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Tanzania - No Consensus Yet On EAC Single Tourist Visa
East African Community (EAC) regional block have never reached a consensus on the issuance of the single tourist visa by Kenya, Uganda and Rwanda. "There has never been any agreement on the arrangement at the EAC level, as a matter of fact, the member states are still discussing the issue," Acting Director for Trade and Investment in the Ministry of Foreign Affairs and East African Cooperation, Bernard Haule, said yesterday.
Mr Haule was responding to allegations by some media outlets and social networks, suggesting that Tanzania had snubbed the multi-entry visa for tourists outside the regional bloc. The official maintained that introduction of the arrangement for all EAC member states was still under discussion through sectoral meetings on tourism and wildlife, noting that Tanzania was fully participating to the deliberations.
A senior tourism development officer from Uganda, Ms Anne Awori, was recently quoted at a forum in Kigali, Rwanda, complaining that some of the countries implementing the agreement were forcing tourists with the documents to pay extra upon entering their countries.
"We have come across many cases of officials asking tourists who have obtained the single entry visa from Uganda to pay entry fees in Rwanda or Kenya," said Ms Awori, adding, "A recent case is when Rwanda charged a 13-yearold tourist an extra 60 US dollars despite having the regional visa from Uganda."
At a follow up meeting in 2010, the task force briefed the ministers on issues to consider, including harmonisation of visas for the EAC member states. "It was as well proposed that the visas be issued electronically, the taskforce further proposed a proper system for collection and sharing of revenues accrued from the visa fees," Mr Haule explained.
The official stated further that after recommendations by the experts, the sectoral ministers in July 2013 agreed to form another working team to propose the best ways member countries could address the issues raised by the first team. "Before the team got to work and suggest the way forward, the three countries decided to introduce the single visa on their own," he remarked.
According to Mr Haule, the experts working on the issues were drawn from multiple areas including immigration departments, tourism, information and communication technology, security organisations, finance, legal affairs and ministries of foreign affairs.
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15 years after, Africa accounts for $4.1b non-oil export under AGOA
The United States Government has stated that Nigeria and other African countries accounted for $4.1 billion worth of non-oil trade under the Africa Growth and Opportunity Act (AGOA).
According to the Assistant U.S. Trade Representative for Africa, Florizelle Liser, the scheme has resulted in a four-fold increase, from $1.4 billion in 2001 to $4.1 billion in 2015, in the continent’s non-oil trade with the country.
Worried by the infrastructural deficit impeding trade growth, the U.S. recommended that African countries should focus on infrastructure development, in particular, electricity and transportation, and should build new roads, bridges and railways to link major trade hubs that would improve economies of scale.
Liser added that African governments should also support the ability of commercial banks to modernize and finance small and medium-sized businesses and should strategically identify sectors that could benefit from AGOA and develop them, she said.
In a presentation at the headquarters of the African Export-Import Bank (Afreximbank) during the maiden edition of the Afreximbank Trade and Development Seminar Series, Ms. Liser said that sectors that had benefitted most from AGOA included automobiles, apparel, footwear, prepared fruits and vegetable, nuts and cut flowers.
“AGOA has had success in helping many African countries diversify their export portfolios,” continued Ms. Liser, who added that hundreds of thousands of jobs had been created as a result of the Act.
Noting that Africa currently accounts for only two per cent of U.S. trade, she said that supply-side constraints, including unreliable electricity and transportation, poor ports, lack of transnational highways, and poor access to the internet were among the impediments to trade development on the continent.
Other factors included low intra-Africa trade, which result in low economies of scale, and the difficulties faced by African producers in meeting U.S. agricultural and other standards, she added.
Ms. Liser identified other Africa-focused trade development initiatives by the U.S. to include the Millennium Challenge Corporation, which had set aside $7.9 billion, or 68 per cent of the total compact portfolio, for Africa.
According to her, the Corporation, which, at $3 billion, is the lead contributor to the U.S. Government’s trade capacity building assistance to AGOA-eligible countries, has dedicated 20 of its 33 compacts to African countries.
Other initiatives included Power Africa, the trade-related capacity programme administered under USAID and unveiled by U.S. President Barack Obama in 2013; Trade Africa, the USAID’s initiative to increase internal and regional trade and expand trade and economic ties; and the U.S. Overseas Private Investment Corporation, the government’s development finance institution which mobilizes private capital to address critical development challenges and which provides investors with financing, political risk insurance, and support for private equity investment funds, when commercial funding cannot be obtained elsewhere.
Earlier, Afreximbank President Dr. Benedict Oramah said that the fact that despite the size of the U.S. market and the preferential access granted to African countries for 15 years under AGOA, the continent had remained a marginal player in that market, raised questions about why Africa had been unable to better penetrate the market and about what could be done for it to take full advantage of the opportunity presented by AGOA.
The President noted that a deficit of product diversification had been singled out as a key hindrance to Africa’s access the U.S. market, and announced that Afreximbank, had identified the development of industrial parks and special economic zones as a strategic path to accelerating the industrialization of African economies and diversifying their exports.
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African Trade Insurance Agency (ATI) officially open for business in Ethiopia and Zimbabwe to ease investors' concerns
At a press conference, the CEO of the African Trade Insurance Agency (ATI), George Otieno, along with H.E. Dina Mufti, the Ethiopian Ambassador and Gabriel Negatu, Regional Director, African Development Bank announced today that it is ready to begin covering transactions in Ethiopia and Zimbabwe. After a year-long process that was supported with funds from the African Development Bank, both countries are now members.
The announcement will give investors crucial comfort to start or continue doing business in these countries.
ATI was established in 2001 by African governments and a range of other shareholders to ease the concerns of investors by providing a range of investment and political risk insurance products.
In the case of Ethiopia, one of Africa’s fastest growing economies, ATI will help the country maintain its status as one of Africa’s biggest success stories.
The $66 billion economy has been expanding as much as 10.3 percent annually over recent years, according to the International Monetary Fund, with a dip to 6.5 percent last year due to drought. Ethiopia has also been successful in attracting large manufacturers such as Unilever NV, Diageo Plc and Hennes & Mauritz (H&M) and has taken the lead in export of agricultural products.
For Zimbabwe, membership in ATI would give a boost to the country’s quest to attract foreign direct investments.
“I have no doubt that our membership will contribute to Zimbabwe’s current efforts to reduce the cost of doing business by making political risk and credit insurance, as well as non-payment and FDI cover readily available to exporters, importers and investors,” noted Industry & Commerce Minister Mike Bimha.
He also noted that his office had been inundated with inquiries from the private sector and potential investors on how they could access ATI’s insurance services.
“The African Development Bank is pleased to have financed Ethiopia and Zimbabwe’s membership into ATI. The affiliation with ATI will attract prospective investors with additional guarantees to participate in the priority areas of powering & lighting, feeding, industrializing and integrating both countries. It will also help improve the livelihood of millions of Ethiopians and Zimbabweans,” noted Gabriel Negatu, African Development Bank’s Regional Director.
In both countries, ATI has a current project pipeline estimated at over one billion USD, which is expected to double in the short-term based on existing demand for its products. Prospective projects include a 400 MW solar energy plant in Ethiopia that would contribute to the country’s carbon neutral growth plan to improve the living conditions of its citizens. And in Zimbabwe, ATI is considering a line of credit targeting commercial banks that will allow them to increase their lending volumes.
“I believe our entry into Ethiopia and Zimbabwe, particularly at this time, sends a powerful message to investors. Our presence signals that both countries are open for business because we are standing beside them as a credible and internationally-respected insurer with an ‘A’ rating from S&P. This should be positive news to anyone interested in doing business in the either country,” noted Mr. Otieno, ATI’s Chief Executive Officer.
ATI provides political, investment and trade credit risk insurance and surety bonds to clients doing business in its member countries. The products are created to help countries attract more investments and to promote domestic trade by providing insurance that mitigates against sovereign risks and specifically, currency inconvertibility and exchange transfer, expropriation, trade embargoes, non-honouring of contracts and payment default risks among others.
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tralac’s Daily News Selection
The selection: Tuesday, 18 October 2016
COMESA Summit updates:
Countries seek COMESA support for top jobs at the AU: Eight countries presented requests to the COMESA Council of Ministers for support of their proposed candidates for top jobs at the African Union Commission during the forthcoming African Union Assembly scheduled for January 2017. Kenya presented its Cabinet Secretary, Ministry of Foreign Affairs Ambassador (Dr) Amina Mohamed for the position of Chairperson of the African Union Commission. Other candidates included Egypt's Mona Toema El-Garf and Zambia's Ambassador Albert Muchanga (for Commissioner for Trade and Industry), Dr Jabine Ntakirutimana of Burundi and Mrs Amira El Fadil of Sudan (for Commissioner for Social Affairs), Mr Antoine-Marie Moustache of Seychelles and Dr Austin Sichinga of Zambia (for Commissioner for Agriculture and Rural Economy).
Kenya wins new Comesa sugar cover on poll fears (Business Daily): Next year’s General Election has spared Kenya’s sugarcane farmers external competition after Comesa cited the poll as one of the reasons for restricting cheap imports from the trading bloc for another two years. Comesa’s council of ministers also noted court cases stopping the privatisation of the State-owned mills. “In discussing this matter, the meeting noted the imminent political elections in Kenya, and cases brought against the government regarding the privatisation programme,” read a memo from Comesa after the end of the meeting 19-member States. The general election is slated for August and western Kenya, where sugarcane is the dominant cash crop, will be a battle ground between the opposition and the ruling coalition.
Inquiry into the UK’s Africa Free Trade Initiative (APPG-TOP)
First, if alternative and no-less favourable trading arrangements with Africa are not put in place by the UK Government at the point of the UK’s departure from the EU, the effect would be that African exports to the UK would de facto face new tariff and trade restrictions. Non-LDC African countries which are not covered by the Everything But Arms scheme and are not (yet) members of a signed EPA with the EU (like Kenya, Nigeria, Ghana and Cote D’Ivoire) face particular risks here as new bespoke arrangements would need to be put in place for their exports to the UK. Our assessment is that the potential impacts here would be more significant for some African countries and sectors than others based upon their trading profiles. Some countries which would be most affected due to the value of their exports into the UK include South Africa, Nigeria, Angola, Kenya, Ghana and Côte d’Ivoire.
Second, major African exporters to the UK may also be affected in the face of a weaker pound. A weaker pound reduces the competitiveness of Africa’s exports, such as Kenyan’s horticulture exports, against UK domestic production. Profits will also shrink for African exporters whose expenditure is in US dollars but their income in sterling. The prospect of a deceleration in economic growth in the UK and of prolonged uncertainty regarding future trading arrangements between the UK and the EU could hold back trade and investment growth between the UK and African partners. Reduced growth in sales of African producers into the UK, and reduced levels of investment into such business, could have a significant impact on households, farmers and workers in parts of the continent. [Financial Times: UK ready to shift focus of Africa aid to trade]
Reaping richer returns: public spending priorities for African agriculture productivity growth (World Bank)
Enhance credibility by committing to an external agent: This is an important principle underlying international trade treaties. The sweeping agricultural reform program in Mexico, for example, was motivated by the determination to join the North American Free Trade Agreement and the consequent need to firmly “lock in” the policies that would make this possible. In a similar vein, regional agreements and institutions in Africa, such as the Comprehensive Africa Agriculture Development Program, can play this role if commitments are taken seriously. CAADP’s peer reviews of National Agricultural Investment Plans and the Joint Sector Review process with an emphasis on “mutual accountability” mechanisms could potentially enhance credibility. As noted earlier, the fungibility of resources makes it difficult for donors and development partners to have a significant influence over the size and composition of agricultural budgets through the mechanism of funding individual projects. But with agricultural public expenditure reviews becoming more common, they provide a tool to get a comprehensive view of the entire budget, identify shifts in overall spending patterns, increase transparency, and facilitate more effective input into budget planning and implementation. [The analysts: Aparajita Goyal, John Nash] [Note: The full report will be available in January 2017]
Increasing private sector investments in frontier markets in Africa through a regional approach (pdf, AfDB)
The services to be provided under the assignment include: (i) Assess the overall FDI landscape and the greatest opportunities for investment and trade in the following regions in Africa: Great Lakes, Horn of Africa, Sahel and Mano River Basin; (ii) Identify the region that has the greatest potential to attract investments from and increase trade with South Korean chaebol and SMEs. Identify those Korean companies that are most likely to make an investment in the region over the next 18 months.
SAPP: Regional power deficit will be over by 2021 – Kandjoze (New Era)
Meanwhile, Nampa reports that Namibia and Angola will soon sign a MoU on the interconnector power transmission project in an effort to boost integration of the regional power grid. Kandjoze said Namibia is working closely with Angola on the preliminary studies needed before the Angola-Namibia interconnector power transmission project can proceed. The project involves the construction of power transmission lines from the proposed Baynes Hydropower Plant in lower Kunene, Namibia, so as to link up with the national power grid of Angola.
Ethiopia, Sudan prepare to launch single border-crossing (Sudan Tribune)
A four-day workshop to develop the legal framework for the border crossing has commenced in Khartoum on Monday with the participation of legal experts from COMESA. Sudan’s Minister of Presidential Affairs and head of the higher committee for border crossings Fadl Abdalla Fadl, who addressed the workshop, said the workshop seeks to develop a draft agreement between Sudan and Ethiopia on the border crossing.
Kazungula Bridge OSBP update: Zambia, Botswana sign K263m contract with Chinese firm (Lusaka Times)
Zambia and Botswana have signed a contract with Anhui Foreign Economic Construction Group Company Limited of China (AFECC) for the construction of OSBP facilities at Kazungula Border on the Zambian side at a cost of more than K263 million. The contract valued at K263, 670, 419.98, which is funded through a loan from the AfDB, forms package three of the Main Kazungula Bridge Construction Project which is expected to be completed in December 2018. Package three of Kazungula Bridge consists of 10 main buildings, 800 metres of circulation roads, parking areas and 2.4 kilometres of the main bridge road. [Note: 2nd edition of the OSBP Sourcebook to be published in October (ICA)]
N$1bn Namibia, DRC trade park on course (New Era)
Construction recently began on the Namibia Trade and Industrial Park in Lubumbashi in the mineral-rich DRC, Namibian Ambassador to the DRC, Wilbard Hellao, told New Era in an interview last week. The project will be done in four phases and the other phases will commence soon, in sequence. He said that upon completion the trade and industrial park is estimated to will cost the Namibia government close to N$1bn. "This will offer new opportunities to both governments, while also acting as a springboard for Namibians for trade into the Central African and Great Lakes regions,” he said.
East Africa: Regional armed forces move to share industrial facilities (New Times)
The EAC has made significant progress toward shared use of military industrial facilities, an official said during a meeting in Kigali yesterday. Col. Francis Mbindi, Tanzania’s defence liaison officer at the EAC Secretariat, told reporters that officials from EAC partner states will tour Rwanda’s facilities and determine which ones can be put to shared use. The meeting, in line with the EAC defence sector calendar, is a follow up on a similar session held in June in Dar-es-Salaam, Tanzania. Among others, Kenya also informed its peers that all requisite machinery for food processing is projected to be imported by year end. Kenya, Uganda and Tanzania are also working on a joint research and development project to benefit the entire Community. Joint research and development in the production of raw materials from locally available resources between the Tanzanian corporation and Uganda’s Luwero Industries Ltd – an ammunition facility – is reported to be in advanced stages.
SADC Senior Officials for ICTs, Transport and Meteorology are meeting at Esibayeni Lodge in Matsapa, Swaziland, ahead of Ministers Meeting (@SADC_News)
West Africa Gateway: NewsBrief, 4-17 October
AU adopts new charter on maritime safety (Graphic)
Ghana's Deputy Minister of Foreign Affairs, Mr Emmanuel Bombande, said in signing the charter, Heads of State agreed that special technical committees must meet to develop additional annexes that would be automatically be integrated into the charter. Asked if that meant that the charter, in its current form, was not complete, Mr Bombande said "it is complete in the sense that our African leaders have adopted and signed it.” As a result, he said there would be extraordinary sessions of specialised training committees to develop the less visible components that could then be integrated into the main document. Consequently, the minister said the charter was ‘work in progress’ that would be fully complemented by July next year, after the annexes had been adopted and automatically integrated into it.
The role of newly industrialized economies in global value chains (IMF)
This study contributes to the economic literature by performing a similar analysis for the position of newly industrialized economies in global value chains, including Brazil, China, India, Indonesia, Mexico and Turkey. The analysis shows that while all are outsourcing locations and at a similar stage of development, newly industrialized economies play very different roles in global production and in global value chains. [The analyst: Dominik Boddin]
What drives the Rand / US Dollar exchange rate volatility? (IMF)
This paper investigates possible drivers of volatility in the South African rand since the onset of the global financial crisis. We assess the role played by local and international economic surprises, commodity price volatility, global market risk perceptions, and local political uncertainty. The results suggest that rand volatility is mainly driven by commodity price volatility, and global market volatility, as well as domestic political uncertainty. In addition, economic surprises originating in the United States matter, but not those originating from South Africa, Europe, or China. [The analysts: Nasha Maveé, Roberto Perrelli, Axel Schimmelpfennig]
Today's Quick Links:
Afreximbank AGOA seminar in Cairo: two perspectives
Kenya pushes for review of CET rates on sensitive goods
Gas boom in southern Tanzania casts bleak future for cashew farming
Aflatoxins affect African food exports, experts say
Zambia Development Agency says investment pledges have hit $2.6bn
Pradeep S. Mehta, Abhishek Kumar: How does India score well on competitiveness but poorly on ease of doing business?
Jomo Kwame Sundaram: Why farmers respond differently to higher food prices?
Samir Saran: BRICS remains on course for bigger, more effective projects in the years to come
BRICS New Development Bank not feeling peer pressure from AIIB - says VP Paulo Nogueira Batista
BRICS NDB president KV Kamath: interviewed on its medium term outlook
Brazil knocks on India's door to revive trade ties
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COMESA to publish FTA annual assessments
The Common Market for Eastern and Southern Africa Secretariat will publish annual assessments of the benefits and challenges of the Free Trade Area for consideration by member states.The assessment will cover trade in goods and services, logistics and trade facilitation, as well as industrialization and infrastructure development which contribute to boosting intra-regional trade
“This was one of the decisions made by the 36th Comesa Council of Ministers meeting in Antananarivo last year. The Council asked member states that are not in the FTA to take definitive steps to join it to create an integrated internal market,” said Comesa in a statement.
Currently, 15 out of the 19 member States are participating in the FTA. They include Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Uganda, Zambia and Zimbabwe.
In December 2015, the Democratic Republic of Congo passed the required law that allowed it to join the FTA. Its accession to the FTA will be done through a three year phase down approach starting in 2016 with a 40 percent reduction on duty.
This will be followed by a 30 percent reduction in 2017 and another 30 percent in 2018. This will eventually bring the charges to zero percent which is a requirement for a country to fully participate in the FTA.
