleading Mercosur as a customs union. The question has arisen also in the critical discussion on whether RTAs can eliminate trade remedies among themselves despite the WTO Agreements.
Article 41(1) of the Vienna Convention on the Law of Treaties, which has been used and observed by the WTO Appellate Body and Panels, provides for inter se modifications to the WTO Agreements, that is, modifications under an agreement entered by a group of WTO members among themselves and to apply only among themselves; for it says:
Two or more of the parties to a multilateral treaty may conclude an agreement to modify the treaty as between themselves alone if:
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The possibility of such a modification is provided for by the treaty; or
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The modification in question is not prohibited by the treaty and:
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Does not affect the enjoyment by the other parties of their rights under the treaty or the performance of their obligations;
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Does not relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty as a whole.
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On the basis of these provisions of the Vienna Convention, Tania Voon, in a definitive paper on the subject, concluded that:
Article XXIV of the GATT 1994 confirms that Members may enter RTAs modifying their WTO obligations, subject to the conditions laid out in that provision and the rest of the WTO agreements. Specifically, Article XXIV:5 states that the “provisions of this Agreement shall not prevent, as between the territories of Members, the formation of a customs union or of a free-trade area or the adoption of an interim agreement necessary for the formation of a customs union or of a free-trade area…”. (Voon, 2010, p.26)
On its part, the WTO Appellate Body has had occasion to address this matter in quite some informative detail that can provide sufficient guidance.
The point of departure is that there must be no intention on the part of the member/partner states to raise barriers to trade with third countries, but rather, the whole purpose of the provisions of the TFTA, including the provisions on trade remedies or how they are addressed, should be to facilitate trade among the member/partner states within the framework of the TFTA. WTO jurisprudence has been consistent that the purpose of the RTA, the FTA in the case of the tripartite, should be to facilitate trade among the tripartite member/partner states, and the TFTA should do this in a manner that does not raise barriers to trade with third countries not members of the TFTA. The Appellate Body has been consistent on this:
According to paragraph 4 [of GATT Article 24], the purpose of a customs union [read FTA] is “to facilitate trade” between the constituent members and “not to raise barriers to the trade” with third countries. This objective demands that a balance be struck by the constituent members of a customs union. A customs union should facilitate trade within the customs union, but it should not do so in a way that raises barriers to trade with third countries. We note that the Understanding on Article XXIV explicitly reaffirms this purpose of a customs union, and states that in the formation or enlargement of a customs union, the constituent members should “to the greatest possible extent avoid creating adverse effects on the trade of other Members”.
With this in mind, the TFTA can operate as an exception to the WTO rules on non-discrimination, specifically the WTO MFN rule and any other rule in the GATT 1994. The TFTA can so operate as an exception on the basis of GATT Article 24 (or the Enabling Clause). As the Appellate Body has stated consistently:
… in examining the text of the chapeau to establish its ordinary meaning, we note that the chapeau states that the provisions of the GATT 1994 “shall not prevent” the formation of a customs union. We read this to mean that the provisions of the GATT 1994 shall not make impossible the formation of a customs union [read FTA]. Thus, the chapeau makes it clear that Article XXIV may, under certain conditions, justify the adoption of a measure which is inconsistent with certain other GATT provisions, and may be invoked as a possible “defence” to a finding of inconsistency.
If one wonders whether this idea of GATT Article 24 operating as an exception applies to the WTO Agreements on trade remedies, the Appellate Body has resolved this issue by explaining that GATT 1994 incorporated the old GATT 1947 and the new Agreements relating to trade in goods, including the WTO Agreements on trade remedies. The exception under GATT Article 24 therefore operates in respect of the entire GATT 1994, including the Agreements on trade remedies:
Thus, the GATT 1994 is not the GATT 1947. It is “legally distinct” from the GATT 1947. The GATT 1994 and the Agreement on Safeguards are both Multilateral Agreements on Trade in Goods contained in Annex 1A of the WTO Agreement, and, as such, are both “integral parts” of the same treaty, the WTO Agreement, that are “binding on all Members”. Therefore, the provisions of Article XIX of the GATT 1994 and the provisions of the Agreement on Safeguards are all provisions of one treaty, the WTO Agreement. They entered into force as part of that treaty at the same time. They apply equally and are equally binding on all WTO Members. And, as these provisions relate to the same thing, namely the application by Members of safeguard measures, the Panel was correct in saying that “Article XIX of GATT and the Safeguards Agreement must a fortiori be read as representing an inseparable package of rights and disciplines which have to be considered in conjunction.”
Or, again, as the Appellate Body similarly decided regarding the Antidumping Agreement:
… Article VI of the GATT 1994 and the Anti-Dumping Agreement are part of the same treaty, the WTO Agreement. As its full title indicates, the Anti-Dumping Agreement is an “Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994”. Accordingly, Article VI must be read in conjunction with the provisions of the Anti-Dumping Agreement, including Art. 9.
It is common ground among scholars that trade remedies are “restrictive regulations of commerce” within the meaning of GATT Article 24. However, there are two strongly opposed legal views on whether or not they should be eliminated in FTAs and customs union. One view is that they should, because GATT Article 24 requires “duties and other restrictive regulations of commerce” to be eliminated in FTAs and customs unions on substantially all trade among the members of the FTA or the customs union. The other view is they can be maintained. The bone of contention arises from the interpretation of paragraph 8(b) of GATT Article 24, which states that,
A free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce (except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
Because the excepted provisions in brackets which can be maintained in the FTA, where necessary, do not include the GATT Articles on trade remedies, namely, Article VI, XVI and XIX (6, 16 and 19), has been the basis for the argument that these trade remedies should also be eliminated as restrictive regulations of commerce. But the other side has responded that the list of excepted provisions is only illustrative and there was no explicit intention or decision not to mention the provisions on trade remedies. Tania Voon’s analysis indicates that this view is factually incorrect, as the drafting history shows that the matter of the list of exceptions was considered and the trade remedy provisions were omitted from the list. This should settle the matter.
However, this position means that trade remedies as restrictive regulations of commerce, are subject to the overall requirement that duties and the restrictive regulations of commerce be eliminated on “substantially all the trade”; raising another troublesome issue. While the Appellate Body has avoided producing an explicitly quantitative position on what constitutes “substantially all trade”, it has at least provided the following guidance:
Neither the GATT CONTRACTING PARTIES nor the WTO Members have ever reached an agreement on the interpretation of the term ‘substantially’ in this provision. It is clear, though, that ‘substantially all the trade’ is not the same as all the trade, and also that ‘substantially all the trade’ is something considerably more than merely some of the trade. We note also that the terms of sub-paragraph 8(a)(i) provide that members of a customs union may maintain, where necessary, in their internal trade, certain restrictive regulations of commerce that are otherwise permitted under Articles XI through XV and under Article XX of the GATT 1994. Thus, we agree with the Panel that the terms of sub-paragraph 8(a)(i) offer ‘some flexibility’ to the constituent members of a customs union when liberalizing their internal trade in accordance with this subparagraph. Yet we caution that the degree of ‘flexibility’ that sub-paragraph 8(a)(i) allows is limited by the requirement that ‘duties and other restrictive regulations of commerce’ be ‘eliminated with respect to substantially all’ internal trade.
