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India, US clinch deal on WTO food stocks, trade facilitation impasse
India and the US have announced that their stand-off over food stockholding at the WTO has been resolved – potentially paving the way for the implementation of a separate deal on trade facilitation, as well as progress on the broader negotiating agenda at the global trade body.
“We are extremely happy that India and the US have successfully resolved their differences,” said Indian Commerce and Industry Minister Nirmala Sitharaman in a statement on Thursday.
A separate statement from US Trade Representative Michael Froman confirmed that progress had been made. “On the basis of this breakthrough with India, we now look forward to working with all WTO members and with Director-General Roberto Azevêdo to reach a consensus that enables full implementation of all elements of the landmark Bali Package,” Froman said.
While specific details about the breakthrough were publicly unavailable, delegates in Geneva viewed it as a positive step, noting that the terms will next need to go to the rest of the membership for review.
Food security and farm subsidy rules
In July, India had refused to approve the adoption of a Protocol of Amendment that would allow the WTO’s new Trade Facilitation Agreement (TFA) to be integrated into the global trade body’s legal framework – a key step in the implementation process.
The reason, New Delhi explained at the time, was the slow progress in devising a “permanent solution” to problems developing countries face under current farm subsidy rules in buying food at government-set prices to stock as part of their food security schemes.
The veto threatened to unravel the package of agreements that trade ministers had reached in Bali, Indonesia, at the organisation’s ninth ministerial conference last December.
Among other elements, this included a deal not to initiate trade disputes against developing countries’ food stockholding schemes, while a “permanent solution” was being negotiated for adoption in time for the 2017 ministerial conference.
The new US-India agreement clarifies that this “peace clause” mechanism will “remain in place until a permanent solution regarding this issue has been agreed and adopted,” according to a briefing on the US Trade Representative’s website.
The accord also “sets out elements for an intensified programme of work and negotiations” on food stockholding, the summary says, while noting that the TFA should be implemented “without conditions.”
Sticking points resolved
The main aspects of the newly-announced accord had reportedly already been agreed between the two trading powers before talks fell apart just before midnight on 31 July.
However, it remained unclear how the US and India were expecting to resolve what had reportedly been the sticking point at that time: whether an eventual “peace clause” deal would take the form of a decision of the WTO’s General Council, as New Delhi wanted – or a statement by its chair, as preferred by Washington.
Sources familiar with the talks told Bridges that, in July, the US had been reluctant to agree to India’s demands on the legal form of the accord, as they feared it would effectively amount to rewriting the agreements reached at Bali.
In contrast, India had feared that the legal value of a statement from the chair of the General Council would not be adequate to protect it later from challenge it needed until a permanent solution was reached.
Sources told Bridges that they were expecting the US to agree to a General Council decision on the issue, along the lines of an outline deal that has been under discussion since September.
High-level maneuvering
The announcement of the bilateral agreement comes only two days before leaders from the G-20 group of major economies are set to meet in Brisbane, Australia.
Over the last three-and-a-half months the food stocks issue has risen to the top of governments’ agendas, with the issue being discussed by US President Barack Obama and Indian Prime Minister Narendra Modi when they met in September.
With the topic reportedly already having dominated talks among G-20 trade ministers in July, sources speculated that trade officials were probably keen to ensure the issue did not overshadow the upcoming meeting among heads of state and government as well.
Following a meeting between Modi and senior trade officials in New Delhi, an envoy was sent to Geneva last week – although no confirmation was made at that time of whether a formal accord was forthcoming.
In the last few weeks India has also sought to address concerns its trading partners have raised about a lack of official data on its food stockholding and farm subsidy schemes. In September, the government notified figures for a seven-year period, up to 2010-11.
At the same time, projections for food and agricultural markets are already anticipating substantial changes as the government begins to roll out plans to expand the provision of subsidised food to millions of food insecure people.
Agriculture committee meeting Thursday
Several delegates from other countries told Bridges that they were unaware of the exact details of the US-India agreement.
However, with the WTO’s regular Committee on Agriculture meeting taking place on 13 November 2014, trade officials said that the accord would not be discussed until later.
