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Collaboration is key to the South African supply chain
Automation and integration result in reduced errors, saved time, and execution with minimal effort
Even in the earliest history of the logistics industry, traders operating across diverse geographies, cultures, and economies knew they had to work together to expand their reach. Today, that spirit of collaboration hasn’t changed, but the technology that ties the global supply chain together certainly has.
When a company wants to increase its profit, two strategies have remained generally in use throughout time: squeeze the customer to pay more, or squeeze the supplier to reduce their prices. But for both, the result is the same: merely taking money out of their pockets and putting it into yours. Unfortunately, neither of these add any real value to anyone. In fact, value is lost when customers are forced to reduce the amount they can buy and suppliers must downgrade the quality of their product to cover costs. This isn’t collaboration, it’s just bad business.
True collaboration unlocks true value for everyone – your supplier, your customer, and your own business.
Running a single platform solution that’s integrated with all your partners’ systems empowers you to manage logistics from a central database across multiple users, functions, offices, countries, and languages.
For the last 10 years, I’ve personally been involved in helping companies collaborate using technology in one of the most diverse regions of the globe. There are major institutional voids in Africa, ranging from electricity supply to internet connectivity, and collaboration is the key to overcoming such gaps. I have seen this work in many instances, and innovative uses of technology often play a major role in bridging these gaps.
The South African Example
With emerging consumer markets flooding goods into the continent, and unprecedented volumes of resources flowing out, Sub-Saharan Africa is the place to be. According to the World Bank, the region is on a GDP growth outlook that is approaching levels that are surpassing expectations in the developed world.
Logistics operations in South Africa are in a great position to take advantage of the massive growth opportunities this represents. There’s a chance for everyone to benefit by sharing skills, goods, and knowledge. And today’s technology makes this collaboration faster, more efficient, and more immune to the stresses of international logistics by sharing it all within a single-database system.
Elements of South Africa’s economy and society can be defined by both the first world and developing world. On one side, we South Africans have embraced the technologies and practices of the west, while on the other we’re also aware of the challenges, institutional gaps, and relevant cultures that surround us. Armed with regional knowledge and cutting edge software, logistics operators and their clients can more easily overcome the undeniable challenges as they take part in Africa’s economic renaissance.
Unlocking Value, Increasing Productivity
Let’s say an order is placed in South Africa. The raw materials are procured in Brazil and sent for production in China. All of it is shipped by an international shipping line or two, with both international and local African agents being involved. From beginning to end, all deadlines are met and everything moves easily. All documents, messages, and milestones are delivered on time with no delays and no issues.
By now, you want to know how this whole supply chain example proceeded so smoothly. It’s simple: we collaborate, and we share information at every step.
Until now, all the data required to get the freight where it needed to go had to be re-keyed at every point and communicated manually via phone calls, faxes, or emails. But technology allows us to start unlocking and retaining value in the transaction. The key to this entire collaborative process is found in having to capture the information only once.
With automation and integration within each supply chain member’s own operations and between the different organizations, the result can be reduced errors, saved time, and execution with minimal effort. Imagine a manufacturer’s ERP system to manage stock notices that vital materials are running low. It can automatically send the supplier a message, which in turn triggers actions for the exporting and importing agents. This not only increases accuracy, it also reduces transactional costs between organizations.
By automating and integrating we can work to create a high-velocity, low-touch supply chain where every member collaborates more effectively and efficiently. When providers work together, their shared logistics technology frees up staff across all borders to be more accurate, more productive, and ultimately more successful.
Nachi Mendelow is general manager of business development, Africa, for WiseTech Global, a developer of cloud-based software solutions for the logistics industries.
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New strategy for Sweden’s regional development cooperation in sub-Saharan Africa 2016-2021
On 22 June 2016, the Swedish Government adopted two new strategies for regional development cooperation: in sub-Saharan Africa and in Asia and the Pacific Region.
Sub-Saharan Africa
Sweden’s new regional strategy in sub-Saharan Africa will contribute to strengthened capacity to face cross-border challenges and opportunities at regional level. The strategy focuses on four areas: democratisation, human rights, human security, and climate change and environmental adaptation measures.
“Climate change and armed conflicts are two examples of challenges that transcend national borders and demand increased regional cooperation. The new strategy shows Sweden’s broad commitment to development, security and climate in the region,” says Minister for International Development Cooperation and Climate Isabella Lövin.
The new regional strategy amounts to SEK 450 million per year. In total, the strategy encompasses SEK 2.7 billion until 2021. The strategy will be implemented by the Swedish International Development Cooperation Agency (Sida) and the Folke Bernadotte Academy.
Direction
Within the framework of this strategy, Swedish development cooperation with sub-Saharan Africa is to contribute to increased regional integration and strengthened capacity to face cross-border challenges and opportunities at regional level.
The strategy will apply for the period 2016-2021 and comprises a total of SEK 2 700 million, of which SEK 2 670 million is intended for activities implemented by the Swedish International Development Cooperation Agency (Sida) and SEK 30 million is intended for activities implemented by the Folke Bernadotte Academy (FBA).
Within the framework of the strategy, Sida is expected to contribute to:
A better environment, sustainable use of natural resources, reduced climate impact and strengthened resilience to environmental impact, climate change and natural disasters
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Strengthened capacity of regional actors to work towards sustainable management and use of common ecosystem services and natural resources
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Strengthened capacity of regional actors to work towards increased resilience against climate change and natural disasters, including capacity for food security
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Increased production of, and access to, renewable energy
Strengthened democracy and gender equality and greater respect for human rights
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Enhanced capacity of regional actors to work towards strengthened democracy and the rule of law, gender equality and increased respect for human rights, with a focus on the rights of women and children
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Enhanced capacity of civil society and media to work towards accountability and respect for human rights at regional level
Better opportunities and tools to enable poor and vulnerable people to improve their living conditions
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Strengthened opportunities for increased economic integration and trade
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Improved conditions, especially for women and young people, for productive employment with decent working conditions
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Strengthened capacity of regional actors to work towards sustainable solutions concerning refugee situations and migration flows, and embrace the positive effects of migration
Human security and freedom from violence
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Strengthened capacity of regional actors for peace and reconciliation
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Strengthened capacity of regional actors to combat violent extremism
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Increased influence and participation by women and young people in processes for peace and reconciliation
Within the framework of the strategy, the FBA is expected to contribute to:
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Strengthened capacity for regional actors to prevent, resolve and deal with the effects of armed conflict
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Strengthened capacity for regional actors to implement the UN Security Council resolutions on women, peace and security
Asia and the Pacific Region
Regional development cooperation in Asia and the Pacific Region will focus on strengthening regional actors and states to take greater responsibility concerning the environment and climate, human rights, democracy and gender equality. The focus is to be on cross-border challenges, where solutions can best be sought in regional cooperation.
“We focus regional development assistance in Asia and the Pacific Region to the places in the region facing the greatest challenges – in the human rights area and with regard to the effects of climate change and environmental damage,” says Ms Lövin.
Asia and the Pacific Region will be hardest hit by climate change. The effects are particularly evident for small island states in the Pacific Ocean.
“We now have the opportunity to contribute to strengthened regional cooperation on adaptation, renewable energy and other matters.”
The new regional strategy amounts to SEK 300 million per year. In total, the strategy encompasses SEK 1800 million for the strategy period.
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From LDC services waiver to GSPs: Follow-up
Fully harnessing the potential of services and inter-linkages between the services sector and the economy as a whole calls for policy coherence and a holistic approach to services regulation and services trade liberalization, especially for LDCs, where service sector is becoming more and more important.
The recent services Waiver for LDCs that was adopted at the Eighth WTO Ministerial Conference in 2011 and extended in Nairobi in 2015 could potentially serve as a stepping stone towards further services liberalization. Aimed at least-developed countries only, the waiver has a potential to provide a comparative advantage so much needed to kick-start LDCs services trade on international markets.
However, while estimating real life benefits of the preferences generated by the Waiver, one has to consider the following issues:
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Are such preferences granted in sectors of interest to LDCs?
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Are they already applied to all trade partners in practice, and consequently fell into mere recognition of MFN treatment?
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Are the preferences really beneficial to LDCs in providing broader and better market access to them?
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What can be a next step on a way of liberalizing access for service providers from LDCs that could provide a higher degree of certainty and accountability on both sides of services trade?
The aim of the meeting on 8 July 2016 is to discuss and shed light on these questions.
The LDC Services Waiver – Operationalized?
A first look at preferences granted, constraints persisting, and early conclusions to be drawn
The notion of special treatment for LDCs in services goes back to the 2003 Decision of the Council for Trade in Services on Modalities for the Special Treatment for Least-Developed Country Members in the Negotiations on Trade in Services. Quite general, this decision aimed at defining negotiating modalities for LDCs in the area of services to ensure that Members would take the special situation of LDCs into consideration when negotiating with them. Interestingly, the LDC modalities recognised among others:
“the importance of trade in services for LDCs […] beyond pure economic significance due to the major role services play for achieving social and development objectives and as a means of addressing poverty, upgrading welfare, improving universal availability and access to basic services, and in ensuring sustainable development, including its social dimension”.
The text also highlighted the need for Members to open their services markets as a priority in sectors of interest to LDCs. A bit more than 2 years later, further developments on the matter were reflected in the 2005 Hong Kong Ministerial Declaration:
“In the services negotiations, Members shall implement the LDC modalities and give priority to the sectors and modes of supply of export interest to LDCs, particularly with regard to movement of service providers under Mode 4”.
The declaration recalled and reaffirmed “the objectives and principles stipulated in (…) the Modalities for the Special Treatment for Least-Developed Country Members in the Negotiations on Trade in Services adopted on 3 September 2003” and in relation to services negotiations, recognized “the particular economic situation of LDCs, including the difficulties they face, and acknowledge that they are not expected to undertake new commitments”.
After several years of discussions on how to effectively implement those LDCs modalities, trade ministers finally adopted on 17 December 2011 a waiver to enable developing and developed-country Members to provide preferential treatment to services and service suppliers of least-developed countries (LDCs). The waiver, initially granted for 15 years from the date of adoption, releases WTO Members from their legal obligation to provide nondiscriminatory (MFN) treatment to all trading partners (GATS Article II), when granting trade preferences to LDCs. It effectively operates as a new LDC-specific “Enabling Clause for services” and follows a two-track approach.
Two years later, however, with no progress made, Ministers came back to the issue with a subsequent decision on the ‘Operationalization of the Waiver Concerning Preferential Treatment to Services and Service Suppliers of Least Developed Countries’, adopted on 7 December 2013 at the Ninth Ministerial Conference in Bali. That decision established a process which foresaw that a High-Level Meeting – an idea akin to that of the Signalling Conference of 2008, or a pledging conference – would be held six months after the submission of a Collective Request by the LDC Group. 4 After a significant exercise in fundamental research commissioned by the LDC Group conducted by ICTSD, WTI Advisors and ILEAP and financed by TAF, the LDC Group developed the Collective Request and circulated it to Members in July 2014, followed by the High Level Meeting in February 2015, at which Members announced how they intended to respond to the LDC request.
Members had agreed that those intending to grant preferences under the Waiver would follow up by submitting specific and detailed notifications of their intended preferences by July 2015. While meeting the deadline proved challenging to some, it is remarkable given the rather sluggish beginnings of the process that to date no less than 23 Members – including several developing countries – have indeed submitted notifications and started implementation, namely Australia, Brazil, Canada, Chile, China, Chinese Taipei, the European Union, Hong Kong (China), Iceland, India, Japan, Republic of Korea, Liechtenstein, Mexico, New Zealand, Norway, Singapore, South Africa, Switzerland, Thailand, Turkey, Uruguay and the United States. Building on this success, the Nairobi Ministerial Conference in 2015 led to the decision to extend the waiver until 31 December 2030. The decision encourages Members that have not notified preferences to do so, and Members that have notified one to provide technical assistance and capacity building in order to allow LDCs to actually benefit from the preferences granted. It also asks Members to address regulatory barriers as defined in GATS article VI:4 and mentions tasks to be fulfilled by the Council for Trade in Services for a quicker and more efficient implementation of the notified preferences.
As they say, however, the proof is in the pudding. While the range of preference-granting countries itself is noteworthy, the breadth, depth and real-life relevance of the preferences offered is less obvious. As a contribution to this process, this paper carries out an in-depth assessment of the preferences offered in the context of the Waiver and the challenges facing LDCs in taking advantage of them. It starts with an analysis of the offers notified so far by preference-granting countries using both a quantitative and qualitative approach. The first step consists in analyzing each preference granted by WTO Members in a matrix. For this purpose, a comparison of the preferences was made with the DDA offer and the best PTA of each granting Member as well as with the Collective Request.
As a second step, the data accumulated in the matrix was used to draw preliminary conclusions on the actual relevance of the preferences in practice: are they granted in sectors of interest to LDCs? Are they already applied to all trade partners in practice, and consequently fell into mere recognition of MFN treatment? Generally, are preferences really beneficial to LDCs in providing broader and better market access to them? Part 3 then moves to identifying the factors that may affect – negatively of positively - LDCs’ ability to effectively benefit from preferences in the area of services, based on existing literature and empirical evidence. It reviews, among others, issues around binding supply side constrains including LDC competitiveness, firm level constrains, policy impediment, or global and regional market requirements.
The paper concludes by suggesting a comprehensive, structured and permanent support system for trade preferences in services following the original idea of a “Generalized System of Trade Preferences” proposed by UNCTAD in the mid-60s. Such an approach would not only focus on reviewing the implementation of the waiver but also on addressing supply side constrains, information and analysis deficit while providing a constructive forum for dialogue among government representatives, IGOs, private sector and relevant stakeholders.
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Facilitating e-commerce can stimulate growth and development – DG Azevêdo
E-commerce can play a pivotal role in fostering growth and raising living standards, particularly for developing countries, Director-General Roberto Azevêdo told a workshop organized by the governments of Mexico, Indonesia, South Korea, Thailand and Australia and supported by the International Trade Centre (ITC).
The workshop, held at the WTO on 5 July, focused on addressing the challenges that inhibit consumers and entrepreneurs from fully seizing the trade opportunities that e-commerce can bring.
“By reducing the trade costs associated with physical distance, e-commerce allows businesses to access the global marketplace, reach a broader network of buyers and participate in international trade. Broader dissemination of such technologies means that the trade opportunities generated by e-commerce are also available to businesses in developing countries, with some of them making significant headway in recent years,” Director-General Azevêdo said.
Among the obstacles developing countries face in fully participating in e-commerce are high digital infrastructure costs, lack of compliance with legal and fiscal requirements of foreign e-markets, underdeveloped financial and payment systems and low consumer trust.
The workshop also looked at the constraints faced by micro, small and medium enterprises (MSMEs) in developing countries, which often “do not have the ability to get around these problems,” DG Azevêdo said. Africa and the Middle-East share less than 2 per cent of the world e-commerce market, the workshop heard.
Participants also discussed the role the WTO can play in lowering these barriers, through the development of multilateral rules to harmonize procedures and reduce operational costs. “We could look at how we can support small suppliers to market their products in a timely fashion, with competitive prices and reliable customer support,” DG Azevêdo said. “This would help consumers to have full confidence in buying from MSMEs in the digital environment.”
The event heard presentations from Arancha González, Executive Director of the ITC and Carlos Grau Tanner, Director-General of the Global Express Association; and from representatives of the World Economic Forum, CUTS International, the United Nations Conference on Trade and Development (UNCTAD), the International Centre for Trade and Sustainable Development (ICTSD) and Consumer International. The presentations were followed by a discussion with WTO members.
MIKTA Workshop on Electronic Commerce
Remarks by WTO Director-General Roberto Azevêdo
I’d like to start by congratulating the MIKTA countries – Mexico, Indonesia, Korea, Turkey and Australia – for their initiative and for inviting me to join in these discussions.
It is clear that electronic commerce provides some huge opportunities – for growth, development and job creation.
Therefore, I think it is equally clear that the international community should strive to ensure that these opportunities are made available to all.
E-commerce has been a feature of international trade for quite some time, but its importance has increased substantially in the past decade. The rapid technological advances and the steady increase in the number of internet users are changing the traditional way of doing business and conducting trade.
The numbers speak for themselves.
Between 2000 and 2015, Internet penetration increased from 6.5 per cent to 43 per cent of the global population.
