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tralac’s Daily News Selection
The selection: Monday, 25 April 2016
This week:
At the WTO: Malawi's Trade Policy Review, 27/29 April
In Dar: the Russian-African Business Forum
In Dakar: trade and development finance top ACP Ministers’ agenda
AGOA mid-term review: update (AU)
The 2016 AGOA Mid-Term Review, organised by the AU Mission to the US, was mainly focused on the effective implementation of AGOA, the development of strategies for its utilization, and the importance of sustained capacity building for eligible countries. It served also as a platform to efficiently prepare for the forthcoming AGOA Forum, which will take place in Washington, DC this year. In her opening remarks, the Commissioner for Trade and Industry emphasized the importance of focusing vigorously on the implementation of AGOA following its reauthorization in order to achieve maximum results.
One Stop Border Post Sourcebook: updated edition (COMESA)
The second edition of the One Stop Border Post Sourcebook is set to be released following the conclusion of a stakeholder’s review exercise. The Sourcebook is an operational guide on the OSBP concept and includes the legal and regulatory frameworks, simplification and harmonization of border procedures, physical facilities and the use of information and communication technologies. During the review workshop held last month in Addis Ababa, the participants discussed on how to use the Sourcebook to operationalize OSBPs and shared experience and lessons learned. They also addressed the role of RECs, development partners and international organizations in the promotion of the OSBP concept and the approach to regularly update the sourcebook. The forum also underscored the need to build a community of practice in developing policies, rules, regulations, standards, and procedures can participate, probably on a web-based platform which, if properly structured, could become a vehicle for updating the Sourcebook.
This weekend's Northern Corridor Integration Projects summit in review: Regional leaders call for faster implementation of EAC projects (New Times), Uganda president Museveni’s oil polygamy and the East African pipeline race (M&G Africa), Tanzania-Rwanda railway line on track, says official (New Times)
How the oil pipeline deal slipped out of Kenya's hands (Daily Monitor)
Kenya's President Uhuru Kenyatta is usually a very jolly man. But at the 13th Northern Corridor Infrastructure Summit held at the weekend in Munyonyo, Kampala, he appeared to be the opposite of his usual self. Days to the summit, it had been concluded, and perhaps he had even been briefed early enough, that Uganda had chosen the southern route through Tanzania for the proposed multi-billion dollar crude oil export pipeline. With an election not so far away, according to insider accounts, Mr Kenyatta had hoped for his country to snap up the deal via the Northern route to the Lamu Port on the Indian Ocean. The project commencing in a pre-election year meant investments, jobs and other associated benefits--which undoubtedly would go to his government's credit. Ugandan technocrats, however, knew clearly and very early enough, after several feasibility studies, that nothing worked in Kenya's favour.
Oil pipeline 'ready June 2020' (Tanzania Daily News)
Construction of the 1403 km pipeline to transport crude oil from Hoima in Uganda to Tanga Port in Tanzania is expected to be completed by June 2020, the Minister for Energy and Minerals, Professor Sospeter Muhongo, announced. Implementation plan for the $4bn pipeline will be up for discussion next Friday in Tanzania where the Ugandan Minister for Energy and Minerals, Ms Irene Muloni, will lead a delegation from Kampala.
Formative evaluation of TMEA projects on non-tariff barriers to trade (TradeMark East Africa)
Detailed recommendations are set out in Chapter 4 and a summary of key recommendations and relevant action points is provided at the end of this executive summary. These include, inter alia, accelerating and augmenting awareness raising activities to reach more beneficiaries; supporting studies to build the evidence base for NTB specific costs and benefits and assessing the impact on gender; strengthening the ability and willingness of stakeholders to strategically Prioritize removal of certain NTBs; linking regional and national online reporting systems; and promoting lesson sharing across the region. [Infographic]
Establishment of a navigational Line between Lake Victoria and the Mediterranean: feasibility study EOI (AfDB)
The principal objectives of this project are to develop sustainable transport linkage between the Nile Basin countries, namely Burundi, DRC, Kenya, Rwanda, Tanzania, Uganda, South Sudan, Sudan and Egypt. This will help promote economic integration among the Nile Basin countries through trade movements, and cheaper and cleaner transport means for goods and people, and ultimately build a development corridor on the Nile River. The project includes the following components:
China’s CHEC involved in investment of $1bn in the new port of Maputo (MacauHub)
An international consortium, which includes the port company China Harbour Engineering Co, is projecting an investment of $1bn in a new port in Maputo province, to serve Mozambique and neighbouring countries, including South Africa. The project for the deep water port of Techobanine in Matutuíne district, southern Maputo province, is being promoted by a consortium led by Mozambican company Bela Vista Holdings (BVH) that in addition to CHEC, inckudes South African public rail company Transnet, according to weekly newspaper Savana. Mozambique and Botswana initially agreed to this project in 2010.
Central Africa: EU, UNDP discuss challenges and priorities for regional action (UNDP)
The participants in the policy dialogue discussed a series of recommendations which aim at encouraged and enhanced ownership by the Central Africa region to advance development, ensure stability and peace, and greater citizens’ voice and participation. “Both ECCAS and CEMAC are important long-term partners of the EU,” said Carla MONTESI, European Commission Director for West and Central Africa.
Lesotho: Fitch downgrades Lesotho to 'B+', outlook stable (Reuters)
The recent SADC commission of enquiry report on its investigation into the death of a former army general highlights the institutional weaknesses. Fitch does not expect meaningful improvement in the political environment in the short-term. Fitch estimates continued weak real GDP growth in 2015 and 2016 due to ongoing political tensions, a drop in SACU revenues and a recent drought. The political tension has hit investment, consumption and confidence, affecting the implementation of the National Strategic Development Plan (NSDP). Fitch forecasts GDP growth of 2.8% in 2016 up slightly from 2.7% in 2015, before increasing to 4% by 2017 as new mining production comes on stream and initial work on phase II of the Lesotho Highlands Water Project (LHWP) boosts the construction industry. Donor relations are becoming increasingly strained.
Kenya reviews tea taxes to boost main foreign exchange earner (The East African)
Kenya is reviewing taxes and levies on tea production after industry executives and farmers said the charges were putting them at a competitive disadvantage. Producers of Kenya's No. 1 export earner complain about a 1 per cent levy on tea sold at a weekly auction in Mombasa and a 16 per cent value added tax on tea processed and consumed locally. A Kenyan department of agriculture team is reviewing taxes and levies, the department's principal secretary Richard Lesiyampe said, adding a report was due out shortly. "It will really help us to see what kind of levies, what kind of licences and fees that we can indeed waive," he said.
Integrating small cocoa farmers into the global value chain (UNCTAD)
This report examines consolidation patterns in the cocoa industry and their potential impacts on stakeholders along the value chain, in particular small cocoa farmers who constitute the backbone of cocoa production worldwide. It also discusses these farmers’ integration into world cocoa markets, highlighting some critical issues they face. It also also offers some policy recommendations which may help governments, the private sector, the international community and producers to foster the development of a sustainable cocoa economy by empowering farmers, consonant with the Global Cocoa Agenda adopted at the first World Cocoa Conference in Abidjan in 2012.
The recent Dakar workshop on advancing regional agro-food value chains: summaries by AgBiz and Donor Platform
China's Belt and Road Initiative: motives, scope, challenges (The Peterson Institute for International Economics)
The so-called Belt and Road Initiative has generated enthusiasm and high hopes but also skepticism and wariness. And as big as China's ambitions are, many obstacles stand in the way. In this volume of essays, edited by Sean Miner and Simeon Djankov, PIIE experts analyze the initiative's opportunities for China and the world, along with the logistical problems and political, economic, and security implications that have generated concerns.
China’s climate change South-South cooperation to date and future trends (UNDP)
Based on the findings of a global survey and interviews, this pioneering study considers and analyzes the experiences, needs and priorities of China’s partner countries and how China could support other developing countries in the future. Futhermore, this paper offers a number of recommendations for overall principles of China’s climate change South-South cooperation including the following: [The author: Moritz Weigel]
'We did not ban export of Nigeria’s agric products' – EU (Leadership)
Enterprise Mauritius initiates first ever promotion to Australia (GoM)
Egypt targets $5bn in trade with Algeria (StarAfrica)
Opportunities lost as Botswana misses AGOA train (Mmegi)
Africa Energy Resources Atlas: update (COMESA)
ECOWAS nations to get 2GW Green Energy corridors (CPAfrica)
SADC harmonized consumer price indices, February 2016
Ethiopia's trade regulatory system: workshop summary
New TAZARA boss pledges to tackle salary delays (Tanzania Daily News)
Mozambique unrest ‘a threat’ to Malawi business (Club of Mozambique)
Press briefing by African Finance Ministers: statements by Mr Mahamat Alamine Bourma Treye (Chad), Mr Martin Dlamini (Swaziland), Madame Rosine Coulibaly (Burkina Faso) Mr Mohamed Ibrahim (Somalia)
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Record support for advancing Paris Climate Agreement entry into force
In an extraordinary show of support for the Paris Climate Change Agreement adopted last December, 175 Parties (174 countries and the European Union) signed up to it at a ceremony at UN Headquarters on 22 April 2016 that far exceeded the historical record for first-day signatures to an international agreement.
The ceremony, held the first day the Paris Agreement was open for signature, marked the initial step toward ensuring the agreement enters into force. The agreement can enter into force 30 days after 55 Parties accounting for 55 per cent of global emissions deposit their instruments of ratification.
“The world will have met the requirement needed for the Paris Agreement to enter into force,” said United Nations Secretary-General Ban Ki-moon, “if all 175 Parties that have signed today take the next step at the national level and join the Agreement.”
Fifteen countries submitted their ratifications during the signing ceremony, including small island developing countries that are on the frontlines of climate impacts. (These countries included the Marshall Islands, Nauru, Palau, Somalia, State of Palestine, Barbados, Belize, Fiji, Grenada, Saint Kitts & Nevis, Samoa, Tuvalu, Maldives, Saint Lucia, and Mauritius).
Several countries announced plans to join the agreement in 2016, including Australia, Argentina, Cameroon, Canada, China, France, Mali, Mexico, Philippines, and the United States. Other countries, including Brazil, the European Union, and the Russian Federation, pledged to swiftly work to complete the necessary steps for joining the agreement.
“I am very pleased to see so much support and political momentum to move the Agreement forward,” said the Secretary-General. “The spirit of multilateralism is strong.”
He added that the participation by so many countries today, and the attendance by 55 world leaders, along with leaders from civil society and the private sector, leaves no doubt that the world is determined to take climate action.
French President François Hollande, who hosted the Paris climate conference, said his country would take the lead to set a price on carbon.
There was strong business engagement at the Signature Ceremony, and United Nations Global Compact Executive Director Lise Kingo called on companies around the world to set an internal carbon price at a minimum of $100 per metric ton over time.
“The Paris Agreement sends a clear signal that business and investors must put climate at the heart of decision-making,” said Ms. Kingo. “We believe that setting a $100 internal price on carbon is one of the most effective ways to drive climate deep into corporate strategy and investment. While leading companies have taken steps to price carbon, we need to see an ascent in ambition and price across the board.”
Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), said: “Today is a remarkable, record-breaking day in the history of international cooperation on climate change and a sustainable future for billions of people alive today and those to come.”
Figueres added, “The urgency now is to implement the Paris Agreement’s visionary pathways at a speed and scale that can deliver the next crucial steps; namely a swift peaking of global emissions, a climate neutral world in the second half of the century and the building of resilient countries and communities for every man, woman and child.”
The Paris Agreement marked a watershed moment in taking action on climate change. After years of negotiation, countries agreed to limit global temperature rise to well below 2 degrees Celsius, while pursuing efforts to keep temperature rise to 1.5 degrees.
Even as the agreement was adopted, countries recognized that present pledges to reduce emissions were still insufficient to reach these goals. The Paris Agreement mandates regular meetings every five years, starting in 2018, to review progress, and to consider whether it is necessary to increase ambition.
‘We are in a race against time,’ says Ban, as leaders sign landmark Paris climate accord
With their signatures of the landmark Paris climate accord, “governments made a covenant with the future,” Secretary-General Ban Ki-moon said at the end of a United Nations ceremony that saw the largest single-day turn-out for such an event, and which puts the world on a path towards low-carbon growth and a more sustainable future.
Yet, while Friday’s signing is a “vote of confidence” in a new approach to climate change, it is imperative that the strong political momentum continues to grow, the UN chief stressed, in concluding remarks to the day-long Ceremony for the Paris Agreement.
Indeed, if all of the countries signing on Friday joined the Paris Agreement at the national level, the world will have met the legal requirement for the Agreement to enter into force – 55 countries accounting for 55 per cent of global greenhouse emissions. In particular, he was pleased to hear several large emitter countries announce that they will ratify in 2016.
“I encourage all countries to raise their level of ambition,” Mr. Ban said. “I urge world leaders to continue to provide direct political oversight and guidance. And I will look to civil society and the world’s young people to hold Governments to account for the promises they made today,” he added.
While it has been a long journey to get to the present moment, the UN chief stressed that a long journey also awaits Member States.
“When I look out at the horizon, I see, more clearly than ever, the outlines of a new and better world,” the UN chief said.
In that regard, Mr. Ban reminded Member States that the 2030 Agenda for Sustainable Development is a “major step forward” for people and the planet.
In addition, the World Humanitarian Summit he will be convening in Istanbul on 23 and 24 May will be a “critical opportunity” to enhance support to the most vulnerable and reaffirm “our common humanity,” Mr. Ban said.
“Let us continue to build on the historic progress of today – and move swiftly, with courage and determination, to usher in the new era we know can be ours,” he concluded.
The ceremony was opened this morning by a brass quintet from the Juilliard School in New York, which played Spring from Vivaldi’s Four Seasons.
Mr. Ban also introduced Getrude Clement, 16-year-old radio reporter from Tanzania and a UN Children’s Fund (UNICEF) youth climate mapper, who focused on why climate action is crucial for children. They, she said, would feel its effects most acutely. “We expect action, action on a big scale, and we expect action today, not tomorrow,” she emphasized. “The future is ours, and the future is bright.”
In his remarks, the UN chief also underscored that while it is good news that States are breaking records at the UN – records are also being broken outside.
“Record global temperatures. Record ice loss. Record carbon levels in the atmosphere. We are in a race against time,” Mr. Ban stressed.
Indeed, he emphasized that the window for keeping global temperate rise well below two degrees Celsius – let alone 1.5 degrees – is “rapidly closing.”
“The era of consumption without consequences is over. We must intensify efforts to decarbonize our economies. And we must support developing countries in making this transition. The poor and most vulnerable must not suffer further from a problem they did not create,” the Secretary-General said.
In that vein, the UN chief highlighted that climate action is essential to achieving the Sustainable Development Goals.
“Today is a day that I have worked toward since day one as Secretary-General of the United Nations and declared climate change to be my top priority. Today you are signing a new covenant with the future,” he said.
The covenant must amount to “more than promises,” Mr. Ban stressed, and find expression in actions taken today on behalf of the current generation and all future generations.
“It must find expression in actions we take today on behalf of this generation and all future generations – actions that reduce climate risk and protect communities, and actions that place us on a safer, smarter path,” the Secretary-General said.
Mr. Ban highlighted that participants would be joined at the morning’s events by 197 children, representing the Parties that have adopted the Paris Agreement.
“Of course, they represent more than this. These young people are our future. Our covenant is with them,” he said.
“Today is a day for our children and grandchildren and all generations to come. Together, let us turn the aspirations of Paris into action. As you show by the very act of signing today, the power to build a better world is in your hands,” Mr. Ban concluded.
Also speaking at the opening ceremony was General Assembly President Mogens Lykketoft, who congratulated Member States, civil society and business leaders for “keeping the pressure on” and taking initiatives to “keep the momentum going.
“This is a moment of great hope,” Mr. Lykketoft stressed.
“We must raise the level of ambition even further. We must take urgent and bold steps to make this transformation happen,” he added.
Friday’s event coincides with International Mother Earth Day, and in his message on the Day, Mr. Ban said that the Paris accord, in conjunction with the 2030 Agenda for Sustainable Development, holds the power to transform our world.
The Paris Agreement was adopted by all 196 Parties to the UN Framework Convention on Climate Change (UNFCCC) at the UN Climate Change Conference in Paris on 12 December 2015, widely known as COP 21. In the Agreement, all countries agreed to work to limit global temperature rise to well below 2 degrees Celsius, and to strive for 1.5 degrees Celsius.
François Hollande, President of France, host of COP 21, recalled the spirit of solidarity expressed at the conference and stressed that the terrorist attacks on Paris had been the backdrop to the Agreement. World leaders had nevertheless demonstrated their ability to come together with a sense of partnership and responsibility to ensure that an agreement would be the fruit of the Paris meeting, as a symbolic act for the rest of the world.
Never in the history of the United Nations had it been possible to bring together 170 countries to sign an agreement, all together, on one day, he noted, emphasizing that there is no turning back now. The world must accelerate action to implement low-carbon policies.
Noting that some $100 billion is needed between now and 2020, he said every country must set an example, particularly developed countries, by stepping up contributions for combating climate change. “It is not just a question of States taking action, the entire world must come together,” he stressed. “Everyone must feel that they have a stake in this.”
Also addressing the ceremony, Academy Award-winning actor Leonardo DiCaprio said that as a UN Messenger of Peace, he had been travelling all over the world for the last two years, documenting how this crisis is changing the natural balance of our planet. He has seen cities like Beijing choked by industrial pollution; ancient boreal forests in Canada that have been clearcut; rainforests in Indonesia that have been incinerated; and unprecedented droughts in California.
“All that I have seen and learned on this journey has terrified me […] I do not need to throw statistics at you. You know them better than I do, and more importantly, you know what will happen if this scourge is left unchecked,” he told the delegates, adding: “Now think about the shame that each of us will carry when our children and grandchildren look back and realize that we had the means of stopping this devastation, but simply lacked the political will to do so.”