The Council asked DR Congo to complete the tariff reductions as set out in the legislation.The Comesa FTA was launched in October 2000 to provide duty free and quota free market access to member States on Comesa originating products.
The regional grouping has established a set or criteria known as the Rules of Origin to ensure that goods that have undergone some processing or are wholly produced within the region get preferential tariff treatment when crossing the border.
Uganda informed the meeting that its tariff reduction schedule will soon be transmitted to the Secretariat.
Eritrea was still applying 80 percent tariff reduction in its trade with the rest of Comesa member states while Ethiopia was still consulting on effecting tariff reductions which were reduced by 10 percent in 1989 for Comesa originating products.
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Inquiry into the UK’s Africa Free Trade Initiative: Final report
Parliamentary group inquiry calls on new UK Government to create “prosperity partnership” with Africa based on development, trade and investment
An Inquiry Committee of distinguished British and African experts has today published a report examining the achievements of the UK’s Africa Free Trade Initiative (AFTi) five years after it was formally launched by David Cameron during his visits to South Africa and Nigeria in July 2011.
The Inquiry Committee – made up of Ali A. Mufuruki, Lord Stephen Green, Lord Paul Boateng, Ambassador Darlington Mwape and Professor Myles Wickstead – was established by the All-Party Parliamentary Group for Trade Out of Poverty earlier this year.
The Inquiry Committee gathered written evidence and held public hearings and other consultative events in the UK and Africa over a six month period, engaging over 60 experts, diplomats, business people and representatives from key multilateral organisations from the UK and across the African continent.
The report, Inquiry into the UK’s Africa Free Trade Initiative, states that:
1. The Africa Free Trade Initiative has been a success – supporting key African priorities, slashing trade costs, and delivering real gains for the continent and its trading partners. The report notes that AFTi has:
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Cut tariffs and reduced red-tape for traders in Africa;
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Streamlined border-crossings and customs procedures;
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Upgraded key gateway ports and transport corridors;
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Leveraged private sector investment into agribusiness, logistics and infrastructure for trade.
2. Recognising AFTi’s success and the need for faster, more inclusive economic growth, the new UK Government should re-boot its relationship with Africa to create a “prosperity partnership” based on development, trade and investment. The report states that a successor initiative to AFTi should be launched as the centre-piece of the UK’s economic policy agenda in Africa focused on increased support around:
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Cutting trade costs and connecting markets;
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Enhancing productive capacity;
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Using trade to drive inclusive growth for poor women and men.
3. The Prime Minister should appoint a Special Envoy to lead the rebooting of the UK-Africa prosperity partnership, delivering in five key areas:
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Better direction and co-ordination across UK Government Departments;
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Closer dialogue between UK Ministers, African Governments, business and civil society on freeing up trade for all;
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More synergy between the investment programmes delivered by the UK Government, the private sector and by international development partners;
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Driving and scaling new, high-impact approaches that can transform opportunities from trade for ordinary Africans.
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Stronger accountability for results and value for taxpayers’ money.
4. While Brexit poses short-term challenges, it also provides an opportunity for the UK to lead the world in structuring a pro-development trade policy with Africa that will genuinely boost growth, jobs and incomes of ordinary people. The report states that new trade agreements should support Africa’s own integration efforts, incorporating the best elements of EU, US, Canadian and other practices, ensuring that they become a model for other OECD countries to follow.
In its examination of AFTi to date, the report records a number of notable successes:
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An Electronic Single Window set up in Rwanda reduced the average time taken to clear imported goods through customs from 11 days to 1.5 days;
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The East African Community Single Customs Territory has helped improve efficiency of the Northern Corridor by reducing cargo transit times from Mombasa to Kampala from 18 days to 6 days;
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Modernisation at the Port Of Dar es Salaam in Tanzania has cut cargo dwell times from 11 days to 7 days, and vessel turnaround times by half;
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CDC financing for expansion of ports and rail connections in Southern Africa will expand capacity for trade and create 43,000 new jobs in Mozambique;
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The Grow Africa partnership has helped leverage $684m in new private sector investment into agribusinesses across 12 African countries;
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A new mega Free Trade Area was launched across East and Southern Africa last year, with negotiations now underway to extend this continent-wide.
Ali A. Mufuruki, Co-Chair of the Inquiry Committee, says:
“All African leaders are anxious to ensure that the UK Government moves quickly to prepare for possible disruptions of African trade to the UK. However, Brexit also presents a big prize – the opportunity for the UK to lead the world in structuring a pro-development trade policy with Africa, becoming a model for other OECD countries to follow.”
Lord Stephen Green, Co-Chair of the Inquiry Committee, says:
“The Africa Free Trade Initiative, which has been aligned with African priorities and supported African-led reforms, shows how effectively the UK and African countries can work together. Successful implementation of the WTO Trade Facilitation Agreement, which the UK and Africa actively championed together in Bali, has the potential to significantly reduce trade costs for poor countries. Twelve African countries have already ratified the Agreement – even outpacing Canada – and I expect this number to rise rapidly.”
Lord Paul Boateng, one of the Inquiry Committee members, says:
“Women play a critical but too often undervalued role in Africa's economy. This report highlights the potential of a successor to the UK’s excellent Africa Free Trade Initiative to strengthen the position of women as agents of Africa's development. African women as farmers and traders stand to benefit from the implementation of the report’s recommendations, furthering the UK’s longstanding commitment to gender empowerment across the globe.”
Professor Myles Wickstead, one of the Inquiry Committee members, says:
“The international community recognises the role of trade as a pathway out of poverty, most notably through Goal 8 of the Sustainable Development Goals which specifically demands an increase in Aid for Trade. The Africa Free Trade Initiative provides us with a solid blueprint for supporting trade and points us clearly in direction we need to take”.
Rt Hon Peter Lilley MP, Co-Chair of the All-Party Parliamentary Group for Trade Out of Poverty, which established the Inquiry Committee, says:
“The Africa Free Trade Initiative has been one of the UK’s outstanding development initiatives of recent years – supporting key African priorities, slashing trade costs, and delivering real gains for the continent and its trading partners. The new UK government should take forward these successes and create a new “prosperity partnership” with Africa – based on development, trade and investment – that will help the continent to trade its way out of poverty.”
Executive Summary
The UK coalition Government of 2010-2015 launched the Africa Free Trade Initiative (AFTi) in 2011 to help African countries to integrate into the world trade system, focusing on political, financial and technical support to boost trade between African countries, and trade of African countries with the world. To mark the fifth anniversary of AFTi the All-Party Parliamentary Group on Trade out of Poverty (APPG-TOP) appointed an Inquiry Committee of distinguished experts to review the achievements of AFTi so far, advise on whether there is a case for a successor-initiative – an “AFTi II” – and if so, what its targets should be and how it would work. The Inquiry, which was provided with secretarial support by the Saana Institute, gathered written evidence and held public hearings and other consultative events in the UK and Africa between April and July 2016.
A core element in the development strategies of African countries’ is progressive regional integration, with the end-objective of establishing an African Economic Community (AEC) which would bring together the 30 various regional economic blocs and associations in Africa, as set out in the African Union (AU) Plan for Boosting intra-African Trade (BIAT). These objectives were recognised by the UK Government in the White Paper on Trade and Investment for Growth of 2011 and in the launch of AFTi by the Prime Minister in South Africa and Nigeria in July that year.
AFTi programmes have focused on cutting tariffs, harmonizing regional trade arrangements, improving both hard and soft trade infrastructure and cutting red tape through modernizing customs systems, procedures and facilities. Assistance has been provided both to individual African governments and to regional economic communities (RECs). Most progress has been achieved by UK support in East and Southern Africa, particularly in the East African Community (EAC) and through technical and policy support for negotiations for the Common Market for Eastern and Southern Africa (COMESA)-EAC-Southern African Development Community (SADC) Tripartite Free Trade Area (TFTA), whose three basic pillars are market integration, industrial development and infrastructure development. The TFTA aims to liberalise 100% of tariff lines between the parties and to set up a single mechanism to eliminate non-tariff barriers. Phase II of TFTA negotiations, planned to start in the second half of 2016, will extend among other issues to trade in services, intellectual property rights and cross-border investment. This work now has also to be seen in the context of negotiations, formally launched in June 2015, for an AU Continental Free Trade Area (CFTA).
AFTi has made significant progress in supporting better trade facilitation among African countries, including assisting the introduction of improved border and customs clearance procedures in some countries and supporting the ratification of, and notifying commitments under, the World Trade Organisation (WTO) Trade Facilitation Agreement (TFA). Recognizing that infrastructure development is a long-term process, AFTi has helped to facilitate coordination and reduce investment-related costs between governments and stakeholders across borders. It has also leveraged private sector investment funding from Development Finance Institutions (DFIs).
Despite the progress in improving trade conditions in Africa that has been achieved since 2011 by African governments, regional organizations, international institutions and bilateral programmes such as AFTi, sustained effort needs to be put into freeing up trade in Africa and boosting the competitiveness of African countries, and growth. This includes more work to reduce tariffs and non-tariff-barriers (NTBs), including effective implementation of trade agreements especially the WTO TFA, determined work to reduce and streamline border clearance procedures, and negotiation of a credible and wide-ranging CFTA.
It is also important to build up the participation of African countries and enterprises in both global and regional value chains, and to move progressively away from the current situation where African countries are overwhelmingly exporters of primary products to a greater engagement in higher value-added products. As essential groundwork for this, Africa’s massive infrastructure deficit needs to be tackled, especially in the transport and power sectors, through public sector investment an multi-sectoral partnerships with large players such as the World Bank Group and the African Development Bank (AfDB) who have already committed massive resources to infrastructure development. It is also necessary to accept that returns on infrastructure investment in Africa need to be calculated over a longer timescale. Similarly, much work is needed to improve practices and yields in agriculture across Africa; and to improve Africa’s involvement in the digital economy, taking advantage of the unprecedented acceleration in mobile technology usage in African countries. Finally, in the interests of the pan-African economy determined efforts are needed to regularise the massive proportion of cross-border trade which is informal and essentially unregulated, to improve and safeguard the position of women in all aspects of trade, particularly across borders, and to create decent job opportunities for the massively increasing population of young people.
The vote in the UK’s referendum on leaving the European Union (EU) has both immediate and longer-term implications for trade with African countries, which export varying quantities of different goods to various countries in the EU including Britain. Post-”Brexit”, some categories of trade will be affected, although how and to what extent is as yet unclear. Where African countries are engaged in global supply chains (for example for cut flowers) involving rapid transhipment between distribution depots in the UK and other EU countries, trade could be disrupted. Macro- economic effects in Europe such as a deceleration in economic growth in the UK could affect demand.
Withdrawal from the EU may of course open up possibilities for the UK to take a more specific and targeted approach to its trade relations with Africa aligned with the Sustainable Development Goals (SDGs), to work to reduce protectionism, particularly as regards technical barriers in areas like agriculture, and to design new trade agreements that would be development-friendly and potentially more liberal. Our report discusses a number of potential models for the UK’s future trade stance with developing countries in Africa, whilst recognizing that it is too soon to come to any conclusion on this issue. We do however stress the importance of the Government providing assurance to African leaders and investors at the earliest opportunity of the UK’s intentions with regard to the effective continuation (or otherwise) of the current preferential trade agreements and GSP schemes immediately upon the UK’s withdrawal from the EU in order to avoid an interruption in the UK’s trade relations with Africa.
We conclude, on the basis of the evidence submitted to our Inquiry, that a successor to AFTi would be widely welcomed in Africa and that the UK should continue to be a champion for freeing up trade and boosting capacity and competitiveness in Africa as part of a long term strategy for prosperity and economic development. We believe that the case for this is strengthened even further by the prospect of the UK’s departure from the European Union, where the potential implications for Africa must be faced positively and there is an opportunity for an even deeper partnership between the UK and Africa on trade, investment and development.
We accordingly recommend that technical, financial and political support should be provided to African countries on the basis of three “pillars”, namely cutting trade costs and connecting markets; enhancing productive capacity; and using trade to drive inclusive growth in African countries. Building on the successes and lessons since 2011, a successor to AFTi should see an intensification of UK AfT engagement in East, Southern and West Africa. There should also be a concerted effort to build on existing strong delivery platforms that are performing well and can be scaled up quickly with support from the UK and other like-minded investors, such as TMEA, PIDG and AgDevCo.
In taking forward an “AFTi II”, the Government should work with African partners towards a “smart regional integration” approach, and establish a leadership rôle to be carried out by an AFTi Special Envoy appointed by the Prime Minister to deliver better direction and coordination both within the Government and with external parties. Our report specifies rôles for the AFTi Special Envoy, essentially to strengthen dialogue between UK Ministers and African governments, and on the basis of standing advisory consultations, to stimulate better synergy between the programmes delivered by the UK Government and by international development partners.
Under each of the above three pillars several detailed practical objectives are proposed, together with tentative targets and timelines for their achievement, for example completion by 2025 of Single Window clearance systems in a suggested 5 African countries, together with a suggested two regional customs inter-connectivity projects, and establishment of NTB elimination schemes in 12 countries by 2018. Our recommendations also specify actions to implement the “smart regional integration” approach including policy alignment with the African Union’s action plan for boosting intra-African trade, targeting investment on countries where realistic plans and strong political commitment are in place, and working with African institutions to improve data collection and analysis. An AFTi knowledge platform should be set up in order to share with interested parties the lessons learnt and knowledge gained from AFTi initiatives, including an annual stakeholder conference and publication of annual reports.
Finally, we also see an important role for the APPG on Trade Out of Poverty to play in continuing to make the case for a successor to AFTi with the new Government, to work with its network of partners to track the delivery of an “AFTi II” over its implementation period, and to champion the importance of the UK’s work on boosting trade and integration across Africa for sustainable and inclusive development.
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tralac’s Daily News Selection
The selection: Monday, 17 October 2016
Starting tomorrow, in Accra: the 2016 ReSAKSS Annual Conference
SADC Regional Poverty Observatory: EOIs for impact evaluation
Extraordinary Summit of the Assembly of the AU on Maritime Security, Safety and Development: statement by AUC Chairperson
BRICS Summit updates:
The Goa Declaration: We commend our Customs administrations on the establishment of the Customs Cooperation Committee of BRICS,and on exploring means of further enhancing collaboration in the future, including those aimed at creating legal basis for customs cooperation and facilitating procedures of customs control. We note the signing of the Regulations on Customs Cooperation Committee of the BRICS in line with the undertaking in the Strategy for BRICS Economic Partnership to strengthen interaction among Customs Administrations. We reaffirm our commitment towards a globally fair and modern tax system and welcome the progress made on effective and widespread implementation of the internationally agreed standards. We support the implementation of the Base Erosion and Profit Shifting Project with due regard to the national realities of the countries. We encourage countries and International Organisations to assist developing economies in building their tax capacity.
Sustainable investment opportunities in Africa: prospects for BRICS (Export-Import Bank of India): This study envisages identifying areas of sustainable, responsible and impact investments in this remarkably huge African continent. The study also appreciates the existence of a dual need in Africa. On the one hand, investments are required in an area which are its strengths, namely in minerals and agriculture, but there is a need is to establish forward and backward linkages so that there is value addition, and the local community benefits. This study briefly highlights the existing investments in Africa by the BRICS economies in areas like mining, agriculture and agro processing, solar and healthcare. The Study surmises that sustainable and sustained investment in these sectors over a medium to long term horizon would not only induce better infrastructure, but also generate jobs for the young Africa. BRICS economies would also significantly benefit out of such investments. [Related: BRICS Development Bank: to lend $2.5bn next year, expand staff to 300 over next three years, PM Modi doubles intra-BRICS trade target to $500bn by 2020, BRICS Business Council finalises report: 14 major recommendations, BRICS business leaders seek ‘angel investor network’]
COMESA Summit updates:
Secretary General’s statement at 36th Meeting of the Council of Ministers: Your Secretariat has done a study which has established that although intra COMESA trade is low, there is a potential of intra trade worth $82.3bn based on 2014 statistics. The paradox is that these products are produced and exported to the rest of the world and at the same time imported from the rest of the world into the region. The products include, textiles, wooden furniture, horticulture, house hold items, confectioneries, hides and skins, foot wear and leather products, sugar confectioneries, tobacco and precious metals. The study has shown the member States with the highest potential in producing and exporting the products whose total value is approximately ten times that of existing trade. The same study has identified transport and logistics challenges that have to be addressed to make the region competitive. Of fundamental importance to the COMESA agenda of “inclusive and sustainable industrialization” is the absence within the region of cross border production networks which would result in intra industry trade between and among firms. In Europe intra – industry trade approximately accounts for 45% of trade, whilst in Asia is it slightly above 34%. We all have heard of “factory Asia”. These production networks do not happen automatically but are a result of clear micro, macro and institutional policies. It is against this background that I would urge member States to expeditiously review the current rules of origin and conclude negotiations and implement the COMESA Common Investment Area Agreement.
COMESA Free Trade Area: annual assessment of benefits, challenges to be published: COMESA Secretariat will publish annual assessments of the benefits and challenges of COMESA Free Trade Area for consideration by the Member States. The assessment will cover trade in goods and services, logistics and trade facilitation, as well as industrialization and infrastructure development which contribute to boosting intra-regional trade. This was one of the decisions made by the 36th COMESA Council of Ministers meeting in Antananarivo 14-15 October 2016. The Council asked Member States that are not in the FTA to take definitive steps to join it to create an integrated internal market. Currently, 15 out of the 19 member States are participating in the FTA. They include Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Uganda, Zambia and Zimbabwe. [Medium Term Strategic Plan for 2016–2020 approved]
EAC Common Market Update: tracking Kenya’s compliance to the EAC Common Market Protocol (pdf, EA Trade & Investment Hub)
Kenyans pay higher for South African goods on stronger Rand (Business Daily)
The South African rand’s 14.5% exchange rate gain to the dollar this year compared to a one per cent gain for the Kenya shilling is exposing local importers of SA goods to higher costs. At the same time, the rand has appreciated by 16.8% in exchange rate to the shilling year-to-date, with one rand now the equivalent of Sh7.10 compared to Sh6.08 in January. The stronger rand means that Kenyan importers have to fork out more in dollars to purchase goods from Africa’s most industrialised state with Kenya counting South Africa as its largest source of imports on the continent. On a positive note, however, the other large source of Kenyan imports in Africa - Egypt - has seen its currency weaken to the dollar by 12% this year, meaning that Kenyans are paying less for Egyptian goods.
Botswana: Govt seeks to break impasse with SA retailers (Mmegi)
The Ministry of Investment, Trade and Industry says it is working to resolve the impasse with South African retailers over trade licences for business lines reserved for citizens. Speaking at a Stanbic Bank stakeholder engagement on Botswana consumer sector, Chief commercial officer for the citizen economic empowerment, Banusi Mbaakanyi, said government is still negotiating with some foreign-owned retailers who continue to refuse to accept locally produced goods in their shops. “The ministry is currently data-basing all firms ready to supply the retail markets to see if there are local companies that are capable of supplying the malls,” she said.
