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30th Ordinary Session of the AU Executive Council: Challenges and opportunities to foster transformative and inclusive development in Africa
The African Union (AU) Executive Council has emphasised the need for Africa to boost investment in Africa’s youth by promoting transformative and inclusive development agendas aimed at recognising the efforts by the youth in entrepreneurship and innovation.
This was stated during the opening of the 30th Ordinary Session of the African Union Executive Council on 25 January 2017, at the AU Headquarters, Addis Ababa, Ethiopia, under the theme: “Harnessing the Demographic Dividend through Investments in Youth”.
The opening ceremony was attended by a high level gathering that included: H.E. Dr Nkosazana Dlamini-Zuma AUC Chairperson; AU Ministers of Foreign Affairs; AU Commissioners; Dr. Abdullah Hamok, acting Executive Secretary of the UN Economic Commission for Africa (ECA); officials and invited guests.
Addressing the distinguished delegates at the opening ceremony, the Chairperson of the AU Commission, H.E. Dr. Nkosazana Dlamini-Zuma said that for Africa to succeed in its integrated and inclusive development agenda “it requires that we revive and strengthen the spirit of Pan Africanism, unity and solidarity to successfully steer our way towards agenda 2063”.
To meet the 1st target in Agenda 2063 of commencing the Continental Free Trade Area by the end of 2017, Dr. Dlamini-Zuma stressed on the need to unlock the potential, the energy, the creativity and the talent of Africa’s young men and women. She said that this can be achieved only through the African Skills revolution, by creating jobs and economic opportunities, through diversification, agricultural modernisation and industrialisation so that Africa’s youth can be the drivers of agenda 2063.
Dr. Dlamini-Zuma concluded her remarks by saying “whatever we do at this summit, we must ensure that we preserve the precious and principled unity of this continent and our union”.
Hon Minister of Foreign Affairs of The Republic of Chad and Chair of the Executive Council Mr. Moussa Faki Mahamat in his opening remarks noted that the 30th Executive council is being held on the back drop of significant changes happening at the African Union commission such as the AU reforms requested by Heads of States in Kigali and the pending AU elections which will be important for the organisation moving forward in meeting its obligations to the citizens of Africa.
The Minister commended the Excellent leadership of the AUC Chairperson and her Commission on championing Africa’s development agenda through the promotion of Agenda 2063. He ended his speech by officially declaring the 30th Executive Council open.
Dr. Abdullah Hamok, Acting Executive Secretary of the UN Economic Commission for Africa (UNECA), in his opening remarks noted that unlike other regions of the world, the proportion of youth in Africa’s total population was rising and this growth presented great opportunities as relates to the continent’s demographic dividend as well as challenges derived from the risks associated with soaring rates of youth unemployment.
The Executive Council meeting is the second of three statutory meetings to be held under the on-going 28th Summit of the African Union, holding from 22-31 January 2017. The first meeting was that of the Permanent Representatives Committee which was held from 22 to 24 January. The final meeting of the summit will be that of the Heads of State and Government to take place from 30-31 January.
For three days, the Ministers of External Affairs and other ministers or authorities designated by the governments of AU Member States will deliberate on the different reports of the Specialized Technical Committee (STCs) ministerial meetings organised by the AU Commission during the last six months. They will also adopt the report of the Permanent Representatives Committee.
The Executive Council will prepare the agenda of the AU Summit with appropriate recommendations for consideration by the Heads of State scheduled to take place from 30-31 January 2017.
The meeting of the Executive Council was officially closed on Thursday 26th January 2017.
Harnessing Demographic Dividend through Investment in the Youth
Address by Dr. Abdalla Hamdok, Executive Secretary a.i. United Nations Economic Commission for Africa (UNECA), to the AU Executive Council
On behalf of the United Nations Economic Commission for Africa I am pleased to address the AU Executive Council in its January 2017 session.
As this is my first time addressing this Ordinary Session as the Acting Executive Secretary, I am bringing the good wishes from ECA’s staff and those from the UN system in Ethiopia in general.
At ECA we strongly believe in our very special partnership with the African Union and its member states and remain focused to keep delivering on our common vision to build a prosperous and developed Africa.
The theme of this year’s Summit on “Harnessing the Demographic Dividend through Investments in Youth” is indeed relevant and timely and is at the heart of the political, economic and social issues shaping the debate on the continent’s development. Unlike any other time in recent history, Africa and the whole world are confronted today with critical emerging and ongoing developments that are likely to shape the future of humanity for many years to come.
In this context, I wish to focus my address on FIVE key messages that would present major challenges as well as opportunities for the continent to foster transformative and inclusive development. These messages relate to global megatrends; the imperative of promoting good governance, peace and security; the theme of the AU Assembly; development policy framework needed for the Continent to accelerate investment in its youth and promote transformative and inclusive development; and regional cooperation and policy coordination for Africa’s development in a fast changing world.
There are several megatrends worth highlighting in today’s changing world. I would like to briefly mention three of them which I believe will have important implications for Africa’s development and structural transformation agenda.
First, fractured and fragmented globalization. Arguably, the changing face of globalization represents the most important megatrend today. Globalization has been gradually shifting from a reality of interdependence to a realm of coexistence. The outcome of the US elections and Brexit are two examples of dissenting voices against globalization as we know it. Whereas in the past, there was broader consensus and acceptance of interdependency and the need to share global responsibilities, recent developments point to a disconnect with the global status quo. As a result of this trend, we could be witnessing a slowing or fracturing of globalization. From a political economy perspective, we may experience a loss of momentum towards negotiating development- friendly trade agreements. In part, this is manifested in the deadlock of multilateral trade negotiations in the World Trade Organization. Currently a compromise appears nearly impossible over developed countries’ agricultural subsidies.
The second major megatrend relates to global partnerships for sustainable development. The fragmented and selective nature of globalization also has implications for existing global partnerships, notably Agenda 2030 and Addis Ababa Action Agenda as well as some of the strategic partnerships the African Union has with the rest of the world, including NEPAD. The Sustainable Development Goals, which were adopted by the United Nations in September 2015 and which seek to end poverty, protect the planet and ensure prosperity for all by 2030, contain transformational aspirations which will require transformational financing. Indeed, it is estimated that implementation of the SGDs will require $3 trillion a year. For Africa alone, financing needs are estimated at US$638 billion a year. It is clear that, Africa will need substantial resources to achieve its development objectives at a time when the global development finance landscape is shifting from a model centered on ODA to a framework that relies more heavily on domestic resource mobilization.
The third megatrend I wish to highlight relates to global growth prospects which remain modest. Whereas during the commodity super cycle we experienced global output riding on the back of trade growth and opportunities for business abounded, world growth prospects today remain modest at 2.7 for 2017, with trade and investment opportunities contracting both in the developed and developing world. Global outlook remains uncertain, especially as growth fundamentals remain weak and commodity prices are expected to continue stalling.
It is time for us to pause and ask ourselves: what does all the talk about megatrends mean for Africa? Given the prevalence of these megatrends, the continent needs to look inward for opportunities to boost trade, develop regional value chains and drive structural transformation. More than ever before, the rationale for boosting intra-African trade and investment gains relevance given the prospects of fragmented globalization, where global partnerships are more selective and report less financing for development opportunities. Therefore, ECA stands ready to work with you in addressing these challenges.
Africa also needs to look inward and focus on governance, democracy, peace and security as a prerequisite for its development. There is near consensus around the importance of governance, democracy, peace and security for development, as well as the potential of development to enhance both governance, democracy peace and security.
It is therefore not by chance that issues of governance, democracy, peace and security rank high in Agenda 2063 and Agenda 2030 with clear linkages to development. The two agendas recognize that the achievement of structural transformation and sustainable development is simply not possible in the absence of well governed, peaceful and secure environments. It is therefore arguable that for the foreseeable future, the drivers of conflict and violence in Africa will include demographic dynamics and the youth bulge, high unemployment, lack of equal opportunities, urban-rural divide, poverty, inequality and bad governance.
The third area of focus of my address is the theme of our Summit “Harnessing the Demographic Dividend through Investments in Youth”.
During the course of demographic dividend there are four mechanisms through which benefits are derived, these are: increased labor supply; increased savings as a result of low dependency rate; increasing domestic demand due to higher GDP per capita; and human capital development which all require specific investments in education and skills development; health and well-being, including Family planning
Africa’s employment challenge and inequalities are inextricably linked to demographic factors. The continent has the highest rate of population growth of more than 2.5% annually and has the fastest growing working age population. Between 1960 and 2010, Africa’s working-age population (15-64 years) grew more than four times, and will continue to increase over the next 40 years.
Leveraging Africa’s demographic dividend for future growth and prosperity has emerged as a critical challenge. Africa today is the youngest region of the world. The top 10 countries in the world with the youngest populations are all in Africa. By 2050, Africa will be home to 38 of the 40 youngest countries. Unlike other regions of the world, the proportion of youth in Africa’s total population is rising. While this growth provides the opportunity for a demographic dividend, it also presents the risk of soaring rates of youth unemployment.
The pace, depth and scope of any society’s development depends on how well its youth are nurtured, deployed and utilized. Policies for social, political and economic development need to recognize the importance of young people especially in promoting social progress and maximizing economic performance. The youth bulge can be a huge opportunity for economic and social transformation. Alternatively, it can be a source of instability if countries fail to harness their potential through design and implementation of appropriate policies that unlock the demographic dividend and explore new economic opportunities.
The fourth major message speaks to harnessing this dividend as depending first and foremost on the ability of African countries to articulate and implement long-term development plans championed by visionary leadership. Extensive evidence-based research undertaken by ECA since the 2007/2008 economic and financial crises, has repeatedly called on African countries to design and implement long-term development plans that focus on promoting structural transformation and inclusive development through industrialization and value addition. While the Continent is steadily though slowly diversifying its economies, the structural transformation process as articulated in Agenda 2063 and Agenda 2030 has to be accelerated. This hinges on the capacity of the State to identify opportunities and address challenges including infrastructure and human capital deficits.
East Asia provides some of the most compelling evidence to date of harnessing demographic dividend in the context of visionary long-term development strategies.
Their demographic dividend occurred over 5-15 years in the 1950s and 1960s, a shorter time period than anywhere in the world before. It has been argued that, the demographic dividend played a major role in the economic miracles of the East Asian Tigers and accounts for between one forth and two fifths of the miracle.
Therefore, getting the fundamental rights is the first step to harnessing Africa’s demographic dividend and must be supported by targeted policy actions that foster investment in the youth. There is indeed a strategic urgency to put in place policies which take advantage of the demographic dividend. This urgency stems from the relatively small window of opportunity countries have to plan for demographic dividend when many of their population are still young, prior to entering the workforce.
This is why UNECA welcomes the theme of the Summit and we are pleased to have contributed actively with NEPAD, AfDB and UNFPA to supporting the Commission in the preparation of the AU Roadmap. We commit to spare no efforts in the implementation of the theme of the year.
The importance of regional cooperation and policy coordination for Africa’s development cannot be overemphasized and this brings me to my fifth and final message. In this regard, the African Union remains a strategic ally and a trusted partner of the United Nations. The Regional Coordination Mechanism (RCM) has been further revamped to become an important and effective tool for cooperation between the UN and the AU and for coordination of UN activities in support of the AU at the regional level. The mechanism is being used by the UN to support Africa’s development priorities.
There is evidence that Africa, with the support of the UN and other partners, continue to govern itself better in keeping with the aspirations of NEPAD and the cherished goals of the African Peer Review Mechanism (APRM).
Since the signing of the UN-AU Cooperation Framework for the Ten-Year Capacity Building Programme for the African Union and with its successor, the Programme for Africa’s Integration and Development Agenda (PAIDA), the UN agencies and organizations have increased their support to the African Union. Working together in addressing the challenges and tapping on the opportunities to promote transformative and inclusive development is the ultimate guarantor to fostering peace and security and harnessing demographic dividend in Africa.
In this critical and transitional time both at the United Nations, with the commencement of duty of the new Secretary General, Mr. Antonio Guterres and at the African Union Commission which will have a new leadership, anytime from now, prospects seem to be great despite the challenging economic and fiscal environment.
More than ever, ECA needs to be further empowered with additional resources to support the aspirations and quests of African member states with regards to their economic development. Next year 2018 ECA will be 60 years old and personally feel horned to have worked with the last three Executive Secretaries, K.Y. Amoako, Abdoulie Janneh, and Carlos Lopes. I would like to pay tribute to their excellent contribution to Africa’s development challenges.