Indeed, Mr. DiCaprio continued, the historic signing of the Paris Agreement is reason for hope, but evidence shows that will not be enough. “Our planet cannot be saved unless we leave fossil fuels in the ground where they belong. An upheaval and massive change is required now – one that leads to a new collective consciousness. A new collective evolution of the human race inspired and enabled by a sense of urgency from all of you,” he said.
So, after 21 years of debates and conferences “it is time to declare no more talk. No more excuses. No more 10-year studies. No more allowing the fossil fuel companies to manipulate and dictate the science and policies that affect our future. This is the only body that can do what is needed. You, sitting in this very hall. The world is now watching. You will either be lauded by future generations, or vilified by them.”
Among the UN officials reacting to Friday’s events, Oh Joon, President of the UN Economic and Social Council (ECOSOC) said: “With today's historic signing of the Paris agreement, there is no going back on our commitment to combat climate change. Now is the time for taking action to shape a sustainable future for all.”
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African officials meet over climate resilient infrastructure
The development of climate resilient infrastructure is now under the scrutiny of African officials as the continent foresees tremendous potential in infrastructure needs over the next decade.
African officials opened on Wednesday a two-day meeting to discuss ways of addressing challenges in the development of climate resilient infrastructure in Africa.
Dubbed the 2nd edition of Africa Climate Resilient Infrastructure Summit (ACRIS II), the meeting kicked off in Ethiopia's capital Addis Ababa.
The summit, which is the second in its kind, aims at addressing the challenge and assisting AU member states in preparing for and implementing measures related to resilient infrastructure in their respective countries as well as developing and strengthening local, regional and international cooperation on the issues.
According to Andrew Dowell, CEO of GRV Global, co-organizer of the event, close to 100 billion U.S. dollars will be required to meet Africa's infrastructure needs over the next decade.
Much of the needed investment is in long-lived infrastructure, such as power stations, roads, reservoirs and irrigation canals, which are vulnerable to changes in climate patters, said the CEO.
Failure to integrate climate change into planning and design of the infrastructure is said to lead to major negative development impacts, such as crop losses, traffic disruptions, reduced power production and higher energy costs.
Dowell underlined the need to have careful planning and designing to overcome the effects of climate change and to end poverty on the continent.
Tumusiime Rhoda Peace, AU Commissioner for Rural Economy and Agriculture, reiterated that climate change has increasingly been affecting key sectors, including infrastructure development in Africa.
"Africa is currently at the stage of building its infrastructure both at the national and regional levels, all are geared towards achieving sustainable future for Arica, she said.
"However, there is growing evidence that climate change poses significant risks to global infrastructure in the future," she said.
The commissioner underlined the need for African countries to mainstream climate change into development policies.
"Addressing the climate change risks and impacts in Africa requires mainstreaming climate change into development policies, which will provide opportunities for designing climate resilient and a low carbon development," she said.
"In the infrastructure sector, climate proofing of current and future systems will provide sustainable and cost effective options in the long run."
"For Africa, we are already experiencing the negative impacts of climate change in key sectors, including but limited to agriculture and food security, water supply, health care, energy and regional security by diversity and many more," said the official.
"In addition, vital infrastructure including power systems, roads, rail and communications buildings and others are increasingly becoming vulnerable to weather events," she added.
The commissioner underlined the importance for Africa to develop and implement coherent strategies and frameworks to ensure investments in infrastructure that are not only economical viable but also climate proof.
Such strategies include integrating climate change policies into planning and implementation process; generating knowledge and information which will be crucial to address uncertainties; promoting innovative and climate financing initiatives as well as mobilizing private sector participation; enhancing technical capacity in member states and regional institutions; and creating awareness among policy makers and other stakeholders especially the private sector, said the commissioner.
The two-day event includes extensive presentations and panel discussions on the different aspects of climate resilience.
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Formative Evaluation of TMEA Projects on Non-Tariff Barriers to Trade
TradeMark East Africa has been supporting the elimination of Non-Tariff Barriers (NTBs) to trade in the East African Community (EAC). NTBs arise when rules or regulations (non-tariff measures) are poorly designed and/or poorly implemented.
NTBs can be intentional, for example, protectionist measures, or unintentional, for example well-intended but poorly applied food safety regulations. NTBs present a serious challenge to trade with an EAC wide cost estimate of NTBs (2010) being approximately US$490 million.
This formative evaluation gauges progress of TMEA’s NTB projects (5 projects at the country level and 1 project at the regional level) in reducing the time taken and costs involved in trading along the key corridors in East Africa. It follows the 5 OECD-DAC evaluation criteria of relevance, effectiveness, efficiency, impact and sustainability and highlights key successes, failures, challenges and lessons learnt since the launch of TMEA’s NTB projects in 2011. This report aims to help inform the design of Phase 2 of TMEA interventions.
The evaluation comprised a detailed desk review of quantitative and qualitative data (see Annex A for documents reviewed) and conducting semi-structured interviews and Focus Group Discussions (FGDs) across all 5 EAC countries. The table summarizes the findings of the formative evaluation overall, as well as for each NTB project. Confidence levels are ‘high’ for the criteria of relevance and sustainability, and ‘medium’ for the criteria of effectiveness, efficiency and impact, based on the available evidence for each criteria.
Overall, the NTB projects are well aligned with EAC and most national priorities; a significant number of NTBs have been identified and removed, though of varying importance; and a number have been reinstated illustrating the importance of adopting a more politically informed approach. There have been reductions in both time taken and costs involved in trading, though gains cannot be attributed to the NTB projects and there have been challenges with the NTB projects reaching a large number of beneficiaries. The NMCs have largely been well integrated into existing institutional structures though rely heavily upon TMEA support and so sustainability remains a key challenge. Overall the projects would benefit from adopting more of a strategic focus on the most problematic NTBs and facilitating locally led change processes for their permanent removal.
Detailed recommendations are set out in Chapter 4 and a summary of key recommendations and relevant action points is provided at the end of this executive summary. These include, inter alia, accelerating and augmenting awareness raising activities to reach more beneficiaries; supporting studies to build the evidence base for NTB specific costs and benefits and assessing the impact on gender; strengthening the ability and willingness of stakeholders to strategically Prioritize removal of certain NTBs; linking regional and national online reporting systems; and promoting lesson sharing across the region.
Summary of Key Project Recommendations and Action Points
Recommendation 1: Accelerate and augment awareness raising activities. More primary beneficiaries need to be informed and reached, through utilizing far reaching communications channels.
Recommendation 2: Strategically prioritise removal of certain NTBs. Political economy determinants of NTBs need to be better understood. Both within and outside of NMCs, adopt a politically informed, problem focused approach to prioritizing the removal of NTBs.
Recommendation 3: Support studies to build the evidence base of NTBs. More evidence is needed on the costs of certain NTBs, as well as gender disaggregated data. This will enable more rigorous impact analysis to be undertaken and gender to be more appropriately integrated within projects.
Recommendation 4: Link regional and national level online reporting systems. Continue to support real-time monitoring of NTBs, improving complaints anonymity and strengthening feedback loops. Incorporating guidance on how to report NTBs in documents already utilised by beneficiaries.
Recommendation 5: Promote lesson sharing. Swap lessons learnt between countries on what works and doesn’t work. Replicate where possible and explore collaboration with other on-going initiatives.
Advancing Trade, Improving Economies
Trade and Markets East Africa (TMEA) is a US$ 560 million multi-donor funded ‘aid for trade’ agency established as a company limited by Guarantee, to support the growth of trade – both regional and international – in East Africa. Established in 2010, TMEA is focused on ensuring gains from trade result in tangible gains for East Africans, in line with the EAC’s Development Strategy.
Theory of Change
TMEA’s work is underpinned by interrelated propositions that guide what we and our partners do. In turn, these propositions are strengthened by knowledge, assumptions, beliefs and hypothesis about how and why actions are expected to trigger intended changes. While propositions do not predict change, they are ‘theories’ of change. At the higher end of the ‘Theory of Change (TOC)’, in the proposition that three key ‘trade competitiveness’ elements contribute to increasing trade.
These elements, which are TMEA’s current strategic objectives are: increased access to physical markets; an enhanced trade environment and improved business competitiveness through working with the private sector.
Evaluation
In 2014, TMEA’s Evaluation Committee that is composed of TMEA and its development partners who have invested in its programme developed a Joint Evaluation Plan for independent formative and summative evaluations across its strategic objective areas, which will also address cross cutting issues; gender, environment and poverty reduction.
The evaluations will generate evidence and learning about what is working across TMEA – and what is not. Learnings will be used to improve our programmes so that resources are better used. TMEA will also use these evaluations to inform investors and stakeholders the achievements and hence promote accountability.
TMEA Results Framework
The results framework is a sub-set of TMEA’s overall monitoring system. It is structured around the objectives and outcomes in the ‘Theory of Change’, or strategy and gives specific indicators and targets.
TMEA aims to have a results framework that aligns to its strategy (theory of change) and aids clear consistent communication; and presents one holistic and clear view of selected results across TMEA.
The TMEA results framework is the accountability tool predominantly used internally to manage performance, as well as to account to investors.
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13th Northern Corridor Integration Projects Summit: Regional leaders call for faster implementation of EAC projects
The Heads of State under the Northern Corridor Integration Projects (NCIP) initiative on Saturday, 23 April 2016 commended ministers for progress to date on NCIP projects and urged faster implementation.
Rwanda, Uganda, Kenya and South Sudan, are the four countries that are part of the initiative.
President Paul Kagame, his counterpart from Kenya- President Uhuru Kenyatta and their host Ugandan President were in Kampala to attend the 13th Summit of the NCIP.
Aggrey Tisa Sabuni, South Sudan’s Presidential Advisor on Economic Affairs, represented President Salva Kirr.
The summit discussed progress on various regional projects including energy, infrastructure, trade, information technology, immigration, tourism as well as defense and security cooperation.
Emphasizing the need to achieve goals set by the summit, President Kagame called for more urgency and faster delivery:
“As we have just heard, we continue to make strides in important initiatives. However, it is also evident that further progress in key areas can be faster. We must maintain the urgency that informed these initiatives in the first place, so that we can achieve the targets we set.” President Kagame said.
A key area highlighted by the Heads of State is power generation and sharing of energy across borders.
“On Power Generation, Transmission and Interconnectivity, the Summit directed Ministers to address the delays in completion of transmission lines, acquisition of land and way leaves which has hindered the commencement of power trade,” reads a communiqué signed by the Presidents.
The leaders also directed that a joint inspection be undertaken on construction of the 220 kV and 400 kV transmission lines to determine the progress, and asked the Ministers to report to the next summit scheduled for Nairobi, Kenya.
Infrastructure Minister James Musoni told The Sunday Times that there was renewed commitment to expedite the process to not only enable easy trade between Rwanda, Kenya and Uganda but the whole region.
“We agreed to have a framework to determine the transportation charges of the power in the lines. Those transportation charges will have a clear regulatory framework so that if a line comes through one country that country cannot decide on its own how much they will charge,” he said.
The regional leaders welcomed the commitment by African Development Bank to finance the feasibility study for the Olwiyo-Juba 400kV transmission line.
On Standard Gauge Railway (SGR) Development, the Presidents commended progress in the construction works of the Mombasa-Nairobi section, saying it’s on course for completion in June 2017.
The Presidents also expressed concern on the cost of air travel in the region, and directed Transport ministers to continue engaging the airline industry and stakeholders to enhance competition.
On Immigration, tourism, trade, labour and services, the Presidents welcomed the adoption of the joint schedule for total liberalisation of free movement of labour and directed the schedule be implemented expeditiously.
The summit was also attended by Debretsion Gebremichael, Ethiopia’s Deputy Prime Minister, Coordinator of Finance and Minister of ICT, Tanzania’s EAC affairs Minister Dr. Augustine P. Mahiga, and Burundi’s Ambassador to Uganda Jean-Bosco Barege.
Others were DRC’s Charge d’Affaires to Uganda Jean Pierre Massala, the Regional Director of the African Development Bank Gabriel Negatu, and Donat Bagula, Executive Secretary of the Northern Corridor Transit and Transport Coordination Authority (NCTTCA).
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Commissioner Acyl participates in the 2016 AGOA Mid-Term Review and in the World Bank/IMF Spring Meetings
The Commissioner for Trade and Industry of the African Union Commission (AUC), H.E. Mrs. Fatima Haram Acyl, participated on April 11-12, 2016 in the annual African Growth Opportunity Act (AGOA) Mid-Term Review, organized by the African Union Mission to the U.S.
The 2016 AGOA Mid-Term Review was mainly focused on the effective implementation of AGOA, the development of strategies for its utilization, and the importance of sustained capacity building for eligible countries. It served also as a platform to efficiently prepare for the forthcoming AGOA Forum, which will take place in Washington, DC this year. In addition to AGOA eligible countries, the meeting saw the participation of the African Union Commission, the United Nations Economic Commission for Africa (UNECA), the African Development Bank and the World Bank. The second day was devoted to consultations with the U.S. side comprising of representatives of the U.S. Government, U.S. Congressional Staff, the US Private Sector, Think Tanks and Civil Society.
In her opening remarks at the Mid-Term Review meeting, the Commissioner for Trade and Industry emphasized the importance of focusing vigorously on the implementation of AGOA following its reauthorization in order to achieve maximum results. Commissioner Acyl indicated that AGOA eligible countries should reflect on their previous performance under the initial 15 years to identify weaknesses, lessons learnt and devise appropriate actions that can be integrated into their national strategies. She also emphasized the importance of taking full cognizance of the latest developments regarding continental initiatives particularly the launch of the Continental Free Trade Area and the need to promote continental interests.
The Mid-Term Review was a timely occasion for the Commissioner to brief the African Union Ambassadors on the transformational vision of the Continent, Agenda 2063, and its 10 year implementation plan as well as on the strategic importance of realizing the Continental Free Trade Area to better advance African economic priorities in a landscape characterized by mega regional trade agreements.
The Ambassadors Group seized the opportunity to thank the Commissioner for Trade and Industry for her invaluable and instrumental role in lobbying for the reauthorization of AGOA.
Commissioner Acyl also addressed the 2nd Annual AGOA Civil Society Organization Network Spring Conference on April 15, 2016 at the World Bank Headquarters during a panel devoted to trade and private sector expansion as a vehicle for economic growth and improved standards of living in Africa with a special focus on Agenda 2063.
Commissioner Acyl further participated in the 2016 World Bank/IMF Spring Meetings with H.E. Mr. Erastus Mwencha, Deputy Chairperson, who led the African Union Commission delegation. A series of meetings were held with the World Bank leadership and senior experts devoted to the strong partnership between the AU and the World Bank and the latter’s support to the continent, particularly to its economic transformation and diversification agenda. In this particular regard, the meetings held with Mr. Makhtar Diop, the World Bank's Vice President for Africa and the Trade and Competitiveness team of the Bank provided important opportunities to examine the ways and means to take this strategic partnership to the next level.
Finally, the Commissioner for Trade and Industry participated in a working session with Ambassador Michael Froman, the US Trade Representative, chaired by the AUC Deputy Chairperson, H.E. Mr. Erastus Mwencha, that was devoted to AGOA’s utilization, Africa global competitiveness, its capacity to take advantage of tariff preferences, the development of sectoral approaches and the role of regional economic communities to enhance AGOA utilization.
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Cocoa industry reform needed to stop farmers from being left behind
Cocoa farmers in some of the world’s poorest countries are scarcely benefitting from a value chain which sees goods made from their crops, such as chocolate and cocoa butter-based cosmetics, sold for a premium in developed economies, a new UNCTAD report has found.
The report, Cocoa industry: Integrating small farmers into the global value chain, says that the lion’s share of the revenues that are generated along the cocoa global value chain accrues to other stakeholders, including manufacturers and retailers, while farmers only receive a very low share. For example, cocoa farmers receive less than 6.6 per cent of the total value added to one ton of cocoa beans that are sold, according to Cocoa Barometer.
As a result, the life of cocoa farmers in key producing countries such as Côte d’Ivoire and Ghana is generally poor, a situation that discourages young people from entering the business. The report says that this undermines the sustainability of the cocoa economy and could threaten it if the issue is not addressed through concerted action. This can partly be addressed, the report says, by higher prices for farmers.
Attempts to boost prices with trade liberalization reforms in the 1980s and 1990s, while certainly increasing the exposure of farmers to the vagaries of international markets, did not produce a significant, if any, increase in the share of world prices of cocoa accruing to them, especially in Côte d’Ivoire, the world’s largest producer of cocoa.
In fact, the report says, reforms led to high market concentration in cocoa markets. Indeed, the complexity of cocoa markets, characterized by the ease of access of transnational corporations to resources, with a key objective of achieving economies of scale, has led to increased vertical and horizontal integration in the industry.
The report estimates that the three biggest cocoa trading and processing companies traded between roughly 50 and 60 per cent of world cocoa production in 2013. In terms of cocoa processing capacities, on average, four transnational corporations controlled more than 60 percent of world cocoa grindings in 2014.
The report examines such consolidation patterns and discusses exactly how to integrate farmers into world cocoa markets. It offers some policy options which may help governments, the private sector, and the international community to foster the development of a sustainable cocoa economy by empowering farmers in line with such international agreements as the Global Cocoa Agenda, adopted at the first World Cocoa Conference in Abidjan, Cote d’Ivoire, in 2012, and the Sustainable Development Goals (SDGs) adopted by the United Nations in 2015.
Recommendations include:
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reinforce competition laws at national, regional and international levels so as to keep cocoa markets competitive
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make cocoa markets more transparent for all players
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facilitate the formation of commercially oriented farmer-based organizations to empower cocoa farmers
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improve farmers' access to finance and price risk management instruments
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promote product differentiation to enable cocoa growers to obtain higher prices
For these policies to be effective, the report concludes, it is critical to develop a multi-stakeholder approach, engaging governments, the private sector, civil society and international organizations, as well as the farmers, in order to tap into the specific comparative advantage of each entity.