Spain: Partnership agreement between EU and SADC rejected (FreshPlaza)
The Joint Parliamentary Group has presented a non-legislative motion at the Parliament, urging the Government not to ratify the Economic Partnership Agreement between the EU and the Southern African Development Community, as it would harm the Spanish citrus sector. Consequently, the Joint Group fears a reduction to the prices received by Valencian producers and that the economic vulnerability of agriculture in this region will increase. In this context, they ask to ensure that all imports from South Africa arriving in Europe "meet the same requirements" as Valencian citrus when the latter is to be exported.
Row over US pork sold in SA gets sticky (Fin24)
The SA Pork Producers’ Organisation and the Department of Agriculture, Forestry and Fisheries are at odds over the processes involved to allow US pork shoulder cuts into the country. At the centre of this clash is an agreement signed in January as a side letter to the African Growth and Opportunity Act, which gives South Africa duty-free benefits to trade with the United States. Sappo CEO Simon Streicher alleged the side letter allows the US to bypass the Veterinary Procedural Notice route for pork shoulder cuts. However, the DAFF dismissed Sappo’s interpretation of the side letter relating to VPN. "This side letter does not allow the bypassing of the VPN route as alleged by Sappo," Bomikazi Molapo, spokesperson for Minister of Agriculture, Forestry and Fisheries, told Fin24.
SA-led consortium plans to invest Sh193bn in Lapsset (Business Daily)
A consortium of international investors led by the Development Bank of South Africa (DBSA) is ready to invest Sh193 billion ($1.9bn) in the Lamu Port South Sudan Ethiopia transport corridor (Lapsset) project, State House has said. In what could lift the fortunes of the mega infrastructure project whose progress has been slowed down by insufficient funding, the investors are interested in putting up three berths at the Lamu Port and financing the construction of the 537-kilometre Lamu-Garissa-Isiolo road.
New EU-UNCTAD agreement to help Central Africa cut its trade costs
UNCTAD is set to support Central African countries cut the costs of their cross-border trade, after signing a three-year €380,000 ($420,000) deal with the European Union in Brussels on Friday. The project will run for three years, starting in January 2017. The funding was announced after a session of three EU-Africa Caribbean Pacific Joint Parliamentary Assembly committees, and signed by Mr. Reiter and Denis Redonnet, head of the strategy division in the Directorate General for Trade in the European Commission.
Implementing the Trade Facilitation Agreement: from vision to reality (pdf, WTO)
The paper chronicles the path from the conclusion of the talks at the 2013 Bali Ministerial Conference to the present day as we prepare for the Agreement to take effect. It reviews the state of the ratification process, analyses implementation schedules and outlines work still to be done. The study shows that the emerging application of the TFA, like its negotiation, has once again confounded the sceptics – who first doubted that a TF Agreement would see the light of day and then questioned if it would ever be put into practice. While plenty remains to be done to implement the TFA across the full WTO membership, its entry into force is set to happen – a valedictory moment. [The analyst: Nora Neufeld]
Tanzania: Smuggling in border areas reported to be on the rise (The Citizen)
The government says it is deeply concerned by the rising cases of smuggling of contraband goods across the Tanzania-Kenya border where about 360 illegal (panya) routes have been identified. The deputy minister for Home Affairs, Mr Hamad Masauni, said during a recent visit here that the crime posed a threat to the country’s economy and security, adding that most of the goods being transacted are not taxed. The Rombo District Commissioner, Ms Agnes Hokororo, told the deputy minister that out of the 65 markings on the 100 kilometre long border between the district and Kenya had been dismantled, making it difficult for the authorities to know the exact borderline. She cited the border marks near the Rongai forest on the northern slopes of Mt. Kilimanjaro, saying at least 20 concrete slabs marking the border will have to be fixed, to replace the ones that had been pulled down.
Zimbabwe: Zimra incapacitated to stop smuggling — industry (NewsDay)
Industry has raised concern over the Zimbabwe Revenue Authority’s capacity to stamp out smuggling at ports of entry, amid claims its officials were incapacitated to deal with of duty and rules of origin issues. This came out at a Confederation of Zimbabwe Industries roundtable briefing on business and economic matters in Bulawayo on Wednesday. First to raise the issue was the Zimbabwe Textile Manufacturers’ Association vice-president, Freedom Dube, who said smugglers were declaring blankets as woven fabric to avoid paying duty, something Zimra officials were failing to detect. Dube said they had tried several times to engage Zimra over the issue, but with no luck. Zimra was also grilled for failing to administer the rules of origin, which are laws, regulations and administrative rulings applied by the government to determine the origin or source of imported goods. This, industry said, has resulted in the abuse of SADC and COMESA trading certificates by countries outside the region.
South Africa: Annual State of Cross-Border Operations Report 2 (pdf, CBRTA)
The Cross-Border Operations Report serves to inform the Cross-Border Road Transport Agency political principal (Minister of Transport), the Department of Transport (DOT) and other key national (public and private) stakeholders of challenges and developments that impact on the cross-border road transport industry. This report also provides a package of solutions that can be implemented to overcome cross-border constraints. It is anticipated that by providing this information key stakeholders will be able to consider some of the solutions that can be deployed towards enhancing efficiency and productivity of the cross-border road transport industry, thus enabling the industry to play a strategic role in economic growth and development. [CBRTA Resource Centre]
South Africa: Status and collaboration at harbours and participation in protecting the ocean economy (PMG)
The Committee was given insight into the relationship between the Border Management Authority and Operation Phakisa. The Border Management Authority might not be in existence as yet but a relationship was established. The mandate of Operation Phakisa was on ocean governance to unleash the socio-economic potential of the oceans whilst the mandate of the Border Management Authority was on border law enforcement. The modus operandi of Operation Phakisa was to have a coordinated approach whereas the Border Management Authority followed an integrated approach. The Border Management Authority was a national public entity which would take over the functions that some of the departments had. Operation Phakisa was not an organ of state but rather an integrated and coordinated governance initiative. [South Africa’s Border Management Amendment Bill: minutes, evidence from recent parliamentary hearings: 20 September, 14 September, 13 September]
New Partnership for Africa’s Development: UNGA debate summary, documentation
Pledging to support an Africa that was stable, prosperous and at peace with itself, speakers warned the General Assembly that poor infrastructure and trade barriers still hampered the continent’s development, while challenges such as “brain drain” and terrorism threatened to reverse significant gains made since the turn of the millennium. Indeed, a decade and a half into the African Union’s “New Partnership on Africa’s Development”, many delegates said more robust international cooperation was needed to help the continent achieve the 2030 Agenda for Sustainable Development and overcome the lingering effects of centuries of colonial exploitation. Peter Thomson, President of the General Assembly, opening the meeting, said that while Africa’s growth remained strong, unfavourable global conditions, such as volatile commodity prices, limited economic diversification and high levels of debt, risked undermining hard-fought development gains. [Note: Available for download (i) NEPAD - the 14th consolidated progress report on implementation and international support; (ii) Biennial report of the review of the implementation of the commitments made toward Africa’s development; (iii) Causes of conflict and the promotion of durable peace and sustainable development in Africa]
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8th BRICS Summit: Goa Declaration
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We, the Leaders of the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa, met on 15-16 October 2016 in Goa, India, at the Eighth BRICS Summit, which was held under the theme “Building Responsive, Inclusive and Collective Solutions.”
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Recalling all our previous declarations, we emphasise the importance of further strengthening BRICS solidarity and cooperation based on our common interests and key priorities to further strengthen our strategic partnership in the spirit of openness, solidarity, equality, mutual understanding, inclusiveness and mutually beneficial cooperation. We agree that emerging challenges to global peace and security and to sustainable development require further enhancing of our collective efforts.
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We agree that BRICS countries represent an influential voice on the global stage through our tangible cooperation, which delivers direct benefits to our people. In this context, we note with satisfaction the operationalisation of the New Development Bank (NDB) and of the Contingent Reserve Arrangement (CRA), which contributes greatly to the global economy and the strengthening of the international financial architecture. We welcome the report presented by NDB President on the work of the Bank during the first year of its operations. We are pleased to note the progress in operationalising the Africa Regional Centre (ARC) of the NDB and pledge our full support in this regard. We look forward to developing new BRICS initiatives in a wider range of areas in the years to come.
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We note with appreciation the approval of the first set of loans by the New Development Bank (NDB), particularly in the renewable energy projects in BRICS countries. We express satisfaction with NDB’s issuance of the first set of green bonds in RMB. We are pleased to note that the operationalisation of BRICS Contingent Reserve Arrangements (CRA) has strengthened the global financial safety net.
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In order to reach out and enrich our understanding and engagement with fellow developing and emerging economies, we will hold an Outreach Summit of BRICS Leaders with the Leaders of BIMSTEC member countries - Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation comprising of Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand. The meeting will be an opportunity to renew our friendship with BIMSTEC countries as well as to jointly explore possibilities of expanding trade and commercial ties, and investment cooperation between BRICS and BIMSTEC countries, while advancing our common goals of peace, development, democracy and prosperity.
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We reiterate our common vision of ongoing profound shifts in the world as it transitions to a more just, democratic, and multi-polar international order based on the central role of the United Nations, and respect for international law. We reaffirm the need for strengthening coordination of efforts on global issues and practical cooperation in the spirit of solidarity, mutual understanding and trust. We underline the importance of collective efforts in solving international problems, and for peaceful settlement of disputes through political and diplomatic means, and in this regard, we reiterate our commitment to the principles of the Charter of the United Nations.
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We note the global character of current security challenges and threats confronting the international community. We reiterate our view that international efforts to address these challenges, the establishment of sustainable peace as well as the transition to a more just, equitable and democratic multi-polar international order requires a comprehensive, concerted and determined approach, based on spirit of solidarity, mutual trust and benefit, equity and cooperation, strong commitment to international law and the central role of the United Nations as the universal multilateral organisation entrusted with the mandate for maintaining international peace and security, advance global development and to promote and protect human rights. We underline the importance of further strengthening coordination of our efforts in this context.
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We reaffirm our commitment to contribute to safeguarding a fair and equitable international order based on the purposes and principles of the Charter of the United Nations including through consistent and universal respect and adherence to the principles and rules of international law in their inter-relation and integrity, compliance by all states with their international legal obligations. We express our commitment to resolutely reject the continued attempts to misrepresent the results of World War II. We recall further that development and security are closely interlinked, mutually reinforcing and key to attaining sustainable peace.
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We remain confident that resolving international problems require collective efforts for peaceful settlement of disputes through political and diplomatic means. Implementation of principles of good-faith, sovereign equality of States, non-intervention in the internal affairs of States and cooperation excludes imposition of unilateral coercive measures not based on international law. We condemn unilateral military interventions and economic sanctions in violation of international law and universally recognised norms of international relations. Bearing this in mind, we emphasise the unique importance of the indivisible nature of security, and that no State should strengthen its security at the expense of the security of others.
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We recall the 2005 World Summit Outcome document. We reaffirm the need for a comprehensive reform of the UN, including its Security Council, with a view to making it more representative, effective and efficient, and to increase the representation of the developing countries so that it can adequately respond to global challenges. China and Russia reiterate the importance they attach to the status and role of Brazil, India and South Africa in international affairs and support their aspiration to play a greater role in the UN.
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We welcome the substantive measures undertaken by the UN membership to make the process of selecting and appointing the UN Secretary-General more transparent and inclusive.
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We express our gratitude to UN Secretary-General Mr. Ban Ki-moon for his contributions to the United Nations in the past ten years. We congratulate Mr. António Guterres, on his appointment as the Secretary-General of the United Nations and express our support and to work closely with him.
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Cognizant of BRICS countries’ significant contributions to UN Peacekeeping operations, and recognising the important role of UN Peacekeeping operations in safeguarding international peace and security, we realise the challenges faced by UN Peacekeeping and emphasise the need to further strengthen its role, capacity, effectiveness, accountability and efficiency, while adhering to the basic principles of peacekeeping. We emphasise that UN Peacekeeping operations should perform the duty of protection of civilians in strict accordance with their respective mandates and in respect of the primary responsibility of the host countries in this regard.
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We are deeply concerned about the situation in the Middle East and North Africa. We support all efforts for finding ways to the settlement of the crises in accordance with international law and in conformity with the principles of independence, territorial integrity and sovereignty of the countries of the region. On Syria, we call upon all parties involved to work for a comprehensive and peaceful resolution of the conflict taking into account the legitimate aspirations of the people of Syria, through inclusive national dialogue and a Syrian-led political process based on Geneva Communiqué of 30 June 2012 and in pursuance of the UN Security Council Resolution 2254 and 2268 for their full implementation. While continuing the relentless pursuit against terrorist groups so designated by the UN Security Council including ISIL, Jabhat al-Nusra and other terrorist organisations designated by the UN Security Council.
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We reiterate also the necessity to implement the two-state solution of the Palestinian-Israeli conflict on the basis of the relevant UNSC resolutions, the Madrid Principles and Arab Peace Initiative, and previous agreements between the two sides, through negotiations aimed at creating an independent, viable, territorially contiguous Palestinian State living side-by-side in peace with Israel, within secure, mutually agreed and internationally recognised borders on the basis of 1967 lines, with East Jerusalem as its capital, as envisaged in the relevant UN Resolutions.
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We express deep concern at the persisting security challenges in Afghanistan and significant increase in terrorist activities in Afghanistan. We affirm support to the efforts of the Afghan Government to achieve Afghan-led and Afghan-owned national reconciliation and combat terrorism, and readiness for constructive cooperation in order to facilitate security in Afghanistan, promote its independent political and economic course, becoming free from terrorism and drug trafficking. The Leaders expressed the view that capable and effective Afghan National Security Forces (ANSF) should be the key to the stabilisation of Afghanistan. In this regard, the Leaders emphasised the need for continued commitment of regional countries and wider international community, including the NATO-led Resolute Support Mission, which as the ISAF’s heir has a key role in the ANSF capacity-building. The Leaders stressed the importance of multilateral region-led interaction on Afghan issues, primarily by those organisations, which consist of Afghanistan’s neighbouring countries and other regional states, such as the Shanghai Cooperation Organisation, Collective Security Treaty Organization, and the Heart of Asia Conference.
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We welcome the African Union’s (AU) vision, aspirations, goals and priorities for Africa’s development enshrined in Agenda 2063, which is complementary with the 2030 Agenda for Sustainable Development. We reaffirm our support for Africa’s implementation of its various programmes in pursuit of its continental agenda for peace and socio economic development. We will continue to engage in joint endeavours to advance Africa’s solidarity, unity and strength through support measures for regional integration and sustainable development. We further welcome recent elections that have been held in the continent and the peaceful manner in which they were conducted.
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We support the AU’s efforts to resolving conflicts through its peace and security architecture, in collaboration with the United Nations and the continent’s regional organisations, and to contribute towards lasting and sustainable peace and security in Africa.
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We welcome the decision of the African Union’s Assembly to operationalise its Peace Fund, in order to contribute to financing of its peace and security operations. We support efforts aimed at full operationalisation of the African Standby Force (ASF) and note the progress being made in this regard, including the contributions by the African Capacity for Immediate Responses to Crises (ACIRC).
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We express our concern that political and security instability continues to loom in a number of countries that is exacerbated by terrorism and extremism. We call upon the international community through the United Nations, African Union and regional and international partners to continue their support in addressing these challenges, including post-conflict reconstruction and development efforts.
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We welcome the adoption of landmark 2030 Agenda for Sustainable Development and its Sustainable Development Goals during the UN Summit on Sustainable Development on 25 September 2015 and the Addis Ababa Action Agenda at the Third International Conference on Financing for Development. We welcome the people-centred and holistic approach to sustainable development enshrined in the 2030 Agenda and its emphasis on equality, equity and quality-life to all. We welcome the reaffirmation of the guiding principles of the implementation of the 2030 Agenda, including the principle of Common But Differentiated Responsibilities (CBDR).
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The 2030 Agenda, with its overarching focus on poverty eradication, lays an equal and balanced emphasis on the economic, social and environmental dimensions of sustainable development. We call upon developed countries to honour their Official Development Assistance commitments to achieve 0.7% of Gross National Income commitment for Official Development Assistance to developing countries. Those commitments play a crucial role in the implementation of the SDGs. We further welcome the establishment of a Technology Facilitation Mechanism within the UN with a mandate to facilitate technology for the implementation of the SDGs.
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We commit to lead by example in the implementation of the 2030 Agenda for Sustainable Development in line with national circumstances and development context respecting the national policy space. We welcome the G20 Action Plan on the 2030 Agenda for Sustainable Development adopted during G20 Hangzhou Summit and commit to its implementation by taking bold transformative steps through both collective and individual concrete actions.
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We meet at a time when the global economic recovery is progressing, with improved resilience and emergence of new sources of growth. The growth, though is weaker than expected with downside risks to the global economy continuing to persist. This gets reflected in a variety of challenges including commodity price volatility, weak trade, high private and public indebtedness, inequality and lack of inclusiveness of economic growth. Meanwhile, the benefits from growth need to be shared broadly in an inclusive manner. Geopolitical conflicts, terrorism, refugee flows, illicit financial flows and the outcome of UK referendum have further added to the uncertainty in the global economy.
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We reiterate our determination to use all policy tools – monetary, fiscal, and structural, individually and collectively, to achieve the goal of strong, sustainable, balanced and inclusive growth. Monetary policy will continue to support economic activity and ensure price stability, consistent with central bank’s mandates. Monetary policy alone, though, cannot lead to balanced and sustainable growth. We, in this regard, underscore the essential role of structural reforms. We emphasise that our fiscal policies are equally important to support our common growth objectives. We also take note that the spill-over effects of certain policy measures in some systemically important advanced economies can have adverse impact on growth prospects of emerging economies.
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We recognise that innovation is a key driver for mid and long term growth and sustainable development. We stress the importance of industrialisation and measures that promote industrial development as a core pillar of structural transformation.
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We highlight the need to use tax policy and public expenditure in a more growth-friendly way taking into account fiscal space available, that promotes inclusiveness, maintains resilience and ensures sustainability of debt as a share of GDP.
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We note the dynamic integration processes across the regions of the world, particularly in Asia, Africa and South America. We affirm our belief to promote growth in the context of regional integration on the basis of principles of equality, openness and inclusiveness. We further believe that this will promote economic expansion through enhanced trade, commercial and investment linkages.
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We highlight the importance of public and private investments in infrastructure, including connectivity, to ensure sustained long-term growth. We, in this regard, call for approaches to bridge the financing gap in infrastructure including through enhanced involvement of Multilateral Development Banks.
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We reaffirm our commitment to a strong, quota based and adequately resourced IMF. Borrowed resources by the IMF should be on a temporary basis. We remain strongly committed to support the coordinated effort by the emerging economies to ensure that the Fifteenth General Review of Quotas, including the new quota formula, will be finalised within the agreed timelines so as to ensure that the increased voice of the dynamic emerging and developing economies reflects their relative contributions to the world economy, while protecting the voices of least developed countries (LDCs), poor countries and regions.