This can be understood to mean that a decision on whether or not to have trade remedies in the FTA or customs union should be based on an evaluation of whether the requirement of eliminating other restrictive regulations of commerce to substantially all the trade will be met. This would mean that the FTA or customs union that allows extensive use of trade remedies would not meet this requirement, while the one which eliminates them or keeps them to a minimum would be more likely to meet the requirement.
As the Appellate Body has said:
With respect to “other regulations of commerce”, Article XXIV:5(a) requires that those applied by the constituent members after the formation of the customs union [read FTA] “shall not on the whole be … more restrictive than the general incidence” of the regulations of commerce that were applied by each of the constituent members before the formation of the customs union. Paragraph 2 of the Understanding on Article XXIV explicitly recognizes that the quantification and aggregation of regulations of commerce other than duties may be difficult, and, therefore, states that “for the purpose of the overall assessment of the incidence of other regulations of commerce for which quantification and aggregation are difficult, the examination of individual measures, regulations, products covered and trade flows affected may be required”. We agree with the Panel that the terms of Article XXIV:5(a), as elaborated and clarified by paragraph 2 of the Understanding on Article XXIV, provide:
… that the effects of the resulting trade measures and policies of the new regional agreement shall not be more trade restrictive, overall, than were the constituent countries’ previous trade policies. ...
Now, to explicitly answer the question of whether the FTA can exempt its members from the application of a global safeguard against other members of the FTA: regarding WTO members that are not in the TFTA, the rules of the WTO Safeguards Agreement must be complied with by member/partner states in imposing safeguard measures, that is, including the rule that the safeguard should be global, on a non-discriminatory basis. However, if the investigation explicitly shows that imports from the third countries, excluding imports from tripartite member/partner states, satisfy the conditions for applying the safeguard measure and an explicit finding to that effect is made, then the safeguard measure applied by a tripartite member/ partner state can exclude imports from other tripartite member/partner states. The Appellate Body has reached this result, while avoiding a direct answer to the issue, by developing the rule now known as “parallelism”:
… we do not prejudge whether Article 2.2 of the Agreement on Safeguards permits a Member to exclude imports originating in member states of a free-trade area from the scope of a safeguard measure. We need not, and so do not, rule on the question whether Article XXIV of the GATT 1994 permits exempting imports originating in a partner of a free-trade area from a measure in departure from Article 2.2 of the Agreement on Safeguards. The question of whether Article XXIV of the GATT 1994 serves as an exception to Article 2.2 of the Agreement on Safeguards becomes relevant in only two possible circumstances. One is when, in the investigation by the competent authorities of a WTO Member, the imports that are exempted from the safeguard measure are not considered in the determination of serious injury. The other is when, in such an investigation, the imports that are exempted from the safeguard measure are considered in the determination of serious injury, and the competent authorities have also established explicitly, through a reasoned and adequate explanation, that imports from sources outside the free-trade area, alone, satisfied the conditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated in Article 4.2. ...
In conclusion then, as a legal matter, GATT Article 24 provides the possibility of excluding trade remedies from application among members of the FTA and customs union, the TFTA in this case.
Dr Francis Mangeni is Director of Trade, Customs and Monetary Affairs at the Common Market for Eastern and Southern Africa (COMESA). The views expressed in this article are those of the author and do not necessarily reflect the views of tralac.
This article follows others by the same author:
[1] Tripartite Member/Partner States that are WTO Members are the following: Angola (1996), Botswana (1995), Burundi (1995), Congo DR (1997), Djibouti (1995), Egypt (1995), Kenya (1995), Lesotho (1995), Madagascar (1995), Malawi (1995), Mauritius (1995), Mozambique (1995), Namibia (1995), Rwanda (1996), South Africa (1995), Swaziland (1995), Tanzania (1995), Uganda (1995), Zambia (1995), and Zimbabwe (1995). Observers are Comoros, Ethiopia, Libya, Seychelles and Sudan; while Eritrea is neither a member nor an observer. South Sudan is yet to join COMESA, EAC or SADC, though it has been recognized at the UN and African Union as a new nation.
[2] This section draws on the 2012 Annual Reports of the WTO Committees covering trade remedies, available at www.wto.org
[3] Freely available at http://trademarksa.org/resources/trade-negotiation-capacity-building; for comparison or contrast, please see the Asian Development Bank toolkit on trade remedies also freely available at http://www.adb.org/publications/trade-remedies-tool-kit
[4] One of the latest interesting articulation of Africa rising, is Charles Robertson’s The Fastest Billion, Renaissance Capital, October 2012. As usual, there must be some caution, and a pertinent one is that development for the last 100 years has been technology-led, and so it must in Africa as well, indeed as eloquently explained by Peter Diamandis and Steven Kotler in their Abundance – The Future is Better Than You Think, 2012.
References
Willemien Denner, Trade Remedies and safeguards in southern and eastern Africa, Chapter 3 in Monitoring Regional Integration in Southern Africa Yearbook 2009
Luz Helena Beltran Gomez, Is South Africa using trade remedies as a protectionist measure? Reflections on a court case: International Trade Administration Commission v SCAW South Africa [2010] ZACC 6 (9 March 2010), Derecho Economico Internacional
Ousseini Illy, Trade Remedies in Africa: Experience, Challenges and Prospects, Oxford University Global Economic Governance Working Paper No. 2012/70 of June 2012
Sagara Nozomi, Provisions for Trade Remedy Measures (Anti-dumping, Countervailing and Safeguard Measures) in Preferential Trade Agreements, Regional Institute of Economy Trade and Industry Discussion Paper Series 02-E-013, (2002).
Alan O Sykes, Trade Remedy Laws, Law School of the University of Chicago, John M Olin & Economics Working Paper No. 240 (2d Series), April 2005
Tania Voon, Eliminating Trade Remedies from the WTO: Lessons from Regional Trade Agreements, Georgetown University Law Center, 2010
Wentong Zheng, Reforming Trade Remedies, 34 Mich J. Int’l L. 151 (2012)
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International Relations and Cooperation Minister Maite Nkoana-Mashabane and SADC executive secretary Stergomena Lawrence Tax have cautioned that the Southern African Development Community (SADC) regional integration agenda will remain theory unless member states-start to implement concrete plans to move together as one region.
The two briefed the media on Monday ahead of the SADC summit taking place in Tshwane this coming weekend.
“We need to ensure that as a region we move with one voice otherwise regional integration will remain theory,” Tax said.
South Africa will take over from Swaziland as the chair of the regional body and the country will oversee the celebrations of SADC’s 25 years of existence. Deliberations will be kick-started by a meeting of ministers on Tuesday and Wednesday who will prepare several reports for the Heads of State Summit taking place on Saturday and Sunday.