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China’s Belt and Road Initiative: Motives, scope, and challenges
For more than 2,000 years, China’s commercial ties with the outside world have been symbolized by the ancient Silk Road, which began as a tortuous trading network of mountain paths and sea routes that provided a lifeline for the Chinese economy.
Now the leadership in Beijing is reviving the concept with an enormously ambitious plan to build and upgrade highways, railways, ports, and other infrastructure throughout Asia and Europe designed to enrich the economies of China and some 60 of its nearby trading partners. The potentially multitrillion dollar scheme, which Beijing calls the Belt and Road Initiative, has generated enthusiasm and high hopes but also skepticism and wariness throughout the region and in capitals across the world.
What are the motivations for China’s oddly and perhaps illogically titled initiative? (The “belt” refers to the land portion of the silk route – the Silk Road Economic Belt – and the “road” refers to the Maritime Silk Road.) Is China’s goal to serve as the altruistic equivalent of the US Marshall Plan, the massive post-World War II reconstruction of Europe by the United States? Or is it a plan to cement Chinese leadership and perhaps even hegemony in competition with the Trans-Pacific Partnership, the recently signed trade pact involving the United States, Japan, and 10 other countries on the Pacific Rim? One conclusion is certain, the world is paying attention when one country embarks on an elaborate effort to dramatically upgrade the infrastructure serving threefourths of the world’s population, increasing their mutual economic dependence on China and each other.
As big as China’s ambitions are, many obstacles stand in the way. If successful, China will be disrupting historical spheres of influence of many countries, most notably India and Russia, which regard the region as their neighborhood just as much as China regards it as its own. The record also suggests that ambitious plans to build infrastructure run into many logistical problems, from cost overruns to “bridges to nowhere” to corruption. If, on the other hand, China treads carefully, heeding warnings from history and the concerns of its neighbors, and transforms its initiative into a participatory exercise rather than a solo act, the whole world can benefit.
In this volume of essays edited by Sean Miner and Simeon Djankov, PIIE experts analyze the Belt and Road Initiative’s prospects, the challenges it poses, and China’s goal of furthering its economic, political, security, and development interests. They draw on lessons from past initiatives by multilateral development banks and the experience of the United States and United Kingdom in undertaking grand infrastructure projects. The authors find that the initiative presents both opportunities and risks for the United States, China’s neighbors, and the rest of the world.
Djankov assesses China’s true motivations behind this grand initiative. Miner analyzes the economic and political implications and the steps China can take to broaden the initiative’s benefits. Edwin Truman argues that China faces challenges in the way it governs the initiative and that it should redefine its role in multilateral development banks. Robert Z. Lawrence and Fredrick Toohey draw on historical examples to show that such initiatives must be complemented with institutional reforms and policies in countries where the projects are located. Otherwise pressure from profit-oriented firms can rapidly lead recipient countries into quicksand. Cullen S. Hendrix looks at the security implications and whether encroaching on India’s borders and Russia’s self-defi ned sphere of infl uence will cause China more harm than good. Finally, Djankov assesses how the initiative may affect the former Soviet Bloc countries, concluding that success will depend on China’s efforts to blend its goals with those of the governments there.
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tralac’s Daily News Selection
The selection: Friday, 22 April 2016
Concluding today, in Gaborone: the ACP-EU Joint Parliamentary Assembly regional meeting. Access the presentations: Boitumelo Sebonego (SADC), Elizabeth Warn (IOM, Pretoria), Timothy Simalenga (CCARDESA)
Related: the ACP-EU Joint Parliamentary Assembly, 31st Session, will take place in Windhoek, 13-15 June.
In Addis, a 'Fridays of the Commission' debate, 13 May: Drivers and constraints to regional integration in Africa (African Union)
Regional organisations play important roles in regional integration in Africa. Yet, there remains a major gap between the ambitious commitments or aspirations and the implementation on the ground. Hence the call to look more carefully into what drives – or constrains – regional integration on the continent and to explore feasible ways to carry the regional integration agenda forward. The meeting of the Fridays of the Commission in Addis Ababa on 13 May 2016 will be dedicated to finding answers to such questions. The meeting comes at an appropriate time:
South Africa: Minister Ebrahim Patel's Economic Development Dept budget vote (GCIS)
I want to focus today on four key elements of our economic strategy, namely competition policy, trade, industrial funding and infrastructure, because our joint efforts in these areas, when they are successful, resonate powerfully with South Africans who are our partners to create jobs in the economy. And they help to achieve the goals set out in the NDP. This morning, I issued a Trade Directive, published today in the Government Gazette that requires ITAC to consider the commitments companies make on investment, jobs and industrial output, when making its findings on tariff increases or rebates of duty. This is done to ensure that companies do not rely simply on tariff protection or rebates but invest heavily on new technologies, training of workers and product innovation to maintain and increase their market share. It is also to ensure that any costs to connected industries are at least accompanied by increases in jobs. This is an example of leveraging more in the society to ensure we achieve the goals of our trade legislation and our national policy objectives.
Nigeria, Kenya and Ethiopia could rival SA’s motor industry (Business Day)
Harmonised regional trade policies and comprehensive national investment strategies could create at least three rivals to SA’s domination of the vehicle-manufacturing industry in sub-Saharan Africa, says a new report. The report, Navigating the African automotive sector, published on Thursday by Deloitte, says Nigeria, Kenya and Ethiopia have the potential to take advantage of a new-vehicle market that some analysts think could grow by nearly 550% in the next 15 years.
Mozambique seeks investments from South Africa (Nacauhub)
The minister, who was speaking at a seminar sponsored by the Mozambican embassy in South Africa, acknowledged that Mozambique faces enormous challenges due to a lack of infrastructure in the transport and communications sector but considered these challenges as “opportunities for investors.” In the next few days Mozambique and South Africa are due to sign a memorandum of understanding for the transport and communications sector.
Why ECOWAS economic integration is failing – NANTS (Daily Trust)
The weak understanding of regional framework, bribery and corruption, delays of transit goods and un-receipted charges are among the reasons why the ECOWAS trade and economic integration protocols fail years after their enactment and adoption, the National Association of Nigerian Traders (NANTS) has said. Secretariat President of the association Barrister Kenneth Ukaoha said this Thursday in Abuja at a two-day Public-Private Sector Dialogue on strengthening Nigeria’s trade support institution themed 'Nigeria/ECOWAS trade and integration process', organised by NANTS, the EU, GIZ and other Nigerian stakeholders. [Ghana cannot sign EPA alone - trade expert (GhanaWeb)]
Regional Ministers adopt plan of action for Dakar-Abidjan Corridor Development
ECOWAS Civil Society Organisations Platform on Transparency and Accountability in Governance: launched in Abuja, ECOWAS media release
Zimbabwe: For or against import restrictions? (Financial Gazette)
As the trade deficit continues to widen, Zimbabwe has retreated to the age-old debate: to ban or not to restrict imports. On the one hand, are those prodding government to protect domestic industries from foreign competition as way of giving them the breathing space needed to recover from nearly two decades of economic turmoil. A section of traders who are making money from imported goods is obviously baying for a free market system in which the State should leave everything to market forces. Consumers, attracted to the relatively lower prices of imported products, are throwing their weight behind the latter. Naturally, economists are torn between the two arguments. [Related, from the Financial Gazette: Shoppers rush to Botswana despite duty surge, 'Panic in government as Chinese loot Zim economy']
The EU’s trade with emerging markets: climbing the value-added chain and growing IP intensity? (ECIPE)
Trade in the EU’s major patent-intensive sectors – chemicals, pharmaceuticals, and motor vehicles – has generally evolved in a positive fashion in the period studied. However, recent years have witnessed a deterioration of EU exports in these sectors. In many instances, these deteriorations are not the result of the EU’s industrial mix. The under-performance in EU exports can be ascribed to local factors that artificially depress EU corporate competitiveness in those markets. In countries like Brazil, India and South Africa, these factors tend to be very strong and show a clear upward potential for the EU in improving the gains it can reap from trade in patent-intensive sectors. As a consequence, EU trade policy should focus on those sectors that show a strong potential export and import performance, but where other factors than economic competitiveness have caused trade under-performance in the past. [The authors: Matthias Bauer, Fredrik Erixon]
MEPs speak out against GMOs in ‘New Alliance’ food strategy for Africa (EurActiv)
A large majority in the European Parliament’s Development committee adopted a resolution on Wednesday, calling on the EU to “tackle all the weaknesses of the NAFSN, […] in order to ensure that [its] actions are compatible with the development policy objectives”. In its draft version, the text even directly advised European countries to “withdraw its support to NAFSN as long as the deficiencies outlined […] are not duly addressed”.
Ed Brown, Zivayi Chiguvare: 'EU-Africa research cooperation to improve energy access in Africa' (The Herald)
Angel Gurría, Thabo Mbeki: joint statement on the fight against illicit financial flows (OECD)
We resolve to ensure that African countries can fully benefit from the ongoing international efforts at improving tax transparency and call upon all African countries to join these efforts. We acknowledge the important role played by the work of the Global Forum on Transparency and Exchange of Information in bringing about financial transparency in tax matters. We encourage all African countries to participate in this work on an equal footing, and to join almost 100 other jurisdictions in signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. In addition, we recognise the importance for all countries to tackle Base Erosion and Profit Shifting (BEPS) and welcome the opening up of the BEPS project to all interested countries. [Related: BEPS, CbC reporting and national statistics - presentation to OECD's Working Party on International Trade in Goods and Trade in Services Statistics]
Thomas Farole: 'Jobs and economic transformation for IDA countries' (World Bank Blogs)
So, how do we move to better and more inclusive jobs (not to mention more of them) in IDA countries? The answer is far from simple. But one thing that is certain is that it needs to involve a process of economic transformation. As shown in Figure 2, the vast majority of jobs in IDA countries are in agriculture – mainly very small scale farming. Increasing earnings (‘better jobs’) starts with raising productivity in agriculture, a process which will eventually release workers into higher value added activities.
Implementing the Sustainable Development Goals: UNGA debate
Christine Kalamwina (Zambia), speaking on behalf of the Group of Landlocked Developing Countries, said the Goals and the Addis Agenda were complementary to the Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014-2024. Landlocked developing countries needed to realize the priorities set out in the Vienna Programme of Action in order to achieve the Goals. With the global development agenda in place, she said, implementation was the catchword of the day. She identified a number of key areas requiring attention so that no one was left behind, such as national level mainstreaming, which would help avert duplication. It was also important for international organizations, the United Nations system, and regional and subregional groups to mainstream the Vienna Programme of Action into their work, thus providing landlocked developing countries with customized support, as well as increased financial and technical assistance. [ECOSOC adopts text affirming commitment to Addis Ababa Action Agenda on Financing for Development]
Why Africa needs green bonds (Africa Economic Brief, AfDB)
In the last four years, about US$2.5bn has been mobilized for development in Africa through the issuance of green bonds. This makes it a parallel option for financing developments in climate change mitigation and adaptation. The mechanism for green bonds which is increasingly incorporating standardization, transparency monitoring and reporting with the participation of responsibility minded investors also makes it attractive for Africa.
Leaders set landmark global goals for pricing carbon pollution (IMF)
Six heads of state and government, two city and state leaders, and the heads of the World Bank Group, the International Monetary Fund and the OECD today agreed on an ambitious global target for putting a price on carbon pollution. The leaders, who are all members of the Carbon Pricing Panel, convened by World Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde, challenged the world to expand carbon pricing to cover 25% of global emissions by 2020 – double the current level – and to achieve 50% coverage within the next decade. [Vision statement by the Carbon Pricing Panel]
Ghana's National Trade Facilitation Committee: update (UNCTAD)
SA government officials receive Special Economic Zone training in China (GCIS)
Bill will give firms operating across SA’s borders access to justice services (Business Day)
South Africa: Trade and Industry Committee welcomes INVESTSA initiative
Three African Presidents appointed to High Level Panel on Water
IGAD to mobilize resources for a regional cancer centre
Skilled Rwandans urged to exploit job opportunities presented by EAC bloc (New Times)
EU importers calls for free trade deal with China (EurActiv)
Kenneth Rogoff: Anti-trade America? (Business Standard)
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President of Gabon: The Paris Agreement is just the start of Africa’s climate quest
Today I will join world leaders in ratifying the historic climate agreement we negotiated in Paris last December. After years of campaigning on this issue, it is with great pleasure that I will sign the Republic of Gabon up to the initiative; but, once the ink dries on that agreement, the real work begins.
One crucial tension at the heart of the COP21 Paris Agreement’s future success may not much feature in these proceedings: how the developing world improves the standard of living for its people totally in contrast to how western nations did through rapid industrialization. Yet it is the crucial challenge for my country and my continent.
Until now, progress towards meaningful action has been slow because powerful leaders in developed countries have feared the cost of reducing their nations’ heavy dependence on burning fossil fuels. Newly emerging economies similarly relied on non-renewable energy sources to achieve astonishing rates of growth and, too often, felt able to wash their hands of responsibility for tackling global pollution.
Finally, in December 2015, we acknowledged the world is at a tipping point where irreparable damage is being done, and we cannot continue this way.
Importantly, the Paris talks also highlighted that developed nations were closing the path to growth that they pursued, expecting the rest of the world to find its own way without reasonable support. Consequently, more advanced economies need to increase their efforts to extend technological and financial assistance to the developing world; this is the price of our shared responsibility.
However, the real solutions will not come solely from the West. Countries like Gabon, the continent of Africa, and the whole global south have an opportunity to lead in this transformation as well.
Climate change is a security threat that Africans have had to deal with all of our lives. In fact, the continent has been dealing with the consequences of changing temperatures for thousands of years. Around 500 B.C. a phase of climate change sparked the mass movement of my people, the Bantu; when hot dry conditions degraded the environment and sparked forest fires, my ancestors were driven from their homeland to travel the length and breadth of Africa. Indeed, even today many of my countrymen can understand the language of our brothers the Zulu, who migrated from Central Africa to South Africa at this time!
As we look to the future, we cannot improve our living standards while simultaneously degrading the natural environment around us. If we do, we will certainly face a similar climate migration, sparking a humanitarian crisis. Africa is going to have to walk a tightrope if we are to achieve sustainable growth.
Across the continent, we must find solutions together. Gabon has been an early advocate for Green policy and south-to-south exchanges. Our first environmental protection laws stretch back to 1993, immediately after the first Rio Summit. Building a ‘Green Gabon’ has always been a central pillar of my government, and in 2014 I introduced a new legal framework that puts environmental protection and sustainable development firmly at the heart of our future economic growth.
Yet we cannot simply stop production of fossil fuels; as President of an oil-producing country, I have great hopes about continuing to responsibly find and develop both oil and gas in the future. But an economy reliant on hydrocarbons is not sustainable and this is why I have gone to great efforts to bring economic diversification, particularly building up the country’s timber, agriculture and ecotourism sectors. Working in this way, over the longer term, we can generate new jobs in dynamic sectors that will spur growth.
Gabon is in a unique position today – we are rich in minerals, oil and gas, and yet our natural environment is still relatively pristine. Our National Climate Change Action Plan has developed an approach to preserve the rain forests that cover 88 percent of our territory and to manage the emissions resulting from our industrial activities.
We know we have to integrate climate sensitivity and responsibility into all of our sectorial development strategies; the result is a low carbon development strategy that can be a blueprint for other nations and bring the high skilled jobs our future will require.
Conserving our natural environment, while not limiting economic opportunities for our people – that is the global challenge today; a challenge that requires new models of doing business, models that we all recognise are necessary, but which many of us still struggle to embrace.
If every country’s climate policy was driven purely by environmental science, we may have no need for international agreements. But this has always been about economics. The processes that advanced most Western economies are the ones now seen to threaten its future. So it is right that they spur more green investment in the global south. But the solutions must come from us, supported by northern economies.
With each new project, we can build our collective knowledge on sustainable development, and ensure we do not repeat the mistakes of the industrialized past.
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OECD Integrity Week: Visit of HE Thabo Mbeki and the High Level Panel on Illicit Financial Flows from Africa
Joint statement on the fight against illicit financial flows
by OECD Secretary-General Angel Gurría and Thabo Mbeki, Chair of the High Level Panel on Illicit Financial Flows from Africa
The issue of illicit financial flows (IFFS) is at the forefront of the international agenda. Both the OECD and the High Level Panel have focused attention on this problem and have identified ways in which to tackle it. In the wake of recent revelations in the media exposing the use of secrecy, shell companies, and offshore accounts for illegal activities, there is an urgent need for the international community to come together, as money-laundering, tax evasion and international bribery which form the bulk of IFFs, affect all countries.
While there has been significant progress in the past few years due to a global crackdown on opacity and secrecy in financial and tax matters, more needs to be done. The Governments of African countries and the rest of the world should come together and strengthen the efforts to foster even greater international cooperation to end the illegal practices which continue to harm all communities.
We resolve to ensure that African countries can fully benefit from the ongoing international efforts at improving tax transparency and call upon all African countries to join these efforts. We acknowledge the important role played by the work of the Global Forum on Transparency and Exchange of Information in bringing about financial transparency in tax matters. We encourage all African countries to participate in this work on an equal footing, and to join almost 100 other jurisdictions in signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
In addition, we recognise the importance for all countries to tackle Base Erosion and Profit Shifting (BEPS) and welcome the opening up of the BEPS project to all interested countries.
Introductory remarks by Angel Gurría, Secretary-General, OECD
It gives me great pleasure to welcome His Excellency Thabo Mbeki back to the OECD, along with colleagues from the High-Level Panel on Illicit Financial Flows from Africa. As you know, this is Integrity Week at the OECD and we are still amidst the aftershock of the Unaoil scandal and the Panama Papers. Your visit, Mr. President, could not be more timely.