I would also like to commend Dr. Nkosazana Dlamini-Zuma, Chairperson of the African Union Commission and Mr. Erastus Mwencha, Deputy Chair Person and the Commissioners for their leadership, commitment and also for the excellent relationship and cooperation we had between our two institutions.
The youth potential represents both our greatest hope and our most vexing challenge. Africa’s children can scale the ladder of hope based on decisions we take. Our yardstick for success will be adequately measured by future generations if our words are weighted against our action to foster transformative and inclusive development.
I thank you for your kind attention.
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G-20 Agriculture Ministers agree to improve food, water sustainability
Against a backdrop of growing international tension over trade, agriculture ministers from the G-20 coalition of major advanced and emerging economies agreed to improve the sustainability of water use in farming when they met in Berlin on Sunday, 22 January.
“We commit to approaches that improve sustainability of water use in food and agricultural production while ensuring food security and nutrition in accordance with our multilateral trade commitments,” said an action plan released by ministers in conjunction with a political declaration.
The ministers also said they would continue implementing the 2030 Agenda for Sustainable Development, including the seventeen Sustainable Development Goals (SDGs) that were adopted by the United Nations in New York in 2015, and would push ahead with implementation of the Paris Agreement on climate change.
A statement from German Agriculture Minister Christian Schmidt underscored that agriculture lays the foundation for peace and security. “That makes agriculture part of global security policy,” said Schmidt, who hosted the event as part of Germany’s G-20 presidency.
The G-20 ministerial took place in the margins of the annual Global Forum for Food and Agriculture, which saw agriculture ministers and senior officials from 83 countries meet in Berlin and issue a separate declaration.
Sources told Bridges that as the conference came immediately following the inauguration of new US President Donald Trump, Washington was represented at the event by a senior civil servant rather than by Sonny Perdue, the recently nominated US Secretary of Agriculture. Perdue has not yet been confirmed by the Senate.
What role for trade?
The ministers agreed that agricultural trade and investment could contribute towards sustainable development and food security.
“We recognise that strengthening agricultural trade and promoting responsible agricultural investment are important for progress towards sustainable agricultural development, food security and nutrition, and inclusive economic growth,” the declaration said.
However, sources told Bridges that disagreement over agriculture talks at the WTO meant that the G-20 was reluctant to go into any depth on trade.
In their final communique, G-20 ministers committed to working “constructively with all WTO members with the objective of achieving progress in agricultural negotiations” by the global trade body’s next ministerial conference. This gathering is scheduled to be held in Buenos Aires, Argentina, in December 2017.
At the WTO, agricultural exporting nations have been joined by members of the African and Least Developed Country groups in calling for the ministerial to agree to discipline policies that distort markets for food and agriculture, such as subsidies for farming and fisheries.
However, the US and China remain at loggerheads over how best to address farm subsidies, with each arguing that the other needs to commit to taking more meaningful action.
Combating resistance to antibiotics
G-20 ministers also agreed to take steps to tackle the growth of antimicrobial resistance, for example by analysing the risks associated with the use of antibiotics as growth promoters for livestock.
Antimicrobial resistance prevents medicines such as antibiotics from treating diseases effectively, as microorganisms evolve when they are exposed to the drugs used to treat them – making it harder to protect humans and animals from harmful illnesses.
Talks on the issue again brought forward latent trade tensions, with agricultural exporting countries in Latin America expressing caution about the proposed new commitments. Sources said that EU members had favoured strong new language on the topic.
Ministers eventually agreed on steps such as requiring treatment with antibiotics to be prescribed by veterinarians or other people who had first received appropriate training.
Sources told Bridges that the sensitivity of the issue had meant talks had progressed in successive spurts, with officials frequently having to call their capitals to consult chief veterinary officers on the proposals that were being made.
Information technology in farming
The G-20 ministers’ action plan also instructs the group’s agriculture deputies to consider recommendations on information and communication technology (ICT) that were put forward in a report by the United Nations Food and Agriculture Organization (FAO), with inputs from other international agencies.
When G-20 agriculture ministers met last June in Xi’an, China, they stepped back from earlier proposals to launch a new platform on information and communications technology.
“We will strengthen our efforts to improve the ICT skills of farmers and farm workers via training, education, and agricultural extension services,” said the action plan, which singled out in particular the needs of smallholders, women, and youth.
Taking stock of actions
G-20 agriculture ministers also agreed they would take stock of the actions they had launched since France held the group’s presidency in 2011. With food prices unusually high and volatile at the time, the French G-20 presidency saw member countries agree to a swathe of initiatives of food security, ranging from measures to improve the transparency of market information in agriculture through to agreements on export restrictions affecting humanitarian food aid.
Since then, while some G-20 hosts have moved to launch new initiatives or build consensus around particular ideas, others decided not to convene meetings of agriculture ministers at all during their presidency. At the Xi’an ministerial, the G-20 agreed for the first time that the group’s agriculture ministers should meet regularly.
With the stock-taking exercise due to be carried out under the upcoming Argentine G-20 presidency, the Berlin declaration instructed the ministers’ deputies to prepare terms of reference for the initiative beforehand.
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Billions needed to eradicate poverty and hunger – IFAD conference looks for new ways of financing
The world needs to take urgent action to mobilise the estimated US$265 billion a year needed to achieve the first two Sustainable Development Goals to end poverty and hunger by 2030, said Kanayo F. Nwanze, President of the International Fund for Agricultural Development (IFAD) at Wednesday’s opening of a conference focused on finding innovative ways to finance rural development.
“We must be more creative in how we use public resources and how we mobilise financing,” said Nwanze at the event held at the Italian Ministry of Economy and Finance. He added that we need to make it easier for the private sector and philanthropists to invest in rural areas – the places where rates of poverty and hunger are highest.
Pier Carlo Padoan, Italy’s Minister of Economy and Finance, stressed the importance of ensuring all rural people can access financial services so that they can invest in their own development. The majority of rural people work on small farms and it is estimated that there is a $150 billion gap between the financing they need and what is currently available.
“While the state should not intervene directly in rural finance, it should create an enabling environment,” he said. He added that this is a theme that Italy intends to push forward during its G7 presidency this year.
Speakers agreed it cannot be left up to governments alone. In 2015, Official Development Assistance (ODA) was approximately $192 billion and only $9 billion of that was earmarked for agriculture.
The conference comes at a critical time with political changes and humanitarian crises – such as war, migration and natural disasters – reshaping global priorities and potentially diverting money away from development.
“The need is urgent,” said Nwanze. “Despite decades of commitments and considerable effort to end poverty and hunger, nearly 800 million children, women and men still go hungry every day, and an almost equal number live in extreme poverty.”
The majority of these poor and hungry people live in rural areas of developing countries. Investments need to be targeted to transform rural areas into vibrant places that offer all people the opportunity to have decent jobs and lead dignified lives free of poverty and hunger.
Nwanze stressed that the financing needs for development are enormous, but so are the opportunities. “Agri-food is already a $5 trillion sector, and it is growing,” he said. “It holds tremendous promise for the private sector and for producers in developing countries.”
Keynote speaker, Nobel Laureate Professor Eric Maskin, the Adams Professor at Harvard University, said that recent globalisation has led to increased inequality. “It is up to us to make sure globalisation works for everybody,” he concluded.
Over the next two days, the conference “Investing in inclusive rural transformation: innovative approaches to financing” brings together development agencies, governments, philanthropic organisations, the private sector, academia and farmers’ organisations to look at innovative ways to mobilise money and smarter ways to spend it. There will be a focus on sharing knowledge and coordinating action.
The conference is co-organised by IFAD, the Italian Ministry of Economy and Finance, the Brookings Institution and the University of Warwick and will continue from 26-27 January at IFAD Headquarters in Rome.
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Kenya Revenue Authority now mulls regional customs system
Kenya Revenue Authority is mulling a regional customs management platform to curb tax evasion within East African countries. Commissioner General John Njiraini said work had started on a common system to manage taxation of imports would eliminate the loopholes exploited by tax cheats.
Among the inherent weakness commonly abused in the diversion of transit cargo including top-end vehicles destined to the other countries, often with no taxes paid in either Kenya or the intended destination. “The initiative once implemented should have substantial impact in reducing loopholes exploited by unscrupulous traders with intent on evading the payment of their fair share of taxes,” Mr Njiraini said Thursday.
A common system would mean that all imported cargo will be cleared though the same platform by Kenya and the other regional neighbours; Uganda, Tanzania, Rwanda and Burundi. He was speaking during the annual international Customs Day where KRA listed successes drawn from the digitisation of customs operations, including the Integrated Customs Management System that replaces the Simba System later this year.
Mis-declaration
“This new system (iCMS) will have more enhanced features and assist in areas like faster cargo clearance, secure trade chain, easy access to the Customs’ system across various platforms and reduce the cost of doing business,” added the Commissioner General.
Previous measures implemented by the KRA including the Electronic Cargo Tracking System have only reduced the level of diversion of goods, with several cases of the malpractice often reported. A fragmented customs management among the different countries presents an opportunity for mis-declaration of goods imported to the region through the main port of Mombasa. Recent improvements on scanning of all cargo has discovered the scale of tax cheating, specifically for transit cargo declared in the import documents as goods of a much lesser value.
Conflicted needs to encourage cross-border movement of people and goods, while checking on illegal migration and other security concerns presents the single biggest challenge for the revenue agency – which is also responsible for border management.
“Economic prosperity relies on the free movement of goods and people, but if those flows are not monitored and controlled the result will be smuggling, trafficking and illegal immigration and with these, organised crime and terrorism,” KRA said of the need for credible data of cross-border activity.
Commissioner for Customs and Border Control Julius Musyoki said his department was building a data warehouse which would enable officials to have a single view of taxpayers and their respective risk profiles.
KRA also expects to have over 70 per cent of the cargo coming through the sea port to be cleared before the vessel arrive, as part of wider reforms to enhance faster uptake of goods and ease congestion.
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Malmström put on spot by Nigeria on EU deals with ACP countries
EU Trade Commissioner Cecilia Malmström came under fire from Nigeria on Tuesday, 24 January over the state of the bloc’s Economic Partnership Agreements with the developing world.
Malmström, author and proponent of the EU’s new ‘ethical’ ‘Fair Trade for All’ policy, was speaking at an event for ActionAid and the European Trade Union Syndicat in Brussels, where she was confronted by a call from the Nigerian Charge d’Affaires to renegotiate the EPA.
The EPAs are reciprocal trade agreements with the African, Caribbean and Pacific (ACP) nations, intended to give the developing world largely tariff-free access to the EU single market, in return for slowly opening up their own domestic markets.
First created in the 1970s under the Lome Agreement, and updated in 2000 in Cotonou, the talks are currently seemingly stuck in a quagmire, with no date or location set for the signing of the so-called Post-Cotonou Agreement, when it expires in 2020.
Many of the more radical NGOs have criticised the form the EPAs have taken, and there was serious disquiet, as reported by EurActiv.com last year, at the previous EU-ACP trade meeting in Dakar, Senegal.
Suleiman Umar, from the Nigerian Embassy to the EU, told Malmström bluntly: “It is not that we don’t want to sign EPA.”
Umar added (in slightly broken English), “What we are saying, that unless we renegotiate certain things that are there… they are issues that can always be adjusted.”
And he added: “During the last ACP trade ministers’ meeting, I remember I complained to DG Trade, where the same issues were discussed.
“But the DG Trade told us, I’m sorry, I have to say it, she [Malmström] told us… that there will be no room for a renegotiation of the EPA. We will either assent to it, or there’ll be no [deal],” he said.
“Which we felt, if you are, talking about issues that require constant retooling or negotiation, making room for adjustment.”
He continued, acknowledging other neighbouring West African countries had already signed the EPAs.
“Agreed, some countries and regional groups before us have signed, and we have nothing against that, they used their sovereign rights. But, as it is said, ‘a sovereign is bound by his own action and it cannot extend to another country’. That was why even though the EPA agreement was aimed at creating jobs, which in line with our own policy, we feared that since we have the raw products why don’t the EU encourage their fellow investors to go there and start [investing]?
“So what we are saying is the market is there, the space is there, you can always go there [Nigeria] and start off your business, tax-free for the first five years, and depending on what you do, you can even get other investors for it. It will be a win for the investor, a win for the country and for the world at large.