The Council of Ministers oversees the functioning and development of our Community, SADC, and ensures that policies are properly implemented. The Council consists of Ministers from each of the fifteen Member States, usually from the Ministries of foreign affairs, economic planning, or finance, and it meets twice a year in February or March and immediately prior to the Summit in August or September.
Lesotho and the Democratic Republic of Congo are likely to be under the spotlight in the discussions on peace and security. The Ministerial Committee of the organ on Politics, Defence and Security cooperation and the ORGAN Troika will meet on Friday.
Both countries have been plagued by political instability where even killings have taken place as in the case of Lesotho. On Monday, Tax said the regional body will continue to support countries in conflict and these include Lesotho and the DRC. Deputy President Cyril Ramaphosa was appointed as SADC Facilitator in Lesotho ahead of the elections in that country.
Minister Nkoana-Mashabane also confirmed on Monday that to commemorate SADC historic founding, the current Chairperson of SADC King Mswati III of Swaziland, will deliver the SADC Day Message for 2017 on Wednesday.
The Heads of State on Saturday are expected to endorse the theme for the 37th Summit which has been chosen as: “Partnering with the Private Sector in Developing Industry and Regional Value Chains”. South Africa, as the incoming chair, proposed the theme and will be presented to the summit for its approval and subsequent operationalisation.
Minister Nkoana-Mashabane said the council of ministers will receive progress on actions undertaken by the Secretariat in implementing the pdf SADC Industrialization Strategy and Roadmap 2015-2063 (2.34 MB) .
“Council will also receive and review the proposed Milestones for Monitoring Implementation of the SADC Industrialization Strategy and Roadmap for approval by Summit,” she said.
The Council will also receive reports on the findings of the exercise on profiling of the mineral and pharmaceutical sectors and identification of potential areas for the development of value chains. SADC has identified at least six value chain clusters in the fields of Agro-processing, Mineral beneficiation and related mining operations, pharmaceuticals, other consumer goods, capital goods and services.
The Council on Tuesday will also receive progress on the operationalisation of the SADC University of Transformation, following the meeting of the Committee on Higher Education, Training and Research earlier this year.
At the time, the council observed that the concept of the SADC University of Transformation has the potential to address the provision of appropriate skills required for value addition, in the three agreed value chains of the SADC Industrialisation Strategy and Roadmap.
The Council will receive and consider the Report of the SADC Executive Secretary for the period 2016-2017 which includes the overview of the political and economic developments in the region and the implementation of programmes of regional cooperation and integration.
“The Council will consider the Draft SADC Common Position on the negotiations of the Draft Protocol to the Treaty Establishing the African Economic Community relating to the Free Movement of Persons, Right of Residence and Right of Establishment,” said the minister.
The Summit on Saturday will also consider the application by the Union of Comoros and the Republic of Burundi for membership of SADC.
Minister Maite Nkoana-Mashabane: Media briefing on 37th SADC Summit
Distinguished Ladies and Gentlemen of the Media, thank you for coming to this morning’s Pre-Council information sharing session.
As it has become customary to SADC, we invited you with the view to share information on the upcoming meeting of the SADC Council of Ministers scheduled to take place here in Pretoria from Tuesday to Wednesday August 15-16, 2017, in preparation of the 37th Ordinary Summit of SADC Heads of States and Government.
To date, the following meetings have already taken place:
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On Thursday and Friday, the 10th and 11th of August, the Standing Committee of Senior Officials met.
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On Saturday the 12th of August, the Finance Committee met to receive the report of the Finance Sub Committee, the Human Resources Committee and the Audit Committee and finalized the preparation of the issues to be discussed at the meeting of the Council of Ministers.
Other activities leading to the 37th Summit are as follows:
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From Wednesday, 16th to Thursday 17th August, the Council of Ministers Meeting will take place. The Council of Ministers oversees the functioning and development of our Community, SADC, and ensures that policies are properly implemented.
The Council consists of Ministers from each of the fifteen Member States, usually from the Ministries of Foreign Affairs, Economic Planning, or Finance, and it meets twice a year in February or March and immediately prior to the Summit in August or September.
As you may know, the 17th August is an important day on the SADC calendar as this is the day when our regional organisation was established in 1992. To commemorate this day, the current Chairperson of SADC, His Majesty King Mswati III of the Kingdom of Swaziland, will deliver the SADC Day Message for 2017 which will be shared with the Media.
On Friday the 18th of August, the Ministerial Committee of the ORGAN (MCO) on Politics, Defence and Security Cooperation and the ORGAN Troika Meeting will be held at Army Foundation, Pretoria.
On Saturday, the 19th the Official Opening of the 37th Ordinary Summit of the SADC Heads of State and Government will take place in this building.
During its meeting in the coming two days, the SADC Council of Ministers will endorse the theme for the 37th Summit of Heads of State and Government, titled: Partnering with the Private Sector in Developing Industry and Regional Value Chains, which has been proposed by the Government of the Republic of South Africa, in its capacity as the Incoming Chair of SADC, and will be presented to the Summit for its approval and subsequent operationalization.
Issues on the agenda
The Council will receive progress on actions undertaken by the Secretariat in implementing the SADC Industrialization Strategy and Roadmap 2015-2063. Council will also receive and review the proposed Milestones for Monitoring Implementation of the SADC Industrialization Strategy and Roadmap for approval by Summit.
The Council will also receive reports on the findings of the exercise on profiling of the mineral and pharmaceutical sectors and identification of potential areas for the development of value chains.
The Council will further receive progress on the operationalisation of the SADC University of Transformation, following the meeting of the Committee on Higher Education, Training and Research that met 20 March 2017. The Committee observed that the concept of the SADC University of Transformation has the potential to address the provision of appropriate skills required for value addition, in the three agreed Value Chains of the SADC Industrialisation Strategy and Roadmap. The Committee improved the terms of reference for the skills assessment and scoping study to take into account the issues from Summit to cover transformative initiatives from Member States.
The Council will also receive the report on the outcomes of the Ministerial Retreat on “the SADC we want”, which was held in Ezulwini, Swaziland, in March 2017 and the progress on the development of the Implementation Plan and Roadmap.
The Council will receive some Legal Instruments such as the draft Agreement amending the Protocol on Extradition, and the Draft Agreement Amending the Protocol on Mutual Legal Assistance in Criminal matters, with a view to recommend to Summit for approval and adoption and subsequent submission to the State Parties for signatures.
The Council will receive and consider the Report of the SADC Executive Secretary for the period 2016-2017 which includes the overview of the political and economic developments in the Region, the Implementation of Programmes of Regional Cooperation and Integration, the implementation of Corporate Activities, the Continental Cooperation and Integration, the Development Cooperation and Resource Mobilisation, the Good Governance and Financial Management, and the Summary of Implementation Challenges and Recommendations. The report will cover progress on the Secretariat activities, challenges confronted and proposals aimed at addressing such challenges and subsequently, Council will provide guidance where necessary, on the implementation of SADC programmes and projects for regional cooperation and integration.
On Continental Integration, the Council will receive progress on the implementation of the Tripartite Free Trade Area (TFTA), the COMESA-EAC-SADC Agreement; and Continental Free Trade Area negotiations.