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We welcome the inclusion of the RMB into the Special Drawing Rights (SDR) currency basket on 1October, 2016.
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We call for the advanced European economies to meet their commitment to cede two chairs on the Executive Board of the IMF. The reform of the IMF should strengthen the voice and representation of the poorest members of the IMF, including Sub-Saharan Africa.
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We share concerns regarding the challenges of sovereign debt restructurings, and note that timely and successful debt restructuring is key for ensuring access to international capital markets, and hence economic growth, for countries with high debt levels. We welcome the current discussions to improve the debt restructuring process, and on the revised collective action clauses (CACs).
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We reiterate our support for the multilateral trading system and the centrality of the WTO as the cornerstone of a rule based, open, transparent, non-discriminatory and inclusive multilateral trading system with development at the core of its agenda. We note the increasing number of bilateral, regional, and plurilateral trade agreements, and reiterate that these should be complementary to the multilateral trading system and encourage the parties thereon to align their work in consolidating the multilateral trading system under the WTO in accordance with the principles of transparency, inclusiveness, and compatibility with the WTO rules.
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We emphasise the importance of implementing the decisions taken at the Bali and Nairobi Ministerial Conferences. We stress the need to advance negotiations on the remaining Doha Development Agenda (DDA) issues as a matter of priority. We call on all WTO members to work together to ensure a strong development oriented outcome for MC11 and beyond.
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We appreciate the progress in the implementation of the Strategy for BRICS Economic Partnership and emphasise the importance of the BRICS Roadmap for Trade, Economic and Investment Cooperation until 2020. We believe that close cooperation between the sectoral cooperation mechanisms, BRICS Contact Group on Economic and Trade Issues, the BRICS Business Council, New Development Bank and the BRICS Interbank cooperation mechanism is crucial in strengthening the BRICS economic partnership. We welcome, in this context, the continued realisation of the major BRICS economic initiatives such as enhanced cooperation in e-commerce, “single window”, IPR cooperation, trade promotion and micro, small and medium enterprises (MSMEs).We recognise non-tariff measures (NTMs),services sector, and standardisation and conformity assessments as possible areas of future cooperation. We note in this context the meeting of BRICS Trade Ministers in New Delhi on 13 October 2016 and welcome its substantive outcomes.
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In operationalising the Strategy for BRICS Economic Partnership, we encourage measures that support greater participation, value addition and upward mobility in Global Value Chains of our firms including through the preservation of policy space to promote industrial development.
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We welcome India’s initiative to host the first BRICS Trade Fair in New Delhi. This is an important step towards the implementation of Strategy for BRICS Economic Partnership. We believe this will further consolidate trade and commercial partnership among BRICS countries. We welcome the deliberations and outcome of the meeting of BRICS Trade Ministers held on 13October 2016 in New Delhi.
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We noted the Annual Report by the BRICS Business Council, including the various initiatives undertaken by its Working Groups. We further direct the Council to accelerate the development and realisation of joint projects which, on a mutually beneficial basis, contribute to the economic objectives of BRICS.
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We agreed that MSMEs provide major employment opportunities, at comparatively lower capital cost, and create self-employment opportunities in rural and underdeveloped areas. MSMEs thus help assure equitable wealth distribution nationally and globally. We commend organisation of BRICS second round-table on MSMEs by India with a focus on technical and business alliances in MSMEs Sector. We agree to work for greater integration of MSMEs in Regional and Global Value Chains.
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We commend China for the successful hosting of the 11th G20 Leaders’ Summit in Hangzhou and its focus on innovation, structural reform and development as drivers of medium and long term economic growth. We recognise the role of G20 as the premier forum for international and financial cooperation and emphasise the importance of the implementation of the outcomes of G20 Hangzhou Summit, that we believe will foster strong, sustainable, balanced and inclusive growth and will contribute to improved global economic governance and enhance the role of developing countries.
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We stress the importance to foster an innovative, invigorated, interconnected and inclusive world economy. We will enhance our consultations and coordination on the G20 agenda, especially on issues of mutual interest to the BRICS countries, and promote issues of importance for the Emerging Market and Developing Economies (EMDEs). We will continue to work closely with all G20 members to strengthen macroeconomic cooperation, promote innovation, as well as robust and sustainable trade and investment to propel global growth, improve global economic governance, enhance the role of developing countries, strengthen international financial architecture, support for industrialisation in Africa and least developed countries and enhance cooperation on energy access and efficiency. We stress the need for enhanced international cooperation to address illicit cross-border financial flows, tax evasion and trade mis-invoicing.
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The role of BRICS and its collaborative efforts in the field of economic and financial co-operation are yielding positive results. We emphasise the importance of our cooperation in order to help stabilise the global economy and to resume growth.
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We welcome experts exploring the possibility of setting up an independent BRICS Rating Agency based on market-oriented principles, in order to further strengthen the global governance architecture.
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We welcome the reports of BRICS Think Tanks Council and BRICS Academic Forum that have emerged as valuable platforms for our experts to exchange views. They have submitted their valuable suggestions with regard to promoting market research and analysis in BRICS and developing countries and exploring possibilities of carrying this process forward. We believe that BRICS institution-building is critical to our shared vision of transforming the global financial architecture to one based on the principles of fairness and equity.
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We emphasise the importance of enhancing intra-BRICS cooperation in the industrial sector, including through the BRICS Industry Ministers Meetings, in order to contribute to the accelerated and sustainable economic growth, the strengthening of comprehensive industrial ties, the promotion of innovation as well as job creation, and improvement of the quality of life of people in BRICS countries.
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We congratulate the United Nations Industrial Development Organization (UNIDO) for the 50th anniversary of its foundation and recall its unique mandate to promote and accelerate inclusive and sustainable industrial development and its contribution in promoting industrialisation in Africa. We note, in this context, the progress achieved so far in the establishment of the UNIDO-BRICS Technology Platform.
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We commend our Customs administrations on the establishment of the Customs Cooperation Committee of BRICS, and on exploring means of further enhancing collaboration in the future, including those aimed at creating legal basis for customs cooperation and facilitating procedures of customs control. We note the signing of the Regulations on Customs Cooperation Committee of the BRICS in line with the undertaking in the Strategy for BRICS Economic Partnership to strengthen interaction among Customs Administrations.
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We recall the Fortaleza Declaration wherein we recognised the potential for BRICS insurance and reinsurance markets to pool capacities and had directed our relevant authorities to explore avenues for cooperation in this regard. We would like this work to be expedited.
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We reaffirm our commitment towards a globally fair and modern tax system and welcome the progress made on effective and widespread implementation of the internationally agreed standards. We support the implementation of the Base Erosion and Profit Shifting Project (BEPS) with due regard to the national realities of the countries. We encourage countries and International Organisations to assist developing economies in building their tax capacity.
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We note that aggressive tax planning and tax practices hurt equitable development and economic growth. Base Erosion and Profit Shifting must be effectively tackled. We affirm that profit should be taxed in the jurisdiction where the economic activity is performed and the value is created. We reaffirm our commitment to support international cooperation in this regard, including in the Common Reporting Standard for Automatic Exchange of Tax Information (AEOI).
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We note the ongoing discussions on international taxation matters. In this regard, we recall the Addis Ababa Action Agenda on Financing for Development including its emphasis on inclusive cooperation and dialogue among national tax authorities on international tax matters with increased participation of developing countries and reflecting adequate, equitable, geographical distribution, representing different tax systems.
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We support the strengthening of international cooperation against corruption, including through the BRICS Anti-Corruption Working Group, as well as on matters related to asset recovery and persons sought for corruption. We acknowledge that corruption including illicit money and financial flows, and ill-gotten wealth stashed in foreign jurisdictions is a global challenge which may impact negatively on economic growth and sustainable development. We will strive to coordinate our approach in this regard and encourage a stronger global commitment to prevent and combat corruption on the basis of the United Nations Convention against Corruption and other relevant international legal instruments.
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We recognise that nuclear energy will play a significant role for some of the BRICS countries in meeting their 2015 Paris Climate Change Agreement commitments and for reducing global greenhouse gas emissions in the long term. In this regard, we underline the importance of predictability in accessing technology and finance for expansion of civil nuclear energy capacity which would contribute to the sustainable development of BRICS countries.
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We reiterate that outer space shall be free for peaceful exploration and use by all States on the basis of equality in accordance with international law. Reaffirming that outer space shall remain free from any kind of weapons or any use of force, we stress that negotiations for the conclusion of an international agreement or agreements to prevent an arms race in outer space are a priority task of the United Nations Conference on Disarmament, and support the efforts to start substantive work, inter alia, based on the updated draft treaty on the prevention of the placement of weapons in outer space and of the threat or use of force against outer space objects submitted by China and Russian Federation. We also note an international initiative for a political obligation on the no first placement of weapons in outer space.
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Priority should be accorded to ensuring the long-term sustainability of outer space activities, as well as ways and means of preserving outer space for future generations. We note that this is an important objective on the current agenda of the UN Committee on the Peaceful Uses of Outer Space (UNCOPUOS). In this respect, we welcome the recent decision by the UNCOPUOS Scientific and Technical Sub-Committee Working Group on Long-term Sustainability of Outer Space Activities to conclude negotiations and achieve consensus on the full set of guidelines for the long term sustainability of outer space activities by 2018 to coincide with the commemoration of the 50th Anniversary of the first United Nations Conference on the Exploration and Peaceful Uses of Outer Space (UNISPACE + 50).
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We strongly condemn the recent several attacks, against some BRICS countries, including that in India. We strongly condemn terrorism in all its forms and manifestations and stressed that there can be no justification whatsoever for any acts of terrorism, whether based upon ideological, religious, political, racial, ethnic or any other reasons. We agreed to strengthen cooperation in combating international terrorism both at the bilateral level and at international fora.
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To address the threat of chemical and biological terrorism, we support and emphasise the need for launching multilateral negotiations on an international convention for the suppression of acts of chemical and biological terrorism, including at the Conference on Disarmament. In this context, we welcome India’s offer to host a Conference in 2018 aimed at strengthening international resolve in facing the challenge of the WMD-Terrorism nexus.
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We call upon all nations to adopt a comprehensive approach in combating terrorism, which should include countering violent extremism as and when conducive to terrorism, radicalisation, recruitment, movement of terrorists including Foreign Terrorist Fighters, blocking sources of financing terrorism, including through organised crime by means of money-laundering, drug trafficking, criminal activities, dismantling terrorist bases, and countering misuse of the Internet including social media by terror entities through misuse of the latest Information and Communication Technologies (ICTs).Successfully combating terrorism requires a holistic approach. All counter-terrorism measures should uphold international law and respect human rights.
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We acknowledge the recent meeting of the BRICS High Representatives on National Security and, in this context, welcome the setting up and the first meeting of the BRICS Joint Working Group on Counter-Terrorism on 14 September 2016 in New Delhi. We believe it will further promote dialogue and understanding among BRICS nations on issues of counter terrorism, as well as coordinate efforts to address the scourge of terrorism.
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We acknowledge that international terrorism, especially the Islamic State in Iraq and the Levant (ISIL, also known as Daesh) and affiliated terrorist groups and individuals, constitute a global and unprecedented threat to international peace and security. Stressing UN’s central role in coordinating multilateral approaches against terrorism, we urge all nations to undertake effective implementation of relevant UN Security Council Resolutions, and reaffirm our commitment on increasing the effectiveness of the UN counter terrorism framework. We call upon all nations to work together to expedite the adoption of the Comprehensive Convention on International Terrorism (CCIT) in the UN General Assembly without any further delay. We recall the responsibility of all States to prevent terrorist actions from their territories.
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We reaffirm our commitment to the FATF International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation and call for swift, effective and universal implementation of FATF Consolidated Strategy on Combating Terrorist Financing, including effective implementation of its operational plan. We seek to intensify our cooperation in FATF and FATF-style regional bodies (FSRBs).
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We welcome the outcome document of the Special session of the General Assembly on the world drug problem, held in New York from 19-21 April 2016. We call for strengthening of international and regional cooperation and coordination to counter the global threat caused by the illicit production and trafficking of drugs, especially opiates. We note with deep concern the increasing links between drug trafficking and terrorism, money laundering and organised crime. We commend the cooperation between BRICS drug control agencies and welcome the deliberations in second Anti-Drug Working Group Meeting held in New Delhi on 8 July 2016.
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We reaffirm that ICT expansion is a key enabler for sustainable development, for international peace and security and for human rights. We agree to strengthen joint efforts to enhance security in the use of ICTs, combating the use of ICTs for criminal and terrorist purposes and improving cooperation between our technical, law enforcement, R&D and innovation in the field of ICTs and capacity building institutions. We affirm our commitment to bridging digital and technological divides, in particular between developed and developing countries. We recognise that our approach must be multidimensional and inclusive and contains an evolving understanding of what constitutes access, emphasising the quality of that access.
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We reiterate that the use and development of ICTs through international and regional cooperation and on the basis of universally accepted norms and principles of international law, including the Charter of the UN; in particular political independence, territorial integrity and sovereign equality of States, the settlement of disputes by peaceful means, non-interference in internal affairs of other States as well as respect for human rights and fundamental freedoms, including the right to privacy; are of paramount importance in order to ensure a peaceful, secure and open and cooperative use of ICTs.
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The increasing misuse of ICTs for terrorist purposes poses a threat to international peace and security. We emphasise the need to enhance international cooperation against terrorist and criminal misuse of ICTs and reaffirm the general approach laid in the eThekwini, Fortaleza and Ufa declarations in this regard. We reaffirm the key role of the UN in addressing the issues related to the security in the use of ICTs. We will continue to work together for the adoption of the rules, norms and principles of responsible behaviour of States including through the process of UNGGE. We recognise that the states have the leading role to ensure stability and security in the use of ICTs.
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We advocate also for an open, non-fragmented and secure Internet, and reaffirm that the Internet is a global resource and that States should participate on an equal footing in its evolution and functioning, taking into account the need to involve relevant stakeholders in their respective roles and responsibilities.
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We recognise the importance of energy-saving and energy-efficiency for ensuring sustainable economic development and welcome the Memorandum of Understanding which was signed in this regard.
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We recognise the challenge of scaling-up power generation and its efficient distribution, as well as the need to scale up low carbon fuels and other clean energy solutions. We further recognise the level of investments needed in renewable energy in this regard. We therefore believe that international cooperation in this field be focused on access to clean energy technology and finance. We further note the significance of clean energy in achieving Sustainable Development Goals. We recognise that sustainable development, energy access, and energy security are critical to the shared prosperity and future of the planet. We acknowledge that clean and renewable energy needs to be affordable to all.
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We support a wider use of natural gas as an economically efficient and clean fuel to promote sustainable development as well as to reduce the greenhouse emissions in accordance with the Paris Agreement on climate change.
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We note that BRICS countries face challenges of communicable diseases including HIV and Tuberculosis. We, in this regard, note the efforts made by BRICS Health Ministers to achieve the 90-90-90 HIV treatment target by 2020. We underline the imperative to advance cooperation and action on HIV and TB in the BRICS countries, including in the production of quality-assured drugs and diagnostics.
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We take note of United Nations High Level Meeting on Ending AIDS in June 2016 and forthcoming Global Conference on TB under WHO auspices in Moscow in 2017.
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Recognising global health challenges we emphasise the importance of cooperation among BRICS countries in promoting research and development of medicines and diagnostic tools to end epidemics and to facilitate access to safe, effective, quality and affordable essential medicines.
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We welcome the High Level meeting on Anti-Microbial Resistance (AMR) during UNGA-71, which addresses the serious threat that AMR poses to public health, growth and global economic stability. We will seek to identify possibilities for cooperation among our health and/or regulatory authorities, with a view to share best practices and discuss challenges, as well as identifying potential areas for convergence.
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We reaffirm our commitment to promote a long-term and balanced demographic development and continue cooperation on population related matters in accordance with the Agenda for BRICS Cooperation on Population Matters for 2015-2020.
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We welcome the outcomes of the meetings of BRICS Labour & Employment Ministers held on 9 June 2016 in Geneva and on 27-28 September 2016 in New Delhi. We take note of the possibility of bilateral Social Security Agreements between BRICS countries, and of the commitment to take steps to establish a network of lead labour research and training institutes, so as to encourage capacity building, information exchange and sharing of best practices amongst BRICS countries. We recognise quality employment, including a Decent Work Agenda, sustaining social protection and enhancing rights at work, are core to inclusive and sustainable development.
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We welcome the outcomes of the fourth BRICS Education Ministers’ meeting held on 30 September 2016 in New Delhi, including the New Delhi Declaration on Education. We stress the importance of education and skills for economic development, and reaffirm the need for universal access to high-quality education. We are satisfied with the progress of the BRICS Network University (BRICSNU) as well as the BRICS University League (BRICSUL), which will commence their programmes in 2017. These two initiatives will facilitate higher education collaboration and partnerships across the BRICS countries.
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We appreciate the organisation of Young Diplomats’ Forum held on 3-6 September 2016 in Kolkata. We also welcome the signing of the Memorandum of Understanding between BRICS Diplomatic Academies to encourage exchange of knowledge and experiences.
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We welcome the outcomes of the fourth BRICS STI Ministerial Meeting held on 8 October 2016, wherein they adopted the Jaipur Declaration and endorsed the updated Work Plan (2015-2018) aimed at strengthening cooperation in science, technology and innovation, especially leveraging young scientific talent for addressing societal challenges; creating a networking platform for BRICS young scientists; co-generating new knowledge and innovative products, services and processes; and addressing common global and regional socio-economic challenges utilising shared experiences and complementarities.
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We stress the importance of implementation of the BRICS Research and Innovation Initiative. We welcome the hosting of the first BRICS Young Scientists Conclave in India, instituting of BRICS Innovative Idea Prize for Young Scientists. We note the progress of the first Call for Proposals under the BRICS STI Framework Programme, in ten thematic areas, with funding commitment from the five BRICS STI Ministries and associated funding bodies. We welcome the establishment of the BRICS Working Group on Research Infrastructure, and Mega-Science to reinforce the BRICS Global Research Advanced Infrastructure Network (BRICS-GRAIN).
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We welcome the outcomes of the Agriculture Ministers’ Meeting, held on 23 September 2016, including the Joint Declaration. We emphasise the importance of ensuring food security, and addressing malnutrition, eliminating hunger, inequality and poverty through increased agricultural production, productivity, sustainable management of natural resources and trade in agriculture among the BRICS countries. As the world’s leading producers of agriculture products and home to large populations, we emphasise the importance of BRICS cooperation in agriculture. We recognize the importance of science-based agriculture and of deploying information and communication technology (ICT).
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To further intensify cooperation among BRICS countries in agricultural research policy, science and technology, innovation and capacity building, including technologies for small-holder farming in the BRICS countries, we welcome the signing of the MoU for Establishment of the BRICS Agricultural Research Platform.
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Considering the dependence of agriculture on water, we call upon the development of infrastructure for irrigation to assist farmers in building resilience during times of drought and welcome sharing of experiences and expertise in these areas.