Regular sessions of the committee on agriculture are tasked with reviewing the implementation of existing WTO rules on farm trade, rather than negotiating new agreements.
TF next steps?
A few more steps still remain for implementing the TFA, sources noted. A few explained that the Preparatory Committee on Trade Facilitation – which is tasked with taking the necessary steps to allow the deal to be brought into force – will still need to meet to finalise the text of the Protocol of Amendment and associated General Council decision.
Both are necessary to incorporate the TFA into the WTO’s legal framework so that individual members can then ratify it. While the drafting process had been underway before the stalemate, building on proposed protocol text submitted by Norway, this has since been on hold.
“We still don’t actually have a protocol text,” one source said. “The question will be how that is handled. We don’t know at this stage.”
Delegates familiar with the TFA process generally welcomed the US-India step as a positive sign, while cautioning that some potential difficulties could remain.
While the focus has been in recent months on New Delhi, some other delegations had in the past raised questions over the balance of the Bali package and whether the implementation of the TFA should be made provisional on the conclusion of the Doha Round. While that suggestion was seemingly put to rest in July, sources noted that those concerns still may remain among some members.
Whether members will meet the target of ratifying the TFA domestically by 31 July 2015 – as indicated by trade ministers in Bali – is another open question. Ratification by two-thirds of the membership is required for the deal to enter into force for those members.
Some sources suggested that the ratification process could take longer, given the length of the domestic legislative process in some countries.
Shifting timeline
One trade source told Bridges that they expected a special General Council meeting to be convened in November, while the December meeting of the same body could be postponed.
The objective would be to allow more time for WTO members to discuss the post-Bali work programme on how to resolve the outstanding Doha issues, the source said.
Many noted that Thursday’s breakthrough was indeed a step in the right direction. However, others cautioned that rebuilding some of the substantial trust lost over the past few months could take time, and that meeting the end-year target for the Doha work programme would be unrealistic.
Another noted that the discussions among negotiating groups before the July breakdown were only just finishing their preliminary stages.
“The Director-General’s vision was modalities, and we’re a long way from that,” one said. “If members want something really substantive, that’s going to take time.
However, negotiators were broadly upbeat about the news of the US-India deal. “It’s positive,” said one, who added that “the WTO is still in business.”
In a statement issued by the global trade body on Thursday, the Director-General welcomed the news, while urging members to “redouble” their efforts in making up for the lost time caused by the delay.
“The post-Bali work programme remains a priority. Members will need to make every effort to get it back on track as quickly as possible,” Azevêdo said.
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Statement by the Heads of the Multilateral Development Banks and the IMF on Infrastructure
13 November 2014, Brisbane, Australia
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We, the Heads of the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the Islamic Development Bank, the World Bank Group and the International Monetary Fund, welcome the emphasis the G20 has placed on infrastructure over the past few years and the advances made this year under the Australian Presidency. We also welcome the new G20 Global Infrastructure Initiative and look forward to contributing to its implementation.
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Infrastructure is key to tackling poverty and promoting inclusive growth. Infrastructure helps improve access to basic services, especially for poor people, links producers to markets and connects countries to the opportunities in the global economy. Well-functioning infrastructure is essential to overcome bottlenecks to growth in emerging and developing economies, and as an enabler of private sector led growth. No country has developed without access to well-functioning infrastructure. At a time when the outlook for global growth is disappointing, investment in infrastructure can play an important role in boosting short-term demand, as well as bolstering longer-term supply capacity.
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MDBs are major players in infrastructure, providing over US$130 billion of financing for infrastructure annually. We work on the ground in countries at all levels of development, under country-owned and country-led strategies to support the full life cycle of infrastructure development – from advice on sectoral and business climate reforms, and project preparation, transaction structuring and financing, through to implementation and ongoing maintenance, as well as monitoring and evaluation of development impact. We help countries not only to build resilient infrastructure, but also to build the institutional capacity to manage that infrastructure over the longer term.