The Council will consider the Draft SADC Common Position on the negotiations of the Draft Protocol to the Treaty Establishing the African Economic Community relating to the Free Movement of Persons, Right of Residence and Right of Establishment.
The Council will also recommend for approval by Summit, the convening of the SADC Solidarity Conference with Saharawi Arab Democratic Republic (SADR)/Western Sahara.
Council will receive progress on the second year of the implementation of the Regional Indicative Strategic Development Plan (RISDP), as well as the progress report on the implementation of the Regional Indicative Strategic Plan and the proposed Milestones for Monitoring Implementation of SADC Industrialization Strategy and Roadmap for approval by Summit.
In Politics, Defense and Security, Council will receive the progress made in the development of the draft Concept Paper on the SADC Peace Fund to be submitted to the next Ministerial Committee of the ORGAN (MCO) for consideration.
On the application by the Union of Comoros, and the Republic of Burundi for membership to SADC, Council will receive the report from the meeting of the Ministerial Committee of the ORGAN (MCO) on Politics, Defence and Security Cooperation held on 21 July 2017 in Dar es Salaam, Tanzania.
The Council will receive the report on the improvement of the Food Security situation in the region following the climate change factors that affected the region with some of the Member States experiencing drought while others experienced floods.
Council will receive the report and decisions from the Committee of Ministers of Finance and Investment on the operationalisation of the SADC Regional Development Fund, the Regional Resource Mobilisation Framework and the Disaster preparedness and response fund as well as the request to approve the regional Disaster Preparedness and Response Fund as part of the Social Window in the SADC Regional Development.
Ladies and Gentlemen, I have just given you highlights of issues to be discussed during the Council of Ministers.
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Dar calls off Kenya trade row meeting
Tanzanian officials have put off a meeting intended to iron out outstanding trade disputes with Kenya amid concerns Dar es Salaam was maintaining a hardline stance in the spat.
Representatives of the two countries, including officials from cross-border trade agencies, were expected to meet from tomorrow in Tanzania, according to an agreement reached on August 3.
But Kenya’s principal secretary for trade Chris Kiptoo, who was also scheduled to meet his Tanzania counterpart Adolf Mkenda on Friday, said the meeting was off following a note from Tanzania postponing the meeting.
“I have just seen the note asking for a postponement to 9th September. We would review it and communicate the outcome. My technical team was ready including the private sector to begin these negotiations which had started on a positive note,” Mr Kiptoo said.
The two trade bosses led a meeting in Namanga where both countries agreed to lift some of the trade restrictions, including the one that barred milk and milk products from Kenya from entering Tanzania and the restrictions on wheat from Tanzania.
The agreement resolved to allow some 26 trucks ferrying wheat from Tanzania that were stopped at the border to be allowed entry into Kenya and opened borders for Kenyan milk and milk products some of which had expired over the standoff, leading to unquantified losses.
The Namanga agreement failed to reach a deal on a number of issues raised by Kenya, including a higher tax on cigarettes from Kenya which are treated like products coming outside the East African Community.
Tanzania cited domestic legislation when it hit Kenya cigarettes with an excise tax of 75 per cent, pricing them out of the market.
“The United Republic of Tanzania will develop an action plan to address the issue and communicate the framework for the implementation to the Republic of Kenya during the next bilateral meeting,” read the agreement signed by both officials.
Kenyan Tobacco manufacturers said the prohibitory taxation was in breach of East African Community laws.
The protocol treats all goods originating from partner states as community goods, hence tradable under the Community preferential tariff treatment.
Kenya and Tanzania have had long trade squabbles across their borders that received the attention of both President Uhuru Kenyatta and Tanzania’s John Magufuli.
A trade truce signed between Foreign Affairs cabinet Secretary Amina Mohamed and her Tanzanian counterpart Augustine Mahinga was not followed to the letter as Kenyan products still experienced various barriers forcing Mr Kiptoo to travel to Namanga for the August 3rd meeting.
Kenya’s exports to Tanzania dropped 34 per cent in the first five months of the year to Sh4.35 billion raising concerns over negative impacts of the long running trade standoff.
Tanzania has been Kenya’s second largest market in the region after Uganda, providing sale outlet for a range of products that include palm oil, soap, medical drugs, cooking fats, iron sheets, sugar confectionery, and margarine.
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tralac’s Daily News Selection
Profiled tweet, @jattamensah: In Addis on 9/8/17, @_AfricanUnion finance ministers agreed to meet financing targets set in 2015 by 2020
Finance Ministers of the AU Member States: communiqué (AU)
We have put forward a set of proposals that should inform the forthcoming revision of the Scale of Assessment in line with the principles of equitable burden sharing, ability to pay, solidarity, equity, ownership and sustainability. We proposed that a new and more robust sanctions and incentives regime be adopted by the forthcoming January 2018 AU Assembly of Heads of State and Government in order to encourage Member States to effectively comply and pay their contributions on time. We welcomed the F10’s recommendation that after funding the budget of the African Union and the Peace Fund, any balance of the proceeds from the 0.2% levy on eligible imports be retained by Member States for their own development projects. We propose that the number of F10+ members, to be expanded to 15, and the AU Commission, through its Reform Implementation Unit, to take forward these outcomes and keep us regularly briefed on a bi-annual basis and this prior to Ordinary sessions of the AU Assembly. [Note: the statement is also available in French]
Dr Francis Mangeni: CFTA negotiations – the end game (tralac)
It is possible to have tariff schedules for the CFTA by December 2017, at least from a critical and sufficient number of countries, especially those that have embedded trade liberalisation and export strategies in their national development programs, if the tariff negotiations are done in plenary meetings in terms of every country presenting its tariff schedule for comment, requests for improvement, and finalisation as an initial package or outcome from this first round of negotiations, subject to subsequent regular rounds in future. However, if tariff negotiations are conducted on a bilateral basis, it will definitely be impossible to complete the tariff negotiations by December 2017 or even December 2018. The permutations or groups of bilateral negotiations to be conducted among close to 55 countries or customs territories will be multifarious and overwhelming.
Actual intra-Africa trade happens on only a few tariff lines. The idea here is to focus on these tariff lines and get a commercially meaningful CFTA. Less attention for the time being need be given to idle tariff lines, many of which due to geographical or cultural or economic conditions might never have products traded among African countries in the foreseeable future.
In addition, tariff lines with applied MFN rates currently at zero percent could be harvested fairly quickly if agreed upfront as a principle, on the understanding that applied tariff rates are the starting point for elimination and reduction in FTAs, according to some WTO rules. If in the next two or three rounds of negotiations, good progress is made in these three areas along the lines suggested above, then the CFTA can be launched this year 2017. The three areas are: the text for the Agreement including a regime on non-tariff barriers, rules of origin, and tariff schedules for opening Africa’s market. Then provision can be made for transition arrangements and a built-in agenda to take care of outstanding work. [The author is Director of Trade, Customs and Monetary Affairs at COMESA]
SADC Finance Committee meets ahead of Council of Ministers meeting (15-16 August); 37th SADC Summit: Harnessing public-private partnerships
Briefing by Bentry Chaura (Acting Director of FANR): Mr Chaura announced the launch of the SADC Regional Aquatic Animal Health Strategy (2016-2026) and the SADC Regional Aquaculture Strategy and Action Plan (2016-2026) which aim to improve national and regional aquatic biosecurity and aquatic animal health, and facilitate aquatic development and promote increase in aquaculture production and investment.