In 2013, global business-to-consumer e-trade accounted for an estimated $1.2 trillion.
Meanwhile, the value of global business-to-business e-trade exceeded $15 trillion.
By reducing the trade costs associated with physical distance, e-commerce allows businesses to access the global marketplace, reach a broader network of buyers and participate in international trade.
Broader dissemination of such technologies also means that the trade opportunities generated by e-commerce are also available to businesses in developing countries, with some of them making significant headway in recent years.
But there is a long way still to go. Four billion people in the developing world remain offline. Of the nearly one billion people living in LDCs, around 850 million do not use the Internet. So this is a major challenge.
Being connected is essential – but we can’t just assume that people will automatically benefit from greater opportunities once they are online. It is a necessary condition, but it is not sufficient. A range of other economic and technological barriers can still cause problems – such as underdeveloped financial and payment systems, low consumer trust, and weak legal and regulatory frameworks.
Bigger companies have the ability to get around these problems, while smaller companies often do not.
It was not surprising that e-commerce was a major topic at the workshop last month on Micro, Small and Medium Enterprises (MSMEs), which was organized by another group of Members.
So I think it could be useful to look at how new technologies can facilitate the participation of smaller players in the global economy.
We could look, for example, at how we can ensure that, through multilateral rules, MSMEs benefit from harmonized procedures and reduced operational costs.
We could look at how we can support small suppliers to market their products in a timely fashion, with competitive prices and reliable customer support. This would help consumers to have full confidence in buying from MSMEs in the digital environment. Otherwise, consumers will always prefer the well-known big suppliers.
There are a range of interesting ideas out there. I have met with a number of people from the industry in recent weeks, including the founder of Alibaba, Jack Ma. He is proposing the creation of e-hubs, or digital free trade zones, for small firms. We will continue that discussion in the weeks ahead.
The intersection between MSMEs and e-commerce was also raised by business representatives at the ‘Trade Dialogue’ event that we facilitated here at the WTO on 30 May.
Some 60 business leaders attended that meeting, representing small and large companies, from developed and developing countries.
They identified e-commerce as an area where the WTO can make an important contribution. In addition to MSME issues, they also suggested that steps could be taken on:
- enhancing transparency and non-discrimination;
- harmonizing e-commerce practices and procedures, and;
- improving consumer protection.
So I think those conversations have provided some food for thought.
Clearly, the debate is complex and encompasses a wide range of issues, but it is interesting that some themes seem to recur.
I think it is important now that we take time to engage in these discussions. We need to better understand this subject – and so this workshop is very welcome. And I am pleased to see there are a range of different organisations and perspectives represented here today.
In exploring these issues, I think we should seek to build on the work that is already under way. UNCTAD, the ITC, and others, are working on these issues. WTO Members themselves are continuing their conversations in the context of the Work Programme on e-commerce, under the stewardship of Ambassador Suescum, as the Friend of the General Council Chair on e-commerce.
But, perhaps as a result of our two successful ministerial conferences, it seems that the debate is significantly more dynamic than it has been in recent years. There is a new air of openness and positivity, which I think has to be a good thing.
Now it is for Members to decide whether and how to take these discussions further within the WTO.
It is encouraging that one member has already put forward a non-paper on e-commerce issues, and I understand that others may also be forthcoming.
I hope that today’s workshop takes us closer to understanding the challenges and opportunities offered by e-commerce – and that it provides some meaningful, concrete ideas which can be fed into further discussions.
So I urge you all to have a very focused and results-orientated conversation on how the WTO can help.
I am looking forward to hearing the outcomes of your deliberations.
Thank you.
Speech delivered by ITC Executive Director Arancha González
I believe it is accurate to say that the Geneva trade community is witnessing an e-commerce revolution.
Just last week ITC, with the cooperation of DHL and E-Bay, held a ‘Caravan of Peace’ at the United Nations to showcase the power of going digital for small and medium sized enterprises (SMEs). Yesterday ITC held an e-commerce caravan and souk right here at the WTO with entrepreneurs from Cote d’Ivoire, Ethiopia, Morocco, Rwanda, Senegal, and Syria not only selling the physical goods from their countries but showcasing how these goods can be purchased using online platforms which ITC has helped to develop.
And UNCTAD is continuing to coordinate a number of the agencies in Geneva around an e-trade for all partnership that will be launched at UNCTAD XIV in Nairobi later this month. Therefore this event today organized by MIKTA is perfectly timed. I thank you for inviting ITC to be part of this.
In the WTO e-commerce has been on the agenda for many years. But recently the interest levels have increased. Why?
Because this is a booming market. Just in Africa this market is estimated to grow from US$ 8 billion in 2013 to US$ 50 billion in 2018. Because virtual selling is particularly adaptable for SMEs all around the world to connect with customers hence avoiding costly intermediation and capturing a higher value of the sale.
But for this form of trade to work, the rules of trade need to be supportive. The aim must be to create a trade policy architecture that balances the need to regulate e-commerce with supporting what is at the core of digital solutions: fast, technology driven, less expensive and more convenient. Despite the disruptive nature of new technologies and ways of transacting, effective e-commerce remains premised on three main elements from the trade policy perspective: trade facilitation, non-tariff barriers and services.
The WTO Trade Facilitation Agreement is the framework with which goods purchased online can get from point A to point B without unnecessary red tape. This is why having it enter into force is a crucial ingredient to make e-commerce happen. And improving it to ensure a fast route for small transactions – a big part of what MSMEs trade on-line – so called de-minimis, would be of great help to them.
This will mean also better identifying the non-tariff barriers that exist which may prevent this from happening at optimum efficiency.
The ability to offer globally connected digital solutions is very much linked to services regulations that support rather than hinder the establishment of platforms and payment solutions, specifically financial services; that support faster and more performing logistic and distribution services; that protect consumers through insurance services. And which embrace, rather than restrict competition in the related sectors. There is a clear need to better understand the services related policies around e-commerce and I am pleased to see that this will be one of the issues discussed during the sessions today.
ITC is working with policy makers and SMEs around the world to make e-commerce and digital solutions an integral part of the business ecosystem. Building on the information we have collected through our work, we have launched two publications over the last few months, which provide some important and practical information to help better position e-commerce.
The first one, ‘International e-commerce in Africa: the way forward’ is a practical assessment of the challenges and opportunities which SMEs face in Africa in using e-commerce. Despite e-commerce representing an estimated $15 trillion in annual business-to-business transactions and over $1 trillion in annual business-to-consumer trade, developing countries, especially in Africa, still have substantial untapped potential to exploit this approach.
The current share of consumer e-commerce by African enterprises is below 2% for example. This can be a game changer for SMEs in Africa and in the developing world.
A second publication launched in China last month on ‘Bringing SMEs onto the e-Commerce Highway’, examined major policy challenges in four key segments of the online retail: 1) establishing an online presence for business, 2) international e-payments, 3) international delivery and 4) after-sale services. It also contains a number of real-life case examples from developing country SMEs and provides checklists that explain what needs to be at the firm level, in the immediate business environment and at the national policy level in order for e-commerce to function smoothly and for SMEs to benefit from it.
ITC will continue to be your partner in providing both the important policy perspective on e-commerce and the on the ground experiences.
For example, with the World Bank, we are supporting MSMEs in Jordan, Morocco and Tunisia to increase exports of their goods and services through ‘virtual marketplaces’. This has ranged from supporting public and private sector discussions on these issues with the aim of targeting policy changes to improve the business environment for e-commerce polices and regulations, to helping SMEs become better equipped in terms of e-payment and risk insurance systems. In Rwanda we are working to empower SMEs to internationalise through the ‘made in Rwanda’ e-commerce platform in partnership with DHL.
Just yesterday at the ITC JAG, I signed a partnership agreement with Ebay, which will bring together ITC’s on the ground expertise with SMEs with Ebay’s enviable track record in providing platforms for entrepreneurs to use digital solutions to reach a consumer base in real time.
The cooperation will include ensuring MSMEs ITC works with gain higher on-line visibility as well as access to Ebay’s network of fulfilment centers to ensure more cost effective logistics. The possibilities here are incredible- the merging of ITC’s trade and market intelligence with data from Ebay’s research and analysis will help SMEs to better target product and market combinations in e-commerce.
Today as you discuss the policy elements around e-commerce I ask you to pay special attention to the practical ways of ‘doing e-commerce and e-trade’.
In my view, the trade policy architecture does not have to be remade for e-commerce, rather we have to ensure that it responds to the reality on the ground. WTO tools allow for adaptability to evolutions, as it happened for telecom and financial services Post Uruguay Round.
In your work to take the issue of e-commerce forward in the WTO, I encourage you to ensure that MSMEs are part of the intelligence gathering that will go into this process. It is an opportunity and a tool for them to multiply their customer base and deepen their trading footprint. Our collective aim must be to facilitate connectivity.
Thank you.
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The differentiated effects of non-tariff measures
Non-Tariff Measures (NTMs), and in particular technical regulations, are here to stay. Diversity of effects calls for a new policy paradigm.
Trade costs matter
A large number of empirical studies and surveys document the importance of trade costs as a factor determining the competitiveness of developing country-based enterprises and national trade performance. This includes not only export values but also participation in international production networks and diversification into new products and new markets. Strikingly, most trade cost components have fallen for all groups of countries but more slowly in low-income countries. Transaction costs remain high for countries with lower levels of per capita income[1]. As a consequence, these countries may have not been able to take up crucial trade, production and development opportunities.
Trade transaction costs consist of two broad categories. The first category encompasses exogenous factors such as geographic distance. The second category includes endogenous trade costs that are a direct consequence of policy choices. Standard trade policy instruments such as tariffs have been at the core of policy actions at both the multilateral and regional level for a long time. Overall results are mixed, and the scope for further significant tariff liberalization has shrunk in most countries and most sectors. The Trade Facilitation Agreement recently concluded by WTO members contains provisions on expediting customs procedures and cooperation between customs and other relevant authorities and is expected to reduce transaction trade costs. This is important and good news. However, it does not address another, probably even more important trade cost component.
NTMs, the new frontier
The new frontier for trade policy has shifted towards Non-Tariff Measures and in particular technical regulations (sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs)). Figures 1(a) and 1(b) illustrate the distribution of NTMs across broad categories and sectors[2].
Figure 1: NTMs incidence
For each category, both the frequency index (i.e. the percentage of HS 6 digit lines covered) and coverage ratio (i.e. the percentage of trade affected) are reported. We observe that international trade flows are highly regulated through the imposition of technical barriers (TBT), with more than 30 per cent of product lines and almost 70 per cent of world trade affected. Quantity and price control measures affect about 15 percent, and sanitary and phytosanitary measures (SPS) about 10 per cent of world trade. When looking at the coverage of NTMs by broad category, one can observe that agriculture is the most affected, with the majority of world agricultural trade subject to SPS and TBT measures.
While technical regulations are not new trade policy instruments, they have become core determinants of market access opportunities especially for firms in developing countries. Recently published UNCTAD research shows that low-income countries’ exports of agricultural goods to EU markets are disproportionately negatively impacted by SPS measures.[3] The result is consistent with the hypothesis that market access is increasingly determined by the capability to comply with the regulatory framework and that countries at a lower level of development find themselves outcompeted. However such mechanisms may also be at work within any specific country.
Theoretical insights suggest that the effect of a technical regulation on export performance may depend on the size of a firm, provided that size is associated with (for instance) productivity, and hence with the ability to overcome the additional costs of exporting imposed by new technical regulations. In other words, not all firms will be able to cope with the higher costs of new technical regulations, be it a fixed cost of adaptation and/or a variable trade cost. Ongoing UNCTAD research on Peruvian firms exporting to Latin American Integration Association countries supports these theoretical insights.
Results indicate that technical regulations tend to push small firms away from world markets and leave the largest shares of exports to large multinational firms, further strengthening their global influence. Figure 2 shows the effect of technical barriers to trade on export value as a function of the size (measured by lagged total exports) of exporting Peruvian firms. The largest 10 per cent of Peruvian exporters are found to benefit from the implementation of a new TBT in LAIA destinations in terms of export value while the smallest 50 per cent are likely to lose.
Figure 2: The impact of TBTs on Firms’ exports
Note: estimates obtained for data on Peruvian firms exports to ALADI countries during the 200-2014 period.
Implications for policy
While technical regulations may impede exports and in particular exports of small and medium producers in developing countries, they are important instruments to achieve sustainable development. Technical regulations and standards have primarily non-trade objectives, such as public health and safety, and protecting the environment. It would be misleading to look at technical regulations as we look at tariffs. In light of the existing evidence more efforts have to be devoted to facilitate and possibly streamline the implementation of NTMs.
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First, governments should ensure that NTM requirements are scientifically based. Public authorities should also accelerate the standardization process. Collaboration with private certifiers can play an important role in this process.
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Second, developing countries’ concerns should be addressed specifically. The inclusion of these countries in the standard-setting process should be increased, and special attention should be paid to their small and medium firms. Intensifying technical assistance and capacity building activities in order to help developing countries and their exporters to fulfil NTM requirements is highly desirable. Special efforts should also be made in order to integrate these activities with national ones.
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Third, in addition to technical assistance and capacity building programs, private sector based initiatives could also be contemplated to promote the participation of small and medium enterprises in export markets. Governmental and non-governmental organizations could instigate the establishment of cooperatives within which small and medium enterprises could exchange and collaborate on issues related to the compliance with technical regulations on international markets. Encouraging long term exporter contracts could also be useful.
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Fourth, as leading firms in developing countries are key actors in driving compliance with standards, their active implication should be recognized by public authorities and non-governmental institutions.
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Finally, systemic and systematic collection of relevant data should be placed at the core of political agendas at the national regional and international levels.
[1] Arvis, Jean-François & Shepherd, Ben & Reis, José Guilherme & Duval, Yann & Utoktham, Chorthip, 2013. “Trade Costs and Development: A New Data Set.” World Bank – Economic Premise, 104, pp1-4.
[2] Originally published in UNCTAD, 2015. “Key Statistics and Trends in Trade Policy 2015.”
[3] Nicita, Alessandro & Murina, Marina, 2015. “Trading with Conditions: The Effect of Sanitary and Phytosanitary Measures on the Agricultural Exports from Low-income Countries.” forthcoming in The World Economy.
Fugazza, Marco & Olarreaga, Marcelo & Ugarte, Christian, 2016. “Trading with Hurdles: Too Big to Stumble.” Policy Issues in International Trade and Commodities Research Studies Series #78, UNCTAD.
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tralac’s Daily News Selection
The selection: Tuesday, 5 July 2016
Trade-Related Developments: report to the Trade Policy Review Body from the Director-General (WTO)
The number of trade remedy investigations initiated by WTO Members has increased during the review period. Metal products, and in particular steel products, chemicals and plastics and rubber account for the largest shares of these initiations. As for previous review periods, more initiations were recorded than terminations, and anti-dumping measures made up the overwhelming majority of trade remedy actions. The analysis of sunset reviews of anti-dumping and countervailing measures initiated in 2008 and 2009 seems to indicate that there is no discernible change in extensions versus expiry of measures coinciding with the financial crisis.
During the review period, the Committees on Sanitary and Phytosanitary measures and on Technical Barriers to Trade saw significant developments. The share of SPS notifications from developing countries remained high, accounting for about two-thirds of all notifications, and confirming the increased participation of developing countries in the total number of notifications since 2007. An increase in the number of notifications does not, however, automatically imply greater use of measures taken for protectionist purposes. In the TBT area, the Committee has recorded a significant increase in the number of specific trade concerns. The 116 new and previously-raised STCs discussed during review period confirm the upward trend, observed over the past years, of a greater number of STCs being raised in the TBT Committee. [Download, pdf]
Namibia: Standards of cattle production (The Namibian)
The furore over the new import regulations imposed by South Africa on Namibian livestock is surprising. A long time ago already, Namibian farmers decided that our internal market was too small and our farming environment too inhospitable to support mass-production of livestock and meat. Insufficient production capacity would inhibit us competing at regional level with other SADC countries whose populations numbered tens of millions of people, especially with the 55 million South Africans; let alone compete in a rapidly globalising world. We therefore decided to concentrate on the quality of our livestock and meat rather than its quantity, as this would give us a competitive advantage.