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Just as important as the quantity of spending is the quality of infrastructure spending. Infrastructure investments need to be sustainable: fiscally, economically, socially and environmentally. MDBs help countries to select the right projects, and design them for effectiveness and efficiency, maximizing their impact on growth and jobs. Through policy dialogue, we assist countries in thinking through what the public sector is best placed to provide, and where partnering with the private sector can promote greater efficiency, in the context of each country’s institutional capacity and policy environment. We work with countries to identify, allocate and mitigate the full range of risks associated with infrastructure projects, including, with the IMF, fiscal commitments arising from certain kinds of participation of the private sector in provision of public infrastructure. The IMF also works with countries to put in place sound fiscal frameworks and integrated budget processes that enhance management of the public investment budget, while also monitoring and containing risks stemming from any associated accumulation of public debt.
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The needs are immense: the infrastructure gap in emerging and developing economies is broadly estimated at over US$1 trillion per annum. Meeting these needs will require renewed efforts to mobilize resources from existing as well as new sources of finance, including from institutional investors. MDBs have the knowledge and experience to leverage greater private sector involvement in the infrastructure sector worldwide and are developing new platforms to mobilize private finance on a larger scale.
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Upstream, we are working with countries to create an enabling environment to mobilize investment through regulatory reforms and robust tender processes and legal frameworks for Public Private Partnerships (PPP). We are scaling up our efforts to develop the information base necessary to attract investors, working with partners to undertake assessments of country readiness for PPPs and building databases of projects and information on project documentation and project performance. We are developing a greater range of financing instruments, with new or improved capacity to deliver project structures that will attract the involvement of the private sector without recourse to sovereign guarantees.
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The critical barrier to achieving an uplift in infrastructure investment in emerging and developing economies is not a lack of available finance, but an insufficient pipeline of bankable projects ready to be implemented. In response, MDBs are strengthening project preparation through specific or dedicated project preparation facilities (PPFs). In addition to our existing PPFs, (e.g., the IDB’s InfraFund, the AfDB’s NEPAD Infrastructure Project Preparation Facility (IPPF), and EIB-hosted initiatives such as the Joint Assistance to Support Projects in European Regions and the Arab Financing Facility Technical Assistance Fund (AFFI-TAF) co-managed by IsDB and IFC), we are ramping up our efforts through complementary new initiatives such as EBRD’s Infrastructure Project Preparation Facility (IPPF) and AsDB’s Asia Pacific Project Preparation Facility (AP3F), as well as and the African Development Bank’s Africa50 Initiative, which will focus on both project preparation and project finance. The Global Infrastructure Facility (GIF), a World Bank Group Partnership, will provide an open global platform for greater collaboration in preparation and structuring of complex infrastructure projects – working with a number of MDBs as technical partners, and with the private sector, governments and bilateral and national development finance institutions to boost private sector investment in infrastructure in emerging markets and developing economies, and structuring projects to enable participation by institutional investors or other private providers of long-term financing.
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MDBs have a strong record of cooperation on infrastructure. At the policy level, MDBs work together to develop global public goods and knowledge sharing tools, including standard documentation covering project identification, preparation, procurement, monitoring and supervision, and capacity-building. We are promoting a harmonized approach among MDBs to project preparation and supervision, including through use of standardized procurement policies and documents and environmental and social safeguards; similar requirements for ex-ante cost-benefit analysis and project “executability” assessments; and the use of concrete metrics to monitor and report on development effectiveness. The IMF is developing a set of concrete guidelines on strengthening public investment management practices across countries at differing levels of development.
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We stand ready to bring our experiences and skills to the G20’s work on infrastructure and to support a proposed new Global Infrastructure Hub. We are well placed to contribute to knowledge sharing and creation of infrastructure networks. The MDBs active networks bring together in-depth and global expertise on infrastructure policy and design, as well as practitioners engaged in the business of structuring, financing and implementing projects. They include the wide range of private sector players with which we regularly work on projects, as well as counterparts in governments (national and subnational) and national development banks. We look forward to partnering with the G20 to convene events to share knowledge and develop practical tools to assist infrastructure policy-makers and practitioners. We would also be able to bring to the table our existing collaboration on knowledge and capacity-building initiatives as part of this to help countries learn from each other how complex projects have been planned, structured, tendered and implemented using real world examples. We would be happy to work with the Turkish Presidency and the G20 to host a first meeting on infrastructure issues in early 2015.