Briefing by Dr Lomkhosi Mkhonta-Gama (Acting Director of Industrial Development and Trade) and Mr Sadwick Mtonakutha (Acting Director of Finance, Investment and Customs)
$4.8bn trade volume between Egypt and African markets (Daily News)
Commercial relations between Egypt and African countries witnessed a noticeable increase in 2016, the trade volume amounted to around $4.8bn against $4.5bn in 2015, said Minister of Industry and Trade Tarek Kabil on Saturday. Kabil added that the increase in Egyptian exports was the main catalyst for the increase in the volume of trade exchange. Egyptian exports to African countries in 2016 accounted for about $3.4bn, while the value of imports reached $1.3bn. Moreover, the upcoming African tour of President Al-Sisi to the countries of Tanzania, Rwanda, Chad, and Gabon will represent an important step toward the strengthening of strategic relations between Egypt and the African countries, on both political and economic levels, according to the press statement. [Egyptian president to visit Rwanda this week]
Namibia: Statement by Ministry of Finance in response to Moody’s downgrade decision (pdf)
After having considered the statement the Namibian Government holds the strong view that a substantive rating change should have been preceded by an in depth assessment and engagement of the Namibian authorities instead of a desk review of developments in the corridors of international financial head quarters. This recent rating acting by Moody’s relied merely on an exchange of emails on a single item, that of outstanding invoices and how Government is planning to settle them. This is highly regrettable. A thorough assessment taking all factors into consideration would have been the proper way in dealing with reviewing Namibia’s sovereign credit rating. Government would like to use this opportunity to put a number of key factors into proper perspective. [Namibia: Finance Ministry Strategic Plan 2017/18 - 2021/22, pdf]
Namibia: Trump’s advisor keen to invest (New Era)
US President Donald Trump’s Advisor on North Africa and the Sahel region, Christopher ‘Chris’ Cox, visited President Hage Geingob yesterday at State House, where he expressed interest in bringing investors to Namibia in the areas of manufacturing, energy and agriculture. Cox, who was in Namibia for a one-day visit, said he came in his personal capacity and therefore had no message from Trump. Although Cox and Geingob had a closed-door meeting, the U.S. investor said he came to Namibia because of its stable political system and conducive environment for economic development.
Southern African countries receive support in testing products to facilitate market access (UNIDO)
The meeting (2 August, Pretoria) was organized by UNIDO, in cooperation with SADC’s Regional Laboratory Association, with funding from the Ministry of Foreign Affairs of Finland. Representatives of 11 Southern African National Laboratory Associations were in attendance. The participants worked on establishing a way forward for the efficient implementation of the project. Among others, two trainings will be held in the next eight months to help NLAs run their association in a sustainable manner and to bolster the capacity of food and water-testing laboratories in method validation and method uncertainty for both microbiological and chemical test methods – the latter being of particular relevance to the region as the main export is food.
AGOA Forum: Introductory remarks by Dr Okechukwu Enelamah, as African Co-Chair - Plenary 1
I am aware that there is wide scope for our exchange of views. We know that one size will never fit all. This is why, as Co-Chair, I would encourage frankness, openness and objectivity. This would be the best way to go about our exchange at this Panel. This said, several recurring points, preparatory to this 16th US/Sub-Saharan Africa Trade and Economic Cooperation Forum, merit our frank exchange, as we work to strengthen US-Sub-Saharan Africa trade relationship on the strategic foundation of AGOA. Several of these points include, but are not limited to the following: (i) explicit AGOA support for the regional integration process in Africa, in the context of the on-going Negotiations for the CFTA in Africa, that Nigeria has the honour to lead; and is committed to an end-of-year conclusion; (ii) an explicit AGOA Module to support the implementation of the WTO Trade Facilitation Agreement, which is critical to reduction of trade costs in Africa; (iii) how the value of US./Sub-Saharan African Trade, including under AGOA, which has been in decline, can and should be scaled-up, with targets, including through elimination of barriers in non-tariff forms;
AfDB policy briefs: from the ‘How They Did It’ series
(i) Ethiopia: lessons from an experiment. In this chapter, we will review industrial policy in Ethiopia with the aim of extracting lessons from the comparative review of labor–intensive export-oriented sectors, such as leather and leather products; capital-intensive, import–substitution industries, such as the cement industry; and high productivity modern agriculture, such as floriculture. These three sectors have different industrial structures and can collectively illustrate the practice of industrial policy and uneven outcomes in Ethiopia. [The author: Arkebe Oqubay]
(ii) Financing industrial development in Korea and implications for Africa. It is not surprising that many countries in Africa at low-income stages have had trade deficits for many years. That is basically due to weak export capabilities, compared with ever-strong demand for imported goods in African economies. Korea also went through the three decades of trade deficits, until it recorded its first trade surplus in 1986; since then, it has maintained a trade surplus. Korea, in the early 1960s, had a 1 to 9 ratio of exports to imports, which is much worse than a typical country in Africa. Thus, Korea had a huge savings gap with the domestic savings only at 9% of GDP and gross investment at 15% of GDP, thus relying on foreign borrowing to fill the gap. This illustrates why exports are so important and are the critical binding constraints for growth for an economy at lower or middle-income stages. Given that getting out of a trade deficit may take several decades, a country at a lower-income stage may find it necessary to take transitory measures to manage the balance of payments. In looking for specific policy tools, the past experience in Korea could be useful. [The author: Keun Lee]
(iii) Building effective clusters and industrial parks. An essential element of the fiscal decentralization in China is that career competition between regional officials at the same level is based on fiscal performance, which effectively mitigates the problem of incentive misalignment. However, the incentive design used in China may not apply to other countries. Due to differences in institutions, the forms of incentive mechanisms are likely to vary across countries and over time. In a country with strong state capacity like China, it is not an issue to earmark a certain area as an industrial park and provide it with favorable policies and infrastructure. But in some democratic countries, it may not be legitimate to offer special treatment to certain locations. The industrial park concept does not necessarily transmit well to all developing countries. It is necessary to bear in mind the limitations that apply to using the creation of industrial parks as a policy instrument to foster industrial development. [The author: Xiaobo Zhang]
India’s lacklustre approach towards international trade is hurting its foreign and economic interests (The Wire)