COMESA: ‘Let’s harmonise sanitary, food regulation’ (Daily Mail)
There is need to harmonise sanitary and phyto-sanitary regulatory frameworks aimed at addressing food security, food health and trade and industrial development in the region, COMESA assistant secretary general Nagla El Hussainy has said. During the seventh COMESA technical meeting on SPS, Ms El Hussainy said trade within COMESA, Southern African Development Community and East African Community grew from $30.6bn in 2004 to $102.6bn. And Ministry of Agriculture permanent secretary Julius Shawa said investments in SPS capacity is still low with most countries lacking coherence in the establishment of SPS priorities and related investments.
Kenya and Rwanda’s manufacturing sector: AfDB reports examine technology, innovation and productivity policy issues
Rwanda (pdf): This approach of leapfrogging technology transfer would also allow Rwanda to participate in global value chains which in general is problematic because of its landlocked status and resulting high transport costs in both time and money to major ports. Air transport is hence the only feasible option and that is only feasible for high value components such as electronics. The likely target areas would be global technology for local markets, where Rwanda could seek to capture industrial activity in emerging consumer or industrial goods for sale into the EAC. Buying relocaters would fit well with this since, for example, the acquisition of failing refrigerator plant in, say, Europe would provide the basis for a partnership deal with European suppliers of that firm to continue to provide the inputs that Rwanda would turn into fridges for the EAC market. Rwanda should experiment in the art of quantum leaps in technology by setting up a state-owned industrial holding company that buys select failures in the industrialised world. The criteria for selecting losers should be roughly as follows:
Kenya (pdf): Tax incentives remain an important strategy for attracting foreign investors wishing to exploit the natural resource base in Kenya and those viewing Kenya as an export platform for EAC and Eastern and Southern Africa regional markets. Recent manufacturing incentives schemes in Kenya have, however, been ineffective. Reform of the incumbent incentives including those related to export zone processing, manufacturing under bond, and other incentives involving tax refunds is therefore necessary to address the challenges reducing their utilization. Review should target ensuring quick tax refunds and tight control of the refund process to reduce cases of abuse of the schemes including elimination of corruption. As these are potentially contradictory objectives, improved monitoring technology and institutional reforms will be necessary. The current schemes also need to be reviewed to reward more use of high technology and research and development.
Kenya: Diaspora remittances increase slightly in May 2016 (Central Bank)
Remittance inflows to Kenya increased by 2.3% in May 2016 compared with 1.7% growth in April 2016. The increase in May 2016 is reflected in inflows from Europe and the rest of the world. Cumulative inflows in the 12 months, to May 2016, increased by 11.1%, to $1,636 million, from $1,472 million in the year to May 2015. [Multinationals, tea pickers lock in fight that threatens the industry (Daily Nation)]
Ugandan investors negotiate tough junction into EAC (Daily Monitor)
Contrary to what their counterparts who have raised their respective national flags high making use of the freedoms through investing into other member states, Uganda is taking baby steps. Uganda has witnessed an influx of Kenya’s blue print brands such as KCB, Equity Bank, Fina Bank, Insurance Company of East Africa, chain retail supermarkets like Nakumatt and Tuskys, Brookside Dairies which bought off the country’s largest dairy corporation. Tanzania, the region’s second economic power, has also established foot prints in Uganda through Bakhresa Group with brands like Azam Television, mineral water, confectionaries and soft drinks. Uganda’s presence in other member states is hard to trace apart from a few Simba Telecom outlets which have spread wings into Kenya and Tanzania. This begs the big question: Is Uganda more porous compared to her neighbours?
RSA citrus trade sees Brexit opportunities (Fruitnet)
South Africa’s citrus industry says the UK Brexit vote could see a "normalisation" of citrus trade between Southern Africa and the UK, unencumbered by protectionism, tariffs and technical barriers to trade. The South African Citrus Growers Association says at present UK plant health regulations are the same as those of the EU, as these were harmonised in 1992. Entry requirements for citrus shipped from Southern Africa to UK are the same as entry requirements for citrus shipped to the mainland European member states of the European Union. “An independent UK will in all likelihood introduce its own plant health regulations, or at least remove or rescind those regulations that have no impact on the UK. Since the UK does not have any citrus (produce any citrus), plant health regulations on citrus imports should be easier to comply with than present EU regulations.”
Kenya’s forex reserves dip by Sh28bn as CBK fights to stabilise shilling after Brexit (Business Daily)
Kenya’s foreign currency reserves plunged by Sh28 billion last week as the Central Bank of Kenya used its fire power to stabilise the market in the wake of financial markets’ turmoil that followed Britain’s recent vote to leave the European Union. The CBK’s reserves stood at $7.237 billion (Sh732.45 billion) at the end of last week, equivalent to 4.73 months of import cover, having declined by $280 million from the previous week’s $7.517 billion (Sh760.8 billion) or 4.91 months of import cover, according to weekly official data. [Brexit chaos pushes Kenya to back burner (Daily Nation)]
Brexit makes SABMiller deal sweeter (IOL), Headwinds for India: Brexit and its impact via other countries (LiveMint)
Lesotho: Country Partnership Framework 2016-2020 (World Bank)
The World Bank Group Board of Executive Directors on 30 June endorsed a five-year Country Partnership Framework for Lesotho, expected to deliver $154m over 2016 to 2020 to projects in support of the Mountain Kingdom’s efforts to improve public sector efficiency and effectiveness and promote private sector job creation. Government spending in Lesotho is highly correlated with volatile SACU revenues (see Figure 1(b)). In the last decade, Lesotho shifted from an export driven economy to one driven by government spending. In the past four years, the government maintained public spending above 60% of GDP. The biggest contributor to this spending was the wage bill, which grew from 18.9% of GDP in 2012 to 23.1% in 2015/16 – among the highest in the world. However, such growth in public expenditure, which is dependent on volatile SACU revenues, has made the macroeconomic environment less stable, and cannot sustainably drive economic growth to address Lesotho’s extreme poverty and shared prosperity needs. Lesotho urgently needs to restore fiscal sustainability, focusing in particular on public spending. Lesotho is facing three adjustment scenarios - back-loaded, insufficient and ordered adjustment. [Download]
A selection of postings on Zimbabwe’s economy, trade prospects:
Rand might save the Zim economy (IOL)
The deVere Group, a global adviser on specialist global financial solutions, is one of those championing Zimbabwe’s adoption of the rand. As its manager for Zimbabwe, Botswana and Mozambique, Shane Helberg, recently said: “Whilst the rand perhaps isn’t as weighty as the US dollar for international trade - as it’s more volatile against major currencies - it must be noted that the dollar has not been effective in arresting the freefalling economy in recent times. Using one primary currency, the rand, for commerce, is likely to be beneficial for several key reasons.” For one thing, using just one semi-convertible currency rather than the present basket, reduces confusion and uncertainty and creates stability and certainty, which foreign investors want. Adopting the rand should also boost trade links with South Africa, Zimbabwe’s major trading partner. One could add, in particular, that it would boost Zimbabwean exports to South Africa. [Prioritise addressing policy inconsistency: IMF (NewsDay)]
Govt to set up standards regulatory authority (The Herald)
Zimbabwe’s Minister of Industry and Commerce Mike Bimha has said the appointment of Bureau Veritas as an import inspection agent is an interim measure and Government is working towards setting up a standards regulatory authority. Government last year signed a four-year Consignment-Based Conformity contract with the French global company. Minister Bimha said the Ministry of Industry and Commerce is in the process of identifying staff for the new regulatory authority.
Zimbabwe explores Tanzania to grow exports (NewsDay)
Zimbabwe's trade facilitation body, ZimTrade has called on local companies to consider growing exports to Tanzania’s pharmaceuticals, construction and leather products sectors to improve the country’s trade position and ease the cash crisis. Official figures show that Tanzania’s import bill for 2015 stood at $9,7bn, with China being the largest supplier, contributing 44%. Regionally, South Africa has a 5,6% share, while Zimbabwe contributes less than 1%. In 2015, 79% of Zimbabwe’s exports to Tanzania were construction and mining equipment, with the remaining 21% being mainly clothing and textiles, paper and printing services, as well as tobacco.
Egypt's BoP deficit jumps 260% in Jul-Mar on falling tourism revenues, transfers (Ahram)
Egypt’s balance of payments deficit leaped a whopping 260% in the first nine months of the current fiscal year due to ongoing fall of tourism receipts, services income and transfers, the Central Bank of Egypt said Sunday. The overall BoP deficit reached $3.6bn from July to March in the fiscal year 2015-2016, compared to $1bn in the same period of the previous year as the current account deficit rose by around 75% to reach $14.5bn from $8.3bn.
SA-India trade update (GCIS)
India is now SA 6th largest trade partner. Trade in 2015 was almost R95bn. Trade with India represented 4.9% of SA imports and 4.1% of exports. South Africa’s Trade statistics shows that India’s exports to South Africa increased from R29bn in 2011 to R54bn in 2015, while South Africa’s exports to India increased from R24bn in 2011 to R41bn. The trade surplus is in favour of India. Efforts are underway to promote SA exports of especially value-added products. In order to deal with the trade imbalance, the dti has undertaken outward missions to India including: [SA-France trade update (GCIS)]
Zanzibar Declaration on timber trade: update on implementation (TRAFFIC)
East African member states will establish a Secretariat to oversee the effective implementation of the Zanzibar Declaration and Bi-Lateral Timber Trade Agreements, with Zambia also requesting to become a signatory. The announcements came following a meeting hosted by the Kenya Forest Service and WWF Kenya to build on the commitments made in the Zanzibar Declaration on Illegal Trade in Timber and Forest Products that was finalized and signed in September last year at the XIV World Forestry Congress in Durban, South Africa.
OECD-FAO Agricultural Outlook 2016-2025
This year’s Outlook includes a special focus on the prospects and challenges facing agriculture in sub-Saharan Africa. The rise of the middle class, rapid urbanisation, as well as increased commercial interest in Africa’s resources and farmland, will all shape the sector’s development. As the region faces rapid population growth, agriculture will continue to be the single largest source of employment for many young people. The Outlook foresees a further increase of food imports into sub-Saharan Africa, because demand for food is expected to grow at more than 3% over the coming decade, while total agricultural production is projected to rise by only 2.6% a year, despite improvement in productivity.
Africa Carbon Forum 2016 closes in Kigali
US and WTO partners begin implementation of the Expansion of the Information Technology Agreement (USTR)
Namibia’s Competition Commission appoints acting CEO, Vitalis Ndalikokule (The Namibian)
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Making politics work for development: Harnessing transparency and citizen engagement
Too often, government leaders fail to adopt and implement policies that they know are necessary for sustained economic development.
Political constraints can prevent leaders from following sound technical advice, even when leaders have the best of intentions. Making Politics Work for Development: Harnessing Transparency and Citizen Engagement focuses on two forces – citizen engagement and transparency – that hold the key to solving government failures by shaping how political markets function.
In today’s participative world, citizens are not only queueing at voting booths, but are also taking to the streets and using modern communication technology to select, sanction, and pressure the leaders who wield power within government. This political engagement can function in highly nuanced ways even within the same formal institutional context and across the political spectrum, from autocracies to democracies. Political engagement becomes unhealthy when leaders are selected and sanctioned on the basis of their provision of private benefits rather than public goods, giving rise to a range of government failures.
“This book not only provides an authoritative statement of what we know about how to align political incentives with the interests of society, but it does so with an eye to making change happen even in the face of political opposition. The World Bank will never be the same again” – James Robinson, University Professor, Harris School of Public Policy, University of Chicago.
The solutions to these failures lie in fostering healthy political engagement within any institutional context, and not in circumventing or suppressing it. Transparency – citizen access to publicly available information about the actions of those in government and the consequences of these actions – can play a crucial role by nourishing political engagement. The report distills policy lessons for governments, international development partners, and civil society on how best to target transparency initiatives so that the provision of public goods becomes the focus of political contestation.
“This pathbreaking report places politics at the heart of the development dialogue – exactly where it belongs. It provides constructive ideas for harnessing the forces of transparency and citizen engagement in ways that are suited to diverse institutional contexts so that reform leaders can overcome political constraints to their countries’ development goals” – Asli Demirgüç-Kunt, Director of Research, Development Research Group, The World Bank.
Even so, unhealthy political engagement may persist. But to build institutions that are capable of tackling public goods problems, politics needs to be addressed and cannot be side-stepped. Targeted transparency is one way to move in the right direction: it complements everything else policy makers do and holds the potential to make politics work for development rather than against it.
“A lesson for us at the World Bank also comes out of this research. We can do more… to work with our clients to diminish political constraints to achieving development goals… To do this we have to overcome the fear of talking about politics, and confront it as part of the challenge of development. That is what we are doing through this report” – Kaushik Basu, Senior Vice President and Chief Economist, The World Bank.
This Policy Research Report was prepared by the Development Research Group of the World Bank by a team led by Stuti Khemani. The other authors of the report were Ernesto Dal Bó, Claudio Ferraz, Frederico Finan, Corinne Stephenson, Adesinaola Odugbemi, Dikshya Thapa, and Scott Abrahams.
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USTR announces major expansion of trade preferences for least developed and African countries
Aiming to promote poverty alleviation and economic growth in poorest countries
The Office of the United States Trade Representative announced on 30 June 2016 the outcome of the Obama Administration’s Annual Product Review under the Generalized System of Preferences (GSP) program.
This review adds new duty-free status for travel goods (including luggage, backpacks, handbags, and wallets) for Least Developed Beneficiary Developing Countries (LDBDCs) and African Growth and Opportunity Act (AGOA) countries.
GSP is a 40-year-old trade preference program under which the United States provides duty-free treatment to many imports from beneficiary developing countries and additional products for LDBDCs.
“Trade preference programs such as GSP and AGOA can make a powerful contribution to lifting people out of poverty and supporting growth in some of the poorest countries in the world, while also reducing costs to American consumers and businesses,” said U.S. Trade Representative Michael Froman. “We have used these programs to give beneficiary countries a vital leg up vis-à-vis more advanced competitors.”
Based on the Administration’s review of various issues and petitions related to eligibility of products under the GSP program, President Obama also made several other determinations today affecting product coverage under GSP, including the following:
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The removal of products from specific GSP countries where the country is sufficiently competitive and so as to no longer need tariff preferences to compete in the U.S. market, including fluorescent brightening agents and PET resin from India;
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The granting of competitive need limitation (CNL) waivers, ensuring continued GSP duty-free benefits, for 114 products from 15 countries.
The full results of the GSP 2015/2016 Annual Review are available on the USTR website and will be announced in the Federal Register.
Background
Under the GSP program, approximately 5,000 products from 122 beneficiary developing countries and territories, including 43 least-developed countries, are eligible for duty-free treatment when exported to the United States. Nearly 1,500 of these products are reserved for duty-free treatment for LDBDCs only. In 2015, the total value of imports that entered the United States duty-free under GSP was $17.4 billion.
The Trade Preference Extension Act (TPEA) of 2015 gave the President, for the first time, the authority to add certain travel and luggage goods products to GSP, subject to the regular, petition-driven review process. The 27 HTS subheadings cited in the TPEA included luggage, handbags, backpacks, and pocket goods (such as wallets).
As part of the GSP 2015/2016 Annual Review, an interagency committee led by USTR (the GSP Subcommittee of the Trade Policy Staff Committee) received and considered requests seeking:
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to add or remove products from the list of those eligible for duty-free treatment under GSP;
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to waive product exclusions for certain countries based on statutory requirements related to competitiveness (CNLs); and
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to withdraw or limit a country’s eligibility for GSP trade benefits based on statutory eligibility criteria, including whether a country is taking steps to afford internationally recognized standards for worker rights, whether it provides important investor protections including enforcement of arbitral awards, and the extent to which a country adequately and effectively protects intellectual property rights.
For those petitions accepted for review, the USTR-led committee holds public hearings, solicits public comments, and – in the case of product petitions – reviews analyses prepared by the U.S. International Trade Commission of the economic impact of product eligibility decisions on domestic industries and consumers. Any change to the lists of products or countries eligible for GSP benefits requires a presidential determination.
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Report to the TPRB from the WTO Director-General on trade-related developments
This trade-monitoring report reviews trade-related developments during the period from 16 October 2015 to 15 May 2016. During this seven-month period, there seems to have been a relapse in WTO Members’ efforts at containing protectionist pressures. Not only is the stockpile of trade-restrictive measures continuing to increase, but also more new trade restrictions were recorded during the period, covering both import and export measures.