Recent events have underscored the urgency with which illicit flows must be tackled
When President Mbeki last visited the OECD two years ago, we spoke at length of the challenges presented by illicit flows for African countries. Of the brake that they put on development and poverty reduction. And of the importance of addressing them if we are serious about enabling African governments to mobilise their own resources for development.
Since then, the Panel released its report, informing successful outcomes in both Addis Ababa, and at the SDGs Summit in New York last September. Congratulations, Mr President.
SDG 16 could not be clearer: the international community has committed itself to reducing illicit flows significantly by 2030, to strengthening the recovery and return or stolen assets, and to combating all forms of organised crime. There are also commitments to address corruption and bribery, and to develop effective and accountable institutions.
The Panama Papers have shone a light on the ongoing risks posed by jurisdictions which do not commit to, and do not effectively implement, international tax transparency and anti-corruption standards. It has also laid bare the role that professional enablers – such as lawyers, accountants, financial institutions, corporate and trust service providers – play in maintaining a shroud of secrecy over illicit activities such as tax evasion, money laundering and corruption.
Mr President: I welcome your statement following the release of the Panama Papers. Together, we must keep up the pressure on those countries that enable financial opacity, or that have laws enabling banking secrecy and the registration of shell companies. As your work has shown, the impact of these practices is felt globally and, quite often, in some of the world’s poorest countries.
Collective action is crucial – for Africa, and for the world
The only real solution to these challenges is to ensure transparency of financial flows and specifically on beneficial ownership. This effort cannot only be led by Africa – it involves each and every member of the OECD too.
In 2014, we released a report on how our member countries are doing in countering illegal flows from developing countries. We measured their performance against international standards on money laundering, tax evasion, bribery and asset recovery.
In the area of tax transparency, there has been significant progress in the past seven years driven by the OECD’s work to establish global standards that ensure government authorities have access to the information they need to detect and investigate tax and other financial crimes.
But while those standards are robust, they are not enough. Without global adoption and effective implementation, they will remain as lifeless as the papers on our shelves.
Taking the next step on tax transparency requires several things:
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First, we need to ensure that all countries and jurisdictions commit to and implement the existing standards without further delay. Just last week, the G20 noted that it will consider defensive measures against non-cooperative jurisdictions if progress is not made.
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Second, we need to get on and tackle the beneficial ownership issue. We are already looking at ways in which the transparency around beneficial ownership can be improved, including a possible standard on automatic exchange of beneficial ownership information.
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Third, we need to address the role of professional enablers, who facilitate tax evasion and other financial crimes. This includes transferring and holding funds offshore through complicated arrangements to mask the beneficial owners of those assets.
The OECD stands ready to support Africa in its fight against illicit flows
The concerns of African countries are very close to our heart. We work very closely with African governments in many ways, for example:
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We are proud to host the Global Forum on Tax Transparency, which now has 21 members from Africa participating on an equal footing. And in 2014, the Global Forum launched its Africa Initiative, recognising the need to allow even more countries to benefit from its work.
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We’re advancing our work on the “supply side” of corruption with partner countries, building on the Anti-Bribery Convention. We are now working with the African Development Bank to develop a publication on Anti-Bribery Policy and Compliance Guidance for African companies.
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We are also encouraging a whole-of-government approach to tackling secrecy. In 2011, the OECD launched the Oslo Dialogue, which brings together senior officials from tax administrations, finance ministries, law enforcement, and other parts of government to fight the scourge of financial crimes.
Finally, I know that President Mbeki and the Panel have an interest in addressing the issue of large multinationals which strip African countries of much needed revenues through artificial arrangements that result in Base Erosion and Profit Shifting (BEPS). Unlike some of the other challenges I’ve discussed, the BEPS challenges are about companies using and abusing legal loopholes to avoid paying tax. But it doesn’t make them any more desirable. That’s why the OECD launched the BEPS Project and has now created an inclusive framework to support implementation and tackle the remaining technical issues. It is open to all countries on an equal footing and will meet for the first time in June. We are also very proud to be working with African countries as they develop tax audit capacity through the Tax Inspectors Without Borders project, in partnership with UNDP.
In short: the OECD is committed to doing its part. I look forward to hearing President Mbeki’s thoughts on these issues and others.
President Mbeki: please keep pushing us to do more for Africa! The floor is yours.
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UN urges action on sustainable development to create pathways for global ‘transformation’
The President of the United Nations General Assembly on 21 April 2016 called on the international community to take action on the new UN sustainable development agenda in order to begin a transformation for the benefit of all people and the planet, or risk failure that will be felt for generations to come.
“The choice is yours,” said General Assembly President Mogens Lykketoft as he opened the High-Level Thematic Debate on Achieving the Sustainable Development Goals at UN Headquarters in New York, which takes place as world leaders are also gathering ahead of tomorrow's signing of the Paris climate accord.
“You, the global political, business and civil society leaders can kick-start [Sustainable Development Goals] SDG implementation. You can catalyse ambitious and immediate actions at all levels. You know how to make this transformation happen,” he added.
Mr. Lykketoft reminded participants that a little more than six months ago, many of them had gathered in the same hall to embrace the 2030 Agenda for Sustainable Development.
“It was a moment of genuine hope in a world beset by crises – hope that was built on in Paris through an incredible breakthrough on climate change,” he said.
The General Assembly President said that together, the two agreements deliver a clear message to the world: that a transformation has begun which will ensure both shared prosperity and the vitality of our planet.
Since making those commitments, world events have underlined even further the need for urgent action, Mr. Lykketoft emphasized.
Violent extremists have destroyed the lives of thousands around the world, while violent conflicts are threatening the lives of millions. In addition, an inadequate response to a global humanitarian and refugee crisis is undermining human rights, global solidarity and the concept of leaving no one behind, he said.
For their part, the agreements, taken together, provide world leaders with a “solid framework” to address the root causes of such crises, the General Assembly President said.
“But this will only happen if they are implemented with urgency; if we build on the foundations laid by the MDGs and if we manage the opportunities before us for the benefit of all,” he stressed.
Over the course of the day, he said that participants would examine five key areas: how countries are responding to the SDGs; how to move money and markets to support the SDGs; how to transition from partnerships for the Millennium Development Goals (MDGs) to partnerships for the SDGs; and how climate action can help deliver on the entire SDGs, and vice-versa.
“Action now can create pathways out of our current crises and begin the transformation that our world desperately needs – a transformation that is good for people and planet; one that creates opportunities for citizens and business; one that advances peace and prosperity,” Mr. Lykketoft said. “But if we fail, the consequences will be felt for generations – centuries.”
Along those lines, UN Deputy Secretary-General Jan Eliasson, who spoke on behalf of Secretary-General Ban Ki-moon, underscored that the fact that today's event was being held on the eve of the signing of the Paris Agreement was an important signal.
“The development and climate agendas are inseparable and mutually reinforcing. One cannot be achieved without the other,” he stressed.
Member States should have a sense of “pride and achievement” for their adoption of the 2030 Agenda this past September, as it is a global blueprint for ending poverty and building a safer and more equitable world.
“It is a universal agenda, one which all countries are to integrate with their national plans and aspirations,” Mr. Eliasson noted. “It enshrines a responsibility to focus on the world's most vulnerable and those affected by protracted conflicts or caught in the nightmares of humanitarian disasters.”
The breadth and depth of the Agenda call for adopting new approaches and “breaking down silos,” Mr. Eliasson said, adding that no one in today's world can solve problems in isolation.
“We need to take an integrated approach to development efforts, connecting them both to humanitarian action and human rights as well as to peaceful societies and well-functioning institutions. The goals must be meaningful on the ground, which means making goals and targets relevant and adapted to national and local situations,” he said.
For that, financing for development will be “critical,” as set out in the Addis Ababa Action Agenda, Mr. Eliasson said.
“Governments are in the drivers' seat. Domestic public finance will be important keys to ownership and sustainability,” he said. “But we must also harness the full power of official development assistance, the Bretton Woods institutions and private-sector financing.”
The UN system had already begun to support countries, both strategically and operationally, to implement the 2030 Agenda. Some 95 UN Country Teams are working with their national counterparts to mainstream the SDGs into national plans, accelerate implementation and provide policy support.
“Just as Governments will need to take a holistic approach, the United Nations is to take a whole-of-system approach, working horizontally and building on the strengths of each institution. Tailored UN responses will be developed to support capacity building, inspire partnerships and improve policy coherence at all levels,” Mr. Eliasson noted.
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Economic and Social Council adopts text affirming commitment to Addis Ababa Action Agenda on Financing for Development
Group urges ‘change of mindset’ to make future outcomes more substantive
Affirming its strong commitment to the full and timely implementation of the 2015 Addis Ababa Action Agenda on financing for development, the Economic and Social Council’s financing for development follow-up forum closed its inaugural session on 20 April 2016 with the consensus adoption of a brief set of intergovernmentally agreed conclusions and recommendations.
By that text, the forum recognized that the Addis Agenda provided a global framework for financing sustainable development and was an integral part of the 2030 Agenda for Sustainable Development, and that it helped to contextualize the 2030 Agenda’s means of implementation targets with concrete policies and actions.
Further by the text, the forum welcomed the proposed three-pronged approach of the 2016 Inter-agency Task Force on Financing for Development report, and looked forward to future reports which contained a discussion of the global context and its implications for the follow-up process, as well as an overview of each chapter of the Addis Agenda.
Speaking after the document’s adoption, the representative of Thailand, on behalf of the “Group of 77” developing countries and China, expressed disappointment that the important mandates of assessing progress, identifying obstacles, addressing new and emerging topics and providing policy recommendations were not reflected in the outcome document.
He said that the Group had hoped for a substantive outcome that reflected elements from all action areas of the Addis Agenda in a balanced manner. The document adopted, however, failed to deliver on such an aspiration. Calling for a “change of mindset”, he stressed that the document adopted this year must not set a precedent for future sessions of the forum.
The representative of the European Union noted that the agreed conclusions were much less ambitious than his delegation would have liked. However, he welcomed the report of the Inter-agency Task Force, which, despite its brevity, was a testimony to what had been agreed in Addis Ababa.
“What is most important in financing for development is our shared commitment to working together,” said Oh Joon (Republic of Korea), President of the Economic and Social Council, in closing remarks. Indeed, that spirit of collaboration and the willingness of States to seek “win-win solutions” were more important than putting words into an outcome document. Without genuine collaboration, neither developed nor developing countries would be able to achieve the 2030 Agenda.
Delegations, civil society and business sector representatives had demonstrated their commitment to the timely and effective implementation of the Addis Agenda, he said, adding that the forum had been the first time the financing for development community had met following the major summits held in 2015. Many constructive ideas had been put forward, including the need to promote policy coherence for sustainable development and concrete and specific measures to further the implementation of the 2030 Agenda.
The forum held three round tables on the following themes: debt and systemic issues; trade, science, technology, innovation and capacity-building; and data, monitoring and follow-up.
In other business, the forum approved a draft procedural report on its first session.
Participating in the general debate were the representatives of Montenegro, Nicaragua, South Africa, Portugal, Spain, Egypt, Ethiopia, Guinea-Bissau, Saint Vincent and the Grenadines (on behalf of the Caribbean Community), Sudan, United Kingdom, Qatar, Jamaica, Canada, Switzerland, Guyana, Myanmar, United States, El Salvador, Australia (also on behalf of Mexico, Indonesia, Republic of Korea and Turkey), Republic of Korea, Republic of Moldova, Russian Federation, Dominican Republic (on behalf of the Community of Latin American and Caribbean States), China and Cuba.
Also speaking were representatives of the International Labour Organization (ILO), United Nations Human Settlements Programme (UN-Habitat), United Nations Children’s Fund (UNICEF), civil society and the business sector.
Closing remarks by H.E. Ambassador Oh Joon, President of ECOSOC
Forum on Financing for Development Follow-up: New York, 20 April 2016
We have now come to the end of the inaugural ECOSOC Forum on Financing for Development follow-up.
First of all, let me express my appreciation to all of you for your active participation in the Forum.
All delegations have demonstrated their commitment to the full and timely implementation of the Addis Ababa Action Agenda. The representatives of major institutional stakeholders reaffirmed their commitment to continuing their collaboration that we have seen in recent years. Non-governmental organizations and the business sector also reminded us of the importance of multistakeholder partnerships.
I also wish to extend my special thanks to all the panelists and moderators who came from all over the world to make their contributions.
And once again, I thank the co-facilitators, the Ambassadors of Benin and Croatia, for their efforts in working out the intergovernmentally agreed conclusions and recommendations.
This inaugural Forum was special in many ways. It was the first time that the FfD community from all sectors met together again after Addis Ababa. It was the first major follow-up event to the three historic global-level agreements we made last year.
Many constructive ideas were put forward over the last three days that can help us realize the ambitious commitments made in Addis. On Monday, we highlighted the need to promote policy coherence for sustainable development and also discussed how to address the humanitarian and development nexus through the interactive dialogue with major institutional stakeholders.
On Tuesday and Wednesday, we discussed concrete and specific measures to address the Addis Agenda and the Means of Implementation of the 2030 Agenda in six thematic round tables, which covered all action areas of the Addis Agenda. We also had an opportunity to take stock of commitments and actions to finance sustainable development. We reviewed initial steps taken by Member States and relevant actors toward the implementation of the Addis Agenda. We discussed future monitoring and followup framework on financing for development.
This is only a snapshot of the rich discussions we had over the last three days. Many more points were made and concrete recommendations were put forward that will help us. We look forward to a more detailed summary of the Forum by the Secretariat, which will be issued in due course.
On a final note, one important lesson I learned while preparing for and conducting the Forum, which I hope other participants share, is that what is most important in financing for development is our shared commitment to working together. Sharing the sense of ownership, the spirit of cooperation, and the willingness to seek win-win solutions are much more important than making the Forum long or short, or putting in or taking out some wordings in the document. It is simple truth but we seem to forget sometimes that without each other’s genuine cooperation, neither developed nor developing countries would be able to achieve effective development cooperation.
Together we can make an important step to build on last year’s global actions and usher in a new era for sustainable development. For this, we must keep our spirit of collaboration alive at all levels.
Thank you.
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Minister Ebrahim Patel: Economic Development Dept Budget Vote 2016/17
Speech by Minister of Economic Development, Ebrahim Patel, at the Budget Vote on Economic Development, 21 April 2016
During 2015, the economy for the first time crossed the R4 trillion GDP mark and total employment levels reached, also for the first time, 16 million jobs.
Economies are about people, not simply numbers and policies. I am therefore today separately releasing the first of a series of Profiles that tell the stories of a number of South Africans who are involved in projects that have been enabled or are supported by government. These include Mike Msizi a shareholder in Tsitsikamma Windfarm, Annemarie Brunswick a pensioner from Tshwane who uses public transport and Grade 11 student Sophy Baloyi who is in a new school that opened last year.
We have also put together an exhibition here at parliament, of local entrepreneurs who have been partnered by government, for MPs and members of the public to visit after the debate today.
You will meet entrepreneurs such as Sibusiso Maphatiane who runs a tooling plant in Gauteng, Meintjie Mouton who manufactures rooibos tea in Citrusdal and Dr Kit Vaughan, an innovator of a state-of-the art breast cancer machine.
I want to focus today on four key elements of our economic strategy, namely competition policy, trade, industrial funding and infrastructure, because our joint efforts in these areas, when they are successful, resonate powerfully with South Africans who are our partners to create jobs in the economy. And they help to achieve the goals set out in the NDP.
First, competition.
To power up the economy, we need improved competition with increased jobs, small business opportunities and industrialisation as the targeted outcomes. In the past year, we focused attention on three competition channels: cartels and abuse of market dominance; regulations of mergers & acquisitions; and competition market inquiries.
Cartels and abuse of market dominance results in high prices to the disadvantage of ordinary citizens and of economic efficiency and they create quasi-monopoly practices in the economy. Over the past twelve months, the competition authorities investigated cartels in a number of industries, including steel, auto components, glass products and in the farm supply-chains. We are taking firm steps to end cartels.
Honourable Members will recall the R1,4 billion fine previously imposed on companies in the construction industry for acting as a cartel and fixing prices. Since then, Government engaged the companies concerned in a broader reparation package to financially compensate the state, transform the sector and sign Integrity Commitments to ensure that there is no collusion or corruption in their dealings with government, with each other and towards other private sector clients. Our actions against cartels have begun to have an impact but more needs to be done.
A recent World Bank study on competition in South Africa noted the following: “In the case of four cartels in maize, wheat, poultry and pharmaceuticals – products which make up 15.6% of the consumption basket of the poorest 10 percent – conservative estimates indicate that around 200 000 people stood to be lifted above the poverty line by tackling cartel overcharges”.
We are confident that because our work on cartels over the past five years has given clarity in the market on what collusion entails and what kind of acts falls within prohibited practices, we can now step up our efforts to the next level in our endeavour to combat corruption, cartels and anti-competitive conduct that raise prices and keep businesses and new entrants out of local markets.
Accordingly, government will tomorrow gazette a Presidential Proclamation that brings into effect certain sections of the Competition Amendment Act, with effect from 1 May 2016, which make it a criminal offence for directors or managers of a firm to collude with their competitors to fix prices, divide markets among themselves or collude in tenders or to acquiesce in collusion and they expose themselves to time in jail if convicted.
Let me turn next to mergers and acquisitions.
The Competition Commission considered 408 company mergers and acquisitions in the past year and of these, 98% were approved. In 35 cases, competition or public interest conditions were set.
Recently, two proposed large mergers in the beverages sector attracted public comment. The first involves the R1,5 trillion global takeover of SAB Miller by AB InBev and the second is a Coca-Cola/SAB Miller merger of three large South African soft-drinks bottlers.
Last Thursday I announced an agreed approach with AB InBev to the competition authorities on the takeover of SAB Miller. Today I am releasing additional details on the agreement as it affects South Africa.