“And we win, because you help us reduce the children roaming the streets, the youth unemployment…”
Malmström: Renegotiation ‘not possible’
Malmström replied that “13 countries in West Africa have already signed up to these Partnership Agreements, and they are hoping for it to enter into force as soon as possible.
“So starting to renegotiate it all now, because Nigeria has a few problems, is not possible.
“Once it is in force, of course there always is a review mechanism, there’s always ways to try to improve it but these 13 countries have already been waiting for quite a lot of years, and they believe this is a powerful tool for regionalisation, cooperation, for industrialisation, for a possibility to develop their economies. So I hope we can find a solution for Nigeria so you will hopefully be able to join as well.”
Malmström, generally seen as one of the stronger Commissioners, who has made the brief her own, also faced criticism from Nuria Molina, of the Global Social Justice NGO, who pointed out the EPAs were generally negotiated from a position of “amazing asymmetry”, where the “weaker sometimes get hurt”.
Molina pointed out Western industrialised nations had largely built up their economic power through the 18th and 19th centuries through protecting their own industries as they “moved up the value chain”.
She also said much of Africa’s heralded growth rate was “heavily-driven by extraction [i.e., of minerals], not by manufacturing, and this growth model has its limits.”
FTAs vs EPAs
Separately from the question of ostensibly ‘benevolent’ EPAs with the ACP countries, Thao Hoang Phuong, director of ActionAid, criticised the ‘aid for trade’ model of the EU’s Free Trade Agreements (FTAs) with middle-income countries such as Vietnam.
Phuong said the FTA with Vietnam, not yet ratified, meant “we can only be [the] supplier of raw materials: the EU refines and markets them. We are a permanent slave to the ‘value chain’.”
Phuong said such FTAs create environmental damage, and a “further deregulation of labour standards”, claiming that outside Ho Chi Minh city, only 60% of minimum wage earners were paid the mandated health and social insurance by their employers.
Malmström replied that the distribution of wealth within a country was a role of that sovereign country, and that although there were no ‘sanctions’ applied if FTAs were not implemented and enforced, the ultimate “extreme” was that an FTA could be ended.
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tralac’s Daily News Selection
AU Summit briefings today in Addis:
Mrs Rhoda Peace Tumusiime (Commissioner for Rural Economy and Agriculture): Strengthening mutual accountability to achieve CAADP/Malabo goals and targets, Dr Aisha L. Abdullahi (Commissioner of Political Affairs): Youth participation and representation in governance and democratic processes in Africa
Profiled AU Summit agenda policy issues:
Executive Council, 25-27 January: Item: Outcome of the 5th Retreat of the Executive Council. The 5th Ministerial Retreat held in December 2016 focussed on (i) Global and continental political trends elections – positioning of Africa; (ii) Draft Commodities Strategy; (iii) Update on the implementation of Agenda 2063 and Integration. The Executive Council will adopt the recommendations made during the Retreat held in Addis Ababa, 8-9 December 2016.
Assembly of the Union, 30-31 January: Item (in closed session): Report of the Commission on the Continental Free Trade Area and the Mechanism to eliminate Non-Trade Barriers in Africa. The Assembly [in July in Kigali] requested the Commission “to present feasible options on how to eliminate non-trade barriers among African countries to foster intra-African trade”. The Commissioner for Trade and Industry, on behalf of the Commission, will submit a report on the implementation of this Decision to the Executive Council for consideration.
Briefing by Dr Anthony Mothae Maruping (Commissioner for Economic Affairs): ‘African Agenda 2063: what progress since adoption in 2015?’
After witnessing sluggish implementation of previous OAU/AU frameworks where lies the source of hope that there will be successful implementation of Agenda 2063? Lessons of experience prompted the African Union to avoid overlooking factors crucial for meticulous implementation of frameworks. 11 pointers:
Dr Nkosazana Dlamini Zuma: welcome remarks to 30th Ordinary Session of the Executive Council
Zambia markets candidates for AU positions at AU summit
tralac’s Gerhard Erasmus: ‘Dealing with technical barriers to trade in the Continental Free Trade Area’
The CFTA will hopefully provide for better trade governance on national as well as regional levels. There should be binding legal instruments to ensure effective implementation, the protection of rights, remedies in case of violations of obligations, legal certainty, and institutional oversight. International agreements do not guarantee more trade and a better business climate but a well-designed legal construct which tackles underlying causes is a sine qua non for improving the present situation. For the CFTA to deliver on its promises some bold decisions about sharing national policy space and sovereignty are required.
Continental standards body urges members: ‘Set up more testing facilities’ (NewsDay)
The African Organisation for Standards is urging its members to set up more testing facilities to help certify products, as it moves to harmonise standards on the continent. This comes as the major theme for Arso in 2017 is to promote Africa-made products and shift trade that is heavily skewed in favour of the developed world to the continent. Speaking at a press briefing of the upcoming second edition of the Arso President’s Forum and Made in Africa Expo, the organisation’s president, Eve Gadzikwa said testing facilities would allow African-made goods to compete on the market. The forum will be held from 1-4 March in Victoria Falls.
African Digitalisation Maturity Report 2017: ‘Digitisation could boost Africa by R4 trillion’ (Business Report)
The adoption of digitalisation by African countries could add $300bn (R4 trillion) to the continent’s economy by 2026, with South Africa poised to derive the most benefits. This is according to an inaugural report released on Monday by global technology firm Siemens. The 2017 African Digitalisation Maturity Report (pdf) was conducted by the company to benchmark levels of digitalisation in South Africa, Nigeria, Kenya and Ethiopia, with emphasis on the sectors of transport, manufacturing and energy.
The Western Indian Ocean’s blue economy can thrive: here’s how (The Conversation)
Few readers will have heard the term “Western Indian Ocean”. Yet, this 30 million square km of ocean off the coasts of ten east and southern African countries supports some 60 million people living within 100km of the shore. The annual economic output of the ocean is estimated to come fourth in line behind the region’s biggest economies – South Africa, Kenya and Tanzania. It produces more than $20.8 billion in goods and services every year. So a key question is: can the ocean economy in the Western Indian Ocean grow and support those countries’ aspirations in coming decades? Remarkable and sobering findings, and possible answers, are contained in a new report. It was led by the World Wildlife Fund, the Boston Consulting Group and CORDIO (Coastal Oceans Research and Development in the Indian Ocean East Africa) East Africa. [The author: Ove Hoegh-Guldberg]
UK-South Africa joint trade statement
Bilateral trade in goods and services between the UK and South Africa stood at £7.6 billion in 2015, with UK exports of goods and services increasing by 25% in the last decade. South Africa’s exports into the UK have increased by over 5% on an annual basis for the last decade. South Africa is the third biggest trading partner for the UK in the Commonwealth. The meeting was an opportunity for ministers to discuss existing links as well as opportunities to further develop these. Both ministers committed to strengthening ties as the UK prepares to leave the European Union and to work together to identify trade and investment opportunities that will benefit not only the UK and South Africa, but across the wider southern Africa and Africa region.
SA must shut down dumped chicken imports to prevent industry collapse (Business Day)
SA needs to act quickly and implement the technical barriers used by other countries — phytosanitary measures, health checks and demands for abattoir certification — that can help protect the South African chicken industry. Chicken dumping is becoming a national crisis. If nothing is done, the country could have another 130,000 jobless people by Christmas 2017, leaving about 1.3-million family members and other dependants without food or income. That grim prospect is a call to action for the policy makers who can prevent it. [The authors: Agmat Brinkhuis is chairman of the South African Poultry Association, Scott Pitman is MD of RCL Foods’ consumer division, Katishi Masemola is general secretary of the Food and Allied Workers Union] [Chicken fight rocks SA-Europe trade relations (Bloomberg)]
South Africa: Treasury acts to fortify steel industry (Business Day)
The Treasury has designated fabricated structural steel with 100% local content for procurement by state entities, in a move that might protect the domestic industry from a "blood bath". The instruction note, dated 13 January, is a long-awaited development that could kickstart large-scale infrastructure projects in SA. It is also a non-tariff response to the financial crisis, which decimated the world’s steel industry.
Swaziland: Market Assessment Report – December 2016 (Ministry of Agriculture, GoS)
Swaziland produced 34,000 tonnes for the 2016-17 marketing season, down from 94,000 tonnes in 2015-16 (-64%) and down from the five year average (2011-2015) of 92,000 tonnes (-63%). In terms of national requirements, Swaziland has produced only 20% of its national cereal requirement for the 2016-17 marketing season. The remaining 80% (197,000 tonnes) will need to be imported from South Africa, up from the five year average of 62%. Food prices, especially maize, have been falling in Southern Africa for most of 2016. The price of maize meal in Swaziland however has not seen a similar reduction in 2016. Maize meal was on average 53% more expensive in Swaziland in August/September 2016 compared to the southern African average.
Tanzania: Dar seeks 2tri/ - development funding from World Bank (Daily News)
Tanzania’s government is seeking a $785m (over 1.7tri/-) soft loan from the World Bank to execute development projects in the next fiscal year, Finance and Planning Minister, Dr Philip Mpango, revealed yesterday. According to the minister, the projects include implementation of the second and third phase of the Bus Rapid Transit in Dar es Salaam which is expected to cost 425 million dollars (about 950bn/- ) and the 305 million dollar (678bn/-) expansion of the Dar es Salaam port. Expansion of the Dar es Salaam port requires 600 million US dollars (over 1.3tri/-), but the World Bank has offered 305 million dollars for the first phase of the project," Dr Mpango elaborated.
Address gender-based violence in the region: A resolution to that effect, moved by Hon Shyrose Bhanji, unanimously sailed through the House as it condemned all act(s) of gender-based violence, urging EAC citizens to refrain from the same. The legislators further urged the Partner States to step up public awareness campaigns against all acts and practices of gender-based violence and to take up measures including strengthening legislation to curb the same.
New Bill outlawing discrimination against Albinism in the offing: An EAC Protection of people with albinism Bill, 2016 is in the offing with the House granting its mover, Hon Shyrose Bhanji leave to introduce the Bill. The object of the Bill is to prohibit the discrimination against people suffering with albinism and to ensure affirmative action in their favour. It also stipulates the sanctions against those who indulge in suffocating the rights of persons with Albinism. The Bill hopes to put in place sanctions including conviction of those who discriminate against albinos.
Christine Lagarde: Standing with the Central African Republic (IMF)
After shrinking almost 40% in 2013, the Central African Republic’s economy has a long way to go. Infrastructure has been shattered. Agriculture, forestry, and mining have not returned to past levels of output. Institutional capacity remains weak. And the security situation in some parts of the country is still tenuous. To complicate matters, rebuilding is taking place at a time of slow growth affecting both the global economy and that of Sub-Saharan Africa. Commodity prices have fallen, and access to external finance is more constrained. These issues are particularly relevant to the CEMAC region, where the difficult challenges of low oil prices and fragile regional security are having a severe impact.
Enhancing regional partnerships among top priorities for UN Peacebuilding Commission in 2017 (UN)
Strengthening the UN’s partnerships with the African Union, empowering women and youth, and greater cooperation with the World Bank will be among the key priorities this year for the UN Peacebuilding Commission, its new chair, Cho Tae-yul, the Permanent Representative of the Republic of Korea to the UN, said yesterday. The six countries currently on the Peacebuilding Commission agenda are Burundi, Sierra Leone, Guinea, Guinea-Bissau, Liberia and Central African Republic.
Home-grown African wealth funds seeking foreign partners to fix infrastructure gap
Zimbabwe: Rapid Results Initiative expected to boost exports
Sustainable agriculture, better-managed water supplies, vital to tackling water-food nexus – UN
Erin Collinson: What Tillerson’s leadership could mean for US development policy
US seeks enhanced India market access after Trans-Pacific Partnership pullout
Trump must re-engage Africa to halt Chinese inroads
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African Agenda 2063: what progress since adoption in 2015?
Extracts from the Briefing prepared by Dr. Anthony Mothae Maruping, Commissioner for Economic Affairs at the African Union Commission, during his press conference at the 2017 African Union Summit
Introduction
African Agenda 2063 is a framework formulated for the purpose of guiding Africa’s development in the next fifty years. Organization of African Unity (OAU) focused on decolonization of Africa and performed very well in that regard. African Union (AU) is focusing on development on a broad front, be it economic, social, political, scientific as well as cultural. African Agenda 2063 built on existing African frameworks, programmes and declarations, consultations with a broad spectrum of African stakeholders at the grassroots level, synthesis of 35 national and Regional Economic Communities (RECs) strategic and action plans, situational analysis and study of global mega trends. It was adopted by the African Union Summit in January 2015. Its First Ten Year Implementation Plan (FTYIP) was adopted in June 2015. It predates global Agenda 2030 and Sustainable Development Goals (SDGs) of September 2015, Addis Ababa Action Agenda (AAAA) adopted by the Third Conference on Financing for Development; and end of 2015 Paris COP21.