A strategically crafted foreign policy can not only benefit from trade and other domestic policies but can also provide critical inputs for them. For instance, India has been trying to regain its diminishing space as a supporter of developing and least developed countries at the multilateral trading system, which is primarily based on our trade and investment relations with Africa. Currently, mineral fuels, pharmaceutical products, non-railway related vehicles, boilers and related products are our key exports to Africa, and collectively comprise close to half of our exports to this region. A decline of around 11% was registered in the last fiscal. An in-depth diagnostic of reasons with a clear action agenda for boosting exports is needed. Without significant trade interests, we might not be in a position to forge a strong partnership with African countries, denying us an opportunity to act assertively in multilateral negotiations. Therefore, the political establishment will need to realise that trade policy is not just about trade. It should recognise linkages between domestic policy, trade policy and foreign policy, and ensure that the policies reinforce other. [Pradeep S. Mehta is Secretary General, CUTS International; Bipul Chatterjee and Amol Kulkarni of CUTS also contributed to this article.] [Deepak Nayyar: A strong rupee hurts the Indian economy]
Asean: The next 50 years (Manila Times)
As the new anxiety over globalization and multilateralism takes hold, the impact on the region can’t be ignored. Free trade will be curtailed, foreign investment will shrink, and most of Asean’s traditional markets will look inwards and turn away from foreign imports. The region will have to rely on itself. This is why expanded regional economic integration with larger nearby economies is crucial to our success and survival. The Regional Comprehensive Economic Partnership with six trading partners: China, Japan, South Korea, India, Australia and New Zealand must be concluded urgently. We are talking about turning existing bilateral trade agreements with these countries into one trading bloc. As protectionist tendencies grow in distant markets, it is only prudent to consolidate an economic community closer to home. There is no room for delay or procrastination, it is a matter of survival for the entire region. There is also an urgent need for solidarity in Asean’s dealing with external partners. Whether in strategic and security matters, trade negotiations or global issues, Asean needs a common and solid front more than ever. [The auhor Surin Pitsuwan is a former Secretary-General of Asean]
Emeka Anyaoku: Re-establishing Nigeria’s leadership position in the world (ThisDay)
Nigeria should also endeavour to reclaim its place and influence in the West Africa sub-region. ECOWAS is critical to Nigeria for economic and security reasons, and also because it is the country’s primary sphere of influence. And Nigeria must work to ensure that ECOWAS dwells more actively on inter-state infrastructural development, especially in the areas of transport and power in order to promote greater cohesion and integration of the sub-region. So also should Nigeria similarly, for security and economic reasons, pay greater attention to promoting cooperation in its other sub-regional associations namely, the Gulf of Guinea Commission and the River Niger and Lake Chad Basin Commissions. [The author was Commonwealth Secretary-General, 1990-2000]
Intra-regional fish trade in Africa: AU-IBAR communiqué
The objective of the meeting (2-4 August, Abuja) was to present the research, development findings and outputs by studies under the Fisheries Governance and Fish Trade Projects and to identify policy entry points that will enhance intra-regional trade of fish and fish products for improved and significant contributions to the Malabo goals of tripling regional trade by 2025. The workshop achieved the following outcomes: (i) Lessons and best practices shared for strengthening inter and intra-regional fish trade in Africa; (ii) Priority actions identified for strengthening inter and intra-regional fish trade in the continent; (iii) Priority entry points for harmonization of intra-regional fish trade policies identified. Participants adopted the following recommendations:
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CFTA Negotiations – the end game
At their last summit this July, the African presidents reiterated their determination to launch the Continental Free Trade Area (CFTA) this year, that is, by December 2017. They directed that negotiations including on goods and services be completed this year.
The apparent grounds for this optimism are that modalities for negotiating goods and services have so far been agreed and adopted, and a draft text for the CFTA Agreement has been produced and put on the table for negotiation. With these modalities and draft text, some believe the job is more or less done, and two or three negotiation sessions before the end of this year will do, and the CFTA can be launched.
Stakes are high. If the CFTA is not launched this year, Africa will be the laughing stock of the world, for failing to meet the deadline of 2017 set in 2012. There is a sense of pride and duty. This self-imposed burden is quite heavy but not insurmountable. The challenge seems to be that pride and duty require some brains and strategy as well. It is this combination that can deliver the CFTA this year.
For starters, a CFTA must have an Agreement covering the essential elements, namely, establishment, principles and objectives, non-discrimination, tariff elimination, customs and trade facilitation, standards, transparency and notification, institutions, disputes, and the usual final provisions. Outstanding work if any, details of trade remedies for instance, can be put into a built-in agenda for continuing work afterwards. It is in this sense possible to have a CFTA Agreement. A good strategy for quick progress is to construct the CFTA Agreement using the provisions already available in the Agreements of the African regional economic communities (RECs), which African countries have already been using over the years. A provision-by-provision comparison in a matrix would assist, to graphically demonstrate that the text or at least the essence is the same, or at least a clear and convincing presentation on sources of, and process of producing, the draft text for the CFTA Agreement.
To supplement this, instruments on customs and trade facilitation, and health and technical standards can be constructed on good practices from the World Customs Organisation and international standards setting bodies, respectively, as African administrations and regulatory agencies, as well as the RECs, happily use instruments and documents from these organisations.
There are areas of difference among RECs; settlement of trade disputes, for instance. This is a critical area where rules are required for peaceful and speedy settlement, so trade is not unnecessarily impeded due to confusion, lack of clarity, or drawn out procedures. A simple provision for consultations and binding arbitration can start off the Agreement, but with a built-in agenda for elaborating a comprehensive trade-dedicated court or panel process that is suitable for Africa and eschews the pitfalls of the World Trade Organisation dispute settlement system.
Best practices from the RECs demonstrate that an easy digital system for addressing non-tariff barriers can be handy and appropriate for trade disputes. The COMESA-EAC-SADC Tripartite Online System for Reporting Monitoring and Eliminating Non-Tariff Barriers (available at www.tradebarriers.org) is a best practice par excellence. Trade problems can be reported through the system using internet or SMS on mobile phones. Since 2008 when the system was established, 581 NTBs have been reported, out of which 506 have been eliminated using the system, leaving 75 currently outstanding. In COMESA, this system is supplemented with bilateral consultations and a standing agenda item on NTBs at the technical and ministerial level meetings. Out of 204 NTBs reported among COMESA countries since 2008, only five remain unresolved today, showing a very high level of success. The EAC supplements the online tripartite system with its own action plan called a time-bound matrix for eliminating specific reported NTBs. And a few years ago, the EAC Parliament adopted a law providing for penalties for imposing NTBs.
On trade disputes then, the CFTA could build on the tripartite online system, putting it together with the ECOWAS one, to agree on and operationalise a continent-wide digital system, to start off with. And in the meantime, the African Union Trade Ministers’ meetings can regularly look into any matters requiring attention.