These include the following: AB InBev committed R1 billion to a localisation effort for farmers and other suppliers of inputs. This is the largest financial commitment yet by a company in merger proceedings and is about four times larger than the financial commitments imposed on Walmart by the Competition Appeal Court.
R610 million of this will be used to support the development of 800 new emerging farmers and 20 new commercial farmers to produce more local barley, hops, maize and malt, with the strategic intent to create at least 2 600 new jobs in agriculture. The company is looking to turn South Africa from a net importer of hops from other countries, to a net exporter of hops and value-added malt.
In a ground-breaking commitment on jobs, the company agreed that it will not retrench any worker involuntarily as a result of the merger, now or at any point in future. In addition to this commitment, the company also agreed to maintain their workforce in the beer and cider divisions – roughly 5 900 permanent employees – at current levels for the next five years.
Other terms dealt with economic empowerment, keeping their African HQ in Johannesburg, access for small brewers to fridges and cooler space and promoting alcohol-free and low-alcohol products in the SA market. An Implementation Board will monitor the progress with the R1 billion commitment, with equal representation from the company and government.
This is the most comprehensive agreement of its type yet that has been placed before the competition authorities for consideration. We are still in dispute with Coca-Cola and its partners SAB Miller on the combination of three existing soft-drink bottlers. While we have made progress with some areas of localisation and also on keeping at least 20% of the equity of Appletiser in South African hands, there are still serious challenges. Government is concerned at two critical matters: very substantial job losses that may result from the transaction over the next few years; and practices by Coca-Cola that closes the market to smaller soft-drink producers through refusing access to fridge or cooler space to rival brands.
These competition interventions are not isolated actions but are part of a coherent strategy by government to ensure a better fit between the legitimate interests of shareholders in mergers and acquisitions, and the public interest on jobs, industrialisation, empowerment and small business development. The competition authorities have widened the scope of their examination of potential anti-competitive structures and conduct through the use of market inquiries, looking particularly at the level of concentration or exclusionary conduct at the distribution stage of value-chains, in how cooking and heating gas is distributed to consumers, the costs of private hospitals where medical services are distributed to patients, beverage companies tight control over cooler boxes and fridges in spaza shops and taverns and access to shopping malls for smaller retailers.
The Competition Act has been a cornerstone of our efforts to promote a more inclusive economy. Based on our experience with the Competition Act and court rulings, a number of gaps and weaknesses as well as possible solutions have been identified. This will include changes to the legislation to address matters relating to excessive pricing, abuse of market dominance, guidelines for competition leniency applications and procedures for the work of the competition authorities, including on information claimed as confidential.
We are consulting further within government and with the competition authorities and expect to release details of the proposals for wider public consultations in the course of the year.
Second, trade.
South Africa exported R1 trillion of goods and services last year, equal to 31% of our GDP. Trade policy can play a key role to promote industrialisation, innovation and investment. Our top five export markets are China, the United States, Germany, Namibia and Botswana.
Last year, Africa overtook Asia to become the biggest single regional market for South African manufactured products. We sold just over R300 billion of products and services to the rest of the continent. Our Africa-centred strategy also includes deepening the flow of outward-investment to other African countries. For example, the IDC approved a tin-mining and smelter transaction in the DRC. The supply of construction services and equipment to the mine will come from South Africa, with a value of between $20m and $40 million dollars per annum spent here.
The current top five exports to other countries are platinum, cars, gold, iron-ore and coal. We need to do more to export labour-intensive, manufactured products and move away from being simply a supplier of raw materials. We have made some advances on this issue.
Trade with the rest of the continent is more value-adding and indeed, we sell more manufactured articles, including cars, trucks and construction machinery to our neigbours, creating close to a quarter million jobs in South Africa. I issued regulations last year that addresses the procedures to be followed and the criteria to be considered when evaluating tariff applications.
This morning, I issued a Trade Directive, published today in the Government Gazette that requires ITAC to consider the commitments companies make on investment, jobs and industrial output, when making its findings on tariff increases or rebates of duty.
This is done to ensure that companies do not rely simply on tariff protection or rebates but invest heavily on new technologies, training of workers and product innovation to maintain and increase their market share. It is also to ensure that any costs to connected industries are at least accompanied by increases in jobs. This is an example of leveraging more in the society to ensure we achieve the goals of our trade legislation and our national policy objectives.
In the past 12 months, we reduced tariffs through rebates on duties where it helped to bring down input costs and create local jobs: examples are the fabric used in upholstered furniture, components for electric water meters and panels for flooring systems.
Anti-dumping duties were implemented on cement from Pakistan and wheelbarrows from China. Additional protection was granted primarily to steel products including for steel tubes and pipes.
The steel industry has been through a particularly difficult time, with a big surplus of steel in global markets. This has resulted in fierce price-cutting and pressure on steel-plants to close. In South Africa, we felt the effect of these global storms through a surge of imports. We consulted both primary steel makers and their customers to determine the best way forward.
In the past six months, government introduced tariff support on 8 steel products. Last week ITAC recommended a tariff duty of 10% on two additional steel products: hot rolled coil and certain steel bars and rods. The recommendation is now being processed within government.
In order to stop this facility from being abused, ITAC will be putting measures in place to track prices in the industry and it will review the tariffs annually. The clear understanding between the main steel-maker and government is that they will invest at least R4,6 billion to improve their plant competitiveness, will not close any steel plants and will not cut jobs beyond what had previously been announced.
Third, industrial funding and investment.
Industrial funding is the fuel that drives the expansion of factories, mines, farms, economic infrastructure and tourist facilities.
The Department itself helped to unblock a number of investment projects:
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One example is a local noodle factory who received grant funding to improve their competitiveness and now supplies Massmart.
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A new film studio was supported in Joburg to strengthen the country appeal as a film-making location of choice.
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A tender in the Northern Cape for water pipes was rewritten to ensure tender specifications were aligned with local industrial capacity.
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A fruit canning operation in the Western Cape was supported to obtain electricity during power shortages, which saved their crops and 2000 seasonal jobs.
I have reported on a number of additional examples like these to parliament over the past twelve months. Supporting the efforts of EDD, the IDC itself continues to play a quite extraordinary role as a catalyst for new investment and innovation in the economy.
In the period since 1994, the IDC has invested R166 billion in the economy, with R70 billion of that directed at black-empowered companies. In the past 12 months, preliminary figures show the IDC approved R13,6 billion of new funding and disbursed R11,5 billion to partner companies. These are significant levels of new investment that in turn attracts more private sector capital and in this way the IDC investment will create 12 200 new jobs and save 4 700 jobs.
A particular focus is on the development of black industrialists and female and male youth entrepreneurs. IDC investments include support for a young entrepreneur Masana Makhetha who manufactures and installs ventilation systems in the mines and Manana Bogatsu who is in partnership with a foreign investor to set up a factory to manufacture gas cylinders.
In the next 18 months, 25 factories or investment projects of the IDC will open for business, employing thousands of people, including
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A coal cogen plant in KZN will open May
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A cable manufacturer in Gauteng will open in August
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A new hotel in Limpopo will open in September
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A pet-food factory in the Western Cape will open November
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A car-parts factory in the Eastern Cape will open June 2017
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A wind-farm in the Northern Cape will open October 2017
Four months ago, the IDC signed two important agreements during the Chinese President’s State Visit to South Africa. The first was for a joint Investment Fund with a R10 billion pledge by the China
Construction Bank. The second was an agreement with BAIC (Beijing Automotive International Group) to consider establishing an automobile plant in SA – which if it meets the feasibility study criteria, will be the first new light passenger assembly plant to be built in more than 40 years – with an initial capacity to produce about 50 000 cars, trucks and SUVs.
This Sunday, 24 April, the IDC will sign a Joint Development Agreement in Beijing that earmarks the Eastern Cape as the proposed location for the plant. The IDC and the company are optimistic and hope to finalise the feasibility studies to enable the plant to complete construction by 2018.
There are a few key trends to note about the performance of the economy: Global growth levels remain largely subdued. Over the weekend, the IMF again reduced its forecasts of global and Africa growth. South African growth rates are very modest and below the levels required to achieve our national goals.
Jobs numbers have however, grown in the past calendar year, by some 700 000 new jobs, but there are new pressures particularly in mining and related sectors that are of concern to us. The data gleaned from the CCMA indicates many more companies are considering retrenchments to address the drop in demand for their products. Continuing pressures in the mining sector means we will not see a mineral-led economic recovery. Unemployment numbers remain high with many millions of young people looking for work.
We need a social pact on a package of measures and commitments that we must all make – government, business and workers – to pull the economy through these difficult times.
I have asked the Industrial Development Corporation therefore to adjust its strategy to the new market conditions. The IDC will aim to disburse R96 billion to partner projects over the next five years, with a target of 66 000 new or saved jobs over the next three years. It is also developing support measures to companies in distress due to the drought and these new market conditions.
It will restructure current facilities, where needed, to enable partner companies under pressure to stretch out their repayments periods and will make available fresh capital to modernise and expand company operations and save jobs.
It will partner with the UIF and PIC to make resources available. We estimate the value of these interventions will be about R20 billion over the next few years, with R4,7 billion for immediate intervention funding and R8,9 billion for medium-term funding while loans to the value of R7,1 billion will be restructured.
Fourth, infrastructure.
Complementing our efforts on industrial funding, we are investing heavily in new infrastructure.
Let me share a few figures that sum up how we are improving the lives of ordinary people like Charles Zitha from Soweto and Nomawethu Mvambo from Buffalo City.
We are now investing more than R1 billion per working day in infrastructure
The money helped us to:
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Build 160 new schools
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Build about 100 000 new houses
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Connect 245 000 houses to electricity, equal to 1 000 houses connected every day to the grid, Monday to Friday, 52 weeks a year
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Bring 1 700 megawatts of new electricity onto the national grid, equal to the household needs of Nelson Mandela Bay, Emalahleni, Polokwane, Mangaung, Buffalo City and Rustenburg.
The R1 billion a day enabled us to
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Lay 100 kms of large water pipelines that can convey billions of litres of water a week to communities and businesses
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Build 29 new clinics and one new hospital
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Complete three buildings of Mpumalanga University and new student accommodation for 4 210 student country-wide
We made similar progress with manufacture of buses, taxis and trains; roads that were refurbished, new bus-lanes built and new Wi-Fi sites in urban and rural areas. The direct employment created through infrastructure investment is estimated at 291 000 and with indirect and induced employment, there were 715 000 jobs supported by the state’s infrastructure programme.
The Presidential Infrastructure Coordinating Commission (or PICC) drives and coordinates the public infrastructure programme. EDD support to it in the past year included technical work on legislation to combat cable and metal theft from public infrastructure, unblocking build-projects and addressing funding gaps.
A few days ago, the BRICS New Development Bank approved a loan in record time of R2,6 billion (US$180m) to South Africa to lay transmission lines for the renewable energy plants. I acknowledge the work of the PICC Technical unit and Eskom in making this possible.
New mega-projects that will be brought into construction include the Mzimvubu Dam, two massive bridges as part of the N2 Wildcoast road from East London to eThekwini, the Moloto Road, raising of the ClanWilliam Dam and the large water pipeline from the Mokolo and Crocodile rivers to Lephalale in the Waterberg area.
Concluding
I have shared progress made in the past year with this august House. I also outlined a series of actions we are taking:
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To bring new infrastructure mega-projects into construction.
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To improve the investment and employment impact of trade decisions
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To increase and support productive investment through the IDC
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To strengthen our actions against cartels and large companies who exclude smaller entrepreneurs
They are part of the wider 9-point Plan announced in SONA last year. We are going through tough times in the global economy. We must build on our strengths as South Africans and use the social dialogue experience to forge a strong partnership between business and labour on the shop-floor, use the competitively-priced currency to export more aggressively, claw back our domestic market and improve the quality of life for workers, their families and communities.
Inclusive growth requires firm action against corruption in the public and private sectors and integrity in our dealings in the economy, with state-procurement and in the services that public servants and public representatives render to communities.
Finally, I wish to pay tribute to the memory of the acting Director General of Economic Development, Mr Kumaran Naidoo, who passed away two weeks ago and who was a person of integrity, a pillar of strength and a fine example of what a public servant should be.
Honourable members, it is an election year, yet we still hope we can have a constructive debate today and it is my pleasure therefore to table the Economic Development Budget, covering the Department and its agencies.
Thank you.
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The EU’s trade with emerging markets: climbing the value-added chain and growing IP intensity?
International trade is a powerful force of societal transformation. Trade agreements not only stimulated trade; they have improved the quality and integrity of domestic economic and political institutions. This view on trade as a force of institutional development and societal transformation has been reinforced in the recent decade when the routes to the world market for developing countries have been through global supply and value chains of multinational firms.
In this paper, we examine whether the trade profile of fast-growing emerging economies reflects the broader theory that has underlined thinking about trade: when these countries grow, do they expand their import from developed countries in the direction of high value-added goods in order to get access to technology and knowledge that they cannot produce as efficiently at home?
We find that the EU has seen strong growth in patent-intensive sector exports. Europe’s aggregate trade performance with key emerging economies has confirmed the expectation about the composition trade between an advanced economy and an emerging economy. Accordingly, the EU has by a high degree of certainty been able to climb the value-added chain through trade with emerging economies. However, the pattern of trade is not always as expected, or predicted by theories of comparative advantage. Trade in the EU’s major patent-intensive sectors – chemicals, pharmaceuticals, and motor vehicles – has generally evolved in a positive fashion in the period studied. However, recent years have witnessed a deterioration of EU exports in theses sectors.
In many instances, these deteriorations are not the result of the EU’s industrial mix. The under-performance in EU exports can be ascribed to local factors that artificially depress EU corporate competitiveness in those markets. In countries like Brazil, India and South Africa, these factors tend to be very strong and show a clear upward potential for the EU in improving the gains it can reap from trade in patent-intensive sectors. As a consequence, EU trade policy should focus on those sectors that show a strong potential export and import performance, but where other factors than economic competitiveness have caused trade under-performance in the past.
Introduction
International trade is a powerful force of societal transformation. Time and again through modern history, countries have begun a process of economic development by stepping into the global market for trade and investment. Greater integration with other markets has provided new economic opportunities, both for real business and for policy makers desiring to better domestic policy framework for economic and regulatory policy. Apart from promoting trade, trade agreements have improved the quality and integrity of domestic economic and political institutions, leading to greater economic benefits outside the field of cross-border trade.
The importance of trade for economic development is widely acknowledged, but there has been a wing of the argument that has seen it through the exclusive prism of export. This school of thought – pointing to export powerhouses such as China and, before that, the Asian Tiger economies – has suggested the role of trade for economic development is largely a story about exports, in essence by scaling up competitive production and selling abroad. That view has been powerful in trade politics, but has always been at odds with the economics and real experiences of trade. The process of trade and economic development is dependent on import as much as on export – and importing technology or other competitive input products have been necessary for countries to enable exports, let alone improving the efficiency of production. For economies like Brazil and China, about three quarters of their import are intermediary goods. Similarly, good access to foreign capital and a flow of inward investment have always been critical elements of development, in early stages as well as when countries have moved into middle-income status. Making themselves an attractive destination for investments, aspiring countries have also needed to ensure good conditions for imports.
This view on trade as a force of development and societal transformation has been reinforced in the recent decade when the routes to the world market for developing countries have been through global supply and value chains of multinational firms. The fragmentation of value chains has expanded trade and investment, and made it more important for emerging economies to get their policies to reflect good global economic standards.
In this paper, we aim to discuss the nexus of policy standards and volumes of trade, especially the volumes of imports. A number of countries like the BRICS or MINTS have experienced a decade of very fast economic expansion, manifested in general economic growth as well as in the indicators of economic integration with other parts of the world. The question we want to examine in this paper is whether the trade profile of fast-growing emerging economies reflects the broader theory that has underlined thinking about trade: when these countries grow, do they expand their import from developed countries in the direction of high value-added goods in order to get access to technology and knowledge that they cannot produce as efficiently at home? One can also look at it the other way around: has the growth of emerging markets shifted the export profiles of developed regions to the emerging regions? Does their export growth especially manifest itself in products with a higher share of technology, knowledge and value-added?
Basic trade theory on specialisation prompts the view that there should be a shift in the pattern of exports: an entity like the European Union should have seen a relatively faster expansion of one type of products relative to others in its exports to emerging economies. Related to that is the larger political defence in developed regions in their trade with emerging economies: even if imports from emerging economies have grown faster than exports (leading to a shift in the trade balance), the exports that have grown are goods that generate high value-added growth that in turn can provide for more and higher-paying jobs. In this paper, we also aim to examine this sensible political proposition.
The paper is structured as follows. Chapter 2 gives a long overview of trade and economic expansion in emerging economies, and how they have integrated with the EU, in the past ten years. Chapter 3 analyses headline numbers of trade in the in the “ideas economy”, or trade that usually has a higher value-added content. Chapter 4 dives a bit deeper into general trade data in patent-intensive sectors to analyse whether patent reforms have made an impact on EU exports in its top patent-intensive goods. Chapter 5 provides quantitative analysis to examine how the shifts in the trade patterns between the EU and emerging economies reflects structures of production – and whether trade expansion has happened in those sectors you would expect on the basis of basic trade theory and the popular perception about what trade that should grow in trade relations with emerging economies. The chapter is centred around a shift-share analysis of trade in patent-intensive and less patent-intensive sectors. Importantly, it looks at two periods of trade in order to capture the direction of change in recent years. Chapter 6 concludes the paper.
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Leaders aim to put a price on half of all global carbon emissions
Leaders set landmark global goals for pricing carbon pollution; Call for faster action on carbon pricing to deliver on Paris climate change agreement
Six heads of state and government, two city and state leaders, and the heads of the World Bank Group, the International Monetary Fund and the OECD on 21 April 2016 agreed on an ambitious global target for putting a price on carbon pollution.