It should be pointed out from the outset that global Agenda 2030 and its SDGs were heavily influenced by African Union’s Common African Position on Post 2015 Development Agenda (CAP) with Africa being the only region to submit a well articulated position in writing. UN Open Working Group (OWG) and formal inter-governmental negotiations relied heavily on CAP. CAP was adopted by the AU Summit in Addis Ababa in January of 2015 and promulgated in Ndjamena in February 2015.
The question is: What has transpired since adoption Agenda 2063? Has there been any progress towards its implementation? Before addressing these questions what challenges emerged in the global and continental arena after the adoption of Agenda 2063?
Challenging Global Phenomena Post Adoption of Agenda 2063
Global commodities demand, and therefore prices, dropped drastically and remained at that new low level. African exports plummeted. This posed serious problems for most African countries whose economies rely on a narrow band of commodities exports. Extreme climatic conditions in the form of prolonged severe drought and destructive floods adversely affected most of Africa. Strengthening of some major currencies exacerbated external indebtedness and generated inflationary pressures in a number of African countries. Competent macro-economic management saved the day.
The future of Official Development Assistance (ODA) came into question. Signs of fatigue abound. Tilt towards referring to engagement with the private sector is gathering momentum. In any case ODA has always precipitated towards priority areas of providers and not those of the recipients. Despite the Busan undertakings ODA remained selective, conditionality laden and characterized by failures to fulfill commitments. Developed world is fixated with migration.
Need to address aging population in developed countries and non-response of economies to standard stimulus packages following 2007 – 9 financial and economic crises, except that of the United States, prompted resort to economic re-engineering. Compliance with COP21 and 22 is another cause of re-engineering. This will mean changed pattern and magnitude of demand for Africa’s exports down the line.
Globally e-economy and blue economy are rapidly gaining in prominence globally. Accelerated urbanization in Africa is also posing a challenge to be addressed.
The influence of G-8, which later reduced back to G-7, has waned while that of BRICS and G-20 has gathered strength.
Now there are pronouncements of tendencies towards reversion to isolationism and protectionism.
With all these emerging challenges Agenda 2063 originally meant to guide development over the next fifty years is now turning out to be a timely vessel for Africa to navigate complex global dynamics. For Africa transformative growth and development within the context of Agenda 2063 has become an imperative.
What Does Transformative Growth and Development Entail?
Through Agenda 2063 Africa is striving for accelerated, inclusive and real growth with equity; growth that will result in job creation and moving the continent towards eradication of poverty in all its forms (and not just extreme poverty). This is to result in strong, resilient and sustainable socioeconomic development and human development.
In order to achieve this, it is necessary to strengthen productive capacities and ensure raised productivity. Competitiveness has to be improved to elicit significantly increased investment. Diversification in all sectors and value addition and beneficiation will need to be intensified. Integration will have to be accelerated and trade, especially intra-Africa, potential has to be realized.
This calls for development of infrastructure in its broad context and energy generation. Climate smart agriculture and food security will have to be pursued more vigorously. Investment in human capital will need to be intensified. Science, technology and innovation will have to be nurtured. Technology can be developed, transferred or diffused. Industrialization will have to be accelerated. Services sector will need to diversify and strengthen.
In order to achieve goals of Agenda 2063 all human resources at the disposal of society will have to be fully involved in production. Women empowerment has to be accelerated, engagement of youth in economic and social activities has to be ensured. Inclusion of people living with disabilities has to be expedited.
Progress on the Fast Track/Flagship Programmes and Projects
Agenda 2063 has 13 fast track programmes and projects.
The first is based on Article 19 of the AU Constitutive Act stipulates establishment of four continental financial and monetary institutions to service development. They are the African Central Bank (ACB), the African Investment Bank (AIB), the African Monetary Fund (AMF) and the Pan African Stock Exchange.
Regarding the African Central Bank the agreed timeframe for establishing ACB is between 2028 and 2034. Strategy towards this target has been agreed and await blessing by the 28th AU Assembly. When it comes to AIB Statutes have been adopted. Twelve ratifications are needed to reach the required threshold for activation. The agreed schedule for operationalizing AIB is 2025.
AMF statutes have been adopted. Minimum required number of ratifications should be secured punctually for scheduled commencement of operations in 2023. Study has been conducted regarding Pan African (virtual) Stock Exchange to facilitate mobilization and flow of capital for development on the continent. The study is to be scrutinized by Finance and Monetary Affairs Ministers in 2017.
Second, is the Continental Free Trade Area (CFTA) with the deadline for concluding negotiations set for 2017. Negotiations are ongoing. Formation of Tripartite (COMESA, EAC and SADC) has been a giant step closer to CFTA.
Third, comes the African Commodity Strategy is expected to be adopted by the AU Assembly of 2017. Drawing a Plan of Action will then follow.
Fourth, is the Pan African Integrated High Speed Train Network. In this regard a five year action plan and a roadmap have already been agreed upon by AU and committed partners. Building of railways network is thriving in East Africa.
Fifth endeavor deals with the Single African Aviation Market. In this case draft memorandum between RECs and African Civil Aviation Commission (AFCAC) has been forwarded to the RECs for consideration. African airlines are fully committed to expeditiously implementing the Yamoussoukro Decision of 2002.
Sixth, project is energy generation focusing on the Great Inga Dam. The blue print has been developed. AUC is continuing to support mobilization of development partners and the private sector to get engaged in the project. Nigeria and South Africa have already indicated their intended purchase of the power generated by this project. Construction on Inga 3 is still expected to commence in June 2017. It will take about five to ten years to complete.
Seventh, project involves Free Movement of Persons and the African Passport. Consultations have been ongoing and include AU Member States, to develop and validate an AU Protocol on free movement in Africa. African Passport was inaugurated in Kigali in July 2016.
Eighth, undertaking is the annual African Economic Dialogue Platform aimed at bringing together for dialogue on business and economic issues the African Heads of State and Government (HOS & G), African business community, academia and civil society. Preparations are advanced for the inaugural forum in March 2017.
Ninth, is the effort to silence the guns on the African continent by 2020. Aprican Peace and Security Roadmap spanning 2016-2020 has been validated by the Peace and Security Council in Lusaka, Zambia, in November, 2016. It is expected to be considered and adopted by the AU Assembly during this 28th Summit of AU.
Tenth, has to do with the establishment of the Virtual University. Good progress has been made in the preparations. The stage of developing a staffing structure and developing a strategic plan and formulating draft project has arrived.
Eleventh, is the Pan-African E-Network on Tele-Education and Telemedicine (PAeN). The relevant Specialized Technical Committee (STC) on Information and Communication Technologies agreed in April 2016 to: (a) put in place the agreed governance and management structures; (b) effect the transfer of operating this network from India.
Twelfth, initiative is that of developing African Outer Space Strategy. The exercise to devise a clear roadmap for he governance of the African space policy and strategy is ongoing.
Thirteenth, plan of action to establish the Great Museum of Africa is being developed by the AUC in collaboration with Algeria, the host.
Clearly there is progress being made on every fast track programme/project. Implementation of Agenda 2063 has definitely commenced.
Most of these fast track/flagship programmes and projects have the quality of not only being development by themselves but also enabling and facilitating development in other areas. They are also development enablers.
Since implementation of Agenda 2063 is involving not only the public sector but also the private sector and civil society, these projects provide a rich field of investment opportunities.
What is the Source of Hope for Successful Implementation of Agenda 2063?
After witnessing sluggish implementation of previous OAU/AU frameworks where lies the source of hope that there will be successful implementation of Agenda 2063? Lessons of experience prompted the African Union to avoid overlooking factors crucial for meticulous implementation of frameworks.
First, formulation of Agenda 2063 was a bottom-up process. It involved consultations with a wide spectrum of stakeholders. It was participatory and highly inclusive. This means that there is stronger ownership and higher level of commitment.
Second, its implementation is not confined to the public sector but includes private sector and civil society. Private sector and civil society were consulted during formulation. Business Councils and Economic dialogue platform as well as private sector development are empowering African private sector. Civil Society’s Economic, Social and Cultural Council (ECOSOCC) has been revitalized and fully operational. African private sector and civil society have a crucial role in Agenda 2063 implementation. Implementation is participatory.
Third, domestication exercise at national and RECs levels means incorporating contents of Agenda 2063 into strategic and action plans and budgets. These are the instruments of implementation. Domestication strategy has just been reviewed and consolidated.
Fourth, clearly stated vision, 7 aspirations, 20 goals, 39 priority areas, targets and indicators lend Agenda 2063 to results based management of implementation. They make Agenda 2063 concrete and therefore very implementable.
Fifth, accountability architecture has been set up already. It includes Ministerial Follow-up Committee.
Sixth, required capacity to successfully implement Agenda 2063 has been assessed. Capacity building strategy to close observed gaps is being developed.
Seventh, risk that may be entailed has been assessed and strategy for navigating safely around during implementation has been developed.
Eighth, Financing strategy has just been revisited, reviewed and consolidated and await validation by appropriate organs.
Ninth, in order to continue building up and maintaining awareness and commitment to Agenda 2063 communications strategy is being developed in consultation with the media, including engagement of African Editors Forum. Two workshops have already been held on this matter.
Tenth, accelerated women’s empowerment, active engagement of the youth in productive activities and inclusion of people living with disabilities, mean that all talent and energy at the disposal of society will be utilized.
Eleventh, all African development partners have been fully alerted to the fact that all development co-operation with Africa should henceforth be within the context of Agenda 2063. They have all pledged to comply with that request.
Clearly several precautions have been duly taken to raise the chances of successfully implementation of Agenda 2063. These are the reasons for optimism.
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Western Indian Ocean valued at US$333.8 billion but at a crossroads
A groundbreaking new report, Reviving the Western Indian Ocean Economy: Actions for a Sustainable Future, finds the ocean assets of the Western Indian Ocean region are valued conservatively at US$333.8 billion but foreshadows significant challenges for the region’s ocean-based economies and food supplies in the absence of stronger conservation actions.
The report is the result of an in-depth, joint assessment by The Boston Consulting Group (BCG), CORDIO East Africa and WWF. It combines a new economic analysis of the region’s ocean assets with a review of their contribution to human development.
The report shows that the region’s most valuable assets are fisheries, mangroves, seagrass beds and coral reefs. Adjacent coastal and carbon-absorbing assets are also central to the wellbeing of communities and the health of the ocean economy. The analysis finds that the region is heavily dependent on high-value ocean natural assets that are already showing signs of decline. The report offers a set of priority actions required to secure a sustainable, inclusive ‘blue economy’ for the region, and thus to provide food and livelihoods for growing populations.
Country Director of WWF-Madagascar and Western Indian Ocean Islands, Nanie Ratsifandrihamanana, said, “This analysis shows that the leaders of the Western Indian Ocean face a clear and urgent choice: to continue with business-as-usual, overseeing the steady decline of ocean assets, or to seize the moment to secure the natural ocean assets that will be crucial for the future of fast-growing coastal communities and economies. The Western Indian Ocean still has the chance to get it right.”
Dr David Obura, lead author of the report and director of CORDIO East Africa, said, “The Western Indian Ocean is still in relatively good condition in global terms, but we now see clear signs of impact from coastal development, local and global demand for the region’s resources, and climate change. Stronger and scaled-up conservation actions – and investment in management – need to be triggered now to avoid diminishing these crucial ocean and coastal assets.”
The report shows that the annual economic output of the region (the equivalent of gross domestic product) is at least US$21 billion, making the ‘ocean economy’ the fourth largest economy in the region in its own right. The most economically-valuable activities on an annual basis in the Western Indian Ocean are coastal and marine tourism, followed by carbon sequestration and fisheries.
BCG Partner and Managing Director, Marty Smits, said, “The Western Indian Ocean is a real test case for how natural ocean assets can be managed sustainably to support growing demands from coastal populations and global pressures. The business case for action is clear: protecting and restoring ocean assets like mangroves, coral reefs and fisheries is a rational approach to future economic prosperity and security.”