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We affirm that the value of sharing expertise and experiences among BRICS countries with regard to usage of Information and Communication Technology (ICT) in e-governance, financial inclusion, and targeted delivery of benefits, e-commerce, open government, digital content and services and bridging the digital divide. We support efforts aimed at capacity building for effective participation in e-commerce trade to ensure shared benefits.
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We welcome the forthcoming BRICS Telecommunication Ministerial Meeting that will further strengthen our cooperation, including on technology trends, standards developments, skill developments, and policy frameworks.
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We believe it is necessary to ensure joint efforts towards diversification of the world market of software and IT equipment. We call for developing and strengthening the ICT cooperation in the framework of the BRICS Working Group on ICT Cooperation.
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We welcome the outcomes of the meetings of BRICS Ministers responsible for Disaster Management held on 19-20 April 2016 in St. Petersburg and on 22 August 2016 in Udaipur. We also welcome the Udaipur Declaration adopted at the second meeting and applaud the formation of BRICS Joint Task Force on Disaster Risk Management.
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We extend our deepest condolences to the people of Haiti and the Caribbean on the tragic loss of lives following hurricane Matthew. We support the efforts of the UN and humanitarian partners in their response to this tragedy.
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We welcome the outcomes of the BRICS Ministerial Meeting on Environment held on 15-16 September 2016, in Goa, including the Goa Statement on Environment. We welcome the decision to share technical expertise in the areas of abatement and control of air and water pollution, efficient management of waste and sustainable management of bio-diversity. We recognise the importance of participation by BRICS countries in environmental cooperation initiatives, including developing a platform for sharing environmentally sound technologies.
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We welcome the outcome of the 17th Conference of Parties to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), held in Johannesburg, South Africa, as a landmark advancement of the regulation of international trade in endangered species from 24 September - 4 October 2016.
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We welcome the adoption of the Paris Agreement anchored in the United Nations Framework Convention on Climate Change (UNFCCC), and its signing by a large number of countries on 22 April 2016. We emphasise that the comprehensive, balanced and ambitious nature of the Paris Agreement reaffirms the principles of UNFCCC including the principle of equity and common but differentiated responsibilities and respective capabilities, in light of different national circumstances (CBDR & RC).
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We welcome the Paris Agreement and its imminent entry into force on 4 November 2016.We call on the developed countries to fulfil their responsibility towards providing the necessary financial resources, technology and capacity building assistance to support the developing countries with respect to both mitigation and adaptation for the implementation of the Paris Agreement.
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We reiterate the commitments to gender equality and empowerment of all women and girls as contained in the 2030 Agenda. We recognise that women play a vital role as agents of development and acknowledge that their equal and inclusive participation and contribution is crucial to making progress across all Sustainable Development Goals and targets. We emphasise the importance of enhancing accountability for the implementation of these commitments.
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Cognizant of the potential and diversity of youth population in our countries, their needs and aspirations, we welcome the outcomes of the BRICS Youth Summit in Guwahati including, “Guwahati BRICS Youth Summit 2016 Call to Action” that recognise the importance of education, employment, entrepreneurship, and skills training for them to be socially and economically empowered.
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We welcome the BRICS Convention on Tourism, that was organised in Khajuraho, Madhya Pradesh on 1-2 September 2016 as an effective means to promote tourism cooperation among BRICS countries.
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As home to 43% of the world population and among the fastest urbanising societies, we recognise the multi-dimensional challenges and opportunities of urbanisation. We affirm our engagement in the process that will lead to adoption of a New Urban Agenda by the Conference of the United Nations on Housing and Sustainable Urban Development – Habitat III (Quito, 17-20 October, 2016).We welcome the BRICS Urbanisation Forum, BRICS Friendship Cities Conclave, held in Visakhapatnam on 14-16 September 2016, and in Mumbai on 14-16 April 2016, respectively, which contributed to fostering increased engagements between our cities and stakeholders. We call for enhanced cooperation with regard to strengthening urban governance, making our cities safe and inclusive, improving urban transport, financing of urban infrastructure and building sustainable cities.
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We note India’s initiative on the upcoming BRICS Local Bodies Conference to exchange expertise and best-practices, including in local budgeting.
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Noting the importance of orderly, safe, regular and responsible migration and mobility of people, we welcome the outcomes of first BRICS Migration Ministers Meeting in Sochi, Russian Federation, on 8 October 2015.
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We recognise the important role of culture in sustainable development and in fostering mutual understanding and closer cooperation among our peoples. We encourage expansion of cultural exchanges between people of BRICS countries. In this context we commend the hosting of the first BRICS Film Festival in New Delhi on 2-6 September 2016.
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We welcome the forthcoming meeting of the Second BRICS Parliamentary Forum in Geneva on 23 October 2016under the theme of ‘BRICS Parliamentary Cooperation on the implementation of the SDGs’.
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We appreciate the deliberations of the BRICS Women Parliamentarians’ Forum in Jaipur on 20-21 August, 2016 and the adoption of Jaipur Declaration, centred on SDGs, that inter alia emphasises the commitment to strengthen parliamentary strategic partnerships on all the three dimensions of sustainable development, fostering gender equality and women empowerment.
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We note the deliberations on a BRICS Railways Research Network aimed at promoting research and development in this field to further growth in our economies in a cost effective and sustainable manner.
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We congratulate India on organising the first BRICS Under-17 Football Tournament in Goa on 5-15 October 2016. We, in this regard, note the initiative towards a BRICS Sports Council to foster exchanges among BRICS countries.
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Recognising the increasing trade, business and investment between BRICS countries and the important role of BRICS Interbank Cooperation Mechanism, we welcome the signing of the Memorandum of Understanding between the BRICS countries National Development Banks and the New Development Bank (NDB). We welcome the initiative of the Export-Import Bank of India of instituting Annual BRICS Economic Research Award to promote advanced research in economics of relevance to BRICS countries.
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We reiterate our commitment to strengthening our partnerships for common development. To this end, we endorse the Goa Action Plan.
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China, South Africa, Brazil and Russia appreciate India’s BRICS Chairpersonship and the good pace of BRICS cooperation agenda.
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We emphasise the importance of review and follow up of implementation of outcome documents and decisions of the BRICS Summits. We task our Sherpas to carry this process forward.
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China, South Africa, Brazil and Russia express their sincere gratitude to the Government and people of India for hosting the Eighth BRICS Summit in Goa.
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India, South Africa, Brazil and Russia convey their appreciation to China for its offer to host the Ninth BRICS Summit in 2017 and extend full support to that end.
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Secretary General’s statement at the 36th Meeting of the COMESA Council of Ministers
The vision of industrialization in the African continent has been elusive but not impossible as demonstrated by a few member States that have moved away from the traditional model, according to COMESA Secretary General Sindiso Ngwenya.
He said a paradigm shift in the way regional integration was being implemented is imperative by introducing robust institutional and governance structures that are owned and led by Member States for full industrialization to take root.
“Industrialization has been an existential issue since the independence of COMESA countries, yet with the exception of a few, the vision and dream of realizing industrialization has remained a mirage,” Mr Ngwenya said.
He was speaking during the official opening ceremony of the 36th Council of Ministers meeting in Antananarivo, Madagascar whose theme is ‘Inclusive and Sustainable industrialization on Friday 14th October 2016.
He offered that for COMESA policy and strategy on industrialization to be rapidly and effectively implemented, a paradigm shift was necessary for regional integration. This is in recognition that mere adoption of policies and strategies would not make things happen but rather, the need for robust institutional and governance structures that are member States owned and led.
Citing Mauritius as a case, study, the Secretary General said: “Mauritius has proved conventional economic theory wrong, as it has migrated from being a country that economists thought would never develop from low to a middle income country.”
He attributed this success to the country’s transformation from labour intensive to knowledge intensive industrialization and services. He requested the Council to review the proposed structure considered by the Inter-Governmental Committee which envisages member States taking the lead in championing sectors and sub sectors.
With regard to intra-COMESA trade, the SG informed the Council that since COMESA Free Trade Area was launched in 2000, it has increased from USD 3.2 billion to USD 20 billion and still accounts for less than 10 percent of trade with the rest of the world. Yet, there is a potential of intra trade worth US$ 82.3 billion based on 2014 statistics, according to a recent study.
“The paradox is that these products are produced and exported to the rest of the world and at the same time imported from the rest of the world into the region,” he noted.
They include textiles, wooden furniture, horticulture, house hold items, confectioneries, hides and skins, foot wear and leather products, sugar confectioneries, tobacco and precious metals.
The study has shown that member States with the highest potential in producing and exporting the products, their total value was approximately ten times that of existing trade. Hence he proposed that the region should consider adopting a natural resource lead industrialization strategy, given its vast resource endowments.
Statement by Secretary General Sindiso Ngwenya at the 36th Council of Ministers Meeting in Madagascar, 14 October 2016
I would like to take this opportunity on behalf of the Member States and indeed on my own behalf to thank the Government and the people of Madagascar for hosting this meeting and for offering to provide leadership as Chair of COMESA for the coming twelve months. Please convey our gratitude to His Excellency the Republican President. Indeed, I vividly recall meeting His Excellency soon after the elections a couple of years ago in his house, as he had not moved to State House. The fact that His Excellency could offer to host the Summit before he even settled down is evidence if any was needed of the commitment of His Excellency in particular and the entire people of the Government of Madagascar to the cause of regional integration not only in COMESA but in the African continent.
When COMESA Member States negotiated the COMESA Treaty which came into force on 8th December, 1994 they were conscious that the integration of their economies was but one small step towards the integration of the African continent, socially, politically, physically and economically. The evidence of this is to be found in Article 3 sub paragraph (f) of the COMESA Treaty that the aims and objectives of the Common Market are and I Quote” to contribute towards the establishment, progress and the realization of the objectives of the African Economic Community”. It is against this background that COMESA is contributing to the implementation of the program of our mother continental body the African Union of Agenda 2063 and in particular the first ten year program under the rallying cry of the “Africa we Want”.
The COMESA market integration strategy is based on trade and investment as the catalyst for realizing the pillars of Market integration, Industrial Development, Infrastructure Development and the creation of single market for services, to mention but a few.
This morning I will not address all the pillars which have been comprehensively addressed by the Inter Governmental Committee whose report will be presented to the Council meeting later today. Instead, I will my telescope with laser precision on the theme of the Summit of “Inclusive and Sustainable Industrialization”. Industrialization has been an existential issue since the independence of our countries, yet with the exception of a few countries the vision and dream of realizing industrialization has remained a mirage. We need to ask ourselves a very simple and basic question why are we not industrializing? What should we do with respect to policies and institutions? And why is it, that there are countries that in recent years have successfully achieved industrialization?
On the lessons to be learnt from the late comers who have successfully industrialized I would like to mention one of our Member States , Mauritius which has moved from labour intensive industrialization to knowledge intensive driven industrialization and services. Today Mauritius is part of the global production network for the celebrated Swiss Watches and for the Boeing industry for certain types of avionic components. There are other COMESA member States that are on the cusp of realizing the same. The reason I have used the example of Mauritius is because when I was a student of Economics almost 45 years ago one of the first lectures I received from a late Nobel prize Laureate on Development Economics was on why there countries that will never develop and Mauritius was one of the case studies. The logic and justification then of these eminent Economists was that Mauritius was dependent on one commodity Sugar and as such would be trapped in low value production and subjected to the vagaries of the price fluctuations which are normal for commodities. I am happy today to observe that Mauritius has proved conventional economic theory wrong, as it has migrated from being a country economists thought would never develop from low to a middle income country. As I speak today, in couple of years from now Mauritius will have moved up the value chain with respect to sugar by having the largest sugar refinery in the Southern Hemisphere. Thanks to nano technology, which I consider to be the technology of the poor, it is now possible for any country to leap frog and produce hundreds of value added products from sugar. I will later on in my address show why it is important for COMESA member States to move away from the traditional model of industrialization as it is like a road that leads to no destination.
Outside our region, particularly from Asia and South East Asia, Vietnam is a striking example of what a country can do by adopting policies and establishing support institutions for an industrialization path based on labor intensive industries. It is indeed, remarkable that between 1989 and 2016, Vietnam is now moving from labour intensive industries to high tech and knowledge driven industries. For Example, Vietnam is emerging as the largest ship building country in the world and accounts for 85 percent of global production of Samsung phones that are assembled in Vietnam. Last but not least, the Gross Domestic Product of Vietnam has grown from United States Dollars of 3.4 Billion in 1989 to United States Dollars 168 Billion by 2014. Imagine if, as COMESA our countries had industrialization policies and strategies similar to Vietnam the COMESA GDP would by now have grown in 1994 from 285 Billion United States to one (1) Billion United States Dollars by now instead of the current GDP of 525 million United States Dollars.
Allow me now to turn to our COMESA regional integration and throw up some figures on how we have performed and are performing as a region. Our Intra regional trade since the COMESA Free Trade Area was launched in 2000 increased from United States Dollars 3.2 billion to United States Dollars 20 billion and still accounts for less than 10 percent of trade with the rest of the world.
Your Secretariat has done a study which has established that although intra COMESA trade is low, there is a potential of intra trade worth US$82.3 billion based on 2014 statistics. The paradox is that these products are produced and exported to the rest of the world and at the same time imported from the rest of the world into the region. The products include, textiles, wooden furniture, horticulture, house hold items, confectioneries, hides and skins, foot wear and leather products, sugar confectioneries, tobacco and precious metals. The study has shown the member States with the highest potential in producing and exporting the products whose total value is approximately ten times that of existing trade.
The same study has identified transport and logistic challenges that have to be addressed to make the region competitive. Of fundamental importance to the COMESA agenda of “inclusive and sustainable industrialization” is the absence within the region of cross border production networks which would result in intra industry trade between and among firms. In Europe intra-industry trade approximately accounts for 45 percent of trade, whilst in Asia is it slightly above 34 percent. We all have heard of “factory Asia”. These production networks do not happen automatically but are a result of clear micro, macro and institutional policies. It is against this background that I would urge member States to expeditiously review the current rules of origin and conclude negotiations and implement the COMESA Common Investment Area Agreement.
I wish to inform you that the the study that I cited has revealed that raw material imports account for the bulk of the US$ 82 billion trade. The raw material inputs sourced from the rest of the world are for the following industries: textiles, footwear and leather products, sugar confectionary and copper alloys. I wish to illustrate with confectionaries that the COMESA region imports raw materials that are used in producing confectionaries. This suggests that there is something defective with the region’s trade and industrial policy in that the focus has been on trade in Sugar instead of addressing the value chain aspects of the sugar sector which require the establishment of factories in COMESA to manufacture industrial sugar. In the same vein, raw materials inputs that are used in the textile industry are largely imported from outside the region due to the high cost of fibers manufactured in some COMESA member States compared with imported fibers from Asia.
What are the lessons that we can learn from other countries and other regions as we implement our agenda on “inclusive and sustainable industrialization”? I would humbly suggest the following approaches:
Firstly, that given the vast resource endowments, the region should adopt a natural resource lead industrialization strategy and that for the region to achieve global competitiveness the focus should be on effecting those structural changes in our economies that will through skills development, technology and innovation improve the productivity of our producers who include the farmers , industrialists and service providers to mention but a few.
Secondly, that given the huge demand for housing due to rapid urbanization the COMESA region should adopt a metal fabrication led industrialization path. This ,as in the case of natural resource lead industrialization requires the training of technologists and artisans. And for this to happen the region has to agree that the current trend of converting technical colleges and Polytechnics into Universities will defeat the objective of metal fabrication led industrialization and industrialization in general. At this point, I wish to share with Council a remark that was made the President of General Electric of the United States when he was asked by a journalist why General Electric was making massive investments in Vietnam and not in other countries. His remark was succinct and to the point that General Electric was investing in Vietnam because Vietnam produces from their technical colleges 100, 000 welders a year and the challenge for his company was to recruit the very best from the very best.
This brings me to my last point that for the COMESA policy and strategy on industrialization to be rapidly and effectively implemented we need a paradigm shift in regional integration that recognizes and accepts that it is not the mere adoption of policies and strategies that will make things happen , but rather that we need robust institutional and governance structures that are member States owned and led. In this regard, Council will be requested to review and pronounce its self on the proposed structure considered by the Inter Governmental Committee which envisages member States taking the lead in championing sectors and sub sectors.
I would be remiss in my responsibility of I did not acknowledge and applaud the sterling contribution by our COMESA financial and technical Institutions in advancing the implementation of regional programs and projects. In the same vein my thanks go to our cooperating partners whose support has made our countries and the region make remarkable achievements in the creation of a single market.
I thank you for your kind attention.
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Sustainable investment opportunities in Africa: Prospects for BRICS
Sustainable investment in Africa: An overview
Africa, a continent on the rise, achieved relatively high economic growth during the past 15 years in spite of all the constraints, with its GDP expanding from an average of just above 2% during the 1980-90s to more than 5% during 2001-14. However, since 2013, the growth has moderated, largely due to the commodity price slump, and subdued external demand.
Regionwise, the growth remained the highest in East Africa, followed by West Africa and Central Africa, and was the lowest in Southern Africa and North Africa. Assuming gradual improvement in international and domestic conditions, growth is projected to accelerate across regions during 2016 and 2017.
Exports from Africa have been largely commodity based. This huge dependency on commodity exports has been a boon and a bane at the same time. In times of commodity boom in prices, the African countries stands to benefit and garner a lot of revenues. However, during times of slump in prices, the entire economy suffers drastically. For example, the share of ‘Mineral fuels, mineral oils and products of their distillation; bituminous substances’ alone in Africa’s overall exports stood at a phenomenal 45% in 2015 and was equivalent to about 20% of world exports of this particular category. Such high concentration of the export basket in overall exports exposes the African economies to the vagaries of commodity price cycles.
This Study, inter alia, explores the various opportunities for sustainable investments in Africa, which would not only lead to job creation but also facilitate a sustainable mechanism towards wealth creation in Africa.
In the mining and extractive industries, there have been numerous arguments towards diversifying away from commodity based economy. However, it is felt that such an exercise may not be possible in the immediate future, and hence the need of the hour is having a commodity based industrialization which facilitates value addition. In the crude oil sector, there is a scope of setting up refining capacities keeping the long term in view, while in the nonferrous categories opportunities could be explored in intermediate and mid to low end manufacturing.
Another area of focus which could lead to a significant improvement in African economy is agriculture. The continent has been dependent on the sector largely for its sustenance and livelihood. A good opportunity exists in the African agriculture sector wherein cooperative farming and contract farming could be encouraged. Such initiatives can lead to greater mechanisation, which in turn would facilitate development of regional and global value chains in agro products and food processing. Also required would be introduction of new agri equipment, which would significantly help in increasing productivity.
Besides concentrating on resource endowed product chains, there is an important aspect that requires immediate attention. As Africa gradually flourishes under surging economic and population growth rates, it also faces the challenge of ensuring that everybody benefits optimally from the gains of its progress. Two sectors which are critical in this context are energy security and healthcare. Both these would impact the continent’s productivity and translate into greater economic growth.