A free trade area must have rules of origin, that is, criteria for sorting out which products are actually produced within the region and should therefore be given FTA treatment such as not paying customs duties. It is feasible to have CFTA rules of origin by December 2017 if the negotiations take the approach of across-the-board thresholds or general rules for conferring origin. In COMESA, EAC, West Africa and Central Africa, for instance, any good can qualify for FTA treatment if the value of inputs from within the region reaches a set percentage of the total value of the good – 35 percent in COMESA; or the value of inputs from outside the region does not exceed a set percentage of the total value of the good – 60 percent in COMESA. Goods considered wholly obtained are fairly standard, namely agricultural products and minerals in chapters 1 to 25 of the Harmonised System for Commodity Coding and Description. It is possible as well for a good to qualify for FTA treatment if processing it results in a change in its classification at the heading or sub-heading level in the Tariff Book. In COMESA, there is another criterion for qualifying for FTA treatment – if a good has been put on the agreed list of goods of particular economic importance, then the value addition required is only 25 percent.
However, if the rules of origin negotiations take the approach of producing product-specific or list rules, that is, specifying a working and processing required for every single product for it to qualify for FTA treatment, it will definitely be impossible to have rules of origin for the CFTA by December 2017 or even December 2018. The sheer scale of the task, covering more than 5000 products, is monumental and unmanageable, but can be done over an extended period of time. In the tripartite negotiations, after five years including a year or so of trying to agree on the approach, only about 47 percent to total tariff lines or products have been done. In COMESA, it took 11 years to complete the change in tariff heading exercise, but fortunately trade could happen under the other criteria for qualifying for FTA treatment, such as wholly obtained, material content or value addition.
A decision on approach to rules of origin is therefore fundamental and Africa would be best advised to have flexible rules. There is a substantial body of analysis on restrictiveness of different systems of rules of origin.
A related issue is that there have been cases where rules of origin for intra-Africa trade have been more restrictive than those for trade with third countries, for instance those under AGOA or trade schemes with the European Union. This very strange lapse is to be watched and avoided.
Another related matter is that provisions on administration of rules of origin have over the years become fairly standard in the context of facilitating trade and customs. Digitisation of customs operations including the certificate of origin itself, deserve some close attention.
Finally, the CFTA will require every African country to eliminate customs duties on at least 90 percent of its total products lines, leaving out 10 percent. On the 10 percent, every country may designate some as sensitive, meaning that customs duties can be only reduced and over a longer period of time; and may designate others as excluded products, on which no tariff reductions are expected.
It is possible to have tariff schedules for the CFTA by December 2017 at least from a critical and sufficient number of countries, especially those that have embedded trade liberalisation and export strategies in their national development programs, if the tariff negotiations are done in plenary meetings in terms of every country presenting its tariff schedule for comment, requests for improvement, and finalisation as an initial package or outcome from this first round of negotiations, subject to subsequent regular rounds in future.
However, if tariff negotiations are conducted on a bilateral basis, it will definitely be impossible to complete the tariff negotiations by December 2017 or even December 2018. The permutations or groups of bilateral negotiations to be conducted among close to 55 countries or customs territories will be multifarious and overwhelming.
A much better approach would be to adopt a simple continent-wide schedule of tariff elimination, setting out percentages for annual reductions over a five-year period. Each country would then be required to start undertaking annual reductions to reach zero percent duty on 90 percent of its tariff lines. There would then be annual reporting and assessment of the reductions. Countries with sensitive products would produce an additional tariff reduction schedule covering those products. For excluded products, anti-concentration clauses would set out the criteria, using which countries would be required to notify their schedules of excluded products, subject to consultations and regular review.
What would even be better is if those countries in REC FTAs maintained that FTA treatment among themselves, in the context of the CFTA; and then extended that FTA treatment to the rest of Africa but on condition of reciprocity in order to avoid free riding.
Actual intra-Africa trade happens on only a few tariff lines. The idea here is to focus on these tariff lines and get a commercially meaningful CFTA. Less attention for the time being need be given to idle tariff lines, many of which due to geographical or cultural or economic conditions might never have products traded among African countries in the foreseeable future.
In addition, tariff lines with applied MFN rates currently at zero percent could be harvested fairly quickly if agreed upfront as a principle, on the understanding that applied tariff rates are the starting point for elimination and reduction in FTAs, according to some WTO rules.
If in the next two or three rounds of negotiations, good progress is made in these three areas along the lines suggested above, then the CFTA can be launched this year 2017. The three areas are: the text for the Agreement including a regime on non-tariff barriers, rules of origin, and tariff schedules for opening Africa’s market. Then provision can be made for transition arrangements and a built-in agenda to take care of outstanding work.
Dr Francis Mangeni is Director of Trade, Customs and Monetary Affairs at the Common Market for Eastern and Southern Africa (COMESA). The views expressed in this article are those of the author and do not necessarily reflect the views of tralac.
This article follows others by the same author:
Click here to view tralac’s collection of regional legal texts and negotiating documents.
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37th SADC Summit: Harnessing public-private partnerships
The 37th SADC Summit of Heads of State and Government to be held in Pretoria, South Africa will deliberate on a wide range of issues including exploring ways of harnessing the public and the private sector to work together to promote sustainable economic development in the region.
The theme for the SADC Summit set for 9-20 August is “Partnering with the private sector in developing industry and regional value-chains”.
The theme continues the trajectory of the previous three summits, building towards the goal of industrialization and sustainable development.
The 2014 Summit held in Victoria Falls, Zimbabwe focused on economic transformation and sustainable development “through beneficiation and value addition”.
The 2015 Summit hosted by Botswana looked at harnessing industrialization through “Transformation of Natural Endowment and Improved Human Capital,” while the summit held in Ezulwini, the Kingdom of Swaziland in August 2016 paid special attention to promoting industrialization through “Resource Mobilisation for Investment in Sustainable Energy Infrastructure.”
The 37th SADC Summit will focus on how Public-Private Partnerships (PPPs) can be harnessed to drive forward the industrialization agenda of southern Africa.
PPPs are regarded as a viable model for attracting investment for public projects by allowing governments to have more access to additional capital and off-balance sheet financing.
Summit is also expected to consider a report by the Secretariat on the development of an implementation plan and roadmap on the conclusions of the Strategic Ministerial Retreat on the “SADC We Want” that was held in Swaziland in March.
Among other things, the retreat directed the Secretariat to develop an effective mechanism for tracking progress in the implementation of regional programmes as well as compliance to protocols and legal instruments.
It also called on the SADC Secretariat to prioritise programmes by focusing on infrastructure development, industrialisation and market integration, with peace and security as a prerequisite for economic development.
In so doing, it recommended that the prioritization of regional programmes should observe the principles of subsidiarity and additionality. It was agreed that the Secretariat should focus on coordination of programmes while Member States should focus on implementation.
Summit is also expected to consider progress on the development of the SADC Resource Mobilisation Framework (Alternative Sources of Funding SADC Regional Programmes).
The framework is expected to explore alternative sources of funding to determine how fiscal space could be created to enable SADC Member States to finance regional programmes, projects and activities.
Agriculture and food security remains a top priority for the SADC region, and the summit is expected to focus on measures to improve food security in the region, in particular how to strengthen implementation of the Regional Agricultural Policy that aims to improve production, productivity, competitiveness and trade in the agricultural sector, natural resources and environment.
Generally, the 2017/18 food security situation across the region is expected to improve significantly as a result of better rainfall experienced during the 2016/17 growing season, except for the western and north eastern parts where there was below normal rainfall.