John Tanzer, WWF’s Oceans Practice Leader, said, “The Western Indian Ocean must be a central priority for regional and global leaders to successfully implement the UN Sustainable Development Goals and the promise of the Paris climate agreement. Few other places render so starkly how intertwined are the destinies of coastal people and the health of ocean ecosystems. Protecting ocean habitats and managing fisheries sustainably – both small-scale and industrial – are just two areas that will deliver great dividends for years to come.”
“Within the region, the Northern Mozambique Channel initiative provides a good example of the scale of ambition possible for an integrated and sustainable approach to ocean management when decision makers come together around a common vision,” said Mr Tanzer.
Background
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The Western Indian Ocean region described in this report includes Comoros, France, Kenya, Madagascar, Mauritius, Mozambique, Seychelles, Somalia, South Africa and Tanzania – a mix of mainland continental and island states. The total population is around 220 million, over a quarter of whom live within 100km of the coast.
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The report also points to the likelihood that much of the actual fishing in the region is for local, domestic consumption via small-scale fishing which is not adequately monitored, or measured in economic terms, so the actual extent of fishing and its importance to local communities is likely to be far greater than economic analyses indicate.
This report is published by WWF – World Wide Fund For Nature (Formerly World Wildlife Fund).
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Chicken fight rocks South Africa-Europe trade relations
Chinese steel and Mexican-made cars became political dynamite last year as politicians including U.S. President Donald Trump championed anti-free trade rhetoric. Now chickens are at the center of a bitter fight between South Africa and Europe.
South African farmers and labor unions say the European Union is selling chicken legs, thighs and wings at below cost, threatening local companies and jobs. EU producers make enough money marketing breasts in their home market that dark meat is sold as a waste product, they say. Europe says its farmers are simply more competitive than their peers in South Africa.
“We definitely have distress,” South African Trade Minister Rob Davies said in an interview Jan. 24. “We will not have an industry to raise the competitiveness of” if imports continue to flood the market.
The argument has left South Africa with a tough choice: either upset relations with its biggest trading partner or watch the demise of its chicken industry, which employs 60,000 people and is source of 65 percent of all meat consumed in the country. The row marks a rocky start to the European Partnership Agreement, a free trade deal signed last year by the EU and southern African countries including South Africa.
“We’re moving into a more protectionist sort of world,” said Mike Schussler, chief economist at Johannesburg-based research company Economists.co.za. “South Africa has one of the most open agricultural markets in the world and seems to be paying the price.”
Europe’s share of South Africa’s bone-in chicken imports has grown to 80 percent from 0.5 percent in 2012 when tariffs were removed, according to data compiled by the South African Poultry Association. In contrast, South Africa’s biggest chicken producers, including RCL Foods Ltd., are cutting 5,000 jobs and saying the industry is under threat.
Industry Threat
“If things stay the same there will be no chicken industry in a year’s time,” Scott Pitman, managing director of RCL’s consumer division, said by phone.
Shares of RCL, which produces several food brands other than chicken, are 35 percent below a 20-year high of 19.45 rand in 2014.
“The market is looking forward and anticipating lower feed costs” as South Africa’s two-year drought eases, said Victor Dima, a Dubai-based analyst at Arqaam Capital. Chickens in South Africa are fed corn among other feed-stuffs.
South Africa is the world’s fifth-biggest consumer of chicken per capita behind the U.S., Australia, Brazil and Peru, according to the International Poultry Council.
Dumping Accusations
The EU says its chicken exports comply with trade laws and there’s no reason for South Africa to impose duties against them. The accusation of dumping is a sensitive one for the EU, given that the bloc last year imposed tariffs as high as 73.7 percent on Chinese steel that it says is dumped in Europe.
“The real problems of the South African poultry industry are not so much caused by the imports from the EU but that it is suffering from structural problems affecting its competitiveness,” Cecilia Malmstrom, the EU’s trade commissioner, said in a Jan. 11 letter to South African Minister of Trade Rob Davies.
Davies agrees that producers must find ways of raising efficiency. “But they’re not going to be solved if we just allow an influx of spare parts from around the world to come in to take over the market,” he said.
Frozen leg quarters imported to South Africa from Europe cost 17.52 rand a kilogram ($2.8 per pound) before duties and storage this month, about 30 percent cheaper than local producers, according to Astral Foods Ltd.
That rankles local producers who say their production costs for whole birds are lower than European farmers’. Researchers at Pretoria-based Bureau for Food and Agricultural Policy and the Netherlands’ Wageningen University found that South Africa’s whole-chicken costs were about 20 percent lower than in Europe in 2013, the latest available data.
Fat Chickens
European farmers reject accusations of dumping. South African producers inject chickens with brine, or salt water, increasing their weight and reducing quality, Cees Vermeeren, secretary-general of AVEC, a trade body for European chicken farmers, said by e-mail.
Still, South Africa’s chicken producers are asking the government to increase protection from European imports.
South Africa’s government imposed anti-dumping tariffs ranging from 4 percent to 73 percent on some chicken from Germany, the Netherlands and the U.K. in 2015. In December it added a temporary 13.9 percent “safeguard duty” while it investigates allegations of dumping.
“Chicken farming is in crisis and on the cusp of collapse,” Kevin Lovell, chief executive officer of SAPA, said by phone. “The trigger will be when the banks stop funding. That moment is getting close. Then the industry will shrink permanently.”
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tralac’s Daily News Selection
AU Summit press conferences today in Addis: Mrs Fatima Haram Acyl (Commissioner for Trade and Industry): ‘The Continental Free Trade Area: an opportunity for job creation in Africa’; Dr Anthony Mothae Maruping (Commissioner for Economic Affairs): ‘African Agenda 2063: Is there political buy-in? Is it implementable?’
The International Forum for National Trade Facilitation Committees is underway in Geneva: UNCTAD Secretary-General Mukhisa Kituyi outlined the goal of the forum as (i) to produce an overview of the implications and implementation requirements for the TFA, (ii) to establish and outline of the tools and good practices for the effective and efficient establishment and operation of NTFCs, (iii) to find synergies for development and inclusive prosperity for all through trade facilitation. [Profiled presentation: ‘WTO Trade Facilitation Agreement: state of play and the road ahead’ (pdf, Sheri Rosenow, WTO TFA Facility)]
Starting today in Nairobi, a joint ICTSD, TMEA workshop: Leveraging services and digital potential for inclusive economic growth
Data, ICT developments and the Continental Free Trade Area (tralac)
In 2017, we (at tralac) intend to support debate on the enormous opportunities ICTs present for African economies in a year where intense negotiations are expected to conclude with the signing of the Continental Free Trade Area agreement. This is recognised as a very ambitious target. Member states still have to agree on the level of ambition for the negotiations and other aspects of the modalities of the negotiations on trade in goods and services, and then the negotiations will begin. This Discussion Note reflects on the agenda of the inaugural UN World Data Forum which took place in Cape Town on 15-18 January 2017. [The analyst: Tarik Oguz]
Commentary by Mr Kiprono Kittony (Kenya National Chamber of Commerce and Industry): ‘AU: Business-first approach key to Africa’
EU sees no economic, legal basis for South African chicken duty (Bloomberg)
The European Commission sees “no clear economic and legal grounds to justify the imposition of the bilateral safeguard measures,” EU Trade Commissioner Cecilia Malmstrom said in a January 11 letter to Rob Davies, South Africa’s trade minister. The letter was published on the Commission’s website. “It appears that the real problems of the South African poultry industry are not so much caused by the imports from the EU but that it is rather suffering from structural problems affecting its competitiveness,” Malmstrom wrote.
tralac’s Gerhard Erasmus: More trade disputes in 2017? Starting with measures against EU chickens
Rob Davies: ‘SA to pursue trade agreements with UK post-Brexit’ (IOL)
South Africa will continue to pursue bilateral and regional negotiations with the British government despite its exit from the EU, the Minister of Trade and Industry Rob Davies said on Tuesday. Speaking after his arrival from a two-day visit to the UK, Davies said the country’s strategy post-Brexit was to conclude a free-trade agreement with Britain. "We had a number of meetings with investors and parliamentarians to encourage and boost trade between South Africa and the UK," Davies said. "We don’t have a duty-free quota with the UK. Our our template going forward will be partnerships but in the long run we will have to have quotas." [UK-SA Business Process Services update]
Peter Leon: ‘Achilles heel of investment in SA’ (Business Day)
In redesigning SA’s foreign investment regime, of which the regulations form a key part, it is crucial that foreign investors are assured of access to a familiar, fair and effective system of dispute settlement. In so doing, SA should follow international best practice, such as the investor-state mediation rules approved by the International Bar Association in 2012. As currently drafted, the Department of Trade and Industry’s regulations are missing many vital elements of a credible mediation system.
Alexander Mathews: ‘Time for Botswana to confront hard truths’ (Business Day)
Botswana needs a fresh approach: one that is "outward-looking, embracing global integration, vigorously promoting and supporting companies that export goods and services, attracting inward foreign investment, welcoming foreign companies and individuals who wish to invest in Botswana, work in Botswana, and trade with Botswana," Jefferis says. [Job losses as new CEO shakes up Botswana Power Corporation]
Zimbabwe: Textile players rap taxman (NewsDay)
Textile players in Zimbabwe have condemned the Zimbabwe Revenue Authority for failing to enforce restrictions gazetted by government to protect the industry from an influx of cheap imports. In emailed responses to NewsDay, Zimbabwe Textile Manufacturers’ Association secretary-general, Raymond Huni said Zimra was failing to play its role of enforcing import restrictions imposed by government last year. As a result, the sector suffered tremendously due to cheap imports. “The industry did not perform as expected due to failure by Zimra to enforce all statutory instruments (SIs) granted to the textile sector by the Ministry of Finance in the year [2016],” he said.
TPSF set to form Dar-Ankara secretariat (Daily News)
The Tanzania Private Sector Foundation has embarked on procedures to form a secretariat for the Business Council between Tanzania and Turkey at a high pace following President John Magufuli’s directive to fast-track stronger trade relations between the two countries. The Business Council came to fruition during the Tanzania-Turkey Trade Forum after the business community from both countries signed the Memorandum of Understanding aimed at strengthening business and trade ties among them. [Govt optimistic of increased trade volume with Turkey, TZ seeks to rival Kenya as trade hub with SGR project]
Turkey, Mozambique ink 6 agreements (World Bulletin)
Turkey and Mozambique on Tuesday signed six agreements in various domains during President Recep Tayyip Erdogan’s visit - the second stop of his southeastern African tour. Turkish Foreign Minister Mevlut Cavusoglu signed two memorandums of understanding - a mutual visa exemption agreement and a political consultation mechanism for diplomatic services and special passport holders - between the two countries. A trade and economic cooperation agreement and another on protection of mutual investments were signed by Turkish Economic Minister Nihat Zeybekc. [Turkey-Mozambique eye more collaborative projects]
Tanzania: World Bank VP for Africa Region visits (World Bank)
Makhtar Diop, World Bank VP for Africa Region, will visit Tanzania (24-26 January) and will hold high level discussions with President John Magufuli as well as other top government officials. In addition, Diop will meet with representatives of the private sector and civil society. The World Bank is currently supporting 27 national projects amounting to $4.2bn in addition to seven regional operations through which Tanzania accesses $551m in financing, reaching a total commitment of $4.75bn. The bulk of this support (22%) is towards the transport sector, followed by urban development (20%).
Kenya: Fund managers, economists worried of forex cover drop (Business Daily)
A new survey of money market players has revealed rising concern over the continued drop in the country’s forex cover in defence of the shilling, which has depreciated by 1.4% to the dollar this year. The country’s forex reserves have dropped by $940 million since the beginning of October (from $7.79bn to $6.85bn), pulling down the value of the imports cover from 5.2 months to 4.49 months. [George Wachira: A reality check on promised quick exports of Turkana oil]
Angola: IMF Executive Board Concludes 2016 Article IV Consultation (IMF)
Growth was estimated to come to a halt in 2016, with the non-oil sector contracting by ½ percent dragged down by the industrial, construction, and services sectors; industrial production, despite the potential for import substitution, was constrained by shortages of imported inputs due to limited availability of foreign exchange. Annual inflation was estimated to reach 45% by end 2016 - the highest rate in over a decade - reflecting higher domestic fuel prices, a weaker kwanza, and the lagged effects of loose monetary conditions until the first half of the year. Non-oil primary balance in 2015-16 showed an improvement of 18% of GDP mainly through spending rationalization. The current account deficit, which peaked at 10% of GDP in 2015, is projected to be halved in 2016-17, as imports continue adjusting to limited availability of foreign exchange.