Access to electricity would help in businesses operating at higher levels of productivity, farmers running cleaner irrigation systems and processing machines that improve their yields and thus, their income. In rural communities, the farmers benefit from climate controlled storage solutions. At the same time, introduction of solar based electricity would catalyse movement away from fossil fuels as a source of energy of a large part of the population, thereby mitigating the ill-effects of climate change.
Healthcare is another area which requires serious attention. Many pockets of this huge continent do not have access to even basic health amenities. A general well-being of the community helps not only in having better health upkeep, but also improves the overall efficiency of the nation.
This Study envisages identifying areas of sustainable, responsible and impact investments in this remarkably huge African continent. The Study also appreciates the existence of a dual need in Africa. On the one hand, investments are required in an area which are its strengths, namely in minerals and agriculture, but there is a need is to establish forward and backward linkages so that there is value addition, and the local community benefits. On the other hand, there is also need for creating a sound power infrastructure which will sustain the growth paradigm of the African continent. This could essentially be facilitated through introduction of solar infrastructure, on grid and off grid, in a zone which is naturally endowed with almost 300 days of sunlight.
While the Study explores the huge opportunity available, innovative partnerships are also required towards creating sustainable investments. In this context, emerging economies which have largely been proponents of South-South cooperation, can lend their hand towards creating the requisite mechanism. BRICS economies (Brazil, Russia, India, China, and South Africa) in particular can act as instruments towards strengthening their investments in these identified sustainable areas. This Study has briefly highlighted the existing investments in Africa by the BRICS economies in areas like mining, agriculture and agro processing, solar, and healthcare. The Study surmises that sustainable and sustained investment in these sectors over a medium to long term horizon would not only induce better infrastructure, but also generate jobs for the young Africa. BRICS economies would also significantly benefit out of such investments.
» Download: Sustainable Investment Opportunities in Africa: Prospects for BRICS (PDF, 6.99 MB)
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At General Assembly debate on NEPAD, speakers say international support vital to achieving sustainable development
Delegates also point to trade, infrastructure as opportunities for future growth
Pledging to support an Africa that was stable, prosperous and at peace with itself, speakers on 14 October 2016 warned the General Assembly that poor infrastructure and trade barriers still hampered the continent’s development, while challenges such as “brain drain” and terrorism threatened to reverse significant gains made since the turn of the millennium.
Indeed, a decade and a half into the African Union’s “New Partnership on Africa’s Development” (NEPAD), many delegates said more robust international cooperation was needed to help the continent achieve the 2030 Agenda for Sustainable Development and overcome the lingering effects of centuries of colonial exploitation.
Peter Thomson, President of the General Assembly, opening the meeting, said that while Africa’s growth remained strong, unfavourable global conditions, such as volatile commodity prices, limited economic diversification and high levels of debt, risked undermining hard-fought development gains. “Tackling these issues will require efforts by both African countries and development partners,” he said, calling on stakeholders to strengthen capacity-building and increase investment in infrastructure, health services, agricultural productivity and education.
Ibrahim Assane Mayaki, Chief Executive Officer of the New Partnership for Africa’s Development Agency, declared that “the African continent is demonstrating that it is capable of economic, political and social transformation.” Among other things, he described the Agency’s efforts to boost African infrastructure development, engage the private sector and promote agriculture and rural development. Noting that the continent’s lack of economic opportunities were leading young people to search for more prosperous futures elsewhere, he outlined programmes aimed at building innovative skills among young Africans.
A number of speakers pointed to trade as an important opportunity arena for Africa’s future growth. In that vein, the representative of Niger, who spoke on behalf of the African Group, said many of the continent’s recent development projects had been fuelled by the 2015 signing of a Tripartite Free Trade Area Agreement between three subregional economic communities. While the continent had embarked on the domestication of the Sustainable Development Goals, he stressed that “no country or organization can hope to meet these challenges alone” and emphasized the importance of multi-stakeholder dialogue.
Thailand’s representative, speaking on behalf of the “Group of 77” developing countries and China, said African countries were among those most severely affected by global economic challenges and must have access to adequate and predictable resources to address poverty and hunger. Resources must be mobilized in financing, trade, debt relief and transfer of environmentally sound technologies, he said.
Other delegates drew attention to terrorism as one of the greatest threats facing Africa today, with Israel’s representative pointing to the phenomenon as one of the common struggles his country shared with its African neighbours. Noting that long-term development and prosperity could not be achieved without stability, he emphasized the need to combat terrorism and pledged to share his country’s knowledge and experience with Africa.
Cuba’s representative, recalling centuries of colonialism and looting, emphasized that developed nations bore a “moral obligation” to support Africa. To this day, she said, some nations saw the continent as nothing more than a source of resources. “We must get rid of the philosophy of plunder and gain at all costs,” she stressed, adding that the world’s current economic policies and unbridled waves of privatization, together with the neoliberal colonial policies of developed nations, were responsible for Africa’s precarious current situation.
For its joint discussion on Africa’s development and the related item “2001-2010: Decade to Roll Back Malaria in Developing Countries, Particularly in Africa”, the Assembly had before it three reports of the Secretary-General: New Partnership for Africa’s Development: fourteenth consolidated progress report on implementation and international support; biennial report of the review of the implementation of the commitments made toward Africa’s development; and causes of conflict and the promotion of durable peace and sustainable development in Africa.
Also speaking on those items today were the representatives of Guyana (on behalf of the Caribbean Community), Brunei Darussalam (on behalf of the Association of Southeast Asian Nations), United States, Kuwait, Russian Federation, India, Nigeria, Libya, Morocco, Egypt, France, Sierra Leone, Canada, South Africa, Kazakhstan, Cameroon and Zambia.
At the meeting’s outset, Girma Asemrom Tesfay, the late Permanent Representative of Eritrea, who recently passed away, was remembered by colleagues.
Secretary-General Ban Ki-moon recalled Mr. Tesfay as a “masterful diplomat” and negotiator who had helped to foster greater coordination between the Organization and Eritrea. Meanwhile, Mr. Thomson described the diplomat as a dedicated public servant who had represented Eritrea before the African Union, European Union, Belgium, Canada, Ethiopia, South Africa and the United States.
Eritrea’s representative said Mr. Tesfay had been an accomplished and tireless fighter for his people and a champion for fairness and justice for all.
Also expressing condolences were the representatives of Niger (on behalf of the African States), Georgia (on behalf of Eastern European States), United Kingdom (on behalf of Western European and Other States), Kuwait (on behalf of Asia-Pacific States) and the United States (as host country).
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tralac’s Daily News Selection
The selection: Friday, 14 October 2016
Federal Chancellor Angela Merkel: speech at African Union Commission
In 2017 Germany will assume the Presidency of the Group of 20. We will make the issues that concern you in Africa one of the priorities of the G20 agenda and also launch a large scale initiative with Africa to this end. A conference due to take place half way through the year in Berlin will play a particularly important role, featuring high ranking representatives from G20 states and African countries as well as from international organisations and the private sector. Before that ourGerman African Business Summit is planned – this time in Nairobi. Many German enterprises already operate in Africa, but considerably more could do so. That is something that I and our entire Government are working to encourage.
Moono Mupotola: Bracing up for the post-AGOA period (AfDB)
A key challenge for Africa will be to ensure that its industries that have thrived under AGOA do not collapse, that the thousands of jobs created in the automobile and automobile parts, apparel, fruit and nut, cocoa, footwear, and flower industries are sustained and continue to grow beyond 2025. African governments are aware of the challenges. At the September 2016 Ministerial AGOA Forum, African trade ministers recognised the urgent need to plan ahead. They committed to the creation of a task force to outline strategies for US-Africa trade and investment relations beyond 2025. This is a good start. Now, the clock is ticking and the bell signaling the end of AGOA privileges will soon resonate across Africa. We must be ready when it rings. [The author is the director of the NEPAD Regional Integration and Trade Department at the AfDB]
AUC begins process of validating SME Strategy and Master Plan 2017-2021
The objective of the initiative is to develop an AU strategic framework to support the implementation of the Accelerated Industrial Development of Africa (AIDA) and Africa’s sustainable economic transformation under Agenda 2063. The SME Strategy and Master Plan 2017-2021 aims at improving the continental business environment, increasing business formation, supporting formalization of growth-oriented informal enterprises and start-ups, increasing SME/Is, MSMEs and entrepreneurs’ participation in regional and global value chains and promoting innovative financing.
Trade, Gender and Development: advocating inclusive and gender-sensitive economic development on a global level (pdf, UNCTAD)
The Trade, Gender and Development Programme is deepening the scope of its analysis of the trade–gender nexus with three ongoing projects. The first, “Informal cross-border trade for the empowerment of women, economic development and regional integration in Eastern and Southern Africa (2016–2020)”, aims to strengthen the capacities of Malawi, Tanzania and Zambia to leverage informal cross-border trade for the empowerment of women, economic development and regional integration. The purpose of the second project, “Trade and gender in East Africa”, is to conduct an in-depth analysis of women’s participation in trade in that region and of the factors facilitating or impeding it. The purpose of the third project is to develop a trade and gender toolbox and a related trade and gender index.
Infrastructure development and financing in Sub-Saharan Africa: towards a framework for capacity development (pdf, ACBF)
Infrastructure development plays a major role in promoting growth and reducing poverty. In Africa, however, underdeveloped infrastructure continues to be a binding constraint on sustainable development. Notably, African countries, through the continent’s Agenda 2063, recognize that developing infrastructure—transport, energy, water, and e-connectivity—will be critical for the continent to assume a lasting place in the global economic system. The ACBF has produced this occasional paper under its supported Strategic Studies Group to provoke discussion and further investigation of critical capacity challenges to be addressed in developing infrastructure in Africa. [Download: French version (pdf)]
A preview of tomorrow's AU maritime summit in Lome:
On African coastlines, prosperity and security go together (Chatham House): Encouragingly, the next AU summit in Togoon 15 October signals a new ambition to move Africa’s maritime agenda beyond security. It complements the UN’s new Sustainable Development Goal 14, which challenges the world to act urgently to restore healthy, productive and resilient oceans and seas, and reflects the emphasis placed on the ‘blue economy’ by some of Africa’s coastal and island states. The AU has already highlighted these issues in both its Agenda 2063 and its 2050 Integrated Maritime Strategy, but the summit provides an inflection point: Africa’s governments now need to generate the political will to implement maritime development ideas effectively. [AUC Chairperson urges Member States to train, create jobs and wealth]
Kenya, Egypt leads in intra-COMESA trade: Egypt and Kenya registered the biggest share of intra-COMESA export marketin 2015 with 22% and 17% share respectively. Zambia, DR Congo and Uganda followed with 13%, 12% and 11% respectively. Egypt exported products worth $1.7bn and Kenya $1.3bn. The value of Zambia exports was $977m and DR Congo $896m. With regard intra-COMESA import market share, Zambia registered the biggest share at 24% with goods worth $2.0bn in 2015. DR Congo, Sudan, Uganda, Libya, Kenya and Egypt followed with 11%, 10%, 9%, 8% 7.4% and 6.7% respectively.
Chinese, Indian currencies join the COMESA system: The Chinese Yuan and the Indian Rupee will be included in the Regional Payment and Settlement System operated by the COMESA Clearing House as a mode of payments. Currently, the US dollar and the Euro are the only two international currencies used on the system with provision for the British Pound, Japanese Yen and the Swiss Franc. The Director of the COMESA Clearing House Mr Mahmood Mansoor said the inclusion of the two currencies follows the decision by Central Bank governors from the region during their meeting in August this year. [7th COMESA Committee on Statistical Matters: download the presentations, COMESA Harmonised Consumer Price Index: August 2016 presentations, meeting report]
Improved and facilitated trade in West Africa project: Tema Port (ECOWAS)
ECOWAS and the World Bank Group co-hosted two workshops in Ghana from 10-13 October, under the EU-funded Improved and Facilitated Trade in West Africa Project. The first workshop, held on October 10-11, brought together the private sector and selected public sector bodies from the Tema Port to review Port Assessment Process Maps to ensure accuracy and completeness. A discussion was held on how to use the maps as transparency tools to help level the playing field for traders and port service providers. A number of reform proposals were developed and aimed at improving and modernizing the port experience. The project focuses on reducing the time and cost to trade, and increasing border agency cooperation and coordination, to encourage a better flow of goods within the region, and with international trading partners.
EALA urges partner states: Fast-track alternative sustainable funding mechanisms
Given the recent financial crunch the Community has undergone, the Assembly is now urging the Summit of EAC Heads of State to direct the Council of Ministers to implement its directive on alternative sustainable funding mechanisms within a timeframe that it (the Summit) shall determine. This follows a Resolution passed by the Assembly urging the Summit to fast-track implementation of the directive on Alternative sustainable funding mechanisms and/or invoke Articles 143 of the EAC against defaulting Partner States in as far as the financial obligation to the Community is concerned.
Northern Corridor performance dashboard: July 2016 report (pdf, NCTTCA)
The Monthly Mombasa Port Community Charter Report provides an overview of key trends within the port, as well as the Northern Corridor transport system in Kenya. This report summarizes the July 2016 status of 9 key indicators which are tracked by the Northern Corridor performance dashboard as stipulated in the Mombasa Port Community Charter. The indicators reviewed in this report are categorized into Maritime, Port and Corridor indicators. The performance shows improvements in performance on most of the indicators when compared with the month of June, 2016. The summary performance is as follows:
Tanzania pulls out of East Africa common visa plan (The Standard)
In a media briefing Wednesday, Tourism Cabinet Secretary Najib Balala said Tanzania was wary of competition from Kenya. “Tourists who will be moving between the three countries that form the coalition will now be using a common visa that will be charged at $100 (Sh10,122) instead of $150 (Sh15,183) that each country charged before,” Mr Balala said. “The coalition of the willing has also agreed to have a common East Africa stand at the world Travel Market to be held in London on November 7. The stand has been dubbed ‘borderless East Africa’, but Tanzania will not be part of it,” he added. Balala said the problem with the East African region is that countries live with “a fear of the unknown”. He called on the country’s neighbours to look at each other not as competitors, but as friends complementing each other. “Our competitors are the Caribbean countries and the Far East. We shouldn’t compete among ourselves,” Balala said. “I want to encourage Tanzania to join us. Our doors are open,” he added.
Rwanda: Tanzania, Burundi urged to scrap work permit fees for East Africans (New Times)
More needs to be done by the EAC for the region to achieve universal free movement of goods and people, according to Stephen Ruzibiza, the Private Sector Federation chief executive officer. “We are promoting free movement of labour and services, but if some countries are still reluctant to implement what other partner states have agreed on over the past few years, then it’s far-fetched. Tanzania and Burundi have not yet scrapped work permit fees for regional citizens, which affects free movement of labour across the region,” he said. He was speaking in a telephone interview from Nairobi Kenya, where he was attending the inaugural East African Business and Entrepreneurship Conference and Exhibition on Wednesday.
RBZ rules out adoption of Rand (The Herald)
The Reserve Bank of Zimbabwe deputy governor Dr Khupukile Mlambo says Zimbabwe will not adopt the SA rand as its currency although the US dollar has not been the ideal option. Dr Mlambo admitted the greenback has given authorities “headaches” owing to liquidity challenges caused by leakages. However, joining the common monetary area using the rand would not be an option because Zimbabwe does not have its own currency. “We need to understand the South African rand has its own challenges, it is volatile,” said Dr Mlambo at a National Economic Consultative Forum workshop yesterday. [World Bank: Govt to blame for cash shortages, Mystery of $200m bond notes facility]
BRICS Trade Ministers: communiqué
The Ministers appreciated the progress in the realization of the Strategy for BRICS Economic Partnership. They directed the CGETI to put forth initiatives and proposals towards the implementation of the Trade and Investment section of the Strategy at the earliest. The Ministers agreed that close cooperation among the CGETI, the BRICS Business Council and New Development Bank is useful for implementing and bringing the BRICS Economic Cooperation to a new high quality level.
BRICS Trade Fair: speech by India's Commerce and Industry Minister
Trade amongst the BRICS nations is less than 5% of their total global trade. This amounts to, in actual terms, about $300bn out of $6.50 trillion. The subdued global trade could be a major reason, as it has impacted BRICS economies differently, some through falling commodity prices and others on account shrinking demand for manufactured goods. We need to find innovative ways of increasing intra-BRICS trade. In this gloomy scenario, it has been observed that nations are resorting to protectionist measures in the forms of NTMs, creating invisible walls against free trade. It is in this context that cooperation amongst BRICS countries on NTMs remains significant. India has taken a lead on this issue and we should work towards standstill and rollback of protectionist measures.
Related: Export credit agencies discuss ways to boost intra-BRICS trade, BRICS seminar on investment flows: video of speech by India's finance minister, Arun Jaitley, India’s cabinet approves pact between EXIM Bank, New Development Bank, Hamid Ansari: BRICS should trade in their own currencies, China assures greater market access to products of Indian companies, 2015 BRICS Ufa Summit: compliance report
Kenya-South Africa: joint communiqué
Nigeria’s tax chief elected head of African tax forum
Rwanda: Agriculture Land Information System to help attract private investment
Algeria: AfDB’s Interim Country Strategy Paper (pdf)
'SADC countries agreeable to Zim imports ban'
Zimbabwe National Competiveness Report 2016
Zimbabwe’s cut flowers exports decline by 95%,
Zimbabwe: Gold exports accrue $614m
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Op-ed: Bracing up for the post AGOA period
Next time you pick up sporting gear or a pair of jeans in a U.S. mall, do check the label. It may have been made in Lesotho, a small, mountainous and land-locked country completely surrounded by South Africa, with a population of around two million.
Lesotho is a beneficiary of the Africa Growth and Opportunity Act (AGOA), which allows over 6,400 products from eligible sub-Saharan African countries to enter the U.S. market duty-free. The country has made big strides in the garment industry with U.S. exports estimated at US$330 million in 2015, against US$140 million in 2000. Today, according to the Lesotho Textile Exporters Association, about 80% of Lesotho’s textile and garment exports go to the U.S. With 44,000 employees, the garment industry is the country’s largest private sector employer.
There are other ‘Made in Africa’ success stories that have emerged since AGOA was introduced in 2000 and extended by 10 years in September 2015. According to the 2016 AGOA report released by the Office of the United States Trade Representative, non-oil exports to the United States under AGOA nearly tripled from $1.4 billion in 2001 to $4.1 billion in 2015. Automobiles from South Africa and apparel from Kenya, Lesotho, Mauritius, and Swaziland were the leading exports.
The gains from AGOA are undeniable, despite criticisms that the agreement favours petroleum products and that it excludes some agricultural products in which Africans have a comparative advantage. There have also been concerns that the export of Africa’s agricultural products to the United States is made even more difficult by complex health and food safety regulations. This, however, has not stopped bolder, export-ready, African countries from capturing shares in the U.S. market. In July, for instance, Namibia became the first African country to be eligible to export boneless (not ground) raw beef products to the US.