The implementation of new trade-restrictive measures by WTO Members increased over the review period. Since mid-October 2015, WTO Members applied 154 new trade-restrictive measures – an average of 22 new measures per month compared to 15 in the previous interim report. Import tariff increases, customs procedures and various local content measures constitute the main factors behind this upward trend in the overall monthly figure. The 22 new trade-restrictive measures adopted per month by WTO Members are close to the peak observed in 2011 of 23 new measures per month.
During the same period, WTO Members implemented 132 measures aimed at facilitating trade. At almost 19 trade-facilitating measures per month, this represents an increase over the previous mid-year report’s monthly average of 16 measures. However, the trade-facilitating monthly average remains below the monthly average of trade-restrictive measures, thus reversing the positive trend identified over the past years.
Overall, the stockpile of restrictive measures introduced by WTO Members continues to grow. Of the 2,835 trade-restrictive measures (including trade remedies) recorded for WTO Members since 2008, only 708 had been removed by mid-May 2016. The total number of these restrictive measures still in place now stands at 2,127 – an increase of more than 11% during the review period. Although some WTO Members have been eliminating trade-restrictive measures, the rate at which this is done is far too low to dent the overall stockpile of restrictive measures. Of the total number of trade-restrictive measures recorded for WTO Members since 2008, the share of eliminations, or roll-back, makes up 25%.
World trade was volatile in 2015 as diverging outlooks for developed and developing economies unsettled global financial markets and prompted sharp movements in commodity prices and exchange rates. The volume of world merchandise trade grew by 2.8% last year as trade fell sharply in the first half of the year before recovering in the second half. Weak import growth in developing economies (0.2%) was cushioned by stronger import demand in developed countries (4.5%). Import growth was particularly weak in large emerging economies such as China (-4%) and Brazil (-15%). Meanwhile, exports grew slightly faster in developing economies (3.3%) than in developed countries (2.6%). This was balanced by stronger positive import growth in the United States (6.5%) and the European Union (4.5%). Despite positive trade growth in volume terms, the dollar value of world trade fell sharply (-13% for merchandise, -6% for services), largely as a result of lower commodity prices and the general appreciation of the U.S. dollar.
Prospects for 2016 and beyond remain uncertain. The most recent WTO trade forecast of 7 April 2016 predicted merchandise trade volume growth of 2.8% in 2016, unchanged from 2015, but volatility is likely to persist. Exports of developed and developing economies should grow at around the same rate (2.9% in the former and 2.8% in the latter). Meanwhile, imports of developed economies are expected to outpace those of developing countries, with an increase of 3.3% compared to a rise of 1.8%. Preliminary trade volume statistics for the first quarter of 2016 indicate that world trade fell around 1% in the first quarter of 2016 compared to the last quarter of 2015.
The number of trade remedy investigations initiated by WTO Members has increased during the review period. Metal products, and in particular steel products, chemicals and plastics and rubber account for the largest shares of these initiations. As for previous review periods, more initiations were recorded than terminations, and anti-dumping measures made up the overwhelming majority of trade remedy actions.
The analysis of sunset reviews of anti-dumping and countervailing measures initiated in 2008 and 2009 seems to indicate that there is no discernible change in extensions versus expiry of measures coinciding with the financial crisis.
During the review period, the Committees on Sanitary and Phytosanitary (SPS) measures and on Technical Barriers to Trade (TBT) saw significant developments. The share of SPS notifications from developing countries remained high, accounting for about two-thirds of all notifications, and confirming the increased participation of developing countries in the total number of notifications since 2007. An increase in the number of notifications does not, however, automatically imply greater use of measures taken for protectionist purposes. In the TBT area, the Committee has recorded a significant increase in the number of specific trade concerns (STCs). The 116 new and previously-raised STCs discussed during review period confirm the upward trend, observed over the past years, of a greater number of STCs being raised in the TBT Committee.
In the area of agriculture, despite poor notifications’ compliance recorded for some Members, the whole membership continued to use Article 18.6 of the Agreement on Agriculture (AoA) to ask questions on the implementation of commitments. A large number of these questions focused in particular on Members’ domestic support policies.
This report suggests that general economic support measures implemented by WTO Members are on the rise. The monthly average of 14 such measures recorded in the review period approaches the number recorded immediately after the onset of the global financial crisis. However, the numerical counting of such measures and programmes does not provide any indication regarding the extent of these measures, nor their potential impact. The main beneficiaries of such support during the review period included multiple sectors, infrastructure programmes (including several energy-related projects), various industries in the manufacturing sector, the agricultural sector and the telecommunications sector. Several programmes provided specific support to export-related activities or enterprises, including SMEs. Several important policy developments in a very diverse range of services sectors took place during the review period. The overwhelming majority of these services measures see either further liberalization of trade in services or the strengthening and clarification of relevant regulatory requirements.
The OECD has contributed two topical boxes to this report. The first looks at the evolving agricultural policies and markets and the implications for multilateral trade reform. The second seeks to assess the gains from implementing the WTO Trade Facilitation Agreement (TFA).
Several other important trade-related developments also took place during the review period, including in the areas of the Trade Facilitation Agreement, the Information Technology Agreement expansion and the Agreement on Government Procurement.
The overall assessment of this monitoring report has outlined the profound volatility which characterizes world trade today and the current unsettled nature of international financial markets. Despite a number of positive developments, the global environment remains challenging. To address slow economic growth, Members need to get trade moving again, not put up barriers between economies. The best safeguard we have against protectionism is a strong multilateral trading system.
Recent Economic and Trade Developments
Overview
The volume of world merchandise trade partially recovered in the second half of 2015 following a sharp decline in the first half that affected all major economies to varying degrees. Import growth was sluggish in developing Asia and negative in regions that predominantly export natural resources. These slowdowns were cushioned by stronger import demand in Europe and North America as economic activity picked up in those regions.
Global trade volume growth for the whole of 2015 was 2.8%. Despite the modest, positive growth in global trade volumes, the dollar value of world merchandise trade fell sharply in 2015, dropping by 13% to US$16.0 trillion largely as a result of lower commodity prices and a general appreciation of the U.S. dollar. The value of world commercial services trade also declined by 6% to US$4.7 trillion in 2015.
Several factors contributed to the lacklustre performance of trade in 2015, including: slowing economic growth in China and the rebalancing of the country’s economy away from investment and towards consumption; recessions in other large developing economies, particularly Brazil; falling petroleum prices, which reduced the export revenues of oil producing countries; and volatility in exchange rates and financial markets, possibly exacerbated by divergent monetary policies in the United States, Europe and China.
Economic Developments
2015 marked the fourth consecutive year with world trade volume growth below 3%, as well as the fourth year in a row with world trade growing at close to the same rate as world GDP. Growth rates for trade and output in 2015 were also below their average rates since 1990 of 5% and 2.7%, respectively. The slow pace of trade growth relative to GDP growth over the past four years stands in contrast to the period from 1990 to 2008, during which merchandise trade grew 2.1 times as fast as world GDP on average.
The recent spell of slow trade growth is unusual, but not unprecedented, and as a result its importance should not be exaggerated. World trade volume growth was in fact weaker between 1980 and 1985, when five out of six years saw trade growth below 3%, including two years of outright contraction.
Strong fluctuations in exchange rates since 2014 have had a strong impact on nominal trade statistics, most of which are denominated in current U.S. dollars. In January 2016, the U.S. dollar was up 19% compared to January 2014. Although the dollar has weakened somewhat since then, it was still up 13% in April 2016 compared to January 2014. The appreciation of China’s yuan has also moderated since the last monitoring report.
Dollar appreciation can cause trade denominated in other currencies (e.g. intra-EU trade) to be undervalued when measured in dollar terms. As a result, trade statistics in nominal dollar terms should be interpreted with care under current circumstances.
Prices for oil and other primary commodities bottomed out in January-February but have rebounded somewhat since then. The traditional inverse relationship between the level of the U.S. dollar and the price of oil has continued to hold, with the recent easing of the dollar mirrored by a modest rise in fuel prices. Despite the rebound, fuel prices were still down around 60% in April compared to the beginning of 2014. Further production declines could bring about a partial recovery in fuel prices, although a return to US$100 oil/barrel is unlikely.
Other Selected Trade Policy Developments
Trade Facilitation
Following the adoption of the amendment protocol, delegations started to launch their domestic processes for ratifying the Trade Facilitation Agreement. As at 3 May 2016, 77 acceptance instruments were deposited, which represents more than 70% of the ratifications required for the Agreement to enter into force. Members also continued to notify the commitments they designated for implementation as of the Agreement’s entry into force. As at 3 May 2016, 83 of those so-called “category A-notifications” were presented. Delegations already started to notify the commitments they consider to require more time (“category B”) and the acquisition of implementation capabilities through the provision of assistance and support for capacity building (“category C”). Four such category B and C notifications were received by time of reporting (3 May 2016).
The new WTO Trade Facilitation Agreement Facility that was launched in 2014 was put into action in 2015 and aims to provide a platform for information on WTO trade facilitation and to help developing and least-developed members find the assistance they need for the preparation of notifications, ratification of the Agreement, and for its implementation. It also aims to coordinate donor assistance.
To achieve these goals, a new Facility website was created to provide information on donor programmes, to provide case studies and other materials to assist with implementation and to track progress on ratification and notifications received. The Facility conducted, or was involved in, eight events for Parliamentarians to help them gain a better understanding of the new Agreement. The Facility assisted Members to prepare their category A, B and C notifications by conducting national and sub-regional workshops; and by coordinating with partner organizations to conduct workshops. It also assisted Members to find support for implementation of the Agreement in a variety of ways, for example, by providing donor information on the Facility website, by organizing workshops featuring the available donor support, and by direct matchmaking.
Government Procurement
The membership of the Agreement on Government Procurement (GPA) continues to grow. Since the previous report, Ukraine and the Republic of Moldova have concluded the negotiations on their accessions to the Agreement. Following the deposit by Ukraine of its instrument of accession, the Agreement came into force for Ukraine on 18 May 2016. This brings the total number of WTO Members covered by the Agreement to 46. The deposit of the Republic of Moldova’s instrument of accession is expected to be done by 16 June 2016.
Further additions to the membership of the Agreement are expected in the short to medium term. Negotiations on Australia’s accession are progressing well and further discussions were held on Tajikistan’s and China’s accessions. The process of the Kyrgyz Republic’s accession was resumed early this year. Four other WTO Members — Albania, Georgia, Jordan and Oman have applied to join the GPA. Another six WTO Members have provisions regarding accession to the Agreement in their respective Protocols of Accession to the WTO, i.e. Kazakhstan, Mongolia, the Russian Federation, the Kingdom of Saudi Arabia, Seychelles and the former Yugoslav Republic of Macedonia.
ITA Expansion
Under the newly concluded WTO ITA Expansion agreement, import duties will be eliminated on 201 high‐tech products whose annual trade is estimated at $1.3 trillion, accounting for approximately 10% of world trade in goods. Products covered by the ITA Expansion include new generation multi‐component integrated circuits (MCOs), touch screens, GPS navigation equipment, portable interactive electronic education devices, video game consoles, and medical equipment, such as magnetic resonance imaging products and ultra‐sonic scanning apparatus.
The ITA Expansion will result in the rapid and meaningful liberalization of trade in new generation IT products. According to preliminary estimates by the WTO Secretariat, customs duties on 95.4% of Participants’ imports on these products will be fully eliminated by 2019. Negotiations were conducted by 24 Participants, representing 53 WTO Members and accounting for approximately 90% of world trade in these products. The ITA Expansion agreement is open to any other WTO Member wishing to join it.
Dispute Settlement
During the review period, there were 13 new requests for consultations, eight new panels established by the Dispute Settlement Body (DSB), five Appellate Body proceedings, three Article 21.3(c) awards and two Article 22.6 arbitration awards. As at mid-May 2016, there were 16 active ongoing panels, one active compliance panel proceeding under Article 21.5, three panel requests pending before the DSB, and four panels and one compliance panel have been established with panel composition under way. In addition, there were two composed panels and one arbitration under Article 22.6 that were awaiting staff to assist them.
As in previous years, the subject-matter of WTO dispute settlement continues to touch on many of the covered agreements: the six panel reports, four compliance panel reports, four Appellate Body reports and three Appellate Body compliance reports adopted over the reporting period address a wide range of provisions in several agreements. Ongoing dispute settlement proceedings also involve claims under many of these agreements, as well as a range of other covered agreements. Three of the eight panels established during the period under review concern trade remedies or subsidies. Developed and developing countries continue to participate in the WTO dispute settlement system: almost all of the Appellate Body and panel reports adopted over this period involved at least one developing country Member as a party, either as the complainant or the respondent.
Aid for Trade
A new biennium Aid-for-Trade Work Programme covering the period 2016-2017, which the General Council took note of at its meeting in February 2016, provides the framework for WTO’s Aid-for-Trade related work and activities in 2016. With its theme “Promoting Connectivity”, the Work Programme was the first action to be taken in support of the Aid-for-Trade mandate elaborated in the December 2015 Nairobi Ministerial Declaration. The Work Programme seeks to further deepen analysis of the supply-side capacity and trade-related infrastructure constraints faced by developing countries with an increased focus on services trade and upgrading infrastructure. Activities foreseen under the Work Programme will continue to support implementation of the 2030 Agenda for Sustainable Development and relevant Programmes of Action including, inter alia, the Istanbul and Vienna Programmes and the Samoa Pathway. The Work Programme lays the groundwork for the Sixth Global Review of Aid for Trade tentatively scheduled to take place in mid-2017.
While the mobilization of Aid-for-Trade funding continues, commitments fell from their historic high in 2013 by US$1 billion to reach US$54.8 billion in 2014. Aid-for-Trade disbursements, however, continued to increase in 2014 reaching US$42.7 billion, a growth of US$2.3 billion or 5.7% compared to 2013. Progress also continued in support for regional and global Aid-for-Trade approaches. In 2014 approximately US$7 billion was spent on multi-country and regional programmes, more than triple the US$2.3 billion average during the 2002-2005 baseline period.
Middle-income countries continue to be the main Aid-for-Trade recipients. Commitments to least-developed countries declined by US$4 billion in 2014 to US$14.4 billion. Disbursements to LDCs accounted for 24.6% of total Aid-for-Trade expenditure in 2014.
Trade Financing
Since the last report, the WTO has been moving forward on trade finance and this was reflected in the Director-General’s publication “Trade Finance and SMEs”, released on 4 May 2016. The publication draws attention to the fact that globally over half of trade finance requests by SMEs are rejected, against just 7% for multinational companies. The poorer the country, the greater the challenges SMEs face in accessing trade finance. The estimated value of unmet demand for trade finance in Africa is US$120 billion (one-third of the continent’s trade finance market) and US$700 billion in developing Asia. The International Chamber of Commerce and Asian Development Bank’s estimate of the global trade finance gap is close to US$1.4 trillion. Trade financing gaps arise due to a mix of structural and development factors. In developing countries, local banks may lack the capacity, knowledge, regulatory environment, international network and/or foreign currency to supply import- and export-related finance. Other obstacles include banking or country risk issues, and cost of compliance with new prudential and other regulations.
The Director-General proposed a number of further steps in the area of trade finance. These included: first, enhancing existing trade finance facilitation programmes run by multilateral development banks. Currently, trade finance facilitation programmes support trade transaction of a total value of US$30 billion annually, mostly from SMEs. The objective would be to increase this support to US$50 billion annually. Second, reducing the knowledge gap in local banking sectors for handling trade finance instruments by training at least 5,000 professionals over the next five years. Third, maintaining an open dialogue with trade finance regulators to ensure that trade and development considerations are fully reflected in the implementation of regulations. Finally, improving monitoring of trade finance provision to identify and respond to gaps, particularly relating to any future crises.
Policy Developments in Trade in Services
In the area of services, the review period witnessed several important policy developments in such diverse sectors as distribution, financial services, telecommunications and ICT, maritime transport services, and in regard to the supply of services through the movement of natural persons. The large majority of the measures adopted during the review period move in the direction of either further liberalization of trade in services or strengthening and clarification of relevant regulatory requirements.
Policy Developments in Trade and Intellectual Property
The two decades since the WTO TRIPS Agreement entered into force have seen significant developments in the interplay between patterns of trade and trade policy, on the one hand, and the intellectual property (IP) system on the other. The ways in which international trade and the protection and enforcement of IP interact have grown and diversified in recent years.