Industrial commodities prices to surge in 2017 (World Bank)
In its January 2017 Commodity Markets Outlook (pdf), the World Bank is holding steady its crude oil price forecast for the year at $55 per barrel, a 29% jump from 2016. The energy price forecast assumes members of OPEC and other oil producers will partially comply with an agreement to limit production after a long period of unrestrained output. The Bank is raising its metals price forecast to an increase of 11% from the 4% rise anticipated in its October outlook on further tightening of supply and strong demand from China and advanced economies. A Special Focus shows how commodity-exporting emerging and developing economies have been hit hard by slowing investment growth, which has declined from 7.1% in 2010 to 1.6% in 2015.
International trade organisations release compliance guidance for trade transactions (ICC)
The Banking Commission of the International Chamber of Commerce, the Wolfsberg Group, and the Bankers Association for Finance and Trade jointly announce the publication of the Trade Finance Principles. The guidance document updates the Wolfsberg Group’s Trade Finance Principles paper last revised in 2011. This broader industry edition now addresses the due diligence required by global and regional financial institutions of all sizes in the financing of international trade. The document was updated to reflect the growing regulatory expectations, as well as the more stringent application of existing regulations faced by the industry today.
Taxing the good? Distortions, misallocation, and productivity in Sub-Saharan Africa (World Bank)
This paper uses comprehensive and comparable firm-level manufacturing census data from four Sub-Saharan African countries (Cote d’Ivoire, Ethiopia, Ghana, Kenya) to examine the extent, costs, and nature of within-industry resource misallocation across heterogeneous firms. The paper finds evidence of severe misallocation in which resources are diverted away from high-productivity firms toward low-productivity ones in all four countries, although the magnitude differs across countries. The paper shows that a hypothetical reallocation of resources that equalizes marginal returns across firms would increase manufacturing productivity by 31.4% in Cote d’Ivoire and as much as 162.7% in Kenya.
Corruption Perceptions Index 2016 (Transparency International): Sub Saharan Africa: 2016 saw elections across the African continent with the results providing a good reflection of corruption trends in the region. In Ghana, for example, voters voiced their dissatisfaction with the government’s corruption record at the polls where, for the first time in Ghana’s history, an incumbent president was voted out.
Today’s Quick Links:
The NEPAD Agency’s 2016 Annual Report is posted
Zambia Bureau of Standards consulting SADC, COMESA over use of second hand tyres
Zambia’s Luapula Province plans to attract investors from China, Turkey, South Africa
Western Cape: overview of tourism sector
EU’s Malmström: Trump’s trade policy ‘doomed to fail’
The man [Branko Milanović] behind the most important chart of 2016
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“Make trade facilitation a reality” – Officials meet at the first UNCTAD-hosted forum to prepare for new global TFA
NEW presentations are available to download
With a major global agreement on making international trade “faster, easier and cheaper” due to take effect in the early weeks of 2017, more than 300 officials from some 70 countries who are charged with making it work gathered for the first time at an UNCTAD-organized forum in Geneva on 23 January.
The Trade Facilitation Agreement (TFA), brokered by the World Trade Organisation (WTO) in 2013, will require almost the entire world to “streamline, standardize and simplify” passage of goods across borders, adding $1 trillion to global trade output and helping end the sixth straight year of sluggish trade growth.
The week-long meeting allowed leaders to share good practices and provide opportunities to access funding for the implementation of the TFA.
A central element of the TFA is the obligatory establishment in each country of a national trade facilitation committee (NTFC) with both public and private sector stakeholders “to facilitate both domestic coordination and implementation of the provisions of this agreement”.
“Supporting NTFCs and partnerships in trade is important during the present trade slow down and the increasing anti-globalization trend globally,” UNCTAD Secretary-General Mukhisa Kituyi said.
“Through well-functioning and sustainable committees, countries will be able to make trade, easier, faster and cheaper. Trade facilitation can play an important role to turn-around the international trade slump and boost their development agenda.”
Dr. Kituyi added: “UNCTAD has for many years supported interagency collaboration and public-private partnership with a view to promoting trade, improving trade compliance and revenue collection as well as promoting good governance. In this context, it is important to align trade facilitation and investment facilitation to work in tandem focusing also on developing infrastructure, technical skills, entrepreneurship, thus leading to building productive capacity, in developing and least developed countries.”
Dr Kituyi outlined the goal of the forum in three points:
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To produce an overview of the implications and implementation requirements for the TFA
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To establish and outline of the tools and good practices for the effective and efficient establishment and operation of NTFCs
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To find synergies for development and inclusive prosperity for all through trade facilitation
“UNCTAD, together with the other development partners, stand ready to continue our close collaboration with developing and least developed countries to successfully implement the TFA and ensure the successful establishment of NTFCs, thereby boosting partnerships both at national, regional and international levels,” Dr Kituyi said.
WTO Director-General Roberto Azevêdo said: “The timing of this meeting could not be better as the WTO’s Trade Facilitation Agreement will be coming into force very soon. This is great news for a number of reasons. First, the TFA is the biggest global trade deal in two decades – and as such it is essential that it is delivered in full. By ratifying the agreement members are showing their commitment to the trading system, and also following through on the promises made when this deal was struck in Bali in 2013. Second, bringing the deal into force means that we can turn its benefits into reality.”
“The Agreement aims to streamline, simplify and standardize customs procedures, thereby reducing the time and cost of moving goods across borders. By doing so, it will help to cut trade costs around the world. The national trade facilitation committees will have a central role in driving these reforms at the domestic level,” Mr. Azevêdo said.
International Trade Centre (ITC) Executive Director Arancha González said that ITC’s work in the area of trade facilitation up to 2016 has been leading up to the moment of implementation in 2017.
“Implementation of the TFA will create concrete change, including the cost and ease of doing business, especially for micro, small and medium-sized enterprises,” she said.
“As NTFCs bring together the public and private sectors, they will be the best placed to relay the needs of the business community to ITC and other development agencies, so that we can work together to ensure reforms happen on the ground. Giving businesses a voice on trade issues is at the very core of ITC’s activities. The challenge is to have an ‘inclusive’ participation of business of all sizes, including SMEs as well as to consider the regional aspects of trade facilitation”.
William Gain, Global Program manager, Trade Facilitation and Border Management, World Bank Group (WBG), said: “Trade facilitation is a critical economic driver for all countries and the establishment of a National Trade Facilitation Committee is the critical leadership mechanism for implementation of the TFA leveraging the essential public and private sector.”
“Implementation of the TFA is a “win-win” for all countries, However, the benefits fall disproportionally to developing and least developed countries as their traders typically face significantly higher costs that reduce capacity to compete in regional and international markets.”
“The Trade and Competitiveness Global Practice within the WBG was created to bring together the WBG’s extensive global knowledge and expertise to respond to the practical needs of our client countries. Working with other parts of the Bank Group we can deploy world class know how from across the globe to analyze problems, identify reform priorities, provide advice and technical assistance as well financing and implementation support for large scale institutional development and infrastructure projects.”
World Customs Organisation (WCO) Director Ana Hinojosa said that authorities were central to coordinated border management, and consequently, to the work of NTFCs.
“As one of the earliest adopters of complex information technology and data analysis systems, customs has an unique understanding of how goods move across borders, the various processes, procedures and players involved, and the potential areas for greater efficiencies,” Ms. Hinojosa said.
“As the TFA comes into force, the WCO will continue to strengthen its technical engagement of NTFCs, and looks forward to continue positive collaboration with international, regional and national partners,” she added.
The First International Forum for National Trade Facilitation Committees (NTFCs) was organized by UNCTAD in collaboration with the International Trade Centre (ITC), the World Bank Group (WBG), the World Customs Organisation (WCO) and the WTO.
A selection of presentations from the Forum are available to download below.
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UK-South Africa joint trade statement
Joint statement by UK Secretary of State for International Trade Dr Liam Fox, and South Africa Minister for Trade and Industry Dr Rob Davies
Secretary of State for International Trade, Dr Liam Fox, and the South Africa Minister of Trade and Industry, Dr Rob Davies, met in London today, Tuesday 24 January 2017, for bilateral talks.
The meeting was a continuation of the ongoing high-level engagement between the United Kingdom and South Africa (SA) to discuss trade and economic relations and follows the recent visit of the Chancellor of the Exchequer to South Africa in December 2016.
Bilateral trade in goods and services between the UK and South Africa stood at £7.6 billion in 2015, with UK exports of goods and services increasing by 25% in the last decade. South Africa’s exports into the UK have increased by over 5% on an annual basis for the last decade. South Africa is the third biggest trading partner for the UK in the Commonwealth. The meeting was an opportunity for ministers to discuss existing links as well as opportunities to further develop these.
Both ministers committed to strengthening ties as the UK prepares to leave the European Union and to work together to identify trade and investment opportunities that will benefit not only the UK and South Africa, but across the wider southern Africa and Africa region.
International Trade Secretary, Dr Liam Fox, said:
“South Africa is a key trading partner to the UK – a long-standing, strong and strategic ally for the United Kingdom in Africa and internationally. It is our largest export market in Africa; the largest economy in the southern Africa region and a fellow G20 member. South Africa is also the largest recipient of UK foreign direct investment in Africa accounting for 30% of total UK foreign direct investment (FDI) in 2014, a value of £13.1 billion.
“As we become an even more outward looking country, we will continue building on our relationship with South Africa and today’s meeting was an opportunity to discuss how we progress that.”
Minister for Trade and Industry, Dr Rob Davies, said:
“The UK is a historical and strategic trade and investment partner for South Africa and remains a key market especially for agriculture exports accounting for over 20% of SA’s exports of wine and 30% of fruit exports globally. The UK is the biggest destination in the EU for South African investment, accounting for 30% of SA investments into Europe. Furthermore, 46% of SA’s global investment originates from the UK.
“We must ensure that we have a predictable trade and investment environment for mutual benefit for both parties. As we work to achieve this, South Africa looks forward to discussing how our trade post-Brexit could build on the recently concluded Economic Partnership Agreement with the EU.”
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‘SA to pursue trade agreements with UK post-Brexit’
South Africa will continue to pursue bilateral and regional negotiations with the British government despite its exit from the European Union (EU), the Minister of Trade and Industry (the dti) Rob Davies said on Tuesday.
Speaking after his arrival from a two-day visit to the United Kingdom, Davies said the country’s strategy post-Brexit was to concluded a free-trade agreement with Britain.
“We had a number of meetings with investors and parliamentarians to encourage and boost trade between South Africa and the UK,” Davies said. “We don’t have a duty-free quota with the UK. Our our template going forward will be partnerships but in the long run we will have to have quotas.”
After its formal withdrawal from the EU, the United Kingdom will no longer be a party to any of the trade agreements between the EU and any other country or regional bloc.
South African exporters have had preferential access to UK markets under two consecutive agreements entered into with the EU as a regional bloc – namely the Trade and Development Co-operation Agreement (TDCA) since 2000, which was more recently superseded by the SADC-EU Economic Partnership Agreement (EPA).
Davies visited the UK in a bid to showcase opportunities for investment in some of South Africa’s “priority” sectors and to engage in important dialogue following the World Economic Forum’s Annual Meeting in Switzerland.
Asked about foreign investors’ perception of South Africa’s economy, Davies said TeamSA had presented a strong case for investment in the country and pacified rating agencies.
“We can expect a better economic performance this year compared to last year. The agricultural sector looks forward to the rains this year and commodity prices are going up,” Davies said.
“South African business does worry a lot about political and economical challenges in the country and is grappling with a lot of issues. But our continuous meetings with the president through a joint task team of government and business executives, we will continue to deal with concerns of rating agencies.”
Davies said TeamSA had not held formal bilateral meetings with Xi Jinping in Davos, the President of the People’s Republic of China, one of South Africa’s biggest trading partners. Asked about trade pacts with the United States following US President Donald Trump’s decision on Monday to pull out of big Asia trade deal, Davies said South Africa’s trade agreements with the US were underpinned by the African Growth and Opportunity Act (Agoa).
“Agoa was endorsed by Congress until 2025, but we will have to wait and see if anything changes,” Davies said.
» See the joint statement by UK Secretary of State for International Trade Dr Liam Fox, and South Africa Minister for Trade and Industry Dr Rob Davies
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Digitisation could boost Africa by R4 trillion
The adoption of digitalisation by African countries could add $300 billion (R4 trillion) to the continent's economy by 2026, with South Africa poised to derive the most benefits.