The leaders, who are all members of the Carbon Pricing Panel, convened by World Bank Group President Jim Yong Kim and IMF Managing Director Christine Lagarde, challenged the world to expand carbon pricing to cover 25 percent of global emissions by 2020 – double the current level – and to achieve 50 percent coverage within the next decade.
The call, which came on the eve of the signing ceremony in New York of the Paris COP21 Agreement, was made by the Prime Minister of Canada, Justin Trudeau, President of Chile Michelle Bachelet, Prime Minister of the Federal Republic of Ethiopia Hailemariam Dessalegn, President of France François Hollande, Chancellor of the Federal Republic of Germany Angela Merkel, and President of Mexico Enrique Peña Nieto, together with Bank Group President Kim, IMF Managing Director Lagarde, California Governor Edmund G. Brown Jr., Rio de Janeiro Mayor Eduardo Paes and OECD Secretary-General Angel Gurría.
“There is a growing sense of inevitability about putting a price on carbon pollution,” said World Bank Group President Jim Yong Kim. “In order to deliver on the promises of the historic Paris climate agreement, a price on carbon pollution will be essential to help cut emissions and drive investments into innovation and cleaner technologies. Prices for producing renewable energy are falling fast, and putting a price on carbon has the potential to make them even cheaper than fuels that pollute our planet.”
The call to expand carbon pricing was supported by United Nations Secretary-General Ban Ki-moon. “Carbon pricing is an invaluable tool for redirecting investments and transforming markets to build low-carbon, climate-resilient economies that will drive prosperity, strengthen security and improve the health and well-being of billions of people,” he said.
In a joint vision statement released on Thursday, the leaders declared that carbon pricing needs to be implemented faster and further on a global scale to keep to the Paris COP21 commitment of holding the increase in the global average temperature to well below 2°C above pre-industrial levels, and drive efforts to keep the rise to no more than 1.5°C.
“Carbon pricing is the most effective policy for reducing emissions, raises significant revenues, is administratively straightforward, and can have substantial domestic health benefits. It should be front and center as countries move forward on their mitigation pledges for the landmark Paris Agreement,” said IMF Managing Director Lagarde.
The vision statement stresses that putting a price on carbon pollution is one of the most effective policies available for reducing emissions at scale while promoting green growth and creating green jobs.
In support of the global goals in the vision statement, Canada, Chile, Ethiopia, France, Germany, Mexico, California and Rio de Janeiro committed to take specific actions to strengthen and expand carbon pricing mechanisms.
The call by the Carbon Pricing Panel complements the work of the Carbon Pricing Leadership Coalition, which brings together 24 countries and more than 90 global companies and strategic partners to push for action on carbon pricing by collecting and sharing best practices and mobilizing business support.
At present, some 40 countries and 23 cities, states and regions around the world are using carbon pollution pricing schemes, representing about 7 billion tons of carbon dioxide. The schemes, now worth about $50 billion, cover about 12 percent of global emissions, which is a threefold increase over the last decade.
And as Bank Group President Kim noted at a high level assembly on carbon pricing, at the Spring Meetings of the World Bank Group, more action is needed on carbon pricing to help halt global warming and spur more investments into clean technologies.
Speaking at the high level CPLC meeting, the IMF’s Lagarde emphasized the value of cutting emissions.
“If the top 20 emitters in the world were to impose carbon charges that reflect only their domestic and environmental benefits, this would already reduce global emissions by over 10 percent,” she said.
United Nations Secretary-General Ban Ki-Moon, who is expecting a record number of heads of state and government to participate on April 22 in a signing ceremony in New York for the Paris climate agreement said: “We must put a price on pollution and provide incentives to accelerate low carbon pathways. Market prices, market indices, and investment portfolios can no longer continue to ignore the growing cost of unsustainable production and consumption behaviors on the health of our planet.”
Momentum for putting a price on carbon pollution is growing. Some 90 countries included mention of carbon pricing in their national plans, called the Nationally Determined Contributions, known as NDCs, prepared for the Paris climate change conference. In addition, more than 450 companies around the world report using a voluntary, internal price on carbon in their business plans and more plan to follow suit in the next two years. The number of implemented or scheduled carbon pricing schemes has also nearly doubled since 2012, amounting to a collective value of $50b.
The vision statement, which calls for that level to double by 2020 and double again within a decade, says it can be done in three ways: by increasing the number of governments putting a price on carbon, deepening existing carbon pricing programs, and promoting global cooperation.
Carbon Pricing Panel – Setting a Transformational Vision for 2020 and beyond
Vision Statement by the Carbon Pricing Panel: Prime Minister of Canada Justin Trudeau, President of Chile Michelle Bachelet, Prime Minister of the Federal Republic of Ethiopia Hailemariam Dessalegn, President of France François Hollande, Chancellor of the Federal Republic of Germany Angela Merkel, and President of Mexico Enrique Peña Nieto, together with World Bank Group President Jim Yong Kim, IMF Managing Director Christine Lagarde, California Governor Edmund G. Brown Jr., Rio de Janeiro Mayor Eduardo Paes and OECD Secretary-General Angel Gurría.
The Paris Agreement is a major global achievement, and lays the groundwork for collective action to limit warming well below 2 degrees.
Now, the world’s attention is focused on the policies and actions that can deliver on the promise of COP21, achieve the goals of the Paris Agreement, and drive greater ambition.
Carbon pricing has a key role to play, as one of the most effective measures available to reduce climate pollution at the scale and pace the science demands.
Carbon pricing helps ensure that the true costs of fossil fuels – and the benefits of clean energy – are reflected in the marketplace; that energy efficiency earns its full return; and that forest protection has clear economic value. A price on carbon promotes investments in cost-effective emissions reductions today while unleashing innovation in the low-carbon technologies of tomorrow. And carbon pricing supports sustainable green growth and employment in the context of a climate friendly and resilient economic transition, while generating public revenues that can be used, among other things, for broader fiscal reform or supporting climate action.
The good news is that carbon pricing is gaining momentum around the world: 66 jurisdictions (home to more than 1.6 billion people) are implementing emission trading programs or carbon taxes. Ninety countries identified using some form of carbon pricing as means to achieve their nationally determined contributions (NDCs) as communicated in the run-up to the Paris Climate Conference in December 2015. Countries, states, provinces, cities and other jurisdictions are all actively engaged in seeking carbon pricing solutions. The current global low price of fossil fuels increases the urgency – and heightens the opportunity – for policies that correct price incentives, including through carbon pricing.
Still, current efforts are not enough. Only 12% of global greenhouse gas emissions are currently covered by explicit carbon prices. Much work remains to be done as countries implement their NDCs and increase ambition. We need to broaden the set of governments that are using carbon pricing, deepen existing carbon pricing programs, and promote global cooperation, including via Article 6 of the Paris Agreement.
The long-term vision of the Panel is that carbon pricing is implemented on a global scale and with rising ambition sufficient to help meet the goal of the Paris Agreement to hold the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C.
In line with that vision, the High Level Panel on Carbon Pricing calls upon the international community to deliver on the following carbon pricing goal:
CARBON PRICING GOAL: The percentage of global emissions covered by explicit carbon prices doubles to 25% by 2020 and doubles again to 50% within a decade.
In support of this goal, the Panel will support actions along three pathways:
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Broadening carbon pricing, by implementing it in jurisdictions and sectors that currently do not have a price on carbon;
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Deepening carbon pricing where it already exists, by strengthening ambition and ensuring clear long-term price signals for investment, consistent with the long term goal of the Paris Agreement;
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Enhancing international cooperation, by facilitating and promoting the alignment or possible convergence of domestic carbon pricing programs.
We welcome the leadership shown by businesses, investors, and other stakeholders in supporting carbon pricing policies and incorporating carbon pricing in their planning and investment decisions. We commit to work actively with them in implementing effective and ambitious carbon pricing policies, including through the Carbon Pricing Leadership Coalition (CPLC).
The coming years will be of critical importance for humanity and the planet. We commit, individually and collectively, to work toward the carbon pricing goals presented here in our own countries and regions, and contribute our own commitments as a starting point below:
Canada
Carbon pricing is an effective tool to reduce emissions and stimulate investments in clean growth and low-carbon innovation. It is also a crucial tool to support the shift towards sustainable economic growth. Canada recognizes that growing our economy and protecting our environment go hand-in-hand. Provinces and territories in Canada are already employing carbon pricing. As a result of provincial and territorial actions, more than 85% of Canadians will soon live in jurisdictions with an existing or planned carbon pricing.
The Canadian government is working with provincial and territorial governments to develop a comprehensive Canadian climate change plan. The Plan will support Canada’s transition to a low-carbon economy while stimulating innovation, clean growth and resource efficiency. Federal-provincial-territorial working groups have been established, including one on carbon pricing, to develop options to reduce emissions.
There is significant support from business and industry in Canada for effective carbon pricing that will place Canada as a leader in the low-carbon economy.
Canada is also making significant new investments in clean technologies, and will increase the level of ambition of environmental policies over time. This will enable Canada to achieve even greater GHG emissions reductions, consistent with Canada’s commitments under the Paris Agreement.
Chile
The Paris Agreement must be implemented successfully to ensure a safer climate future. Our country will move towards fostering private and public partnerships that link climate technologies and financing. And we will continue to collaborate on green growth and carbon markets, as we stated in a Ministerial Declaration of the Pacific Alliance last month in Colombia. In the Panel we share a common vision in the panel that expanding carbon pricing in the world is good for the economy and the planet.
Ethiopia
Ethiopia communicated its ambitious contribution of reducing its emissions by 64 percent by 2030 from business as usual as part of its national policy to build a climate resilient green middle income economy. Ethiopia renews its commitments to the use and promotion of all policy instruments and public investment schemes, including carbon pricing, that are found to be effective, fair, and efficient in preventing dangerous climate change. To deliver on this commitment, and with the support of the World Bank, Ethiopia will issue a commissioned study producing recommendations on the role and possible forms of carbon pricing policies in Ethiopia, which might also be applicable to similar low-income developing countries.
France
At the national level, France decided to inscribe the trajectory of its carbon tax in its bill on energy transition for the green growth, in order to enhance predictability for economic actors. France therefore commits to strengthen its carbon tax along this pathway, i.e. increase its rate from 22€ in 2016 to 56€ in 2020 and 100€ in 2030.
Germany
Germany highlights the Carbon Market Platform which provides a forum for a strategic high-level dialogue between governments to explore opportunities for cooperating aiming to accelerate the development of a global carbon market. The platform was initiated under the G7 presidency in 2015 and will be conducted with the technical support of the OECD.
At the European level, France and Germany promotes the idea of reforming the EU- Emission Trading Scheme with the view to strengthening its ambition and ensuring a clear price signal for investments and innovations.
Mexico
Mexico is working towards establishing a carbon market, as well as robust national clean energy certificates for the electricity sector by 2018. Both of these efforts will directly support the attainment of the national mitigation goals.
Implementation of these objectives will be based on the market-based mechanisms that Mexico started in 2013 – several of which have already been embedded in legislation:
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A carbon tax approved by the Mexican Congress (through amendments on the Excise Tax Law on Production and Services (IEPS Law)) that covers fossil fuels by carbon content, except for natural gas. This carbon tax has the objective of enhancing environmental awareness and to price carbon in a way that reflects externalities and helps the private sector shifting consumption toward the use of cleaner fuels.
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Clean Energy Certificates that encourage the development and use of low-carbon technologies that derive from the Energy Reform bill of 2014.
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A green bonds initiative through the Mexican Stock Exchange to support the development of green investments in Mexico.
Mexico adopted a fixed-rate excise tax on automotive fuels, eliminating the possibility of future subsidies, through an additional amendment to the Excise Tax Law on Production and Services approved in 2015.
Mexico is convinced that in order to stabilize the increase in global temperature under 2ºC, through efforts to limit such temperature increase to 1.5oC above pre-industrial levels, a fair and real carbon price must be set.
California
California’s cap-and-trade program is one of the state’s key strategies to reduce greenhouse gas emissions that cause climate change. California is committed to leveraging its cap-and-trade program to meet its climate goals, including reducing emissions to 1990 levels by 2020, and 80 percent below 1990 level by 2050.
In 2014, California and Quebec effected a full linkage between our carbon market, and Ontario has expressed its intention to join the California-Quebec market. California is also committed to working with other states in the US on carbon pricing, including through the Pacific Coast Collaborative, and under the Clean Power Plan, as appropriate.
California will work with other jurisdictions to support for the development of environmentally rigorous emissions trading programs globally, including through bilateral memorandums of understanding with China at the national and subnational levels, as well as Mexico. California also engages multilaterally with other jurisdictions including as a technical partner in the World Bank’s Partnership for Market Readiness and as a member of the International Climate Action Partnership. California will seek to promote carbon pricing through the “Under2MOU,” a subnational climate change agreement representing 128 signatories and more than a quarter of the global economy.
Rio de Janeiro
Rio de Janeiro aims to reach 20% greenhouse gas emissions reduction by 2020 and carbon neutrality by 2065. To achieve this goal, the city is promoting policies to reduce GHG emissions. Putting a price on carbon will accelerate Rio’s transition to a low carbon economy. It will help Mayors and communities around the world to build urban prosperity while lowering environmental consequences. This is important because cities are associated with 70% of global energy use and greenhouse gas emissions. Urban actions have the potential to decrease global emissions in 3.7 GtCO2e below national actions currently on track by 2030, and by 8.0 GtCO2e in 2050. Cities are showing leadership through the Compact of Mayors, a commitment and instrument to measure, monitor and track GHG emissions reductions. C40 cities are taking actions to lower emissions, minimize climate risks and increase urban resilience.
Rio de Janeiro is committed to enhance carbon pricing policies. The urban potential for reductions of emissions can be unlocked through carbon pricing and will help us to achieve the Paris Agreement goals.
International Monetary Fund
The Fund recently released the Managing Director’s Statement on the Role of the Fund in Addressing Climate Change and an accompanying paper, After Paris: Fiscal, Macroeconomic and Financial Implications of Global Climate Change. The Fund is developing spreadsheet tools to help countries with implementing carbon pricing schemes and understanding the trade-offs between alternative mitigation policies and offers technical assistance to member countries on carbon and energy pricing reform.
World Bank Group
The World Bank Group will scale up country support and global advocacy work to “get prices right,” by helping clients to reform fossil fuel subsidies, putting a price on carbon, deepening market-based instruments, and reforming other distorting subsidies. Carbon pricing work will be extended to widen, deepen, and connect markets. The WBG will aim to have actively supported country-level Carbon Pricing Leadership Coalition dialogues in 15 countries by end 2017 and in 30 countries by 2020, with an aim to catalyze successful carbon pricing programs. This will supplement and enhance ongoing country programs of the Partnership for Market Readiness and the international discussions of the Networked Carbon Markets initiative. Results-Based Financing mechanisms, which support innovative market-based instruments such as the Pilot Auction Facility and the Transformative Carbon Asset Facility, will be expanded and scaled up.
OECD
The OECD is committed to supporting countries to implement the Paris Agreement and their intended NDCs, building on extensive expertise in carbon pricing and regulation, the analysis and reform of fossil fuel subsidies and taxation of energy. The OECD will increase its focus on the mitigation challenges faced by countries. Specifically, it will contribute to improved transparency of mitigation policies and outcomes in OECD countries and key partners. It will support countries in developing and implementing cost-effective mitigation strategies and policies that can be sustained and deepened over time. For example, the OECD will progress work monitoring taxes on energy use and price signals from emissions trading systems, to help track the use of market-based instruments to price carbon beyond explicit carbon prices.
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Why ECOWAS economic integration is failing – NANTS
The weak understanding of regional framework, bribery and corruption, delays of transit goods and un-receipted charges are among the reasons why the Economic Community of West African States (ECOWAS) trade and economic integration protocols fail years after their enactment and adoption, the National Association of Nigerian Traders (NANTS) has said.
Secretariat President of the association Barrister Kenneth Ukaoha said this Thursday in Abuja at a two-day Public-Private Sector Dialogue (PPD) on Strengthening Nigeria’s Trade Support Institution (SNTSI) themed “Nigeria/ECOWAS Trade and Integration Process,” organised by NANTS, European Union (EU), German International Cooperation (GIZ) and other Nigerian stakeholders.
He said since 1975 formation of ECOWAS key instruments and protocols seeking to position cross border trade as a tool for wealth creation and poverty reduction including ECOWAS Trade Liberalization Scheme (ETLS), the Free Movement Protocol (supported with the Rights of Establishment and Rights of Residence), Common Industrial Policy, Supplementary Protocol on Competition and the Common External Tariff (CET) among others.
“Despite all the above efforts at building a regional market and full trade and economic integration through the existence of these requisite trade protocols and instruments, attainment of full integration in ECOWAS still appear to be a mirage. The trade and integration process in West Africa had suffered this noticeable setback largely owing to the poor implementation of these policy instruments put together and adopted by the regional leaders,” Ukaoha said.
While saying that the ETLS which was the first trade instrument on custom union and common market was obeyed and implemented in breaches, he added that Nigeria sitting on the fence is untenable and must stand to her responsibility as the political and economic leader of the region to fast-track full integration by among others deploying trade as instrument for growth and development and identifying the challenges and solving them.
The Director Trade of ECOWAS, Dr. Gbenga Obideyi said though the governments of the region signed the agreements, the impact and implementation fall more on the private sector and the populace hence the need for sustained harmonious relationship.