The linkages between the IP system and the trading system are too complex and multifaceted to be categorized necessarily as facilitating or restricting trade. A balanced system for protection and enforcement of IP will facilitate legitimate trade while ensuring measures against illegitimate, infringing trade, particularly counterfeit trademark goods and pirated copyright goods. This section looks to provide a broad account of trade-related developments in IP as well as an overview of the specific trends and areas of current interest to WTO Members in this area.
This report is a mid-year preparatory contribution to the annual report by the Director-General provided for in paragraph (g) of the Trade Policies Review Mechanism (TPRM) mandate which aims to assist the TPRB in undertaking an annual overview of developments in the international trading environment that are having an impact on the multilateral trading system. The previous interim trade monitoring report presented to the TPRB covered measures taken over the period from mid-October 2014 to mid-May 2015.
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Climate change response requires finance, cooperation and participation
High-level session closes productive Africa Carbon Forum 2016
Success tackling climate change and achieving sustainable development in Africa will take finance, cooperation and real engagement with non-state actors, participants heard in high-level sessions that wrapped up this year’s Africa Carbon Forum.
“Development must simply be sustainable. Otherwise it is not development,” said Vincent Biruta, Minister of Natural Resources of Rwanda. “We can only meet the Sustainable Development Goals if we deal with climate change.”
Mr. Biruta stressed the importance of cooperation, between the public, civil society and the private sector and between governments, as well as the need to ease access to multilateral support for climate action “so that national governments can focus on implementation.”
Rhoda Peace Tumusiime, the African Union’s Commissioner for Rural Economy and Agriculture, applauded the fact that most countries in the run-up to the Paris Climate Change Agreement in December 2015 spelled out how they intend to address climate change, but she challenged countries to do more.
“We need good, coordinated effort at the country level,” said Ms Tumusiime. She also called for Africa to receive its fair share of pledged climate finance and encouraged countries to adopt policies that incentivize private sector action on climate change.
Mahama Ayariga, Minister of Environment, Science, Technology and Innovation, Ghana, tore down the distinction between climate finance and all other types of finance.
“We’re really talking about climate-smart, good finance,” said Mr. Ayariga. “When we talk about climate finance we’re talking about finance in all sectors, whether roads, housing, agriculture, all finance.”
Ephraim Kamuntu, Minister for Tourism, Wildlife and Antiquities, Uganda brought the dangers and costs of climate change into focus.
Uganda’s greenhouse gas emissions account for only a fraction of one percent of global emissions, but two recent events related to climate change claimed 300 lives and cost half a billion dollars to repair key infrastructure, including clinics and roads.
Uganda’s contribution to climate change is very small, “but in terms of impact, it’s out of proportion,” said Mr. Kamuntu, who called on climate funding pledges to be honored and funds made available quickly.
The head of the African Development Bank delegation, Anthony Nyong, called for streamlining of finance offerings, more rational outlays, and reduction in transaction costs associated with accessing climate finance.
Mohamed Benyahia, Director of Partnership, Communication and Cooperation, Morocco, stressed the need for integration of the non-state actors – the private sector, civil society and non-state constituencies – in the international response to climate change.
Morocco will host the next major International Climate Change Conference, in Marrakesh in November this year. Mr. Benyahia described the “vision and roadmap” of meetings and consultations aimed at integrating participation of non-state actors in the conference and the processes of the United Nations Framework Convention on Climate Change. Morocco is looking to mobilize South-led initiatives and cooperation, including by engaging private sector companies and women as agents of change.
Speakers this week highlighted the opportunity, and indeed need, for Africa to link mitigation action to resilience and green growth, in the context of the ambitious targets in the African Union’s Agenda 2063.
Efforts to increase resilience, linked with economic benefits and jobs, can increase relevance of mitigation actions for local communities.
The important role of capacity-building was also raised several times in the high-level sessions, and in sessions on the previous two days of the event, especially the need for technical assistance in preparing project proposals that can attract private finance.
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Uganda sets up free zones
Uganda is in the process of finalizing the development of its strategic plan that will see the country establishing 10 free trade zones by 2020.
“Our target is to set up two public free zones and to lead the private sector in establishing eight more by 2020.
“These free zones will have a cumulative capacity to generate $1 billion a year and $100m in exports.
“In addition, the free zone will boost the country’s capacity to create jobs by enabling the creation of 2500 new direct jobs while facilitating the creation of an additional 500,000 jobs indirectly,” said Richard Jabo, the Executive Director, Uganda Free Zones Authority.
In simple terms, a free zone is an area within a country where licensed manufacturers and or trader’s imported goods can be stored or processed without being subjected to import or export duty.
Jabo said the free zones, for the case of Uganda, will be suited in customs areas within the country and that 80% of what is produced in the Free Zone will be for exports.
The free zone will among other things provide for a comprehensive package of incentives for holders of Free Zone Developer, Operator or Manager Licenses which include: exemption from taxes and duties on all export processing imported raw materials and intermediate goods, machinery and equipment, spare parts, for exclusive use in the development and production of output for the business enterprise.
In addition, the Free Zone will provide unrestricted remittance of profit after tax, tax holiday for 10 years on finished consumer and capital goods, 100% exemption from tax on income from agro-processing, 100% exemption on income derived from the operation of aircrafts in domestic and international traffic or the leasing of aircraft, exemption on plant and machinery used in the free zones for 5 years and 1 day from Customs duty upon disposal, exemption from all taxes, levies and rates on exports from the free zones namely excise duty and Customs taxes; 100% exemption from tax on income of a person offering Technical Assistance under a Technical Assistance Agreement; Exemption from import duties and taxes on all goods entering a free port zone; VAT exemption on supply of selected services e.g. medical services, social welfare services, power generated by solar; Exemption of Withholding Tax on petroleum, petroleum products, plant and machinery, human or animal drugs and supply/importation of raw materials.
Jabo said these incentives will allow investors to produce and or, process large quantities and better quality goods at a relatively competitive lower cost for the export market.
In the process, this will promote export growth and diversification by creating forward and backward linkages, enhance technology transfer and skills development, accelerate economic growth, facilitate job creation, as well as boost investment to mention but a few.
The Minister of State for Planning in Uganda, Hon. David Bahatiwho was speaking at the meeting as chief guest said Uganda is currently faced with two economic challenges that is; youth unemployment and how to tackle subsistence farming and have more Ugandans on the money economy.
Bahati said government’s focus this financial year is on how to create and provide jobs to the people of Uganda considering the fact that 75% of the youth in Uganda are unemployed. He said the other focus for government, now going forward, is on how to get the 4.8 million households engaged in subsistence farming onto the money economy.
“To realize the aforementioned areas of interest, the ministry of finance has set six priority areas this financial which include: Industrialization and export promotion with a focus on agro processing because for you to be able to export, you must add value,” Bahati said.
Bahati listed other areas of priority for his ministry as investment promotion both local and foreign investments where he called on all Ugandans in their respective capacities to join in marketing the country to attract investor to all the sectors of the economy. Effective service delivery will be one of the ministry’s priorities especially to leverage and easy the procurement processes which he cited as one of the issues affecting service delivery in Uganda.
Bahati said the Uganda Free Zone is therefore a vehicle through which the government and ministry of finance can achieve it priorities and areas of interest that is said are underlined in creating jobs for the youth and to get more Ugandans on to the money economy.
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Cooperation in energy, trade; Major focus of PM’s Africa trip
Deepening cooperation in areas of hydrocarbons, maritime security, trade and investment, agriculture and food will be major focus of Prime Minister Narendra Modi’s five-day visit to four key countries of African continent beginning Thursday.
The four countries – Mozambique, South Africa, Tanzania and Kenya, are considered gateway to many landlocked African nations and Modi, on his first bilateral visit, will try to bring a new momentum to India’s ties with the continent where China has been trying to increase its clout.
The Prime Minister’s visit comes within weeks of President Pranab Mukherjee and Vice President Hamid Ansari travelling to Africa with an aim to strengthen and reinvigorate India’s ties with the nations of the continent.
Briefing the media, Amar Sinha, Secretary, Economic Relations, in the Ministry of External Affairs said a number of pacts will be signed with each of the four countries in a variety of areas during the Prime Minister’s visit.
India imports large quantity of pulses from Africa and, during the visit, a pact with Mozambique is likely to be firmed up for long-term procurement of the commodity beginning with procurement of 100,000 tonnes. The government has been drawing a lot of criticism over the past few months over rising price of pulses.
Under the agreement, India may support a network of farmers in the country who will be given logistical support, technology and seeds and pulses will be procured from them through government agencies.
India will also look at expanding cooperation with Mozambique in the hydrocarbons sector. Mozambique is the third largest exporter of natural gas after Qatar and Australia and a number of Indian companies including ONGC have invested heavily in the hydrocarbons sector in that country.
Modi’s first destination will be Mozambique where he will have bilateral discussions with President Nyusi on July 7. On the second leg of his tour from July 8 to 9, Modi will be in South Africa.
On July 10, the Prime Minister will visit Tanzania and, on the final leg of his trip, he will travel to Kenya.
The Prime Minister will address the Indian community in all the four countries. He will address large gatherings in Johannesburg and Nairobi which have significant number of Indian origin people.
“We are looking at consolidating gains of the India-Africa Forum Summit,” said Sinha.
The Prime Minister’s visit comes within weeks of President Pranab Mukherjee and Vice President Hamid Ansari travelling to Africa.
Minister Rob Davies on the Incoming State Visits by India’s Prime Minister
Prime Minister of India, Mr Narendra Modi will be visiting South Africa on 8 July 2016. India is now SA 6th largest trade partner. Trade in 2015 was almost R95 billion. Trade with India represented 4.9% of SA imports and 4.1% of exports.
South Africa’s Trade statistics shows that India’s exports to South Africa increased from R29 billion in 2011 to R54 billion in 2015, while South Africa’s exports to India increased from R24 billion in 2011 to R41 billion. The trade surplus is in favour of India. Efforts are underway to promote SA exports of especially value added products.
In order to deal with the trade imbalance, the dti has undertaken outward missions to India including:
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India International Trade Fair (IITF), November 2015 (funded by the dti’s EMIA Scheme).
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The 7th Investment and Trade Initiative (ITI), February 2016 (funded by the dti’s EMIA Scheme). The following sectors were targeted for promotion: agro processing, beneficiated metals and mining technology, automotive components, electro-technical and logistics
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Defence Expo India, March 2016 facilitated by the Aerospace, Marine, and Defence (AMD) Export Council.
The Prime Minister is expected to be accompanied by a high level business delegation. The Business Forum will take place at CSIR on Friday, 8 July 2016. The Business Forum will be preceded by the meeting of the South Africa-India CEOs Forum.
There is considerable interaction between South Africa and India in the multilateral context. This includes regular meetings on IBSA, BRICS and India-Africa Forum Summit.
Post our democracy, India’s investment into South Africa has been in numerous sectors such as in the mining industry, financial services, pharmaceutical sector and manufacturing. South Africa has successfully attracted investment from large Indian multinationals such as Tata, Wipro, Cipla and Apollo tyres amongst others.
Companies such as Tata and CIPLA have been early movers and have invested in different projects in South Africa and have a good experience of South Africa as an investment destination. Tata has invested mining, ICT, hospitality, automotive and energy. CIPLA has for example supported the roll out of ARVs and making medicines more affordable to patients. Improving healthcare is one of Government’s key priorities. We welcome CIPLAs expansion and new investment in the value chain of the pharmaceutical sector and look to further investments.
According to the FDI markets, a total of 82 Indian projects in South Africa with a total capital expenditure of R62 billion between January 2003 and January 2016 were recorded from 60 companies. India’s leading sectors were software & IT services (17 projects) and financial services (14 projects). India’s investment in South Africa has created 10 660 jobs.
South African companies have also grown their investments in India with a total of 24 projects. The leading sectors for South Africa’s investment in India were financial sector, machinery and equipment and software and IT services. South Africa investment in India has created 6 981 jobs.
Issued by: The Department of Trade and Industry
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U.S. and WTO partners begin implementation of the Expansion of the Information Technology Agreement
The expansion of the Information Technology Agreement (ITA) achieved a milestone on 1 July 2016 as the United States, along with developed and developing country partners at the World Trade Organization (WTO), began elimination of tariffs on hundreds of information technology goods traded all over the world.
The United States is a world leader in information technology. Following the full implementation of ITA expansion, over $180 billion in annual American technology exports will no longer face burdensome tariffs in key markets around the globe, which will support tens of thousands of well-paying U.S. manufacturing and technology jobs. In addition, duty-free trade in the products covered by ITA expansion will lower costs for downstream manufacturing and services industries that rely on information and communications technology parts and components as inputs, increasing their competitiveness.
ITA expansion will unlock global economic opportunities at home and abroad. The WTO estimates that the ITA expansion will eliminate tariffs on approximately $1.3 trillion in annual global exports of information and communications technology products, which industry estimates will increase annual global gross domestic product by an estimated $190 billion.
“Today as we and other parties to the ITA expansion begin to eliminate hundreds of tariffs, U.S. exporters of state-of-the-art information and communication technology products will realize the benefits of expanding the Information Technology Agreement (ITA) on billions of dollars in American technology exports all around the globe,” said U.S. Trade Representative Michael Froman. “This demonstrates that the WTO can deliver real, commercially significant results. We urge all ITA expansion parties to proceed promptly with their domestic implementation.”
In December 2015, the United States along with over 50 developed and developing country partners reached agreement at the 10th WTO Ministerial in Nairobi, Kenya to begin the necessary steps to implement their tariff commitments on the ITA expansion list of 201 products by July 1, 2016, subject to the completion of domestic procedural requirements.
The original Information Technology Agreement concluded in 1996. Despite the tremendous growth in global trade in technology products, which has nearly tripled to over $4 trillion annually, the scope of the ITA had never been updated. To grow these benefits and capitalize on American technological advantages, President Obama engaged the United States in these negotiations to expand the ITA in 2012. The ITA expansion agreement is the first major tariff-cutting deal at the World Trade Organization in 19 years.
Presidential Proclamation – Implementing the World Trade Organization Declaration on the Expansion of Trade in Information Technology Products and For Other Purposes
June 30, 2016
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On July 28, 2015, the United States and other Members of the World Trade Organization (WTO) issued a Declaration on the Expansion of Trade in Information Technology Products (Declaration), which established a framework for eliminating duties on certain information and communication technology products. These products include advanced semiconductors, medical equipment, and a range of audio and video equipment. The Declaration sets forth commitments for immediate or staged elimination of duties on the covered products, expanding on duty-elimination commitments set forth in the 1996 Declaration on Trade in Information Technology Products, which the United States implemented in Proclamation 7011 of June 30, 1997.
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On December 16, 2015, the United States and other WTO Members issued a Ministerial Declaration in which ministers endorsed the Declaration of July 28, 2015, and acknowledged that the conditions for implementation had been met.
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Section 111(b) of the Uruguay Round Agreements Act (URAA) (19 U.S.C. 3521(b)) authorizes the President to proclaim the modification of any duty or staged rate reduction of any duty set forth in Schedule XX for products in tariff categories that were the subject of reciprocal duty elimination or harmonization negotiations during the Uruguay Round, if the United States agrees to such action in a multilateral negotiation under the auspices of the WTO, and after compliance with the requirements of section 115 of the URAA (19 U.S.C. 3524). The products covered by the Declaration were the subject of reciprocal duty elimination negotiations during the Uruguay Round, and the requirements of section 115 of the URAA have been met.
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Accordingly, pursuant to section 111(b) of the URAA, I have determined to proclaim modifications to the tariff categories and rates of duty set forth in the Harmonized Tariff Schedule (HTS), as set forth in Annexes I and II to this proclamation.
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Section 103(a) of the Trade Preferences Extension Act of 2015 (TPEA) (Public Law 114-27) amended section 506B of the Trade Act of 1974 (the “1974 Act”) (19 U.S.C. 2466b) and section 103(b)(1) amended section 112(g) of the African Growth and Opportunity Act (AGOA) (19 U.S.C. 3721(g)), to provide that in the case of a beneficiary sub-Saharan African country, duty-free treatment provided under title V of the 1974 Act shall remain in effect through September 30, 2025.