This is according to an inaugural report released on Monday by global technology firm Siemens.
The 2017 African Digitalisation Maturity Report was conducted by the company to benchmark levels of digitalisation in South Africa, Nigeria, Kenya and Ethiopia, with emphasis on the sectors of transport, manufacturing and energy.
The assessment was sent to Siemens’ existing and potential clients in the countries.
Sabine Dall’Omo, chief executive of Siemens Southern and Eastern Africa, said, for Africa to compete in the digital age, it needed to implement policy and create an environment conducive for knowledge sharing.
“One need only look at the impact of cellphone technology and smar phones in Africa to see how innovation can leapfrog older technologies at an almost breathtaking speed,” Dall’Omo said.
Siemens said it had received 105 responses from South African companies across the manufacturing, energy and transport industries. The report focused on four pillars of economic maturity – the digital environment, infrastructure, skills and digital literacy – in the four countries.
South Africa emerged as the country with the highest potential to realise digital maturity, followed by Kenya, Nigeria and Ethiopia.
South Africa also came first on economic maturity, with a score of 43 points out of 100, followed by Kenya with 33, Ethiopia at 26 and Nigeria with 18 points.
The country again led the way in digital environment at 60 points, followed again by Kenya with 55, Nigeria at 46 and Ethiopia at 27.
South Africa was also first with regard to ICT infrastructure, with 82 points, followed by Nigeria with 49, Kenya at 44 and Ethiopia with 33 points.
With regard to skills and digital literacy, South Africa came in first with 53 points, Kenya second with 38 and Nigeria had a score of 35 points and Ethiopia 20.
Last year, PricewaterhouseCoopers (PwC) released its report on the outlook for digitalisation in the world. The Industry 4.0: Building the Digital Enterprise report estimated that 87 percent of South African companies planned to introduce new digital products over the next five years.
The report also found that the levels of digitalisation would increase from 27 percent to 64 percent by 2020. The companies surveyed by PwC said they will invest up to R6 billion a year in the five years in their digitalisation programmes.
Dall’Omo said, while digital advances had been made on the continent, there were still infrastructure gaps to be met. “Based on the report’s findings, the understanding of energy diversification across the continent is not very high.”
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Set up more testing facilities: Continental standards body urges members
The African Organisation for Standards (Arso) is urging its members to set up more testing facilities to help certify products, as it moves to harmonise standards on the continent.
This comes as the major theme for Arso in 2017 is to promote Africa-made products and shift trade that is heavily skewed in favour of the developed world to the continent.
Speaking at a press briefing of the upcoming second edition of the Arso President’s Forum and Made in Africa Expo, the organisation’s president, Eve Gadzikwa said testing facilities would allow African-made goods to compete on the market.
The forum will be held from March 1 to 4 in Victoria Falls.
“One of the objectives of Arso is to harmonise standards so that Africa can increase its amount of trade. The biggest challenge has been the technical barriers of trade. So it is important for Africa to have these testing capabilities,” Gadzikwa, also the director general of the Standards Association of Zimbabwe (SAZ), said.
“Some of the measures that have been put in place by Arso were to encourage the development of more testing facilities. This also includes making sure that any product that would have not met basic standards does not come back onto the market.”
She said funding for their actions would come from membership fees of its 36 members, the European Union and European standards bodies across Europe.
The establishment of testing facilities is to prevent a loss of faith from the source market of a product in terms of trade.
Last year, Zambia’s standards bureau had to pull out the Lyons’ peanut butter product from their market as it was found with high levels of aflatoxins, which are harmful to people.
SAZ was later called in to examine the product, and confirmed the existence of higher levels of aflatoxins.
Lyon’s is a subsidiary of Dairibord Zimbabwe Limited.
Gadzikwa said testing facilities were critical in the promotion of locally-made products on the continent, as it was now a “supermarket for the developed world”.
“One of the objectives of the Arso President’s Forum and expo is to rally African stakeholders to appreciate the need for promoting the ‘Made in Africa’ products as a foundation for greater manufacturing, industrialisation and boost intra-African trade,” she said.
The upcoming Arso President’s Forum and Made in Africa Expo is expected to be attended from stakeholders across the continent.
The president of Mauritius Ameenah Gurib-Fakim will be one of the guest speakers at the event, which will be hosted for the first time in Zimbabwe by virtue of Gadzikwa being the Arso president.
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International trade organisations release compliance guidance for trade transactions
The Banking Commission of the International Chamber of Commerce (ICC), the Wolfsberg Group, and the Bankers Association for Finance and Trade (BAFT) jointly announce the publication of The Wolfsberg Group, ICC and BAFT Trade Finance Principles.
The guidance document updates the Wolfsberg Group’s Trade Finance Principles paper last revised in 2011. This broader industry edition now addresses the due diligence required by global and regional financial institutions of all sizes in the financing of international trade.
The document was updated to reflect the growing regulatory expectations, as well as the more stringent application of existing regulations faced by the industry today. The collaborative effort will help standardise the practice of financial crimes compliance for trade transactions.
The publication of this document is the culmination of more than two years of work undertaken by the organisations and their members.
“In keeping with the traditional work of the ICC Banking Commission, this guidance on sound financial crimes risk management for the traditional trade products follows in the steps of the UCP, URC etc. in setting standards by which banks should conduct their trade business and to provide a sound basis for the continuation of the finance of international trade by banks,” said Olivier Paul, Head of Policy of the ICC Banking Commission.
“When the leading industry associations work together, a stronger and universally acceptable standard of behaviours can be developed and adopted by all of the global trade finance community regardless of size,” said Tod Burwell, BAFT president and CEO. “These principles take into account the difference in development, cultures and size of all banks involved in trade finance and are not specific to any one country.”
“The extensive collaboration between the Wolfsberg Group, the ICC and BAFT to enhance the Wolfsberg Group’s 2011 Trade Finance Principles paper will serve a much wider number of Financial Institutions and, as a result, ensure their applicability more broadly across the industry. This publication is particularly timely in light of the recent focus on international trade flows and correspondent banking. This effort demonstrates the impact that such joint work can have on the industry and will no doubt drive further efforts on other issues in the future,” said Tracy Paradise, Executive Secretary of the Wolfsberg Group.
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Industrial commodities prices to surge in 2017: World Bank
Tight supply, strong demand boosts energy, metals prices
The World Bank is forecasting strong gains for industrial commodities such as energy and metals in 2017, due to tightening supply and strengthening demand.
In its January 2017 Commodity Markets Outlook, the World Bank is holding steady its crude oil price forecast for the year at $55 per barrel, a 29 percent jump from 2016. The energy price forecast assumes members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers will partially comply with an agreement to limit production after a long period of unrestrained output.
The Bank is raising its metals price forecast to an increase of 11 percent from the 4 percent rise anticipated in its October outlook on further tightening of supply and strong demand from China and advanced economies.
“Prices for most commodities appear to have bottomed out last year and are on track to climb in 2017,” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook. “However, changes in policies could alter this path.”
Agriculture prices as a whole are expected to rise by less than 1 percent in 2017. Small increases are anticipated for oils and oilseeds and raw materials, but grains prices are forecast to drop almost 3 percent on an improved supply outlook.
Precious metals prices are seen declining 7 percent as benchmark interest rates rise and safe-haven buying slows.
A Special Focus shows how commodity-exporting emerging and developing economies have been hit hard by slowing investment growth, which has declined from 7.1 percent in 2010 to 1.6 percent in 2015.
“Investment weakness – both public and private – hinders a range of activity in commodity-exporting emerging market and developing economies,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group. “Most of these economies have limited policy space to counteract the slowdown in investment growth, so they need to employ measures to enhance the business environment, promote economic diversification, and improve governance to better growth prospects over the longer term.”
The World Bank’s Commodity Markets Outlook is published quarterly, in January, April, July and October. The report provides detailed market analysis for major commodity groups, including energy, metals, agriculture, precious metals and fertilizers. This edition extends price forecasts to 2030 for 46 commodities and provides historical price data.
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EU sees no economic, legal basis for South African chicken duty
The European Union’s executive arm accused South Africa of unfairly protecting its chicken industry with import duties that mask local producers’ inability to compete in global markets.
South Africa imposed a temporary 13.9 percent so-called safeguard duty on bone-in chicken pieces in December, following allegations from its farmers that European producers are dumping dark meat which they can’t sell at home.
The European Commission sees “no clear economic and legal grounds to justify the imposition of the bilateral safeguard measures,” EU Trade Commissioner Cecilia Malmstrom said in a January 11 letter to Rob Davies, South Africa’s trade minister. The letter was published on the Commission’s website.
“It appears that the real problems of the South African poultry industry are not so much caused by the imports from the EU but that it is rather suffering from structural problems affecting its competitiveness,” Malmstrom wrote.
South African producers have warned that their industry could be destroyed by an influx of under-priced European chicken and urged authorities to restrict imports. The International Trade Administration Commission of South Africa is investigating accusations of dumping by EU nations and will make recommendations to the Department of Trade and Industry, spokesman Sidwell Medupe said by phone. Davies will then take a decision on whether to maintain, raise or lower the duties.
Job Cuts
Given Europe’s preference for chicken breast, the continent’s farmers sell white meat at a premium and the dark meat is essentially a waste product that’s sold in South Africa at below cost, according to Kevin Lovell, chief executive officer of the South African Poultry Association.
“We are the EU’s largest waste-disposal market at present,” Lovell said by e-mail. “If the EU thinks we have got the law wrong then why do they not take it on review in a proper forum?” such as the World Trade Organization, he said.
RCL Foods Ltd., which was the country’s biggest poultry producer before it cut output last year, has made annual losses averaging 50 million rand ($3.7 million) in the last five years in its chicken division, Scott Pitman, the managing director of RCL’s consumer division, said by phone. The company is cutting 1,350 jobs as part of plans to reduce its workforce by 20 percent.
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Trump revamps U.S. trade focus by pulling out of Pacific deal
Trade-focused presidential order fulfills campaign pledge
With the stroke of a pen, President Donald Trump abruptly ended the decades-old U.S. tilt toward free trade by acting to withdraw from an Asia-Pacific accord that had been promoted by companies including Nike Inc. and Wal-Mart Stores Inc. as well as family farmers and ranchers.
“Great thing for the American worker, what we just did,” Trump said on Monday after signing a memorandum directing the U.S. Trade Representative to withdraw the U.S. as a signatory to the Trans-Pacific Partnership accord with 11 other nations. He left the North American Free Trade Agreement with Mexico and Canada untouched for now, but an aide, who spoke on condition of anonymity, said action on that accord is still in the works.
“We’ve been talking about this a long time,” Trump said.
While Trump’s action doesn’t come as a surprise – he campaigned against the TPP and other trade deals during his run for the White House – the action rattled some Republicans and company executives who’ve built their businesses around decades of U.S. policy geared toward more open trade. Its unclear whether Trump will replace TPP with other, narrower trade deals. There also is concern about what more protectionist policies will mean for the modern economy, where goods can travel across more than a dozen borders before making their way to the consumer.
“Never has the president been the one to initiate protectionism or been so vocal about turning inward,” Dan Ikenson, the director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, said by telephone. “U.S. trade policy on a bipartisan basis since 1934 has been geared toward liberalization and accommodation and internationalism.”
An unlikely group of bedfellows supported and opposed the announcement. Among the supporters were labor groups, Democrats such as Ohio Senator Sherrod Brown and U.S. tobacco companies, which opposed the deal over a provision that would have prevented them from suing to challenge anti-smoking measures.
Expressing disappointment with the move were farm interests and some members of Trump’s own party, including Senator John McCain, who warned it would mean abandoning the U.S. strategic position in Asia, where China is ready to step into to any vacuum left by the American withdrawal.
“Abandoning TPP is the wrong decision,” McCain, an Arizona Republican, said in a statement. “Moving forward, it is imperative that America advances a positive trade agenda in the Asia-Pacific that will keep American workers and companies competitive in one of the most economically vibrant and fastest-growing regions in the world.”
Difficult to Compete
The Business Roundtable, which supported the agreement, urged the new administration to continue to pursue trade agreements in Asia to give the U.S. a competitive advantage.
“The fact that our major foreign competitors – China and the European Union – are moving forward with their own trade agreements in the Asia-Pacific will make it even more difficult for the United States to compete,” Tom Linebarger, CEO of Cummins Inc. and chair of the Business Roundtable International Engagement Committee, said in a statement.