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tralac’s Daily News Selection
The selection: Thursday, 21 April 2016
Next week’s profiled trade and investment policy conferences:
In Accra: CABRI's Policy Dialogue on revenue management in the extractives sector
The dialogue (26-27 April) will focus on the management of revenue from the extractives sector, specifically minerals and hydrocarbons. The extractives sector is a new focus of CABRI’s policy dialogues that aim to promote knowledge exchange and peer learning in ways that public spending can be more effective, efficient and economic. Keynote report 1: Extractive industries and their linkages with the rest of the economy, Keynote report 2: Revenue management in the extractives sector
In Kampala: a public forum, 30 April, on #TheCFTAWeWant
South Africa: DTI budget vote address, Dr Rob Davies
Our regional trade integration efforts have already had an impact; the continent is now the destination for 30% of South Africa's total exports. More importantly, our trade with the Continent is in value-added products and has been growing while our trade with our traditional partners has stagnated. It is no exaggeration to say that our Manufacturing sector would be in dire straits had Government not consciously decided to focus on developing the African market a decade ago. As we continue to improve our support to exporters trading with Africa, I am pleased to announce that the Africa Export Council commenced operations on the 1st of April 2016. This - our first - multi-sectoral Export Council will ensure that we provide targeted and customised support to manufacturing and service exporters trading on the Continent.
Linked to this, we continue to develop our export credit offering so that South African exporters and especially those operating in the capital goods sector are able to compete on an equal footing with the many global players who are also operating in this space. In addition to this a Services Export Strategy that is aimed at assisting South African firms to integrate into global supply chains of multi-national firms, by actively promoting subcontracting in power, infrastructure programmes and the built environment will be launched.
South Africa: Tyre-manufacturing sector hits a pothole (IOL)
The tyre manufacturing industry has been thwarted in its new attempt to reduce the threat of cheap illegal tyre imports to the sustainability and survival of the industry. This follows the SA Revenue Service (Sars) and Customs and Excise rejecting an industry proposal for a mass-based methodology to determine tyre import duties because of fears it will contravene World Trade Organisation (WTO) and General Agreement on Tariffs and Trade (Gatt) rules.
COMESA Business Dialogue: documentation
The 10th COMESA Business Dialogue was convened [25-26 March 2015] on the margins of the 18th COMESA Heads of State Summit in Addis Ababa. The Dialogue was held under the theme; Taking Action on Illicit Trade- An industrial Competitiveness Agenda. The objective of the Dialogue was to adopt a Public Private approach to combating illicit trade in the COMESA region. The Dialogue attracted more than 150 delegates from the public and private sectors; from the manufacturing sector, construction industry, ICT industries, pharmaceuticals, tobacco industries, international investors and the Chambers of Commerce and Industries in the COMESA region. The key recommendations included: the Development of the COMESA Anti-Illicit Trade Protocol, strengthening of dedicated anti-illicit trade institutional units at national and regional level, strengthening enforcement mechanisms, Public Private Collaboration, proactive action against corruption and the development of the ‘Made in COMESA’ label. [The conference report is not yet available but the presentations can be downloaded]
Vimal Shah: 'Why Africa’s future growth is about the long game' (Knowledge@Wharton)
Q: What are some of the challenges you have faced in expanding to other countries? And how have you addressed those challenges? Shah: 'The challenge that has come up on this issue of trading with other countries is, first, a lot of African countries have been changing policies quite often. Therefore, the predictability of economics, the predictability of where they’re going, is not always clear. No. 2, compliance levels. A lot of countries have varying degrees of compliance. Some are very compliant and some are not. So the trade practices in each country are different. A lot of informal trade has also been happening in a lot of these countries. We go in with computerized systems, everything above board; we pay our taxes. We find challenges in some countries where this is not happening. However, the good news is that this is all changing and it’s happening fast.'
Donald Kaberuka: 'Resources not Africa’s only gem' (Business Day)
I am not suggesting the rise in demand and prices for commodities has not been important for Africa’s economic progress. But the continent’s turnaround began well before the commodity bull-run. The focus on commodities has downplayed the importance of other sectors such as IT and services. Recent statistical reviews of the economies of countries such as Nigeria and Ghana have shown the size and growth of these sectors has been consistently underestimated.
Abuja to become trade hub in Africa in 2020, says chamber (The Herald)
The Abuja Chamber of Commerce and Industry is planning to make the Federal Capital Territory one of the most powerful trade hubs in Africa before 2020. 1st Deputy President of the chamber, Mr Adetokunbo Kayode, said through effective networking, innovative and proactive business strategies, the chamber had attracted investments worth billions of dollars to the nation. “The Shoprite is a clear testimony. Today marks another history in the chamber’s quest to make Abuja a `Dubai-like’ city. [Dangote and Africa’s renewal (ThisDay)]
High-Level Forum: 'The Africa we want in 2030, 2063 and beyond' (UN)
The UN and African countries are working as one to support the continent’s people in realizing their hopes and aspirations for peace and development, which will require “bold and decisive” action, Deputy Secretary-General Jan Eliasson said today at a special event on the continent’s future. Organized by the AU, the Government of Sweden, and the UN Office of the Special Adviser on Africa, the meeting delved into thematic areas which exhibit a strong link between the agendas. In his remarks, Mr. Eliasson underlined his wish to focus on three points in particular: [Background: UN-AU partnership on Africa’s integration and development agenda]
Revving the engine of services trade (World Bank)
Trade fell dramatically during the 2008 financial crisis and has grown sluggishly since then. But this overall trend obscures an important fact: trade in services has proven remarkably resilient, and has been steadily growing since 2010. This expansion of services trade - from health and education to transport, telecommunications, and tourism - presents developing countries with significant opportunities. Until recently data on services trade policies was sparse. But in this month’s Policy Research Talk, Research Manager Aaditya Mattoo unveiled a body of new research and data, including the Services Trade Restrictions Database, that is advancing knowledge about services trade policies, and how best to reform them. Drawing on data on the 40 poorest countries in the world, Mattoo found that services account for more than half of GDP and employment. “If these countries are to grow, and lift people out of poverty, there needs to be a dramatic improvement in the state of services,” Mattoo said. [Related: Aaditya Mattoo's PIIE presentation]
A selection of postings on India's services sector: 'Poised for global ascendancy' - a KPMG/CII report, 'Services to play key role in WTO's trade facilitation pact', Services exports plunge 12.55% in February
From the OECD’s Working Party on International Trade in Goods and Trade in Services Statistics: More detailed trade in services statistics, Merchandise trade versus BOP trade in goods
SEATINI’s position on UNCTAD XIV session pre-conference negotiating text
It is against this background that we present our proposals for consideration in the pre-conference negotiating text and the subsequent declaration. We are proposing areas for further emphasis in the pre-conference negotiating text and the subsequent declaration. Areas which should be emphasized in the text:
On regional trade agreements and the mega regionals: While para 40 (n) of the Pre-Conference negotiating text proposes that the role of UNCTAD should be to assess the implications of plurilateral and regional trade agreements for development prospects of developing countries, we are proposing that UNCTAD should go further to build the capacity of RECs to enable them to factor this process in their regional integration processes.
Trading into sustainable development (UNCTAD)
Trade policymaking, as an integral element of a country's development strategies, will require a new, more holistic approach that looks across three dimensions of sustainable development: economic, social and environmental. This report provides a mapping of the new landscape facing trade policymakers, and helps them navigate in their design, implementation and assessment of trade policy. It also examines the complex interactions between market access conditions - customs tariffs, non-tariff measures and physical connectivity to markets - and the determinants of sustainable development.
Duncan Green: 'Some fascinating new research on how food prices affect people’s lives and politics' (World Bank Blogs)
One of the projects I was proudest of getting off the ground while in (nominal) charge of Oxfam’s research team was ‘Life in a Time of Food Price Volatility’, a four year study of the impact of the chaotic food prices of recent years on the lives of poor people and communities in rural and urban communities in ten countries. Now the project has published its findings in a special issue of the IDS Bulletin. The conclusions of all this effort? This conclusion from the overall introduction to the bulletin by Patta Scott-Villiers and Alexandra Wanjiku-Herbert:
Roman Grynberg: 'African infrastructure and the economics of 10%' (The Namibian)
Botswana continues to buy power from Eskom at very high spot market prices linked to the cost of diesel power−generation. How did this grand and expensive disaster occur? There are many reasons but there has never been, nor shall there ever likely be a public or parliamentary inquiry into the failure of Moropula B, which has so retarded private sector development in the country.
Commentaries on East African infrastructure: Lillian Ochieng: 'Cost of oil pipeline routes' (Daily Monitor), Charles Onyango-Obbo: 'If you think the Uganda pipeline is about a pipeline, you are dead wrong'
Tanzania's 'bold,new 100trn/- national development blue print' is unveiled (IPPmedia)
The National Development Plan 2016/17-2020/21 aims to boost industrialisation and transform Tanzania into a middle-income country by 2020 by pumping 107 trillion/- of public investments into the economy. The new blueprint titled "Nurturing Industrialisation for Economic Transformation and Human Development" is the latest indication of spending plans and priorities of President Magufuli's government over the next five years. The Minister for Finance and Planning, Dr Philip Mpango, presented the plan to parliament yesterday and said the Magufuli government's development blueprint over the next five years will focus on flagship infrastructure projects such as construction of a standard gauge railway and the revival of the ailing national flag carrier, Air Tanzania.
Inaugural 2016 report of the Inter-agency Task Force on Financing for Development (UNDESA)
The first edition of the report of the Inter-agency Task Force on Financing for Development maps out the commitments and action items contained in the Addis Ababa Action Agenda and lays out how the Task Force will monitor their implementation in future years. The Task Force has carefully gone through the full range of these commitments and action items to create a framework for monitoring. It compiled them into nine chapters – on cross-cutting issues, the seven action areas of the Addis Agenda, and on data. In each chapter, commitments and actions are organized by thematic clusters, for which the Task Force presents options for monitoring.
India to appeal against WTO solar ruling in next few days (Livemint)
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SEATINI’s Position on UNCTAD XIV session Pre-Conference negotiating text
UNCTAD will be holding its fourteenth session in Nairobi from 17-22 July 2016 under the theme “Translating the 2030 Agenda for Sustainable Development into action”. As part of preparatons for the session, UNCTAD circulated a Pre-Conference Negotiating text where stakeholders were called upon to develop proposals to input into the text. SEATINI has come up with a position paper, as part of her preliminary contribution to whole process.
SEATINI takes note of the provisions in the Pre-Conference negotiating text. The background to the UNCTAD 14 pre-conference negotiating text is drawn from the continuing challenges to the global economy arising from the financial and economic crises especially the uneven distribution of the gains from globalization and the rising global inequality between and within countries. The text also recognizes the series of significant meetings which took place in 2015 i.e. the ambitious UN SDG summit to end poverty, the COP 21 and the 10th WTO Ministerial Conference. Para 3 of the Pre-Conference Negotiating text stresses the critical role these agreements have played in reinforcing the role of trade and development and interrelated issues of finance, technology and investment for inclusive and sustainable development.
Given this background the Pre-Conference negotiating text should recognize the dichotomy between the ambitious SDGs on the one hand and the outcomes of the COP 21 and the 10th WTO Ministerial Conference on the other. In both conferences there is a regression from the earlier commitments made to address the challenges therein. The COP 21 saw the ascendancy of the more voluntary Intended Nationally Determined Commitments (INDCs) as opposed to the earlier commitments to have in place multilaterally agreed binding commitments on emission reduction. Regarding the WTO MC 10, again, the commitment to conclude the Doha Round was minimal while the push for “new approaches” gained momentum. Issues of critical concern for developing and African countries, especially in the areas of agriculture were not adequately addressed In fact, it can be argued that since the launch of the Doha round, there has been limited progress in tackling the development concerns of Africa and developing countries. The UNCTAD 14 Pre-conference negotiating text should clearly support the conclusion of the Doha Round as all the previous UNCTAD Declarations (Accra and Doha Manar) have done. The Reference to “New approaches” in para 14 would mean that UNCTAD is supporting the introduction of the “New issues” in the WTO, before the conclusion of the Doha Round as proposed by the Africa Group. Therefore UNCTAD should ensure that the Multilateral Trading System supports and provides the policy space for developing countries to promote equitable and sustainable people centred development in Africa and developing countries.
It is against this background that we present our proposals for consideration in the pre-conference negotiating text and the subsequent declaration. We are proposing areas for further emphasis in the pre-conference negotiating text and the subsequent declaration.
Areas which should be emphasized in the text:
1. Regional trade agreements and the mega regionals
One of the contemporary trends reshaping the global trade landscape over the last two decades has been the rise in the number of bilateral & free trade agreement including the “mega regionals”. There are also regional integration efforts in Africa including efforts towards forming a Continental Free Trade Area. These processes are critical for Africa in addressing her development challenges. However, given the fact that the mega regionals have the potential to reshape significantly the global trade landscape over the next few years, Africa will need assistance in participating in and crafting their own regional integration processes to address their development challenges. While para 40 (n) of the Pre-Conference negotiating text proposes that the role of UNCTAD should be to assess the implications of plurilateral and regional trade agreements for development prospects of developing countries, we are proposing that UNCTAD should go further to build the capacity of RECs to enable them to factor this process in their regional integration processes.
2. Investment
While investment is key in promoting sustainable development in Africa, the existing frameworks that prioritise support of investor rights over people’s rights is not inductive to this objective. Whereas para 12 of the Pre-Conference negotiating text argues that foreign direct investment has been mutually supportive contributing to the unprecedented transformation of many developing countries, we note with deep concern that investments have become so liberal that possibilities of capturing the benefits that accrue from them are constrained. UNCTAD should therefore enhance its work on developing the capacity of African countries to come up with pro-development national and regional investment models and policies.
Para 21 of the Pre-Conference negotiating text acknowledges that global governance of investment faces may challenges including those arising from the problematic and fragmented regime of international investment agreements. UNCTAD has also done a lot of research and publications on Investment on the pro-investment model, and this work has enabled a number of countries to commence on the process of reviewing their investment regimes in order to ensure that FDIs support national and regional development aspirations. UNCTAD should enhance its work further in this area by developing the capacity, and supporting the review processes especially in African countries which have not yet embarked on this processes in order to help them come up with national and regional investment model templates that will guide to put in place investment policies that support sustainable development and poverty eradication, and which will help them to engage in negotiations with third parties at multilateral and bilateral levels. At African Union level, UNECA has put in place guiding principles on large scale land based investments in Africa. UNCTAD should continue supporting these efforts to ensure that they result into models that should promote agricultural and rural transformation and increased trade.
3. Domestic Resource Mobilisation
In para 47, UNCTAD stresses that official development assistance continues to be a vital source of financing for development, which, by virtue of targeting the eradication of poverty in its multiple dimensions, is particularly important to the achievement of the Sustainable Development Goals. However, the text should further capture the fact that in a bid to reduce on dependency, the concept of innovative financing has become trendy, mostly pushed within Public Private Partnerships (PPPs). While in theory PPPs could be a great way to transfer the risks of investments in infrastructure to the private sector, this requires wellcrafted contracts that strike a fair balance of risks and benefits; and sufficient institutional capabilities, including transparency and checks and balances, during the negotiation and monitoring of contracts to ensure that the public interest (especially that of citizens and taxpayers in the host country) is adequately protected. Therefore, more capacity is required for African countries to negotiate mutually beneficial PPPs and also most importantly how to mobilise resources fairly and equitable and limit the outflow of resources. Regarding the outflow of resources, African countries need enhanced capacity on how to address the recommendations from the Mbeki report.
4. Industrialisation and structural transformation
There has been a resurgence in the call for industrialisation in Africa. Many African countries have come up with industrial policies. However a lot needs to be done to ensure that all policies and the multilateral trading system are geared towards supporting industrialisation which promote backward and forward linkages, increase productive capacities & create viable employment & reduce inequalities. Para 61 of the Pre-Conference negotiating text recognises structural transformation and industrialisation as key elements in increasing resilience to social, economic and environmental shocks for sustained growth and sustainable development. However, the text should take into consideration the fact that Africa has undergone de-industrialisation as a result of the neo-liberal related policies like the Structural Adjustment Policies, which policies have continues to manifest themselves in regional, bilateral and multilateral trade negotiations. UNCTAD to enhance capacity of African countries to come up with and negotiate coordinated and complementary policies at all levels that support Industrialisation, value chain enhancement and structural transformation.
5. Debt
There has been increasing indebtedness in a number of African Countries as they embark on ambitious infrastructure projects. Uganda’s indebtedness stood at 33.2% of GDP in 2014 and is likely to continue as government engages on new infrastructure projects. In para 15, the text acknowledges the role of strengthening multilateralism in addressing challenges that require collective action at the global level such as debt crisis prevention and resolution. In order to address the debt issue, increased capacity will be required at national level especially in areas of how to balance the sources of financing and the increased involvement of stakeholders in these negotiations, increase in transparency and accountability, and also putting in place an international system of debt arbitration and restructuring.
6. Role of State in development
Para 71 of the Pre-Conference negotiating text stresses the need for an effective developmental State which delivers public goods and services to the population, provides an enabling environment for growth and private sector development, and ensures peace and security. However, it should be noted that the State inmost countries in Africa has been greatly weakened under the SAPs and other subsequent policies which have promoted the private sector at the expense of the State. Therefore, UNCTAD has a critical role to play in enhancing Africa’s capacity to put in place policy frameworks that enhance the capacity of state institutions and this should be complemented by an engaged society, which as UNECA summarises it, participates in public decision making, contributes to the provision of public goods and services, and holds authorities accountable for the means and results of public action.
7. Technology transfer
Para 48 of the Pre-Conference negotiating text argues that foreign direct investment and trade can play a key role in disseminating technologies to domestic companies where domestic policies are conducive to technology transfer. The para also stresses that Technology is a key means of implementation of sustainable development policies. UNCTAD should further assist African Countries in how to access appropriate technology and how to put in place policy frameworks especially in Bilateral Investment Treaties in order to make this happen and promote linkages to technology, innovation and industrialisation.
8. Trade Facilitation
Para 30 of the Pre-Conference negotiating text points out that the WTO Trade Facilitation Agreement will, if implemented effectively, enhance mutual benefits to trading nations and thus promote global sustainable development, as well as generate welfare gains for consumers and businesses. However, Trade Facilitation goes beyond cutting of the red tape at the customs (customs clearance), and in order for the global South in general and Africa in particular to benefit from it, efforts have to be enhanced in addressing structural issues that hinder Africa’s meaningful gaining from Trade facilitation. If these efforts are not enhanced, the TFA will be acting, as dubbed by its critics, an import facilitation agreement.