Preliminary estimates and projections indicate an increase of cereal production in most Member States during the 2016/17 farming season.
Another topical issue expected to be discussed by summit will be the proposed new structure of the SADC Secretariat.
Other key issues for discussion by the summit is the general political situation in the region.
The political and security situation in the region has remained peaceful and stable as Member States continued to adhere to democratic values and practices by holding regular national elections.
There have, however, been some challenges in the Kingdom of Lesotho and continued insecurity in the eastern part of the Democratic Republic of Congo.
At the summit, South African President Jacob Zuma will assume the rotating SADC chair from King Mswati III of Swaziland.
Prior to the SADC Summit, there will be meetings of senior officials, followed by the Council of Ministers and a Double Troika meeting on 18 August.
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SADC for increased intra-regional and international trade
As part of the implementation of the SADC pdf Industrialisation Strategy and Roadmap 2015-2063 (2.34 MB) the SADC Secretariat says it is working towards increasing intra-SADC regional and international trade to help in expanding Gross Domestic Products, creating more employment opportunities and ultimately, reducing poverty in the Member States.
The SADC Secretariat’s Acting Director of Industrial Development and Trade, Dr Lomkhosi Mkhonta-Gama and Acting Director of Finance, Investment and Customs, Mr Sadwick Mtonakutha said on Friday, 11 August 2017 during the joint media briefing which took place at OR Tambo Building, Department of International Relations and Cooperation (DIRCO).
Dr Mkhonta-Gama noted that intra-SADC trade is low at 15-17%, saying as one way of increasing trade within the region, the SADC Secretariat is facilitating the development of regional value chains, in which Member States will trade on products or services that are at various stages of the value chain.
On the international markets, Dr Mkhonta-Gama cited the signing of the Economic Partnership Agreement (EPA) in June 2016 between the European Union and six SADC Member States namely; Botswana, Lesotho, Mozambique, Namibia, Swaziland and South Africa, as an important milestone towards opening up European market for exports originating from SADC Member States.
Dr Mkhonta-Gama emphasized the need for quality products and services that meet international standards so that they can be competitive on the global market.
On his part, Mr Mtonakutha said in order to increase trade both at regional and international levels, the Secretariat mandate entails enhancing SADC competitiveness in industrial and other productive activities for effective participation in the global economy.
He said one of focus areas of the Secretariat is to ensure market integration of the SADC region through the establishment of the SADC free trade area, the SADC Customs Union and the SADC Common Market.
The two Directorates of Industrial Development and Trade and of Finance, Investment and Customs collectively aim to facilitate competitive and diversified industrial development; trade and financial liberalization and also increase investment for deeper regional integration; and poverty eradication in the region.
Related tralac Discussion: Intra-SADC trade remains limited: How can it be boosted?
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Assessing the status and accelerating the implementation of the AU decisions on financing of the Union
African Union Finance Ministers met from 7-9 August 2017 to accelerate implementation of the decisions of the Assembly of Heads of States and Government in Johannesburg (2015), Kigali (2016) and Addis Ababa (2107) to ensure the Union’s financial autonomy by 2020. They committed to the following road map as articulated in the following communiqué.
Communiqué of the Meeting of African Union Finance Ministers
We, Finance Ministers of the African Union Member States, met in plenary today Wednesday August 9th in Addis Ababa, Ethiopia, with the aim of assessing the status and accelerating the implementation of the decisions of the Assembly of Heads of States and Government in Johannesburg (2015) and Kigali (2016) and Addis Ababa (2017) to ensure progressive financial autonomy of the Union.
We recalled that the Johannesburg 2015 Decision was that Member States would assume responsibility for 100% of the operating budget, 75% of the program budget, and 25% of the peace support operations budget, and strengthened budget oversight of Union funds.
We fully understood the importance of our meeting in the light of the continental and global economic developments and agreed on the urgency of accelerating the implementation of the above decisions.
We reaffirmed that meeting the financing targets and timelines established by the African Union in 2015, was a strategic imperative for Africa. We fully ascribed to the position that, in the same way that individual Member States were aspiring to lower external dependence, our Continental Organization must move in the same direction of reducing its dependence.
We deliberated and agreed on how to faithfully, effectively and speedily implement the three Assembly Decisions while bearing in mind the varying national legislative procedures, constitutional obligations, regional and international trade agreements on the one hand, and the differences in structure, nature and levels of economies on the other hand.
We have agreed to keep under review the mechanisms to consolidate the financial management of the Union to ensure rigor in priority setting, budget choices, and division of labor, accountability, transparency and value for money. In this respect, we will agree on a set of ‘golden rules’ to guide the budget of the Commissioner and its Organs.
We have taken note of the expansion of the F10 to the Kingdom of Morocco and the Federal Republic of Nigeria, following the Decision of the 29th ordinary session of the conference of Heads of States and governments held in Addis Ababa on 3rd July 2017, as well as the request from the Republic of Cameroon to be part of the F10, as a result of which F10 will be referred to in the following paragraphs as the “F10+”.
To this effect we have agreed on the processes that will enable our full engagement, through the F10, in the entire budget process of our Union, taking into account the role of existing Policy Organs with budget oversight functions existing.
We have put forward a set of proposals that should inform the forthcoming revision of the Scale of Assessment in line with the principles of equitable burden sharing, ability to pay, solidarity, equity, ownership and sustainability;
We proposed that a new and more robust sanctions and incentives regime be adopted by the forthcoming January 2018 AU Assembly of Heads of State and Government in order to encourage Member States to effectively comply and pay their contributions on time.
We welcomed the F10’s recommendation that after funding the budget of the African Union and the Peace Fund, any balance of the proceeds from the 0.2% levy on eligible imports be retained by Member States for their own development projects.
We expressed our sincere thanks to the Committee of Ten (F10) and their experts for the work done so far and instruct the Commission, in the context of the AU Institutional Reform process, to facilitate their mandate, in particular, deepening and consolidating the work around the budget, financial reforms and oversight.
We commend the AU High Representative on AU Financing the Union and the Peace Fund Dr. Donald Kaberuka for his tireless efforts and ask him to further pursue his support to Member States as well as advocacy at the continental and global level for both the Peace Fund and the overall financing of the Union. We request the AU Commission to provide all support necessary for this purpose.
We propose that the number of F10+ members, to be expanded to 15, and the AU Commission, through its Reform Implementation Unit, to take forward these outcomes and keep us regularly briefed on a bi-annual basis and this prior to Ordinary sessions of the AU Assembly
We reaffirmed our commitment to working closely with the AU Commission, the Permanent Representatives Committee and the Executive Council in the implementation of the decisions of the Assembly.
We are determined to make progress on this matter and have decided to reconvene to review progress immediately before the January 2018 AU Assembly of Heads of States and Government.
We hereby, express our gratitude to the AU Commission for its excellent support in the facilitation of this meeting, as well as to the government of the Federal Democratic Republic of Ethiopia for her warm welcome and fraternity.
Done in Addis Ababa, 9 August 2017
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