White House spokesman Sean Spicer said the administration intends to pursue bilateral trade agreements with individual countries, which could give the U.S. more bargaining power than being part of large group negotiations. Trade deals can take years to hammer out, so it could be some time before any of those are in place.
Beef Sales
The National Cattlemen’s Beef Association, a trade group representing 230,000 cattle ranchers and feeders, said not having a trade deal like TPP costs the industry $400,000 in sales a day and that Nafta has increased U.S. beef exports to Mexico more than sevenfold. Without those deals in place, the price of U.S. beef would cost more overseas, putting them at a disadvantage.
“TPP and Nafta have long been convenient political punching bags, but the reality is that foreign trade has been one of the greatest success stories in the long history of the U.S. beef industry,” the group said in a statement.
U.S. agriculture exports have doubled since Nafta was signed in 1993 by President Bill Clinton.
Trump’s decision to pull out of TPP eliminates potential savings on import tariffs for retailers like Foot Locker Inc. and Wal-Mart, and brands such as Nike, Adidas AG and Puma SE, according to data from Bloomberg Intelligence. Import costs would have been cut by about $450 million a year, according to the Footwear Distributors and Retailers of America.
Company Support
The death of TPP is an especially bitter pill for Mark Parker, Nike’s chief executive officer. He has said TPP would help it add jobs in the U.S. because Nike would be able to use the savings from the deal to invest in the U.S. As the world’s largest sports brand, Nike sources about 40 percent of its shoes from Vietnam, a TPP member nation, and was very public supporter of the trade pact. Representatives from Nike didn’t respond to requests for comment.
Aldo Group, a Canadian footwear maker with a third of sales in the U.S., has been shifting production from China into Vietnam in anticipation of TPP being implemented in the hope of being able to take advantage of lower tariffs, said Bryan Eshelman, chief operating officer.
“TPP would have been fantastic” as the footwear industry pays on average as much as 18 percent of duty for imports to enter the U.S., Eshelman said in an interview before the executive order was signed. “In the short term, we are slightly disappointed that we can’t expect the duty relief that we were hoping for out of Vietnam.”
Taxes, Regulation
If the U.S. economy were to grow more rapidly because of some of Trump’s other policies such as reduced regulation and lower tax rates, Eshelman said, that would be beneficial for the company.
“If that happens, forget tariffs reduction. Our business will grow because the economy will grow and that would be a better outcome for us than lower duty imports into the U.S.,” Eshelman said.
The TPP, a 12-country deal that sought to liberalize trade between the U.S. and Pacific Rim nations including Japan, Mexico and Singapore, was a signature piece of former President Barack Obama’s attempt to pivot U.S. global strategy to focus on the fast-growing economies of Asia. The group that was part of the accord represents about 40 percent of the world economy. However, given rising opposition among Democrats and some Republican, it was never submitted for ratification.
The future of the TPP is now in flux. Japanese Prime Minister Shinzo Abe said in November that a TPP without the U.S. would be “meaningless.” Still, multiple signatory countries including Vietnam and Australia have said they would stick to the deal even without the leading party of the agreement.
‘Good Result’
On Nafta, Trump said Sunday that he’ll meet with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto to begin discussing the deal, which he has routinely blamed for the loss of U.S. jobs although there was little change to employment in the U.S. in several years after it went into effect. Trump signaled that he’s willing to work with the U.S.’s closest neighbors.
“We’re going to start renegotiating on Nafta, on immigration, and on security at the border,” Trump said at the start of a swearing-in ceremony for top White House staff. “I think we’re going to have a very good result for Mexico, for the United States, for everybody involved. It’s really very important.”
Officials in Canada, which is the biggest buyer of U.S. exports, have indicated they want to avoid getting entangled with the Trump administration’s targeting of imports from Mexico and China. The three countries are the biggest trading partners of the U.S.
David MacNaughton, Canada’s ambassador to the U.S., told reporters his focus is on avoiding Canada being “collateral damage” in trade talks.
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Underway in Addis: 33rd Ordinary Session of the Permanent Representatives Committee. Opening remarks of the Chairperson of the AU Commission, Dr Nkosazana Dlamini Zuma
David Luke, Phil Rourke: ‘Canada’s progressive trade agenda starts in Africa’ (UNECA)
Africa has a Brexit challenge: the UK and Europe will be consumed for years with redefining all aspects of their relationship. Trade and investment relations with Africa is way down the list of priorities. Canada should fill this engagement vacuum through the Commonwealth and la Francophonie. A comprehensive trade and development strategy with these members, launched at the WTO Ministerial in December, would provide a blueprint. A services trade and investment focus should be emphasized. Tertiary education, clean energy development, technological cooperation on climate change mitigation strategies, and agricultural productivity services improvements are all priority areas for expansion in Africa. These priorities also address directly Canadian goals for improved women’s empowerment, increased inclusive growth and more broadly-based support for development.
Richard Dowden: ‘Britain must seize chance for more trade with Africa’ (The Times, paywall)
In the debate about trade deals post Brexit, one destination has been almost completely ignored: Africa. China and India are the targets for future UK trade but why is Africa off the list? Too poor? Too strange? Too corrupt or violent? [Expelled in 1972, Uganda Indians lead UK’s Brexit trade]
Ambassador Julian Braithwaite: Ensuring a smooth transition in the WTO as we leave the EU (FCO)
Who will Trump choose for the Africa docket? (Daily Nation)
WTO IP rules amended to ease poor countries’ access to affordable medicines (WTO)
The WTO Secretariat has received in recent days notifications from five members that they have ratified the protocol amending the WTO TRIPS Agreement. These notifications - from Burkina Faso, Nigeria, Liechtenstein, the United Arab Emirates and Viet Nam - brought to two-thirds the number of WTO members which have now ratified the amendment. The two-thirds threshold was needed to formally bring the amendment into the TRIPS Agreement.
New record seizures of illicit medicines in Africa (WCO)
Operation ACIM mobilised 16 African customs administrations over a ten-day period, from 5- 14 September 2016, to inspect simultaneously, in the main ports on the continent, cargoes identified as likely to contain illicit or counterfeit pharmaceutical products posing a dangerous threat to local populations. Some 113 million illicit and potentially dangerous medicines were seized, with a total estimated value of €52 million. The biggest interceptions were in Nigeria, Benin, Kenya and Togo. Among the medicines uncovered by the African customs officials, most were essential treatments: antimalarial drugs, anti-inflammatories, antibiotics, and analgesics, as well as gastro-intestinal medicines. Even if most of the seizures were of everyday medicines, anti-cancer drugs, with over 2 million doses discovered, are also included in this tragic record. “Of the 243 maritime containers inspected, 150 contained illicit or counterfeit products. The need for greater scrutiny of this type of fraud is no longer to be demonstrated and I hope that this operation and the mobilization it has triggered on the side of Customs administrations, other agencies involved in the control of these products and among rights holders will have a lasting effect”, said Kunio Mikuriya, Secretary General of the WCO.
Kenya eyes Mexican maize as neighbours block exports (Business Daily)
Kenya plans to import maize from Mexico to ease the current supply shortage that has seen the price of flour hit a five-year high, making it the first time in nine years that East Africa’s largest economy will be buying the staple from outside Africa. Agriculture secretary Willy Bett said the Kenyan government has been in talks with its Mexican counterpart, who has confirmed the North American nation has enough stocks to supply the export market.
Tanzania: TRA blocks 30 million/- fish load on transit to Zambia (IPPMedia)
Tax officials in Mbeya Region have impounded 25 tonnes of fish worth more than 30 million/- from China that were destined for neighbouring Zambia but being offloaded ostensibly for sale in the local market.
2017 Global Talent Competitiveness Index: Mauritius ranks 46th (GoM)
The GTCI covers 19 Sub-Saharan Africa countries, of which four upper-middle-income countries of this group occupy the highest rankings, namely Mauritius (46), Botswana (63), South Africa (67), and Namibia (76). The report underlines that only Mauritius is above the median GTCI score, supported by a solid Enable pillar (35 in the rankings). This edition of the GTCI which covers Mauritius for the first time, highlights that the regulatory landscape of the country is particularly good (26th in the rankings). [GTCI documentation]
Angola approves new customs tariff (Macauhub)
Hermenegildo Gaspar also told Angolan news agency Angop that the main features of the new Customs Tariff are an the incentive for domestic production, especially agricultural production, and that it will replace the one in effect since 3 March 2014. More than 366 products are exempt from taxes, compared to 914 on the previous Tariff, and tax on imports of cassava, kale and cabbage, tanks, vats and similar containers with a capacity exceeding 300 litres, bricks, boards (slabs), tiles and other ceramic pieces has increased by 35%.
South Africa: Past production policy was naive, says October (Business Day)
SA was stupid and naive to have withdrawn support for its productive sector in the 1990s in line with international policy guidelines, because the country paid a price and had to play catch-up, Department of Trade and Industry director-general Lionel October said in an interview on Friday. October was commenting on a World Bank report on SA released last week in Johannesburg. The bank recommended the government redirect its tax incentives to labour-intensive industries such as agriculture and manufacturing to boost growth and job creation, saying that the social returns in manufacturing were greater than for mining. October said the department welcomed the report:
East Africa yet to resolve border disputes ahead of deadline (The EastAfrican)
The deadline set by the AU for all African countries to delineate and demarcate their borders by the end of 2017, but only 30% of the entire 80,000km borders on the continent have been demarcated. The African Union Border Programme launched in 2007 had initially provided all countries with outstanding border disputes to delimit and demarcate their boundaries by the end of 2010. However, the deadline was pushed to the end of 2017 because of lack of funding and technical expertise. Most of the disputes arise out of the scramble for natural resources or personal differences between leaders of neighbouring countries.
IGAD Ministers launch cross-border development projects (IGAD)
The project Collaboration in Cross-Border Areas of the Horn of Africa Region is aimed at developing cross-border areas between Ethiopia, Kenya, Somalia, and Sudan within the implementation of the IGAD drought resilience initiative (IDDRSI). The First Phase of the cross-border development projects is worth 63.9 million Euros and is funded by the EU. [IGAD Drought Disaster Resilience and Sustainability Initiative: communiqué, 1000 South Sudan pastoralists cross into Uganda]
G20 agricultural ministers meeting: FAO’s José Graziano da Silva (UN)
Turning to the importance of information and communication technologies to build efficiency, resilience and inclusion of poor family farmers, the FAO Director-General spoke about the agency’s digital strategy that aims to support them through knowledge sharing and bottom-up learning. As part of the strategy, the UN agency is working with Google to make high-resolution satellite data an everyday tool to monitor and manage natural resources, promote sustainable agriculture and strengthen food security. It is also engaging with the World Meteorological Organization to improve weather forecasts for farmers, as well as exploring ways to provide small farmers with microclimate forecasts. [Global Forum for Food and Agriculture 2017]
Japan threatens to drag India to WTO on steel (The Hindu)
Japan is threatening to take India to the WTO over restrictions that nearly halved its steel exports to the South Asian nation over the past year, a step that could trigger more trade spats as global tensions over steel and other commodities run high. Such action is rare for Japan. The world’s second-biggest steel producer typically tries to smooth disputes quietly through bilateral talks, but with global trade friction increasing, Japan’s defence of an industry that sells nearly half of its products overseas is getting more vigorous. Besides concern over India’s protection of its domestic steel industry, Japan is also worried about the more rough and tumble climate for global trade being engendered by incoming U.S. President Donald Trump, and feels it must make a strong stand for open and fair international markets.
Connecting India’s states with good logistics (Livemint)
Some estimates suggest that logistics costs in India amounted to a sizeable 14% of GDP in 2014. It is also suggested that inefficient logistics chip off a whopping $45bn from India’s economic output, or about 2% of the country’s GDP. So, have India’s recent efforts to improve its global logistics ranking borne fruit? On this, there is good news.
West African technocrats discuss technical cooperation with India
Nigeria: Bill to mandate govt agencies to patronise Nigerian products gets second reading
Tanzania: Turkey, China caught up in SGR tender confusion
Enough Project, Atlantic Council host discussion on Congo’s Democratic Transition Accord
Andrew Natsios: ‘South Sudan cannot be allowed to collapse’
Rohinton P. Medhora: ‘Refreshing global trade governance’
The problem with Xi Jinping’s Davos pitch
The 2017 edition of International Debt Statistics is out (World Bank)