A key challenge for Africa will be to ensure that its industries that have thrived under AGOA do not collapse, that the thousands of jobs created in the automobile and automobile parts, apparel, fruit and nut, cocoa, footwear, and flower industries are sustained and continue to grow beyond 2025.
This will demand that Africa strengthens its skills base and capacity to compete. Failure to do so could see competitors such as Vietnam erode its growing market share in especially textiles and apparel should the United States ratify the Trans-Pacific Partnership Agreement. The US textile and apparel market is estimated at US$350 billion. Africa, despite its large potential, supplies a paltry one per cent of this. A challenge for the continent is use the next nine years up the end of AGOA in 2025 to build competitive industries in the sector. A country that could emerge as key player is Ethiopia.
A 2015 McKinsey survey of 40 global chief procurement officers in the apparel industry, for the first time named Ethiopia as a possible global sourcing destination. Like with many other African countries, the challenge for Ethiopia is to shift from being of the world’s leading sourcing options to becoming a priority.
For responsive countries, AGOA has provided invaluable lessons that Africans can use to stimulate the growth of their export industries and seize market share elsewhere. It has also helped enhance intra-African trade by enabling producers in different countries to create new value chains that deliver mutual benefit. Botswana, for instance, now exports leather to South Africa where it is processed into upholstery for luxury car exports to the United States.
Meanwhile, the AfDB will continue to play its part by building infrastructure to improve Africa’s competitiveness in U.S. markets. This will include promotion of regional integration that enhances trade and skills for greater global competitiveness. Equally important, within Africa is the creation of solutions for export-oriented small and medium enterprise (SME) to help bridge the unmet demand for trade finance in Africa, currently estimated at US$ 120 billion. Work in this direction is already well underway. Established in February 2013 the Bank’s Trade Finance Program (TFP) has already supported more than 85 domestic banks in 27 African countries, catalyzing approximately US$3.4 billion of trade in vital sectors such as agriculture, manufacturing and construction and energy. More than 60% of the transactions supported are on account of SMEs. Furthermore, the Bank’s emphasis on regional value chains in its “Industrialize Africa” strategy recognizes the opportunities that anchor industries in one country can provide to industries in neighboring countries.
African governments are aware of the challenges. At the September 2016 Ministerial AGOA Forum, African trade ministers recognised the urgent need to plan ahead. They committed to the creation of a task force to outline strategies for US-Africa trade and investment relations beyond 2025. This is a good start. Now, the clock is ticking and the bell signaling the end of AGOA privileges will soon resonate across Africa. We must be ready when it rings.
Moono Mupotola is the Director of the NEPAD Regional Integration and Trade Department at the African Development Bank (AfDB)
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On African coastlines, prosperity and security go together
Africa’s leaders must see their marine space as important for its economic potential, not just as a security threat.
Reversing traditional ‘sea blindness’ is a no-brainer for African development; 70 per cent of African countries have coastlines, and even land-locked countries need safe seas for trade. Africa’s coastlines are an under-exploited resource, which could enhance social and economic stability. Higher per capita food supply from fish would reduce hunger and improve nutrition. Sustainable tourism could be developed, demanding healthy marine bio-diversity, which in turn requires the protection of more marine areas.
Encouragingly, the next African Union summit in Togo on 15 October signals a new ambition to move Africa’s maritime agenda beyond security. It complements the UN’s new Sustainable Development Goal 14, which challenges the world to act urgently to restore healthy, productive and resilient oceans and seas, and reflects the emphasis placed on the ‘blue economy’ by some of Africa’s coastal and island states. The AU has already highlighted these issues in both its Agenda 2063 and its 2050 Integrated Maritime Strategy, but the summit provides an inflection point: Africa’s governments now need to generate the political will to implement maritime development ideas effectively.
Strategic economic importance
To capitalize on the potential of the sea, coastlines need to be factored into development planning. Coastal communities in Africa bear the brunt of climate change and ocean acidification, and the focus of policy-makers in African governments does not always encompass those living on the peripheries. Overfishing and pollution can combine to push them into crisis, worsening the challenges of insecurity and migration.
There are nonetheless examples of innovative new thinking in Africa that could help the emergence of national ‘blue economies’ on the continent.
In the western Indian Ocean there is encouraging news about gross marine product and the asset base that underpins that. The ‘blue economy’ dimension is relatively new for policy-makers but some countries are showing the way with innovative financial experiments, such as Seychelles’ issue of a debt for marine conservation swap and its intention to issue a ‘blue bond’. Others are looking at tourism through a sustainable lens. For example, nine countries, including Senegal, Tanzania and Mozambique, supported by the Global Environment Facility and the United Nations Environment Programme, have been the focus of study on how to conserve eco-systems while reducing negative impacts from coastal tourism.
The African Union, African Development Bank and United Nations Economic Commission for Africa have all begun to look at ‘blue economy’ policy options and can help build coherent strategy models to assist regional and country planners.
If the oceans’ marine resources are to remain healthy, policy should aim at sustainability and generating benefit from ecosystem services, rather than focusing solely on extraction. This approach has been seized positively by island and coastal states like Kenya and Seychelles, which have seen success by integrating the ‘blue economy’ agenda into joined-up cross-governmental action.
Dual priorities
But other African countries seem to be waiting for evidence of impact on jobs and GDP before they act. And even if the right policies are put in place, the development, safety and security of seas remain fundamentally a challenge of governance. Weak national capacities in providing effective law enforcement including coastguards, and weak compliance with international and national laws about boat registration, permits, fisheries and quotas undermine progress. Fisheries agreements with foreign governments can be a source of corruption. Few crimes in the maritime domain come to court in African countries.
Some of Africa’s regions have been putting more effort into tackling dangerous piracy, trafficking and illegal fishing in recent years. Important agreements for regional cooperation have been signed for East and West Africa. And low-cost collaboration between eight eastern African countries through the FISH-i Africa initiative is hitting illegal fishing operators, including those targeting tuna. But insecurity and crime remain an issue, including in the Gulf of Guinea.
The dual priorities of marine security and development should be pursued in concert. Local, national and international efforts towards a healthy, productive, sustainable ocean space will only succeed if basic security is guaranteed. And healthy, prosperous coastal communities can help mitigate security threats including piracy and illegal migration.
Thirty African heads of state are expected to attend the AU Extraordinary Summit on Maritime Security, Safety and Development in Lomé. These leaders must realize the urgency of a shift in strategic planning, to see the marine space as important for its economic potential, not just as an arena for countering security threats.
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Chinese, Indian currencies join the COMESA system
The Chinese Yuan and the Indian Rupee will be included in the Regional Payment and Settlement System (REPSS) operated by the COMESA Clearing House.as mode of as a mode of payments.
Currently, the United States dollar and the Euro are the only two international currencies used on the system with provision for the British Pound, Japanese Yen and the Swiss Franc.
The Director of the COMESA Clearing House Mr Mahmood Mansoor told delegates attending the 36th Intergovernmental committee meeting in Madagascar that the inclusion of the two currencies follows the decision by Central Bank governors from the region during their meeting in August this year.
“This inclusion as the sixth and seventh settlement currencies would make REPSS more robust and meet the growing needs of payments and settlements in the fast changing financial world,” he said.
REPSS is a Multilateral Netting System with end-of-day settlement in a single currency. It provides a single gateway for Central Banks within the region to effect payment in a multicurrency environment (US$, Euro or any other specified currency). Importers and exporters are therefore able to pay and receive payment for goods and services through an efficient and cost effective platform thus increase intra-regional trade. The direct participants of the COMESA Clearing House are the Central Banks of Member States
Mr Mansoor said the two currencies will reduce the requirements for US dollars in trade with China and India and also in the Intra-COMESA and regional trade. This would greatly facilitate COMESA and Non-COMESA Member States.
Member States have steadily been using the REPSS which currently has eight Central Banks live on the platform. The value of transactions processed on the system reached nearly 14 Million US dollars and 1 million Euros as at August 2016.
The use of REPSS is expected to grow as the Central Banks of Egypt and Sudan are poised to begin live operations soon. Currently, Central Banks of DRC, Kenya, Malawi, Mauritius, Rwanda, Sudan, Uganda and Zambia are operating on the system.
In the meeting of Governors, COMESA Secretary General Mr Sindiso Ngwenya was asked to lead a Task Force comprising of the COMESA Clearing House, PTA Bank, COMESA Business Council and any other relevant COMESA Institution, to work in collaboration with Central Banks and main exporters and importers to channel all their payments/receipts through REPSS. The Secretary General will also liaise with Afreximbank to use the Clearing House for their intra-COMESA transactions.
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Improving transparency and trade facilitation at the Tema Port
Public and private sector stakeholders meet and agree on reform action plans
The Economic Community of West African States (ECOWAS) and the World Bank Group co-hosted two workshops in Ghana from October 10-13, under the European Union Funded Improved and Facilitated Trade in West Africa Project. The project aims to improve the flow of regional and international trade, by unlocking transit challenges across key trade corridors in West Africa.
Over 100 participants, including stakeholders from the public and private sectors affiliated with the Tema Port, and representatives from the ECOWAS Commission, the European Union, the World Bank Group, attended both workshops.
“The Economic Community of West African States is committed to implementing programs that facilitate regional integration and making it work for private sector operators and the people of West Africa,” said Mr. Louali Chaibou, Commissioner, Trade Customs and Free Movement, ECOWAS Commission.
The first workshop, held on October 10-11, brought together the private sector and selected public sector bodies from the Tema Port to review Port Assessment Process Maps to ensure accuracy and completeness. A discussion was held on how to use the maps as transparency tools to help level the playing field for traders and port service providers. A number of reform proposals were developed and aimed at improving and modernizing the port experience.
“Our greatest hope is to realize tangible outcomes from the very intensive and passionate discussions with the aim of making Ghana the best and preferred port in West Africa,” said Benny Dolphyne, Sea freight Manager, Bollore Transport & Logistics.
“The fact the European Union is financing this project is a testimony of the importance we give to our relationship with West Africa which are both historical and economic. As you are aware, the EU is the major trading partner to the region. We believe also in the promotion of the private sector as an engine for an economic and social development of West Africa. Our support to improving trade conditions is a priority of the EU cooperation with the region,” said Benoist Bazin – Team Leader, Infrastructure and Sustainable Development who represented Ambassador William Hanna, Head of the EU Delegation to Ghana.
“West African countries have enormous potential to strengthen competitiveness and increase trade flows, which can drive growth, reduce poverty, and deliver jobs to the sub-region. The World Bank Group is pleased to be working in partnership with regional organizations, member states, the private sector and development partners to help these countries unlock transit challenges along key trade corridors, and improve their competitiveness within the global economy,” said Ronke-Amoni Ogunsulire, IFC Country Manager for Benin, Burkina Faso, Ghana, Niger and Togo.
The Improved and Facilitated Trade in West Africa Project is a four-year initiative that was launched in November 2014. The €3,5 million project seeks to support ECOWAS to improve trade in the West African region and, specifically, transit trade along the region’s major trade corridors. It focuses on reducing the time and cost to trade, and increasing border agency cooperation and coordination, to encourage a better flow of goods within the region, and with international trading partners.
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tralac’s Daily News Selection
The selection: Thursday, 13 October 2016
The BRICS trade ministerial meeting takes place today in Goa, as does the BRICS Business Forum. A selection of trade policy commentaries and news updates:
6th Meeting of the BRICS Trade Ministers: Trade Ministers’ Communiqué (PIB)
Ministers recognized the importance of preserving policy space to promote industrialization, industrial upgrading and value addition as a core pillar for structural transformation and sustainable development and BRICS countries integration into the global economy. They agreed to enhance cooperation in this regard. [...]
The Ministers recognised the importance of the Micro, Small and Medium Enterprises (MSME) to the balanced economic development of the BRICS countries. The Ministers acknowledge the role of MSMEs as the engines of export led growth and employment generation given the highest rate of employment per unit of investment in MSMEs; and their crucial role in addressing regional disparity and poverty alleviation. The MSME sector in many of the BRICS economies contribute directly or indirectly to nearly half of their exports, manufacturing output and GDP.
Push for trade pact will polarise BRICS nations, warns South Africa (The Hindu)
An immediate push for a BRICS Free Trade Agreement will polarise heavily-industrialised and lesser-industrialised nations within the five-member grouping, warned South African trade and industry minister Rob Davies. Speaking to The Hindu ahead of the Goa BRICS Summit, Davies said, the bloc comprising Brazil, Russia, India, China and South Africa should instead adopt a practical and gradual approach of identifying opportunities in important sectors such as ‘aircraft manufacturing & maintenance’ to create value chains in the five emerging economies. On the ‘informal’ proposal by China for a BRICS FTA, he said South Africa and the African continent have so far been mainly producers of primary products, but want to retain the policy space for industrialisation to reap the benefits of the ‘Fourth Industrial Revolution’ — meaning, industrialisation using computerisation and other latest technologies.
Referring to certain “structural imbalances” in BRICS trade, he said, for instance, South Africa mainly exports raw materials to China and imports fully-manufactured items from that country. If such a scenario continues, it will not help create value chains that will support industrialisation in South Africa, he said, adding that such imbalances need to be corrected first. “So we can go for cooperation agreements and have business-to-business contacts, and not get enamoured by the title of a highly ambitious agreement that would only cater to the interests of some, but won’t have broader developmental outcomes,” he said, adding that BRICS countries should discuss ways to promote inclusive growth and reduce inequality.
India-SACU trade pact talks needs to be revived: South Africa (PTI)
South Africa’s Minister of Trade and Industry Rob Davies said that both the sides have their sensitivities but the effort should be to expedite the negotiations, which are on a "very slow track". "India has got its sensitivities, we have our sensitivities," Davies told PTI in an interview. Citing an example, he said there are high taxes on wines in India and "we are pretty sensitive about our clothing and textiles. So, I think sensitivities there on both the sides".
South Africa backs India on solar sourcing (The Hindu)
South Africa has backed India’s local sourcing rules in solar equipment manufacturing, while calling for BRICS countries to come up with a joint strategy to work around regulations of the WTO. “BRICS nations need to compare notes on how to re-construct their renewable energy programmes to ensure that the localisation requirements do not technically flout WTO rules,” South Africa’s Trade and Industry Minister Rob Davies told BusinessLine. Without naming the US, Davies said his country will firmly oppose attempts being made by “some of the major countries” to introduce new restrictions on localisation at the WTO. Davies said, “We (India and South Africa) have the freedom in place (to procure locally in case of government purchases) as a result of not being signatories to the Government Procurement Agreement at the WTO. We need to retain that policy space.”
India’s trade deficit: China still the elephant, but India must deal with Indonesia too (Financial Express)
India will discuss its huge merchandise trade deficit with China at the BRICS summit later this week, but it has also to address elevated trade deficit from an unexpected quarter. While China remains the elephant in the room, analysts say Indonesia has fast emerged as one of the most important countries with which India has a trade deficit, especially after the country’s free trade agreement (FTA) with Indonesia came into effect from October 1, 2010, under the broader Asean FTA framework
Why calls for boycott of ‘Made in China’ goods are bound to fail (IndiaSpend)
India, Brazil to sign pact on cooperation and facilitation investment (New Kerala)
China’s trade struggles add to worries over economic outlook (WSJ)
Samir Saran, Abhijnan Rej: ‘The alphabet soup at Goa’ (The Hindu)
Narendra Modi’s Indian Ocean opportunity (LiveMint)
A better approach would see India making a bigger, unilateral push to improve regional connectivity, including greater financial support for new infrastructure investment, and a new push to reduce trade barriers, beginning with its own. The success of China’s grand One Belt, One Road initiative shows that tangible projects between countries are normally the best basis for new economic cooperation across regions. Here, India has work to do, be it pushing projects like the mooted Myanmar-Bangladesh-India gas pipeline, or providing greater development funding assistance to poorer neighbours. The Indian Ocean has the potential to become the most important source of new global growth over the next 20 years, just as the Pacific rim powered the world’s economy for much of the last 20. This fact alone should justify Modi placing much greater emphasis on it. But if India is to emerge at the heart of a new regional order, it needs to open its wallet first. [The analyst: James Crabtree, @jamescrabtree]
Mauritius and India open new chapter of development, says Finance Minister (GoM)
Mauritius and India will open a new chapter of development following the allocation of Rs 12,7 billion by the Government of India for the 2016-2017 budget for the implementation of infrastructure projects in Mauritius. The Minister of Finance and Economic Development, Mr Pravind Jugnauth, expressed his appreciation with regard to the prompt response of India in disbursing funds for several development projects, following his recent visit to India from 13 to 18 September 2016. Among the projects:
Indonesia: Govt to boost trade promotion to India, Africa, Latin America (Jakarta Post)
President Joko “Jokowi’ Widodo has asked the trade ministry to pool all the promotion funds currently held by 17 government institutions so that promotion activities could be expanded to non-traditional markets such as India, Africa and Latin America. “Carry out trade promotion now. So, when the global economy is recovering, we can boost our exports," he told reporters after he officially opened the 31st Indonesia Trade Expo in Kemayoran, Jakarta, on Wednesday.
David Ndii: ‘Shopping malls, motorways and the new debt treadmill’ (New African)
Between Chinese loans and Eurobonds, Africa has stacked up $110bn in foreign debt over the past decade. This exceeds the amount forgiven to the most indebted countries in the mid-2000s. With several countries running into payments difficulties, is this the new debt crisis?
Kenya: Business leaders read wish list to South Africa’s Zuma (Business Daily)
“African countries have largely been brothers in the political context, but this is not translated into the economic context. The rest of the world is scrambling for Africa, why not us?” posed the Kenya Association of Manufacturers chairwoman Flora Mutahi. [Calls to scrap visas between SA and Uganda, How Zuma indicted the Kenyan passport by refusing to budge on visa rules]
Dar aims to become Africa’s next automotive hub in $200m deal (IPPMedia)
According to Simba Motors managing director Jitesh Ladwa, the first trucks will roll off the assembly line before the end of the year. "We will start on a pilot basis by assembling 20 trucks per month, and after 18 months the major assembly plant will be built, enabling us to scale up our production capacity up to 5,000 cars a year," Ladwa told The Guardian in an interview. He further explained that the project will be implemented as a proposed joint venture between Simba Motors, Foton International Trade Co. Ltd company of China, and a Tanzanian government agency. Reports say Tanzania imports about 4,000 pick-up trucks each year, while the annual demand for the entire Southern African Development Community (SADC) region is 35,000 trucks per year.
Egypt’s trade deficit shrinks 13% year-on-year in July: cars and steel imports down (Ahram)
According to CAPMAS, the value of exports is up 15.5% year-on-year, recording EGP 15.4 billion, with fertilisers increasing 212.3% and crude oil 33.1%. The value of imports slowed 5.3% year-on-year to EGP 46.3 billion, with imports of cars and raw materials of steel down 35.3% and 16.7% respectively.