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Accordingly, pursuant to section 506B of the 1974 Act and section 112(g) of the AGOA, I have determined that general note 16(c) of the HTS is modified by striking “September 30, 2015” and by inserting in lieu thereof “September 30, 2025”.
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Section 103(b)(2) of the TPEA amended section 112(b)(3)(A) of the AGOA (19 U.S.C. 3721(b)(3)(A)) to extend the regional apparel article program and section 103(b)(3) of the TPEA amended section 112(c)(1) of the AGOA (19 U.S.C. 3721(c)(1)) to extend the third-country fabric program through September 30, 2025.
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Accordingly, pursuant to sections 112(b)(3)(A) and 112(c)(1) of the AGOA, I have determined that chapter 98, subchapter XIX, U.S. note 2(b) of the HTS is modified by striking “September 30, 2015” where stated in “through the period October 1, 2014 through September 30, 2015” and in “each 1-year period thereafter through September 30, 2015” and by inserting in lieu thereof “September 30, 2025”.
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Section 104(c) of the TPEA authorizes the President to proclaim modifications that may be necessary to add the special tariff treatment symbol “D” in the “Special” subcolumn of the HTS for each article classified under a heading or subheading with the special tariff treatment symbol “A” or “A*” in the “Special” subcolumn of the HTS.
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Accordingly, pursuant to section 104(c) of the TPEA, I have determined it is necessary to add the special tariff treatment symbol “D” in the HTS as set forth in Annex III to this proclamation.
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Pursuant to sections 501 and 503(a)(1)(B) of the 1974 Act (19 U.S.C. 2461 and 2463(a)(1)(B)), the President may designate certain articles as eligible for preferential tariff treatment under the Generalized System of Preferences (GSP) when imported from a least-developed beneficiary developing country if, after receiving the advice of the United States International Trade Commission (Commission), the President determines that such articles are not import-sensitive in the context of imports from least-developed beneficiary developing countries.
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Pursuant to sections 501, 503(a)(1)(B), and 503(b)(5) of the 1974 Act (19 U.S.C. 2461, 2463(a)(1)(b), and 2463(b)(5)), and after receiving advice from the Commission in accordance with section 503(e) of the 1974 Act (19 U.S.C. 2463(e)), I have determined to designate certain articles as eligible articles when imported from a least-developed beneficiary developing country.
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Pursuant to sections 503(b)(1)(E) and 506A(b)(1) of the 1974 Act (19 U.S.C. 2463(b)(1)(E) and 2466A(b)(1)), the President may designate certain articles as eligible for preferential tariff treatment under the AGOA when the articles are the growth, product, or manufacture of a beneficiary sub-Saharan African country if, after receiving the advice of the Commission, the President determines that such articles are not import-sensitive in the context of imports from beneficiary sub-Saharan African countries.
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Pursuant to sections 503(b)(1)(E) and 506A(b)(1) of the 1974 Act, and after receiving advice from the Commission in accordance with section 503(e) of the 1974 Act, I have determined to designate certain articles as eligible articles when the articles are the growth, product, or manufacture of a beneficiary sub-Saharan African country.
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Pursuant to section 503(c)(1) of the 1974 Act (19 U.S.C. 2463(c)(1)), the President may withdraw, suspend, or limit application of the duty-free treatment accorded to specified articles under the GSP when imported from designated beneficiary developing countries.
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Pursuant to section 503(c)(1) of the 1974 Act, and having considered the factors set forth in sections 501 and 502(c) of the 1974 Act (19 U.S.C. 2462(c)), I have determined to limit the application of duty-free treatment accorded to certain articles from certain beneficiary developing countries.
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Section 503(c)(2)(A) of the 1974 Act (19 U.S.C. 2463(c)(2)(A)) provides that beneficiary developing countries, except those designated as least-developed beneficiary developing countries or beneficiary sub-Saharan African countries as provided in section 503(c)(2)(D) of the 1974 Act (19 U.S.C. 2463(c)(2)(D)), are subject to competitive need limitations on the preferential treatment afforded under the GSP to eligible articles.
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Pursuant to section 503(c)(2)(A) of the 1974 Act, I have determined that in 2015 certain beneficiary developing countries exported eligible articles in quantities exceeding the applicable competitive need limitations, and I therefore terminate the duty-free treatment for such articles from such beneficiary developing countries.
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Section 503(c)(2)(F)(i) of the 1974 Act (19 U.S.C. 2463(c)(2)(F)(i)) provides that the President may disregard the competitive need limitation provided in section 503(c)(2)(A)(i)(II) of the 1974 Act (19 U.S.C. 2463(c)(2)(A)(i)(II)) with respect to any eligible article from any beneficiary developing country if the aggregate appraised value of the imports of such article into the United States during the preceding calendar year does not exceed an amount set forth in section 503(c)(2)(F)(ii) of the 1974 Act (19 U.S.C. 2463(c)(2)(F)(ii)).
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Pursuant to section 503(c)(2)(F)(i) of the 1974 Act, I have determined that the competitive need limitation provided in section 503(c)(2)(A)(i)(II) of the 1974 Act should be disregarded with respect to certain eligible articles from certain beneficiary developing countries.
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Section 503(d)(1) of the 1974 Act (19 U.S.C. 2463(d)(1)) provides that the President may waive the application of the competitive need limitations in section 503(c)(2) of the 1974 Act (19 U.S.C. 2463(c)(2)) with respect to any eligible article from any beneficiary developing country if certain conditions are met.
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Pursuant to section 503(d)(1) of the 1974 Act, I have received the advice of the Commission on whether any industry in the United States is likely to be adversely affected by waivers of the competitive need limitations provided in section 503(c)(2) of the 1974 Act, and I have determined, based on that advice and on the considerations described in sections 501 and 502(c) of the 1974 Act and after giving great weight to the considerations in section 503(d)(2) of the 1974 Act (19 U.S.C. 2463(d)(2)), that such waivers are in the national economic interest of the United States. Accordingly, I have determined that the competitive need limitations of section 503(c)(2) of the 1974 Act should be waived with respect to certain eligible articles from certain beneficiary developing countries.
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Section 604 of the 1974 Act (19 U.S.C. 2483) authorizes the President to embody in the HTS the substance of the relevant provisions of that Act, and of other Acts affecting import treatment, and actions thereunder, including removal, modification, continuance, or imposition of any rate of duty or other import restriction.
NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States of America, including but not limited to section 111(b) of the URAA, section 506B of the 1974 Act, sections 112(g), 112(b)(3)(A), and 112(c)(1) of the AGOA, section 104(c) of the TPEA, and title V and section 604 of the 1974 Act, do proclaim that:
(1) In order to provide for the immediate or staged elimination of duties on the information technology products covered by the Declaration, the HTS is modified as set forth in Annexes I and II to this proclamation;
(2) In order to provide that duty-free treatment provided under the AGOA shall remain in effect through September 30, 2025, general note 16(c) of the HTS is modified by striking “September 30, 2015” and by inserting in lieu thereof “September 30, 2025”;
(3) In order to provide that the regional apparel article program and the third-country fabric program are effective through September 30, 2025, chapter 98, subchapter XIX, U.S. note 2 of the HTS is modified by striking “September 30, 2015” where stated in “through the period October 1, 2014 through September 30, 2015” and in “each 1-year period thereafter through September 30, 2015” and by inserting in lieu thereof “September 30, 2025”;
(4) In order to provide for the addition of the special tariff treatment symbol “D” in the “Special” subcolumn where necessary in the HTS, the HTS is modified as set forth in Annex III to this proclamation;
(5) In order to designate certain articles as eligible articles only when imported from a least-developed beneficiary developing country for purposes of the GSP, the Rates of Duty 1-Special subcolumn for the corresponding HTS subheadings is modified as set forth in Annex IV to this proclamation; 5
(6) In order to designate certain articles as eligible articles only when imported from a beneficiary sub-Saharan African country for purposes of the AGOA, the Rates of Duty 1 Special subcolumn for the corresponding HTS subheadings is modified as set forth in Annex IV to this proclamation;
(7) In order to provide that one or more countries should no longer be treated as beneficiary developing countries with respect to one or more eligible articles for purposes of the GSP, the Rates of Duty 1-Special subcolumn for the corresponding HTS subheadings and general note 4(d) to the HTS are modified as set forth in sections A and B of Annex V to this proclamation;
(8) The modifications to the HTS set forth in Annex V to this proclamation shall be effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after the dates set forth in the relevant sections of Annex V to this proclamation;
(9) The competitive need limitation provided in section 503(c)(2)(A)(i)(II) of the 1974 Act is disregarded with respect to the eligible articles in the HTS subheadings and to the beneficiary developing countries listed in Annex VI to this proclamation, effective July 1, 2016;
(10) A waiver of the application of section 503(c)(2) of the 1974 Act shall apply to the articles in the HTS subheadings and to the beneficiary developing countries set forth in Annex VII to this proclamation, effective July 1, 2016; and
(11) Any provisions of previous proclamations and Executive Orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency.
IN WITNESS WHEREOF, I have hereunto set my hand this thirtieth day of June, in the year of our Lord two thousand sixteen, and of the Independence of the United States of America the two hundred and fortieth.
BARACK OBAMA
Countries agree measures for implementation of Zanzibar Declaration on timber trade
East African member states will establish a Secretariat to oversee the effective implementation of the Zanzibar Declaration and Bi-Lateral Timber Trade Agreements, with Zambia also requesting to become a signatory.
The announcements came following a meeting hosted by the Kenya Forest Service (KFS) and WWF Kenya to build on the commitments made in the Zanzibar Declaration on Illegal Trade in Timber and Forest Products that was finalized and signed in September last year at the XIV World Forestry Congress in Durban, South Africa.
The member states of the Zanzibar Declaration – Kenya, Uganda, Mozambique, Madagascar, and mainland Tanzania and Zanzibar – under the umbrella of Southern African Development Community and the East African Community, last week agreed on key actions.
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Creation of a Secretariat to implement the Declaration more effectively and to manage the day-to-day activities pertaining to implementation.
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Establishment of a Steering Committee (SC) composed of high-level officials with the capacity to ensure political and government buy-in to implement the agreed Declaration actions. The SC will include specialized sub-committees comprised of members with technical knowledge (e.g. forestry, law enforcement, customs) to facilitate implementation of a Regional Action Plan.
“These action points were arrived at after analysing common challenges faced by countries involved in timber trade, looking at current initiatives and deliberating on future actions to be taken,” said Julie Thomson, Head of TRAFFIC’s East Africa Office.
As the host country of this year’s forum, KFS agreed to host the Secretariat for 2016-2017, with TRAFFIC and WWF providing financial and technical support to help finalize the Regional Action Plan.
“The Zanzibar Declaration was a huge step forward in regional efforts to address the illegal timber trade that robs local communities and national governments of significant income each year. Now those commitments are in place, today is the time to turn the Declaration’s words into action,” added Geoffrey Mwanjela, WWF’s Regional Forest Programme Coordinator for Eastern Africa.
The 4th Annual East Africa Timber Trade Stakeholders’ Forum took place last week in Nairobi, Kenya, and was organized by TRAFFIC and WWF.
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tralac’s Daily News Selection
Two profiled trade reports from the USAID Economic Analysis and Data Services:
Trade in the Southern African Customs Union (pdf)
This analytical brief surveys the role trade has played in SACU since 2000, highlighting, in part, each member economy’s performance following the global recession brought about by the 2008 financial crisis. The analysis investigates trade patterns, primarily from 2000 through 2015, in an attempt to understand the evolution of SACU’s relationships with other regional partners. Additionally, the analysis examines the United States’ efforts in promoting trade capacity building in the region as well as the trade relationship between the region and the US. More specifically, the analysis provides an overview of US imports from SACU for goods eligible under the African Growth and Opportunity Act.
Trade in the East African Community (pdf)
Trade assumes a major role in the economies of the EAC member countries. In 2014, trade as a percent of GDP for EAC members ranged from 41 to 50 percent, which is below the average of developing countries in Sub-Saharan Africa at 60%. Yet when trade is examined more closely, exports as a percent of GDP are less significant ranging from 3 to 11 percent across the EAC. For example, Tanzania’s trade as a percent of GDP is 49%, while its exports as a percent of GDP are 8%. Similar to many developing countries, EAC countries import more than they export. Exports from EAC to the rest of the world have more than quadrupled since 2000% and grown by 126% since 2006. According to the IMF's Direction of Trade Statistics, the US imports about $698m from the EAC, whereas the European Union imports $2.72bn. Additionally, about $2.3bn is traded within the EAC.
African tripartite constituents endorse the 'Praia Consensus' (ILO)
A selection of Brexit commentaries:
Four lessons from Brexit and EU fallout for the East African Community (The East African)
Now that the immediate turmoil of Britain’s exit vote from the European Union has somewhat subsided, it is a good time to ask what lessons that vote holds for the East African Community. Four stand out. One, a community must be based on values shared by all. Two, a community won’t endure if it is not built on the consent of the people. Three, integration is fragile and it takes but the opportunism of a few leaders in a member state to wreck it. Four, the youth must be given voice in integration; if not, the future — complete with its uncertainties and challenges — will be shaped by those with the least stake in it, the old. The first, second and fourth are lessons for the Community as a whole and the third, though a lesson for all, is particularly important for Kenya, which has ruined the EAC once before. Let’s flesh out each one of these lessons. [The analyst, Wachira Maina, is a constitutional lawyer] [Collins Odote: Brexit and its implications for EAC integration]
Egypt: Brexiting the economy (Ahram)
COMESA Research Forum to underpin regional integration (COMESA)
The Annual COMESA Research Forum took place in Nairobi, Kenya from 27 June to 1 July. The forum discussed the modalities for the establishment of the COMESA Virtual University. A committee of 22 leading Universities across the 19 COMESA Member States that was formed to discuss modalities of implementing the COMESA Masters Program in regional integration came up with several recommendations that were endorsed by the Forum. Eight research papers were presented at the forum covering: the role of trade facilitating infrastructure in promoting manufacturing exports in the COMESA region; the effect of trade facilitation reforms on export performance of COMESA member states and the nexus between international financial integration and trade in financial services in the COMESA region.
Decisions of the sectoral council of ministers responsible for EAC Affairs and Planning (EAC)
Some of the decisions/directives and recommendations of the 24th Meeting of the Sectoral Council of Ministers Responsible for EAC Affairs and Planning: The Secretariat to i) develop a comprehensive strategic framework with clear timelines on the implementation of the Common Market Protocol Scorecard findings and the Single Customs Territory and report to the 25th Meeting of the Sectoral Council; ii) convene a meeting of Heads of Immigration on harmonization of classification/common procedures and fees for issuance of work permit for citizens of EAC Partner States by September 2016; iii) to urgently convene an Extra-Ordinary Meeting of the Sectoral Council on Trade, Industry, Finance and Investment through video conference, preferably by 11 July, to deliberate on the finalization and preparation for signing the EAC-EU-EPA being proposed to take place on 18th July 2016, on the margins of the United Nations Conference on Trade and Development (UNCTAD) XIV Conference in Nairobi.
East Africa: regional geothermal development (New Times)
The upcoming East African Power Industry Convention in Nairobi will focus on how the region can harness the opportunities presented by geothermal power to enhance access to energy, especially among rural communities. “There is no one-size-fits-all approach to developing geothermal. It’s an amazing source of base load, renewable energy, but we have to take a realistic approach to how it’s developed,” said Amanda Lonsdale, the institutional and commercial development advisor for the East Africa Geothermal Energy Facility. Established by the British Department for International Development, EAGER facilitates the development of geothermal energy for power generation and other uses in Ethiopia, Kenya, Rwanda, Uganda and Tanzania.
South Africa: Risk-averse companies missing out in Francophone Africa (Business Day)
Rwanda and Mauritius are also popular with South Africans, although both are also English-speaking nations. But that leaves just under 20 other relatively unexplored markets. Many of the more recent investors are from non-French jurisdictions — China, Thailand, India, South Korea, Germany, United Arab Emirates and others. English-speaking African countries, including Nigeria, Ghana and Uganda are also active in French-speaking markets. The issues were discussed at a forum in Johannesburg last week. Hosted by the French embassy, it aimed to address some of the myths about doing business in the region, improve the understanding in SA of the Francophone region and encourage more people to learn French as a business tool. [The author: Dianna Games] [SA losing out in Francophone Africa (City Press)]
Kenya: Rotich’s taxes on locally made cars put 10,000 jobs at risk (Business Daily)
Nearly 10,000 vehicle and motorcycle assembly jobs are at risk of disappearing in the wake of the recently introduced excise taxes on locally assembled vehicles, industry officials said. The assemblers said they had already retrenched 415 workers in the first five months of the year in response to a slowdown in business associated with the levies. The Kenya Association of Manufacturers (KAM) said last year’s introduction of a flat excise tax of Sh150,000 and its recent enhancement to 20 per cent of a vehicle’s value have effectively wiped out the tariff and tax incentives that led to the establishment of assembly plants in the 1970s.