In conclusion, we commend the important role played by UNCTAD in promoting equitable integration of developing countries into the world economy. UNCTAD has largely fulfilled this mandate than any other multilateral economic institution has fulfilled from a development perspective. However, in order for Given this important role that UNCTAD is playing, enough resources should be committed in order to enhance her work on implementation of the SDGs for the achievement of Agenda 2030.
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Inaugural 2016 Report of the Inter-agency Task Force on Financing for Development – Addis Ababa Action Agenda: Monitoring commitments and actions
The first edition of the report of the Inter-agency Task Force on Financing for Development maps out the commitments and action items contained in the Addis Ababa Action Agenda and lays out how the Task Force will monitor their implementation in future years.
The Task Force has carefully gone through the full range of these commitments and action items to create a framework for monitoring. It compiled them into nine chapters – on cross-cutting issues, the seven action areas of the Addis Agenda, and on data. In each chapter, commitments and actions are organized by thematic clusters, for which the Task Force presents options for monitoring.
Introduction
In July 2015, world leaders came together in Addis Ababa, Ethiopia, to adopt the Addis Ababa Action Agenda (the Addis Agenda) at the Third International Conference on Financing for Development (FfD). The Addis Agenda created a holistic and coherent framework for financing sustainable development. More than just a framework, the Addis Agenda embodies several hundred concrete actions that Member States of the United Nations pledged to undertake individually and collectively. As subsequently emphasized in the 2030 Agenda for Sustainable Development, adopted by the General Assembly in September 2015, full implementation of the Addis Agenda is critical for the realization of the sustainable development goals (SDGs) and targets.
Member States committed to staying engaged through a dedicated and strengthened follow-up process to assess progress, identify obstacles and challenges to implementation, promote the sharing of lessons learned, address new and emerging topics of relevance, and provide policy recommendations for action by the international community (paras 131-132). In this context, the Addis Agenda established an annual United Nations Economic and Social Council (ECOSOC) Forum on FfD Followup to review implementation of financing for development outcomes and the means of implementation (MoI) of the 2030 Agenda.
Credible and timely monitoring and analysis will be required to inform this process. This Inter-agency Task Force, convened by the Secretary-General, will seek to make a substantive contribution to these monitoring and analytical functions. According to its mandate, the Task Force will (i) report annually on progress in implementing the financing for development outcomes and the MoI of the 2030 Agenda for Sustainable Development, and (ii) advise the intergovernmental follow-up processes on implementation gaps and recommendations for corrective action (para 133). The Task Force’s primary official audiences will be the Forum on FfD Followup and the High-Level Political Forum on Sustainable Development (HLPF). The Task Force appreciates that there is also great interest in its work by Governments, international institutions and other stakeholders. It will strive to be technically precise and thoughtful, and to cover the full range of FfD issues, while also being accessible to a broad range of readers.
The Task Force will base its analysis on the premise that, given the nature of the issues being discussed, there is often not one simple policy solution. Rather, the complex nature of the issues implies that there are multiple policy options. Indeed, all economic policies have trade-offs. The Task Force sees its role as mapping out policy options and analysing their underlying assumptions and economic, social and environmental implications, while leaving the final policy choice to the national and international political processes.
As requested by the Addis Agenda, the Task Force aims to build on the positive experience of Inter-agency cooperation that the Secretary-General initiated when he invited the relevant international institutions to leverage their specialized expertise to monitor the eighth Millennium Development Goal (MDG 8). The MDG Gap Task Force drafted analytical reports that incorporated the official indicators, while also monitoring complementary data and information to address emerging concerns. It regularly gave updates on international cooperation commitments and recommended policy measures that could be considered by the international community to further the global partnership. It is a model that the present Task Force will seek to emulate.
The Task Force further appreciates that a different international exercise will monitor progress on achieving the SDGs. That effort will focus on a global indicator framework agreed by the United Nations Statistical Commission for measuring the targets specified under each SDG, including those pertaining to the MoI. These indicators, particularly those for the MoI targets, will be important inputs to the Task Force’s work. The Addis Agenda also includes numerous additional commitments and action items that are not contained in the SDG targets. In addition, the Task Force has found that many items are difficult to fully capture with just one indicator. The Task Force Report will thus complement the statistical report on the SDG indicators by providing: (i) a review of the additional commitments and action items in the Addis Agenda and other FfD outcomes; (ii) an assessment of progress in implementing agenda items that may not be easily captured by quantitative indicators, such as qualitative measurements in areas where data is lacking; and (iii) an analytical discussion of the issues to give a fuller picture of implementation, assess the impact of financing flows and policies on achieving goals, and promote knowledge sharing and mutual learning. Monitoring of commitments made on the sidelines of the Addis Conference is included as Appendix B in this year’s Report, and published as a separate appendix in future years.
The first report of the Task Force, completed in the early months of 2016, does not seek to assess progress in implementation of the Addis Agenda or the MoI of the 2030 Sustainable Development Agenda, which were agreed to less than six months prior to the drafting of this report. Indeed, much of the data for 2015, which is the base year against which to measure progress in implementation, had not yet been published when this year’s report was being prepared. Instead, the focus of this year’s report is on how the Task Force proposes to monitor the implementation of commitments in future years. The Report also seeks to situate that discussion in the context of relevant recent developments.
The evolving global situation
There have been several important developments since Member States came together in Addis Ababa in July, including the successful adoption of the 2030 Agenda for Sustainable Development and the adoption of the Paris Agreement under the United Nations Framework Convention on Climate Change. There has also been progress in other action areas of the Addis Agenda. For example, IMF quota and governance reforms, which had been agreed to in 2010, became effective in January 2016. In response to the call in the Addis Agenda, the new Global Infrastructure Forum, led by the multilateral development banks, will be launched in Washington, DC on 16 April 2016 during the IMF/World Bank Group Spring Meetings.
Nonetheless, these global efforts are taking place in an increasingly difficult environment. Growing global risks threaten to make implementation of the agenda even more challenging than just six months ago. As the finance ministers and central bank governors of the Group of 20 observed in their communiqué at their 27 February 2016 meeting, “The global recovery continues, but it remains uneven and falls short of our ambition for strong, sustainable and balanced growth. Downside risks and vulnerabilities have risen against the backdrop of volatile capital flows, a large drop of commodity prices, escalated geopolitical tensions, the shock of a potential UK exit from the European Union and a large and increasing number of refugees in some regions. Additionally, there are growing concerns about the risk of further downward revision in global economic prospects.” Indeed, as indicated in the United Nations World Economic Situation and Prospects 2016, over $700 billion of capital left developing and transition countries in 2015, greatly exceeding the magnitude of net outflows during the “Great Recession”. At the same time, non-financial corporations in emerging market countries accumulated significant levels of debt, which increased from less than 60 per cent of gross domestic product (GDP) in 2006 to more than 100 per cent at mid-2015, making these countries particularly vulnerable to sudden stops and reversals of capital flows.
Geopolitical risks have also risen. The world is facing the largest crisis of forced displacement since the Second World War, which is putting growing demands on limited public resources. There is a risk that needed assistance will be diverted from long-term development and countries most in need. Indeed, the least developed countries (LDCs) risk seeing their share of ODA falling further, despite the commitment in the Addis Agenda to reverse the decline. The challenge for the international community is to address the need for a response to the crisis while maintaining its commitment to long-term sustainable development and implementation of the SDGs. The Forum on FfD Follow-up could be a useful platform to reassert that development commitments will not be put at risk.
From Monterrey to Addis Ababa and the means of implementation for the SDGs: Monitoring Financing for Development outcomes
The Addis Agenda aims to mobilize public finance, set appropriate public policies and regulatory frameworks to unlock private finance, trade opportunities and technological development, and incentivize changes in consumption, production and investment patterns. It further seeks to align all resource flows and policies with economic, social and environmental priorities.
The holistic approach is rooted in the FfD process, embodied in the 2002 Monterrey Consensus and the 2008 Doha Declaration on Financing for Development. The Monterrey Consensus recognized not only that all sources of financing – public and private, domestic and international – are needed to finance development, but that resource mobilization depends on public policies and a strengthened national and international enabling environment. Both national policies and regulations and international rules and agreements are thus linked to development finance and outcomes.
The global partnership for development, as delineated in Monterrey, emphasizes the central importance of development cooperation and concessional financing. Indeed, development cooperation, and the fora in which it is discussed, remains a crucial part of the agenda. Building on Monterrey and Doha, the Addis Agenda reaffirms that developing countries have primary responsibility for their own economic and social development. National sustainable development strategies are thus a core element of the Addis Agenda. As in Monterrey, domestic policies must be supported by an enabling international environment. Science, technology, innovation and capacity building had been touched upon in the Monterrey Consensus and Doha Declaration on FfD, but they were not accorded detailed treatment. The Addis Agenda explicitly incorporates each of the major non-financial MoI for delivering sustainable development along with the more traditional financial means, complementing and contextualizing them in a comprehensive framework.
The Addis Agenda goes beyond Monterrey and Doha outcomes by taking into account policy requirements for realizing all three dimensions of sustainable development – economic, social and environmental – in an integrated manner. It emphasizes the importance of incentives for private sector investment, as well as the quality of investment. It also emphasizes sustainable consumption and production patterns globally. In doing so, it brings issues such as climate finance, protection of oceans and forests, and other environmental concerns more prominently into the discussion, and incorporates these into the Monterrey global coherence agenda, along with issues of trade and global financial stability.
The commitments and action items in the Addis Agenda are organized in seven main action areas (see Table 1) and a concluding section on data, monitoring and follow-up. Member States also identified a number of cross-cutting thematic areas where policy actions harness the synergies that exist between many of the specific action items elaborated in the action areas of the Agenda.
The relationship between the Addis Agenda and the SDGs
All of the MoI of the SDGs are included in the Addis Agenda. The indicators for the MoI targets will be important inputs to the Task Force’s work, as will relevant indicators for other SDG targets (which are particularly relevant to cross-cutting issues). Nonetheless, the 2030 Agenda for Sustainable Development and the Addis Agenda have different structures, which can make it difficult to track similar targets across the two agendas. The 2030 Agenda is organized around the SDGs, or around goals and outcomes, while the Addis Agenda follows the Monterrey Consensus, and is structured around different financial and non-financial MoI.
As emphasized in the Addis Agenda, the 17 SDGs have enormous synergies across goals, with implementation of one contributing to progress in the others. Similarly, there are synergies across the Addis chapters, as well as between the Addis Agenda and the SDGs (see Appendix C). Each of the SDGs thus draws on inputs from across the Addis Agenda chapters for implementation, while each of the Addis chapters speaks to different SDGs. Whether the issues are presented in terms of flows and MoI (the Addis Agenda) or by outcomes (the SDGs), the agendas need to be understood in a holistic manner.
In consideration of this, the Task Force draws on a nuanced understanding in the Addis Agenda of the benefits and risks associated with different types of finance and other MoI, as depicted by the seven chapters of the Addis Agenda. The different sectors and goals have different capital structures, implying that the appropriate combinations of financing modalities vary by sector, as well as by national contexts. For example, some investments, such as those that meet basic social needs, in most cases will be largely financed by public resources (though in some countries, supplemented by private investment).
Other investments, such as infrastructure, will often need to effectively combine public and private funding. Still others, such as financing for small and medium-sized enterprises (SMEs), will be predominantly private, though generally within public policy and regulatory frameworks that support and incentivize investment. All of these will also need support from non-financial MoI, such as technology and a supportive international environment, including a stable economic system and debt sustainability (see Figure 1).
As noted in the Addis and 2030 Sustainable Development Agendas, the full set of action areas in the Addis Agenda, together, thus form a strong basis for implementation of the SDGs and support for the global partnership for sustainable development.
Monitoring the commitments and actions in the Addis Agenda
Monitoring the Addis Agenda and the MoI of the SDGs represents a complex exercise covering hundreds of commitments and action items. The Task Force has carefully gone through the full range of these commitments and action items to create a framework for monitoring the broad agenda in future years. It compiled and clustered them into nine chapters – on cross-cutting issues, the seven action areas, and on data, with commitments and actions in each chapter organized by thematic clusters. Under each cluster, the Task Force presents options for monitoring, including: (i) the best currently available sources of data that will allow for monitoring progress in implementation in future years; (ii) a discussion on the quality of the data; and (iii) other methods such as qualitative and contextual analysis and case studies. In addition, the Task Force report notes where the indicators for the SDGs will provide additional data and information.
While the Task Force will be flexible and incorporate new data sources in the future, the inaugural 2016 report will serve as a reference guide for the FfD follow-up process. Future reports will also include the monitoring of the broader FfD outcomes, building on the annual monitoring done since the Monterrey Consensus by the FfD Office of the United Nations Department of Economic and Social Affairs, in collaboration with the five major institutional stakeholders of the FfD process.
Task Force assistance to the Financing for Development Follow-up
In fulfilling its mandate to advise this intergovernmental follow-up on progress, implementation gaps and recommendations for corrective action (para 133), this first exercise of the Task Force has focused on building a monitoring and assessment framework. The Task Force work was ongoing in the context of a changing global environment, with new challenges that risked impacting implementation of the agenda. The changing global context, combined with the sheer breadth of the data gathering exercise, raised several questions about future monitoring. In particular, it brought forth three observations on how the Task Force can best support the Forum on FfD Follow-up.
First, the changing global environment underscores the importance of maintaining flexibility in addressing key issues in the FfD follow-up process. As mandated in the Addis Agenda, the FfD follow-up process should address “new and emerging topics of relevance to the implementation of this agenda as the need arises” (para 131). The multidimensional expertise in the Task Force could help provide the Forum on FfD Follow-up with reliable and balanced assessments of the state of play on newly arising issues that have an impact on implementation of the FfD agenda. Indeed, the Task Force brings together the international community’s expertise and responsibilities in support of detailed policymaking in economic, financial and trade questions. A challenge for the Task Force will be how to incorporate flexibility into its work program, given the large number of agencies involved and the timing of the intergovernmental processes. The Task Force could contribute targeted analysis to assist the Forum on addressing new issues in its annual report, if timing allows. Alternatively, analytical inputs could take the form of policy briefs from the Secretariat, working with relevant Task Force members on a case by case basis.
The second point relates to the importance of balancing the breadth and depth of the Agenda. The Addis Agenda is extremely broad, covering seven chapters and cross-cutting issues and including hundreds of commitments and action items. While the breadth of the Addis Agenda calls for full coverage of this wide range of issues, the complexity of the issues addressed also demands in-depth discussions, supported by data and analytical work. To cover the entire agenda in depth every year will most likely exceed a reasonable page limit of the Task Force’s report. It may also overburden the Forum on FfD Follow-up given its mandate of ‘up to five days’. Yet to not cover the full agenda could leave important gaps in implementation.
To address this challenge, the Task Force has discussed a three-pronged approach for the report: first, inclusion of a brief discussion of the global context and its implications for implementation of the agenda and the follow-up process; second, a concise overview of each chapter of the full agenda, including updated data and pertinent issues as well as updates on new initiatives called for in the Addis Agenda (such as the Global Infrastructure Forum and the Technology Facilitation Mechanism), while covering the broader set of commitments and action items in an on-line annex; and third, if Member States so request, a discussion of specific thematic issues, drawing on inputs from across the seven action areas of the Addis Agenda. Such a theme or themes, if supported, could for example draw from the cross-cutting issues delineated in the Addis Agenda, the HLPF or ECOSOC theme, or other issues. The thematic approach would, however, necessitate further guidance from Member States. Given the time necessary to produce a full in-depth report, especially with the active engagement of over 50 agencies, such guidance would need to be given in a timely manner. Member States may wish to consider including recommendations on modality agreements in the prior year’s agreed conclusions of the Forum on FfD Follow-up, or alternatively, laying out in those conclusions a plan of how and when those modalities could be agreed to ensure adequate time for preparation of the Report.
The third point addresses the question of how to engage countries on a national level in the FfD process. While the Report is global in nature, several of the issues addressed in the action areas, particularly those related to national sustainable development strategies, would be best informed by country reporting. Yet, countries already carry a significant reporting burden for the SDGs. Further guidance from Member States would be needed to assess options for country reporting in the FfD process, and its relation to related efforts for the SDGs. Finally, the Task Force will be pleased to have feedback on its current monitoring proposals, which build on the indicators from the SDGs, but go further to serve as a basis for analysis on the full Addis Agenda and the MoI of the SDGs, from the Forum on FfD Follow-up.
Moving from monitoring to action
As noted, the monitoring exercise carried out by the Task Force serves a two-fold purpose: to advise the intergovernmental follow-up on progress and implementation gaps, and to provide recommendations for corrective action. This advisory function establishes an important link between monitoring and implementation. It was perceived as too weak in the experience of the MDG Gap Task Force Report, which in its final assessment found that the monitoring of commitments must be complemented by effective accountability mechanisms and avenues for advocacy to have a continued impact. The Task Force report and its discussion at the intergovernmental level can serve to provide this link.
In the context of an aspirational and nonbinding agreement, such monitoring is a central component and lever of change for achieving progress over time. Indeed, if it leads to a deeper understanding of the issues and the creation of consensual knowledge, monitoring and analysis can change perception of policy options and become a driver of change, as evidenced in the field of environmental agreements. The norms and principles contained in international agreements confer legitimacy and can reinforce the positions of political actors. At the same time, it can contribute to the diffusion of policy approaches and peer learning when it serves to bring together a community of practitioners that can exchange experiences and learn from each other.
Combined with the intergovernmental and multistakeholder discussion in the FfD Forum, it may be hoped that the knowledge created through this monitoring and review exercise can in turn support greater political traction for implementation of the Addis Agenda and the MoI of the 2030 Agenda at national and global levels.