2016 Global Hunger Index: global, regional, and national trends (IFPRI)
Seven countries still suffer from levels of hunger that are alarming. The majority of those are in Africa south of the Sahara: the Central African Republic, Chad, Madagascar, Sierra Leone, and Zambia. The exceptions are Haiti and the Republic of Yemen. Due to insufficient data, 2016 GHI scores could not be calculated for 13 countries; however, based on available data, as well as the available information from international organizations that specialize in hunger and malnutrition, and the existing literature, 10 of these countries are identified as cause for significant concern: Burundi, the Comoros, the Democratic Republic of the Congo, Eritrea, Libya, Papua New Guinea, Somalia, South Sudan, Sudan, and the Syrian Arab Republic.
Services trade restrictiveness, mark-ups and competition (pdf, OECD)
This report explores the relationship between STRI indices and mark-ups at the firm level, which are taken as a measure of competitive pressure. As such, it contributes to quantifying the costs of services trade restrictions for the sectors and countries included in the STRI database. It focuses on the pro-competitive gains from trade as a major source of economic benefits from unilateral or negotiated liberalisation. Using data from the financial statements of services firms in 42 countries and 19 sectors from the BvD ORBIS database, the study analyses the direction in which services trade and competition policies affect profit margins, and which types of policies matter sector by sector, while taking into account the impact of various country and enterprise characteristics on profitability.
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6th Meeting of the BRICS Trade Ministers: Outcomes
Trade Ministers’ Communiqué
New Delhi, 13 October 2016
1. The 6th meeting of the BRICS Trade Ministers was held on 13 October, 2016 in New Delhi on the threshold of the 8th BRICS Summit on 15-16 October, 2016 in Goa, India. The Meeting was preceded by the 13th meeting of the BRICS Contact Group on Economic and Trade Issues (CGETI) which was held from 11-12 October, 2016. The Trade Ministers meeting made an assessment of the BRICS economic scenario in relation to areas of cooperation on trade and investment. The Ministers appreciated the work carried out by BRICS Members during 2016 and urged that this momentum be sustained.
Global Economic Development
2. The global economic order in 2016 has been shaped by a number of key economic developments such as continued slowdown in global growth and depressed global demand, low commodity and oil prices; new shocks to the global economy, including BREXIT; volatility in the equity and currency markets; strains on the banking sector; political turmoil in some parts of the globe etc. Given this scenario, the Ministers noted that the October, 2016 World Economic Outlook Update of the International Monetary Fund projected the global economic growth forecasts for 2016 and 2017 at 3.1% and 3.4% respectively. The Ministers are of the view that the projected growth rates for 2017 in the Outlook for BRICS countries augurs well when compared with 2016.
3. Ministers recognized the importance of preserving policy space to promote industrialization, industrial upgrading and value addition as a core pillar for structural transformation and sustainable development and BRICS countries integration into the global economy. They agreed to enhance cooperation in this regard.
The Strategy for BRICS Economic Partnership
4. The Ministers appreciated the progress in the realization of the Strategy for BRICS Economic Partnership. They directed the CGETI to put forth initiatives and proposals towards the implementation of the Trade and Investment section of the Strategy at the earliest. The Ministers agreed that close cooperation among the CGETI, the BRICS Business Council and New Development Bank is useful for implementing and bringing the BRICS Economic Cooperation to a new high quality level.
Micro Small and Medium Enterprises (MSMEs)
5. The Ministers recognised the importance of the Micro, Small and Medium Enterprises (MSME) to the balanced economic development of the BRICS countries. The Ministers acknowledge the role of MSMEs as the engines of export led growth and employment generation given the highest rate of employment per unit of investment in MSMEs; and their crucial role in addressing regional disparity and poverty alleviation. The MSME sector in many of the BRICS economies contribute directly or indirectly to nearly half of their exports, manufacturing output and GDP.
6. The Ministers were cognisant of the impediments faced by MSMEs and the need for cooperation among the BRICS countries to effectively address the barriers to trade and investment amongst the MSMEs.
7. With a view to ensuring greater business engagement amongst MSMEs in the BRICS region, the Ministers emphasised the importance of developing cooperation among MSMEs in the crucial areas of trade and investment. This cooperation can be in the form of exchange of information on the regulatory framework, rules, regulations and good regulatory practises governing MSMEs; interface among the major chambers of commerce and industry of the MSMEs; and participation of MSME stakeholders in BRICS economic events such as trade fairs, conferences, seminars etc.
8. The Ministers welcome continued efforts to foster cooperation and facilitate exchange of experiences between BRICS countries on MSMEs. In this regard, They welcome the “BRICS Micro Small and Medium Enterprises (MSME) Cooperation Framework” which encourages MSMEs in BRICS to strengthen mutually beneficial commercial relationship. The Framework sets the agenda of cooperation on SMEs by the BRICS countries. The Ministers look forward to constructive engagement on the elements of the cooperation framework by all BRICS Members in the future.
BRICS Business Council and economic cooperation
10. BRICS Trade Ministers considered the continuing role of the BRICS Business Council (BBC) and emphasised the need for the Council to focus on the development and realization of joint projects which would on a mutually beneficial basis contribute to the economic development objectives of BRICS Members. To this end, Trade Ministers urged the BBC to speed up the development of the BRICS Roadmap for Trade, Economic and Investment Cooperation while identifying and implementing suitable projects. In addition, the Council is encouraged to advance key projects as presented by all Member countries. In order to coordinate and advance the BRICS agenda on economic issues, regular engagement by the BBC with BRICS Trade Ministers, as well as the Contact Group on Trade and Economic Issues (CGETI) was requested.
Non-tariff measures (NTM)
11. The Ministers emphasized that the increase in NTMs constrain the participation of developing countries in global trade. The Ministers commended the CGETI for developing a working document on ‘BRICS Mechanism for NTM Resolution’. The Ministers agreed in principle to the concepts in the Mechanism and urged the CGETI to advance this work including on the issue of scope.
Standards
12. The Ministers endorsed the “Framework for Cooperation on Standardisation” that was agreed to by the CGETI. The Ministers urged the CGETI to work on the elements of the Framework with a view to ensuring that the cooperation leads to a better understanding of each other standards. The Framework aims to promote a better understanding and an open dialogue among BRICS countries in this area.
Services
15. The Ministers recognised that the Services sector remains important and contributes to more than half of the GDP of many BRICS countries. Since the services sector is of interest for BRICS economies, it is important for the group to cooperate with the aim of promoting complementarities on services trade. The Ministers highlighted the importance of facilitating expansion of trade in services by addressing existing barriers. The Ministers endorsed the “Framework for Cooperation on Trade in Services”.
Trade Promotion
17. The Ministers expressed their appreciation that India is holding the 1st BRICS Trade Fair from 12-14 October, 2016 in New Delhi. This Fair is an opportunity for stakeholders in the BRICS region to explore and expand business opportunities and networks. The theme of the Fair namely “Building Responsive, Inclusive and Collective Solutions” is apt in ensuring that the BRICS region as a whole benefits from such events. The focus areas and the showcasing of technologies are important in the context of ensuring a commercially meaningful participation in the Fair. The Ministers welcome the idea of CGETI discussing the possibility of holding BRICS Trade Fairs on a regular basis.
18. The Ministers noted that the BRICS Trade Promotion Working Group would create a forum for the Trade Promotion Agencies in the BRICS region to interface towards the promotion of value added trade which would also support integration into global value chains. It is vital that these agencies co-ordinate in other trade and investment events so that the BRICS value added products and services can be showcased more effectively. The Ministers instructed the working group to effectively coordinate activities] so as to ensure that the BRICS stakeholders can benefit from the participation in such events.
Single Window
19. The Ministers noted that Article 10.4 of the WTO Agreement on Trade Facilitation instructs that WTO Members shall endeavour to establish or maintain a single window. They also appreciated the work being carried out in the BRICS countries for development of national single windows . These would facilitate both exporters and importers who would then need a single point interface for all their clearances.
20. The Ministers endorsed the “Framework for BRICS Single Window Cooperation” and underlined the importance of closer cooperation among the BRICS countries in the development of their national single windows. They emphasised the need for BRICS countries to operationalize the Framework based on the Guiding Principles, Objectives and Priorities for Cooperation.
IPR Cooperation
21. The Ministers highlighted the importance of cooperation on intellectual property rights (IPR) towards the development of a BRICS perspective that will be informed by their national priorities. In this context, they appreciate the formation of and endorse the BRICS IPR Cooperation Mechanism (IPRCM). They also took note of the existing cooperation mechanism at the level of Heads of Intellectual Property Offices (HIPO). The Ministers urge both the HIPO and IPRCM to co-ordinate and avoid duplication of their work. They instruct the IPRCM to commence their work on the terms of reference decided upon and endeavor to advance cooperation in a more systematic and coordinated manner.
E-commerce
22. The Ministers reiterated the importance of strengthening intra-BRICS cooperation on E-commerce and appreciated the progress achieved since the adoption of the Framework for BRICS E-commerce Cooperation in 2015. The Ministers have emphasized the need for cooperation to boost [e-commerce] development in the BRICS countries, enhance capacity building and promote cooperation on infrastructure.
23. The Ministers emphasized that the development potential of e-commerce is not fully realized and in this regard they directed the CGETI to implement all areas of the Framework and explore cooperation in areas of common interests. The Ministers took note of the proposal to conduct a joint study to promote areas of common interest in e-commerce and stressed the importance of enhancing the BRICS countries understanding on e-commerce.
BRICS cooperation in the WTO
24. The Ministers reiterated the support for the multilateral trading system and the centrality of the WTO in providing a rules based, transparent, non-discriminatory and inclusive global trading system. The Ministers emphasized the importance of implementing the decisions taken at the Bali and Nairobi Ministerial Conferences. They stressed the need to advance negotiations on the remaining DDA issues as a matter of priority. They called on all WTO members to work together with a sense of urgency and solidarity to ensure a strong development oriented outcome for MC 11 and beyond.
BRICS and the G-20
25. The Ministers commended the work done by China in its current Presidency of the G20. They emphasized the importance of BRICS Members’ coordination in the G-20. They welcomed the outcomes of G20 Hangzhou Summit and emphasized the importance of continued efforts to implement those outcomes. They also underlined the importance of the G20 Trade and Investment Working Group (TIWG) in addressing various issues confronting the G20 economies and the call for further collaboration under this framework.
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COMESA economies robust despite drop in overall growth
The COMESA region has remained the fastest growing economy in the world with five member States – D R Congo, Djibouti, Ethiopia, Kenya, Rwanda and Uganda – recording growth levels of between 5% and 10%.
According to the latest COMESA Macroeconomic report, the growth was supported in most of member countries, by increased private consumption and investment. Among the 51 African countries evaluated on the conditions for doing business, Kenya, Uganda, Rwanda, Seychelles and Mauritius took the lead.
In 2015, the overall growth in COMESA region dropped to 6.0% from 6.5% in 2014 as a result of weaker global demand and lower international commodity prices. This adversely affected the region’s resource-rich countries.
The drop in commodity prices was attributed to weaker growth in China and its transition from investment and exports of industrial goods, towards consumption and services. Thus trade with China registered the largest deficit with a value of US$ 24 billion, followed by EU with US$ 21 billion, India (US$ 9 billion) and South Africa (US$ 5 billion).
In addition, intra-COMESA total exports declined by 8% from US$ 9.2 billion in 2014 to US$ 7.6 billion in 2015.
The report shows that savings rate in most COMESA member countries was below 20% of the Gross Domestic Product (GDP). This resulted from the fact that a large proportion of the population was not connected to the financial system and therefore had no access to savings instruments. It is necessary to generate an adequate level of domestic savings in order to ensure higher level of sustained investment, the report says.
The average overall investment, as a percentage of GDP in COMESA, increased marginally from 24.6% in 2014 to 26.3% in 2015. A number of COMESA member countries recorded investment performance of less than 20% of GDP.
Region-wide, inflation increased marginally from 6.0% in 2014 to 6.8% in 2015. Lower global oil prices and the continuing fall in food prices as well as prudent monetary policies contributed to the single digit inflation in most member countries.
However, currency depreciation in the wake of lower commodity prices increased the risk of inflation. Some countries experienced increase in annual inflation rate due to exchange rate depreciation hence monetary policies in most member countries focused on controlling inflation.
The region further recorded significant depreciation of currencies owing to widening current account deficits. The deficits resulted from persistent trade imbalances and in some cases late disbursement of external aid flows. High public sector demand for foreign exchange to finance big public investment projects, a strong dollar and high demand for foreign exchange from the local corporate sector also led to the depreciation. The countries whose exchange rates were under pressure, responded by tightening monetary policy;
The intergovernmental committee recommended among others that countries undertake continuous improvement in political and economic governance, and economic management to enhance productivity in sectors where individual member countries had comparative advantage.
Further, it recommended that countries need to accelerate regional integration and enhance the implementation of the Tripartite Free Trade Area arrangement, to boost intra-regional trade in manufactured goods.
Kenya, Egypt lead in intra-COMESA trade
Egypt and Kenya registered the biggest share of intra-COMESA export market in 2015 with 22% and 17% share respectively. Zambia, DR Congo and Uganda followed with 13%, 12% and 11% respectively.
This was reported during the 36th Intergovernmental Committee of COMESA that is taking place in Antananarivo, Madagascar. The committee comprises Permanent/Principal Secretaries from the 19 member States.
Egypt exported products worth US$ 1.7 billion and Kenya US$ 1.3 billion. The value of Zambia exports was US$ 977 million and DR Congo US$ 896 million.
With regard intra-COMESA import market share, Zambia registered the biggest share at 24% with goods worth US$ 2.0 billion in 2015. DR Congo, Sudan, Uganda, Libya, Kenya and Egypt followed with 11%, 10%, 9%, 8%, 7.4% and 6.7% respectively. Zambia’s intra-COMESA imports were mainly copper ores and concentrates and Cobalt oxides and hydroxides from Congo DR.
Copper ores and concentrates were the most exported products in value terms in the region from 2011 to 2015 followed by black tea. Cobalt oxides & hydroxides products minerals also performed relatively well in 2015 taking the third slot from the 71 position in 2014.
Trade in live animals has increasingly improved, ranking fourth in 2015 up from seventh and 40th positions in 2014 and 2013.
Intra-COMESA Trade, 2015 (values in US$ million and % shares)
Rank | Exporter | Value | % Share | Importer | Value | % Share |
1 | Egypt | 1,672.8 | 22.1 | Zambia | 2,003.6 | 24.3 |
2 | Kenya | 1,309.1 | 17.3 | Congo DR | 882.1 | 10.7 |
3 | Zambia | 976.5 | 12.9 | Sudan | 796.1 | 9.7 |
4 | Congo DR | 896.4 | 11.8 | Uganda | 699.2 | 8.5 |
5 | Uganda | 835.9 | 11.0 | Libya | 624.1 | 7.6 |
6 | Sudan | 481.9 | 6.4 | Kenya | 612.6 | 7.4 |
7 | Rwanda | 321.5 | 4.2 | Egypt | 550.9 | 6.7 |
8 | Mauritius | 225.7 | 3.0 | Zimbabwe | 432.7 | 5.3 |
9 | Malawi | 212.0 | 2.8 | Rwanda | 394.8 | 4.8 |
10 | Swaziland | 174.3 | 2.3 | Ethiopia | 296.4 | 3.6 |
11 | Ethiopia | 162.1 | 2.1 | Malawi | 224.1 | 2.7 |
12 | Zimbabwe | 101.4 | 1.3 | Mauritius | 171.3 | 2.1 |
13 | Libya | 85.8 | 1.1 | Madagascar | 143.8 | 1.7 |
14 | Burundi | 48.0 | 0.6 | Eritrea | 99.1 | 1.2 |
15 | Madagascar | 45.9 | 0.6 | Djibouti | 93.8 | 1.1 |
16 | Eritrea | 9.2 | 0.1 | Seychelles | 84.9 | 1.0 |
17 | Djibouti | 6.8 | 0.1 | Burundi | 77.3 | 0.9 |
18 | Comoros | 2.2 | 0.0 | Comoros | 22.3 | 0.3 |
19 | Seychelles | 1.6 | 0.0 | Swaziland | 21.0 | 0.3 |
Total | 7,569.3 | 100.0 | Total | 8,230.0 | 100.0 |
Source: COMSTAT Database
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Push for trade pact will polarise BRICS nations, warns South Africa
An immediate push for a BRICS Free Trade Agreement (FTA) will polarise heavily-industrialised and lesser-industrialised nations within the five-member grouping, warned South African trade and industry minister Rob Davies.
Speaking to The Hindu ahead of the Goa BRICS Summit, Davies said, the bloc comprising Brazil, Russia, India, China and South Africa should instead adopt a practical and gradual approach of identifying opportunities in important sectors such as ‘aircraft manufacturing & maintenance’ to create value chains in the five emerging economies.
On the ‘informal’ proposal by China for a BRICS FTA, he said South Africa and the African continent have so far been mainly producers of primary products, but want to retain the policy space for industrialisation to reap the benefits of the ‘Fourth Industrial Revolution’ — meaning, industrialisation using computerisation and other latest technologies.
Referring to certain “structural imbalances” in BRICS trade, he said, for instance, South Africa mainly exports raw materials to China and imports fully-manufactured items from that country. If such a scenario continues, it will not help create value chains that will support industrialisation in South Africa, he said, adding that such imbalances need to be corrected first.
“So we can go for cooperation agreements and have business-to-business contacts, and not get enamoured by the title of a highly ambitious agreement that would only cater to the interests of some, but won’t have broader developmental outcomes,” he said, adding that BRICS countries should discuss ways to promote inclusive growth and reduce inequality.
Davies said it was important that the New Development Bank or the BRICS Bank identified viable renewable energy and infrastructure projects including in South Africa and India, and provide affordable finance. Also being discussed was a BRICS Visa for easier movement of people, he said.
Regarding the yet-to-be-concluded negotiations on the proposed India-Southern African Customs Union Preferential Trade Agreement that began in 2007, Davies said, “We had lost momentum, but there is an appetite to resume the talks.”
The delays were due to the sensitivities involved in committing to lowering duty barriers. However, Davies said it is now “not entirely undoable” to have a PTA that is “fairly low in ambition.” On other bilateral issues, he said many South African financial sector companies had problems regarding getting market access in India.
On the ‘IBSA Dialogue Forum’ aimed at promoting cooperation between India, Brazil and South Africa, Davies said though IBSA “has not been functioning well for a while and has lost momentum, it is absolutely relevant and should continue” despite the BRICS engagements as the three countries have developed several information- and capacity-sharing initiatives including on small businesses.
On India’s proposal for a Trade Facilitation Agreement on Services at the World Trade Organisation-level, Davies said South Africa had so far not made a decision whether to support it, but added that he was not sure if such a pact pushing for easier temporary movement of skilled workers across borders would be agreed upon at a time when many in the developed world have opposed immigration.
On the move by the developed world to introduce “new issues” such as e-commerce and global value chains into the WTO’s negotiations, he said “we are happy to have a conversation from a developmental perspective, but will not agree to rush from there to negotiation on trade rules” regarding the “new issues”.