Uganda, Tanzania discuss oil pipeline (Daily Monitor)
Ministry of Energy officials from Uganda and Tanzania will pitch camp in Hoima District for two days starting tomorrow to review progress of implementation plan for development of the proposed crude oil export pipeline. The Ugandan team is led by Energy minister Irene Muloni while the Tanzanian team is led by Muloni’s counterpart Prof Sospeter Muhongo. The talks will also have representatives from the three oil companies—Tullow, Total and Cnooc.
Dar port doldrums beckon as logistics firms go elsewhere (IPPMedia)
The port of Dar es Salaam risks handling the lowest number of vessels in its history this year after various cargo management and logistics firms opted to bypass it following Value Added Tax imposition on transit goods. A copy of a document from a multinational cargo and logistic firm said charging the VAT rate of $150 plus per 20 ft would reduce their profit levels. “Let the powers that be know that at the ports of Beira, Walvis Bay, Durban, even in Mombasa right here in East Africa officials do not charge any VAT and if we start talking about VAT of $150 plus per 20 ft, other ports become attractive options by far,” the write up said in part. A meeting planned yesterday in Dar es Salaam to discuss the imposed Value Added tax on transit goods between the Tanzania Revenue Authority and the Tanzania Freight Forwarders Association was called off after Commissioner General Alphayo Kidata sent his juniors to deliberate the meeting.
Why Indian leaders, including Modi, are lining up to visit African countries (The Scroll)
At the same time, India’s development diplomacy for the continent has been through a strategic shift. Exim Bank, for example, is now likely to focus more on service exports, rather than compete with China for infrastructure projects in Africa. The bank is looking to disburse close to Rs 10,000 crore in Africa over the next three years as both commercial and concessional credit. Service exports aim to build on India’s traditional strengths in Africa and will include healthcare, education, and information technology services. Exim inaugurated an office in Cote d’Ivoire during Mukherjee’s visit. The office is expected to widen the bank’s footprint in West Africa. Exim Bank is also looking to sharpen its focus on another area of India’s traditional exports to Africa: project exports.
Netanyahu heads for Africa to find deals (Bloomberg)
Netanyahu left Monday on a five-day tour that also includes Kenya, Ethiopia and Rwanda in the first trip by an Israeli prime minister to sub-Saharan Africa in 29 years. With a delegation of 70 business executives, the African excursion is part of the Israeli leader’s effort to cultivate growth markets while economies languish in the country’s biggest trade partners, the U.S. and European Union. “This has very important implications for diversifying our international alliances and international relations and expanding our powers to Asia, Russia, Latin America, and of course now, the African continent,” Netanyahu told cabinet members on Sunday. Before departing Monday, he called the trip “historic” and added, “Israel is coming back to Africa, big time.”
Venezuela mess prods China to reassess Africa lending spree (Bloomberg)
Facing such pressures, China has begun to demand greater financial transparency and responsibility from recipient nations, said Lin Boqiang, the director of Xiamen University’s energy economics research centre and an adviser to the National Energy Administration of China. The message is that China’s shouldn’t squander the world’s largest stockpile of foreign reserves. "China’s more experienced now," Lin said. "It now considers a risk index when making funding decisions. It’s more careful about the terms of loans, asset evaluation of investment projects, and also political security of the recipient countries, because much uncertainty stems from unstable politics."
Bangladesh: Services Policy Review (UNCTAD)
Lake Victoria Fisheries Organization project in crisis (The Citizen)
East Africa Trade and Investment Hub: June newsletter
Russian business delegation to visit Zimbabwe (The Herald)
Tanzania, Germany trade to reach new heights (Daily News)
Zimbabwe: The (un)necessary case of the import ban, protectionism (The Herald), Beitbridge: Shaken govt claims border riots are political (The Standard)
AUC and FAO determined to promote agricultural mechanization (AU)
Local content policies and programmes: an enabler for development and growth in Africa (Bechtel)
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AUC and FAO determined to promote agricultural mechanization
And gearing towards relegating the hoe to the museum
The African Union Commission in collaboration with the Food and Agriculture Organization, on 30 June 2016 launched a project on Sustainable Agricultural Mechanization in Africa.
This project is in line with the AU’s Africa Agenda 2063; the 2014 AU Malabo Declaration on Agricultural Growth and Transformation and the FAO’s new Strategic Framework of making agriculture, forestry and fisheries more productive and sustainable and also in promoting agricultural and rural development in Africa.
The main objective of the project is to contribute to the intensification of sustainable agricultural mechanization programmes in Africa by engaging stakeholders to take stock of the lessons and experiences derived over the years and most importantly, to discuss the need to support the integration of national and regional policies and strategies.
Officially opening the meeting, H.E Tumusiime Rhoda Peace, AUC Commissioner for Rural Economy and Agriculture represented by Department of Rural Economy and Agriculture acting Director, Dr. Janet Edeme, noted that, “the project will contribute to the development of an African strategy for sustainable agricultural mechanization within the context of the Malabo Declaration. It will enhance the capacity of governments to integrate agricultural mechanization in their policy frameworks. Of significance, it will target women who bear the burden of African agriculture.”
Commissioner Tumusiime expressed hope that the project would help catalyze the intensification of sustainable agricultural mechanization in Africa through stocktaking of the lessons of experience and supporting its integration in national and regional policies and strategies.
Mr. Patrick Kormawa, Sub-regional Coordinator and FAO Representative to the AU and UNECA emphasized that, “the dream to have a hunger-free Africa by 2025 would remain a mirage without mechanization.” He also added that, “African will not feed its people if agricultural value chains do not modernize, enhancing food security and nutrition and creating opportunities for rural youths in agriculture.”
Other speakers during the opening ceremony included; H.E Fatima Haram Acyl, AUC Commissioner for Trade and Industry, represented by Frank Mugyenyi. Commissioner Acyl emphasized on the need to take a value chain approach to agricultural mechanization.
Amb. Lazarous Kapambwe, Special Advisor, Bureau of the AUC Chairperson, highlighted the progress being made in relegating the hand held hoe to the museum, in order to empower farmers, especially women, to use advanced tools for farming; and Dr Adama Coulibaly UNECA Country Director, spoke about the need for agricultural transformation to drive the structural transformation of African economies as well as the importance of technology acquisition and transfer in the mechanization process.
Progress is in sight
Agricultural mechanization plays a key role to Africa’s ambition to end hunger in the continent by 2025 as stated in the Malabo Declaration of 2014. The need for agricultural mechanization offers the ability to perform operations at the right time to maximize production potential; provides multi-functional machinery not only for crop production but also for postharvest operations, transport and infrastructure improvement.
Most significantly, this has to be built along the entire agricultural value chain, private sector driven, and environmentally compatible system which forms part of the project.
Despite the renewed interest in mechanization in Africa, a large proportion of agriculture is still done using human power, with huge productivity, health, social and economic losses. Africa, south of the Sahara has the lowest land productivity in the world, and agricultural mechanization has either stagnated or regressed in most countries. Africa’s average of 13 tractors/100km² of arable land compares unfavourably both with the global average (200/100km2) and with the average for other developing regions such as South Asia (129/100km²).
Mechanization is, however, witnessing resurgence in Africa, especially in African Union Member States. Several countries are also re-engaging in upgrading the level of agricultural mechanization, realizing the potential to address some of the most fundamental farming challenges in a profound and comprehensive manner.
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OECD and FAO see likely end to period of high agricultural prices but urge vigilance
Food demand to rise strongly in coming decade; production gains alone will not suffice to eradicate hunger – action needed
The recent period of high agricultural commodity prices is most likely over, say the OECD and FAO in their latest 10-year Outlook. But the two organisations warn of the need to be vigilant as the probability of a major price swing remains high.
The OECD-FAO Agricultural Outlook 2016-2025, published today, projects inflation-adjusted agricultural commodity prices will remain relatively flat overall in the coming decade. However, livestock prices are expected to rise relative to those for crops.
As incomes improve, especially in emerging economies, demand for meat, fish and poultry will demonstrate strong growth. This creates additional demand for feed, particularly from coarse grains and protein meals, causing their prices to rise prices relative to food staples such as wheat and rice.
Globally, the increased demand for food and feed for a growing and more affluent population is projected to be mostly met through productivity gains. Yield improvements are expected to account for about 80 percent of the increase in crop output.
According to baseline analysis made in the Outlook, under a “business as usual” scenario – in which agricultural productivity grows at the current trend rate and no major action is taken to reduce hunger – projected growth in food availability would result in a reduction in the number of undernourished people in the world from around 800 million now to under 650 million in 2025.
The analysis indicates that in sub-Saharan Africa the rate of undernourishment would decline an estimated 23 to 19 percent – but because of rapid population growth the region would still account for a rising share of the world’s population suffering from hunger.
This implies that without decisive steps to move away from business-as-usual, hunger would not be eradicated by 2030 - the global target recently adopted by the international community - and that decisive action is needed.
Focus on sub-Saharan Africa
This year’s Outlook includes a special focus on the prospects and challenges facing agriculture in sub-Saharan Africa.
The rise of the middle class, rapid urbanisation, as well as increased commercial interest in Africa’s resources and farmland, will all shape the sector’s development. As the region faces rapid population growth, agriculture will continue to be the single largest source of employment for many young people.
The Outlook foresees a further increase of food imports into sub-Saharan Africa, because demand for food is expected to grow at more than 3 percent over the coming decade, while total agricultural production is projected to rise by only 2.6 percent a year, despite improvement in productivity.
Policymakers will need to take steps to further boost productivity, including promoting the faster adoption of technology, improving access to markets, and better integrating smallholder producers into value chains.
Key players dominate food trade
The Agricultural Outlook says that the bulk of all commodity exports will continue to originate in just a few countries.
Imports, however, will be far less concentrated among countries, although China is projected to remain a critical market for some commodities, in particular soybeans. OECD and FAO emphasise the importance of well-functioning markets in enabling food to flow from surplus to deficit regions and improving food security.
At the Outlook’s launch in Rome, OECD Secretary General Angel Gurría said: “Although we are now witnessing a period of lower agricultural prices, we need to remain alert as changes in markets can take place rapidly.The key priority for governments in the current context is to implement policies that will increase agricultural productivity in a coherent and sustainable way. Getting our agricultural policies right is critical to end hunger and undernourishment in the decades to come.”
“Significant production growth is needed to meet the expanding demand for food, feed and raw products for industrial uses, and all of these have to be done in a sustainable way,” said FAO Director-General José Graziano da Silva. “We are optimistic that most of that future demand for agricultural commodities will be mainly met through productivity gains rather than expansion of crop area or livestock herds,” he added.
Other findings from the report include:
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Global agricultural trade is expected to grow by 1.8% per annum in volume during the next ten years, compared to 4.3 percent per year over the past decade.
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Food consumer prices are expected to be less volatile than agricultural producer prices over the coming decade.
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In developing countries, human sugar consumption is expected to rise by 15 percent per capita and that of dairy products by 20 percent over the projection period.
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After stronger gains in recent years, crop production is projected to increase at around 1.5 percent a year globally.
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In South and East Asia, agricultural output is expected to expand by 20 percent over the next decade.
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In Latin America, soybean cultivation is projected to drive most of the estimated 24 percent increase in crop area over the next 10 years.
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Middle-income countries: African tripartite constituents endorse the “Praia Consensus”
The first tripartite meeting on ILO’s strategy for Decent Work in Middle-Income Countries of Africa held from 27-28 June in Praia, Cabo Verde, adopted the pragmatic plan by urging member states, social and development partners as well as regional institutions to support its implementation.
Government, employers’ and workers’ representatives of 15 African countries have called for the speedy implementation of an ILO Strategy entitled “Decent Work in Middle-Income Countries” of Africa.
Following a two-day workshop convened by the ILO Regional Office for Africa in Praia, Cabo Verde, delegates to the meeting adopted a communiqué, asserting that they “further endorse the common implementation principles that must guide the Office’s interventions in Middle-Income Countries”.
The communiqué defined their commitment “to working together to demonstrate that through national commitment and international solidarity we can build a better future and enhance the prospects for prosperity and welfare in Africa”.
“We urge national governments, social partners, regional economic communities, and the international community to contribute to ensuring that this strategy is realized through joint, as well as individual concrete endeavours geared towards promoting job-rich inclusive growth, sustainable enterprises, greater social justice, full respect for the fundamental principles and rights at work, the extension of social protection, and vibrant social dialogue, as well as the effective governance of democratic labour market institutions and the rapid formalization of the informal economy”, the “Praia Consensus” underscored.
Moreover, “we call upon our governments to make Decent Work a central goal of national development plans and strategies”, they added.
Almost half of the 54 African nations have been classified as middle-income countries (MIC) by the World Bank. Yet, the term MIC masks an enormous variety and heterogeneity of country-specific contexts and situations. ILO's contribution to the ongoing debate is the design and promotion of a refined intervention strategy that takes into account the individual context of each Africa middle-income country.
The Prime Minister of Cabo Verde, Ulisses Correia e Silva, who opened the conference, committed to support and implement the strategy at the national level.
A message reinforced by the ILO’s Assistant Director General and Regional Director for Africa, Aeneas Chuma who pinpointed that “a strategy is only as good as its implementation. We need concretely-defined development pathways for middle-income countries” in Africa.
The African tripartite communiqué was officially endorsed by Algeria, Cabo Verde, Cameroon, Côte d’Ivoire, Egypt, Gabon, Kenya, Mauritius, Nigeria, São Tomé and Príncipe, South Africa, Sudan, Swaziland, Tunisia and Zambia in the presence of PM Ulisses Correia e Silva, Aeneas Chuma of the ILO, Ulrika Richardson (UN resident Coordinator – Cabo Verde), Ousseine Diallo, Secretary-General of the Federation of West African Employers’ Association, and Mezhoud Arezki, Secretary-General of the Organisation of African trade Union Unity (OATUU).
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EADS Analytical Briefs: Trade in SACU and the East African Community
Trade in the Southern African Customs Union (SACU)
The Southern African Customs Union (SACU) emerged in its modern form as a result of a June 29, 1910 agreement. It is based on an earlier trade openness agreement established by the 1889 Customs Union Convention between the then British Colony of Cape of Good Hope and the Orange Free State Boer Republic. It is the world’s oldest customs union. The five countries comprising SACU are: Botswana, Lesotho, Namibia, South Africa and Swaziland. All members maintain a common external tariff on all goods imported into the union in addition to sharing a common pool of customs revenues. Moreover, members enjoy duty-free movement of manufactured products, not subject to any quantities restrictions, within the union.
This analytical brief surveys the role trade has played in SACU since 2000, highlighting, in part, each member economy’s performance following the global recession brought about by the 2008 financial crisis. The analysis investigates trade patterns, primarily from 2000 through 2015, in an attempt to understand the evolution of SACU’s relationships with other regional partners. Additionally, the analysis examines the United States’ efforts in promoting trade capacity building in the region as well as the trade relationship between the region and the U.S. More specifically, the analysis provides an overview of U.S. imports from SACU for goods eligible under the African Growth and Opportunity Act (AGOA).
SACU trade with regional and global partners: Exports since 2000
Data from the IMF, Direction of Trade Statistics database reveals a significant increase in the value of exports from SACU since 2000. Exports are broken down by five partner regions: Asia (ASI), the United States (US), the European Union (EU), Sub-Saharan Africa (AFR), and the Rest of the world. ASI and AFR groupings are based on USAID regional groupings. Broken down by destination, total exports steadily increased for each partner region up to the global recession in 2008. Nevertheless, the region recovered fairly rapidly as the total value of exports, expressed in current $US, rebounded to $135 billion by 2011, a 29 percent improvement over 2008 figures. While exports to all the major regions listed increased, the rankings of SACU’s preferred export partners have undergone a major reorganization since 2000. The European Union (EU), which received at least 40 percent of annual SACU exports from 2001 to 2006, experienced the most noticeable change as the proportion of exports destined for its economies decreased to 21 percent by 2014. The proportion of SACU exports destined for Sub-Saharan African economies averaged roughly 12 percent over the same period while the U.S. received, on average, 10 percent of all exports from the region. Asia emerged as the favorite destination from SACU exports as it attracted 45 percent of total exports in 2014. In all, the total value of exports from SACU, in current $US, grew by 262 percent from 2001 to 2014. South Africa alone provided, on average, 92 percent of total SACU exports to the world per year (IMF, Direction of Trade Statistics).
SACU intra-regional trade
South Africa, SACU’s largest economy, exported roughly $ 9.8 billion to the other member countries in 2015. Most of the South African goods traded within SACU borders were: machinery and transport equipment, mainly subcategorized under road motor vehicles and electrical machinery and appliances($ 2.5 billion); manufactured goods classified chiefly by material, iron and steel and other manufactures of metal along with textile yarn and fabrics for the most part, ($ 1.9 billion); minerals fuels, lubricants and related materials, mainly comprised of petroleum and petroleum products ($ 1.6 billion), and food and live animals, mainly fruits and vegetables and cereals and cereal preparations ($ 1.4 billion). South Africa’s exports in 2015 by SACU partner were as follows: Botswana ($ 3.8 billion), Namibia ($ 3.8 billion), and Swaziland ($ 1.2 billion) Lesotho ($ 1 billion) (UN Comtrade).
Namibia’s exports to the other SACU members totaled $ 1.8 billion in 2014, down from 2.6 billion in 2013. In 2014, 43 percent of Namibia’s exports to the other SACU members went to South Africa and 55 percent went to Botswana. Namibia was the only SACU economy for which South Africa was not the biggest export partner in 2014. In 2000, however, South Africa received roughly 98 percent of all SACU exports from Namibia. The value of manufactured goods classified chiefly by material, 99 percent of which is comprised of diamonds, not industrial, not set or strung, exported to Botswana from Namibia rose from $ 99 thousand in 2000 to $ 905 million in 2014 (UN Comtrade).
Botswana exported $ 1.5 billion to the other SACU members in 2014, up from 993 million in 2013. 61 percent of Botswana’s SACU exports went to South Africa and 38 percent to Namibia. Namibia went from receiving 2.7 percent of Botswana’s exports in 2000 to capturing close to 40 percent in 2014. This is due to the considerable increase in the value of manufactured goods classified chiefly by material, also mainly nonindustrial loose diamonds, from $ 485 thousand in 2000 to $ 557 million in 2014 (UN Comtrade).
As for Swaziland, the latest figures from the UN Comtrade database, last reported in 2007, indicate 924 million in total exports to the other SACU members, 96 percent of which went to South Africa. These were mostly perfume materials, toilet and cleansing preparations as well as chemical products and preparations. Lesotho, with SACU exports totaling $ 327 million in 2012, the last year reported, sent 98 percent of its goods to South Africa that year.
US trade relationship with SACU
On 16 July 2008, SACU Trade ministers and the US Trade Representative signed a Trade and Investment Development Cooperation Agreement (TIDCA) after previous Free Trade Agreement (FTA) negotiations between the United and State and SACU were suspended in 2006. According to the US Trade Representative, “divergent views on the scope and level of ambition for a FTA” were to blame. The TIDCA is meant to serve as a vehicle for continued collaboration between the two parties to solidify a foundation for future collaboration, particularly keeping as its long-term goal a future FTA.
US-SACU trade
Total (two-way) trade between the United States and SACU was estimated, in current $US, at $16.3 billion in 2014, a 106 percent increase from 2000. 2014 U.S. imports from SACU were $ 9.5 compared to $ 4.6 billion in 2000. Likewise, U.S. exports to SACU more than doubled, growing from $ 3.3 billion in 2000 to $ 6.8 billion in 2014. About 89 percent of SACU goods destined for the U.S. market in 2014 came from South Africa. South Africa has provided, since 2000, at least 85 percent of the total value of SACU goods sent to the U.S. U.S. imports from SACU in 2014, broken down by member country were: South Africa ($ 8.5 billion), Lesotho ($ 373 million), Botswana ($ 324 million), Namibia ($ 257 million), and Swaziland ($ 86 million) (UN Comtrade).
According to UN Comtrade, the $ 6.8 billion worth of goods exported from the U.S. to SACU in 2014 can be grouped into the following major categories: machinery and transport equipment ($ 3.5 billion), chemicals and related products ($ 822 million) and manufactured goods classified chiefly by material ($ 716 million). U.S. exports of food and live animals totaled $ 187 million in 2014, down 17 percent from 2013. U.S. exports significantly increased to all but one SACU member. Since 2000, U.S. exports grew for Namibia (by 327 percent), Lesotho (by 183 percent), South Africa (by 106 percent), and Botswana (by 68 percent). For Swaziland, conversely, the total value of U.S. exports diminished by 62 percent between 2000 and 2014. This is due to decreases of 5, 89, and 95 percent respectively in the value of U.S. exports of machinery and transport equipment, miscellaneous manufactured articles, and manufactured goods classified chiefly by material to Swaziland over that period.
Trade in the East African Community
The East African Community (EAC) is a vibrant economic community that set ambitious goals for deepening its integration. Three steps toward integration were launched – the customs union (2005), the common market (2010), and the monetary union (2013). Now, the five participating countries of Burundi, Kenya, Rwanda, Tanzania, and Uganda seek to introduce a single currency by 2024. The East African Heads of State view these changes as pivotal towards the ultimate goal of a political federation, under the understanding that it not only engenders the free movement of goods, services, and capital throughout the region, but also improves the welfare of the general population through sustained and inclusive growth.
Additionally, in July 2013, President Barack Obama announced Trade Africa, a new partnership to increase trade within Africa as well as between Africa and global markets. The White House noted: “The EAC is an economic success story, and represents a market with significant opportunity for U.S. exports and investment.” The program initially focused on the EAC and set four goals for this initial phase:
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Double intra-regional trade in the EAC;
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Increase EAC exports to the United States by 40 percent;
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Reduce by 15 percent the average time needed to import or export a container from the ports of Mombasa or Dar es Salaam to land-locked Burundi and Rwanda in the EAC’s interior; and
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Decrease by 30 percent the average time a truck takes to transit selected borders.
This brief examines the EAC’s trade patterns and the United States’ role in promoting EAC trade.
Overview of the East African Community
Trade assumes a major role in the economies of the EAC member countries. In 2014, trade as a percent of GDP for EAC members ranged from 41 to 50 percent, which is below the average of developing countries in Sub-Saharan Africa at 60 percent. Yet when trade is examined more closely, exports as a percent of GDP are less significant ranging from 3 to 11 percent across the EAC. For example, Tanzania’s trade as a percent of GDP is 49 percent, while its exports as a percent of GDP are 8 percent. Similar to many developing countries, EAC countries import more than they export. Exports from EAC to the rest of the world have more than quadrupled since 2000 and grown by 126 percent since 2006. According to the International Monetary Fund’s Direction of Trade Statistics, the U.S. imports about $698 million from the EAC, whereas the European Union (E.U.) imports $2.72 billion. Additionally, about $2.3 billion is traded within the EAC.
The E.U. is one of the largest recipients of goods from the EAC with trade increasing by 65 percent since 2006. Its three largest imports from the EAC are ‘coffee, tea, mate, spices’; ‘live trees, plants, bulbs, cut flowers’; and ‘tobacco’. ‘Coffee, tea, mate, and spices’ is the largest E.U. import from Burundi, Rwanda, and Uganda constituting 86 percent, 48 percent, and 52 percent respectively of each country’s total exports to the E.U. Kenya exports $1.55 billion to the E.U., of which 34 percent is ‘live trees, plants, bulbs, cut flowers’. With this, Kenya accounts for 51 percent of the EAC’s total exports to the E.U. Tanzania’s largest export is tobacco at $219.6 million or 27 percent of its total exports to the E.U.
Trade within the East African Community
According to the IMF Direction of Trade Statistics, trade within the EAC has grown by 135 percent since 2006. Intra-regional exports vary substantially by country. Kenya’s total value of intra-EAC exports is $1.51 billion, while Burundi totals $14.98 million. Additionally, 22.64 percent of Kenya’s total exports are traded within the EAC, while 17.28 percent of Burundi’s total exports are traded intra-regionally. Kenya’s largest exports to the EAC by commodity are cement and petroleum at $75.98 million and $77.34 million respectively. Uganda is the largest importer of these products at about $56 million for each category, while Burundi imports the least. Burundi’s largest import by category from Kenya is mineral or chemical fertilizers at $9.17 million.
Tanzania’s largest intra-regionally traded commodities are cereals/maize as well as wadding, felts, and nonwoven materials, totaling $97.39 million and $63.38 million respectively. The total value of Tanzania’s intra-EAC exports is $317.56 million, of which the commodities mentioned above equal 51 percent. Kenya imports the most cereals/ maize from Tanzania at $94.08 million. It is important to note that the share of Tanzania’s exports going to EAC members is only 7.91 percent, demonstrating that most Tanzanian exports are traded outside the EAC. Meanwhile, Rwanda has the lowest share of exports traded among EAC members at 7.34 percent and Uganda has the largest at 23.67 percent.
Trade with the United States
Since 2006, EAC trade with the U.S. more than doubled. The U.S. not only encourages trade through its trade capacity building, but also through the African Growth and Opportunity Act (AGOA). AGOA offers preferential access to U.S. markets for certain exports from East Africa, such as qualifying apparel and textile articles. All five EAC member countries are eligible for preferences under AGOA. Kenya utilizes AGOA extensively for trade preferences in order to gain access to the U.S. market for its apparel industry. According to UN Comtrade, 74 percent of Kenya’s total exports to the United States were in the apparel industry in 2013 (the most recently available year). AGOA was recently renewed in June of 2015 for another ten years
Since the launch of Trade Africa in 2013, the EAC increased exports to the U.S. by $223 million. Articles of apparel and clothing accessories is the largest broad category, accounting for nearly half of EAC exports to the U.S. This category is predominantly exported by Kenya and Tanzania at $258 million and $11 million respectively. ‘Coffees, tea, mate, and spices’ is also an important category totaling about $87.8 million in exports from the EAC. This category is produced in all five EAC member countries. ‘Coffees, tea, mate, and spices’ totals 89 percent of Burundi’s and 42 percent of Uganda’s total exports to the U.S. ‘Boilers, machinery, and mechanical appliances’ comprise five percent of exports (or $25.2 million) from the EAC to the U.S. and are exported from Kenya, Tanzania, and Uganda. Tanzania’s total exports in this category equal $22.4 million, of which $20 million is comprised of rotary internal combustion piston engines.
According to the World Bank’s World Development Indicators, the time to export in days varies significantly by country. The ‘time to export in days’ indicator is defined as the total number of calendar days that are necessary in order to comply with all procedures required to export goods. The time calculation for a procedure starts from the moment it is initiated and runs until it is completed.
Tanzania takes the shortest time to export at 18 days and also has the lowest cost to export at $1,090 per container. Burundi takes the longest to export at 32 days and trade constitutes the smallest percent of GDP at 41 percent. Its cost to export is also the second highest at $2,905 per container. Rwanda has the highest cost to export at $3,245, but it’s time to export is the average among the EAC members at 26 days. The high cost to export from Burundi and Rwanda is most likely due to the landlocked locations of the countries. Trade as percent of GDP is highest at 50 percent in Kenya.
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COMESA Research Forum to underpin regional integration
The Annual COMESA Research Forum took place in Nairobi, Kenya from 27 June to 1 July 2016 with 13 Member States and 16 leading Universities from the region participating in the one week event.
This was the second Forum organized by the COMESA Secretariat under the African Capacity Building Foundation (ACBF) funded project on enhancing the COMESA capacity on economic and trade policy analysis and research. Its theme was: Trade in Services and Trade Facilitation for Inclusive and Sustainable Industrialization in the COMESA region. The 1st Forum took place in Uganda in August 2015.
The objective of the research forum was to enhance evidence based policy decision making, contribute knowledge and build capacity and involve stakeholder contribution to regional integration. The research initiative is supported by the African Capacity Building Foundation (ACBF).
Researchers, scholars, policy think-tanks and other professionals from Burundi, DR Congo, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Seychelles, Swaziland, Uganda, Zambia and Zimbabwe participated.
The five-day Forum discussed the modalities for the establishment of the COMESA Virtual University. A committee of 22 leading Universities across the 19 COMESA Member States that was formed to discuss modalities of implementing the COMESA Masters Program in regional integration came up with several recommendations that were endorsed by the Forum.
Collaborating Universities
Among them was the development of a syllabus for the Masters Degree program in regional integration. It was proposed that COMESA Secretariat should come up with criteria to determine the minimum requirements for a University to be part of the collaborating Universities for the program’s platform. Kenyatta University of Kenya was proposed to host the platform. The leading 22 Universities will be part of the collaborating universities subject to meeting the minimum criteria requirements.
The development of a Memorandum of Understanding between COMESA and the Host University/the Collaborating Universities would be developed with the launching the program proposed for October 2016 at the COMESA Heads of State Summit in Madagascar.
Eight research papers were presented at the forum covering: the Role of Trade Facilitating Infrastructure in Promoting Manufacturing Exports in the COMESA Region; the effect of Trade Facilitation Reforms on Export Performance of COMESA Member States and the Nexus between International Financial Integration and Trade in Financial Services in COMESA Region.
Others were; Trade in Services and Industrialization: Implications for the performance of the Manufacturing Sector in COMESA and the Movement of Persons in COMESA: An assessment of convergence, differences and regional contrasts.
Notable Speakers
Notable speakers that addressed the Forum included Dr. Francis Mangeni, the Director of Trade and Customs in COMESA, the Director of Internal Trade in Kenya, Dr. Jared Nyaundi, Senior Program Officer, ACBF Dr. Folasade Ayonrinde and Justice Prof. James Otieno Odek of the Court of Appeal of Kenya. Others were Prof. Calestous Juma of Harvard Kennedy School, Mr. Patrick Kanyimbo of the African Development Bank, and Senior Research Fellow in COMESA Mr. Benedict Musengele.
Dr Mangeni stressed the critical role of trade in services which he said contributes about 50% of GDP of most economies in the region. He noted that the outcome of the research forum would contribute substantially to the stated objectives of deepening regional integration.
Dr. Nyaundi said deeper regional integration holds a lot of promise in addressing challenges of individual economies.
“The Forum affords an opportunity to contribute to policy development and interventions on regional integration and trade development,” he said “This is by putting together the distinctive thoughts on how to achieve a more integrated region to enhance economic growth and poverty reduction in Eastern and Southern Africa.”
Dr. Ayonrinde described the theme of the Forum as timely not only for economic integration and industrialization but also in the uncertain global economic space (following the Brexit and the consequences trailing it). She underscored the importance of the theme to the Regional Economic Communities, particularly as it relates to the political and economic benefits therefrom.
Prof. Odek pointed out that the region should not separate trade in services from the movement of persons since services contributed more to GDP than trade in goods.
Prof. Juma gave a key note address on the role of research in economic transformation in Africa. He said that adopting existing technology to new applications was the key towards transforming Africa.
“This calls for a strong capacity in basic research in order to effectively domesticate the existing technologies,” he said. “The potential to transform African economies lay in the informal sector, start-ups and iHubs. This potential could be maximized through identifying their needs and upgrading their operations using existing technologies.”
Further, he said there was need to redesign the agricultural education system and have agricultural oriented universities decentralized so as to offer training and extension services to the farmers in close proximity in order to reverse the fact that Africa imports 83% of its food despite having 63% of the global arable land.
Mr. Kanyimbo highlighted five priority projects (Hi-5s) for Africa that includes energy development, agriculture, infrastructure, industry and jobs creation. He said the financing of the projects was as follows; Light up & power Africa (USD12bn) Feed Africa (USD24bn) Integrate Africa (US$ 1.2 bn) Industrialize Africa (USD1.2bn) and Improve People’s life (USD1.3bn).
Mr. Musengele emphasized the critical role played by evidence-based research in regional integration and the significant impact the ACBF funded project has had in COMESA. He informed the Forum that the COMESA-ACBF project grant was for USD 3 million for a period of four years and was scheduled to close by 31 March 2017.