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Africa takes first important step in tackling large scale land-based investments
Continental efforts to adopt land policies that leverage on land as a strategic resource for inclusive and sustainable development took a step forward with the official launch of the African Union Guiding Principles on Large Scale Land Based Investments in Africa (LSLBI).
The launch, which took place during the Inaugural Land Policy Conference in Africa, this Wednesday at the African Union Conference Center in Addis Ababa, kick starts a decade during which African countries are expected to draft policies that recognize the strategic importance of land and encourage its efficient use in Africa’s efforts for structural transformation, industrialization and inclusive development.
“This set of principles will equip African countries and enable them to manage land in a transparent and sustainable manner and to negotiate investments with knowledge of resources available on one land as well as the rights attached to it,” said Joan Kagwanja, Chief of the Land Policy Initiative, housed by the Economic Commission for Africa in Addis Ababa.
Issues around land use and management are becoming important and will increasingly gain prominence as Africa continues to be an attractive destination for foreign – and local – investors. The continual discovery of minerals, and more recently, of oil puts more pressure on governments to negotiate deals that are both economically and socially beneficial to the peoples of Africa and this includes the way land is allocated and the consequences it has on populations living close to mining sites and oil fields.
Moreover, Africa accounts for nearly 60% of the world’s arable land, has a population of just over one billion individuals and records high demographic rates. And with global needs for food security rising, it is not surprising that Africa is seen as the next global ‘food reserve’ and that investors are vying for large portions of land ushering an era of controversial changing of hands of vast swathes of land, in some cases, without compensation to the affected populations.
“When the land grabs took place from 2008, African countries were not ready. Land had not been mapped, owners were unidentified and as a consequence, contracts were not negotiated in a way to make investments sustainable and dwellers ended up losing the most,” says Ms. Kagwanja.
The way forward is articulated in the African Union-led Guiding Principles on Large Scale Land Based Investments aim to facilitate national land policy development and implementation process and to improve the governance of large-scale land based investments. They are articulated as fundamental principles based on human rights of communities, responsible governance of land, social acceptance by affected communities, gender equality and women access to land ownership, cost-benefits study and mutual accountability. They are also aligned to national strategies for sustainable agriculture.
The challenge, following the launch of the LSLBI, is their adoption and operationalization by AU member States. But Ms Kagwanja believes that African countries are ready to take the challenge.
“We have already launched a series of training to build capacity of leaders, parliamentarians, jurists and other practitioners specializing in land issues. We hope that within the next three years at least, we will be able to stop land grabs. And that over the next decade, land management will have seen much needed improvement.”
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Bold commitments needed to secure growth and employment outcomes
The B20 is calling on G20 leaders to commit to a bold reform agenda and ambitious individual country growth strategies when they meet in Brisbane at the annual G20 Leaders Summit this weekend.
Mr Richard Goyder AO, B20 Chair, said the B20 would be asking the G20 to make commitments in five key policy areas – finance, human capital, infrastructure, trade and transparency to drive growth and employment outcomes.
“Since the onset of the financial crisis, governments have tackled low growth with fiscal and monetary policy,” Mr Goyder said. “But this level of spending is clearly not sustainable and is not inspiring the commercial and consumer confidence needed to kick-start the global economy.
“The B20 welcomed the finance ministers’ decision earlier this year to set a growth target of two per cent above expectations over the next five years. But sustainable growth will require business investment driven by more than just confidence.
“The enabling environment for business must be improved to stimulate investment, enhance productivity and increase economic activity and growth.”
The OECD’s latest Economic Outlook found the global economy is still stuck in low gear but it is expected to accelerate gradually if countries implement growth supportive policies.
“The report found that reforms to tax, trade, labour and product markets will benefit domestic investment and global trade, and support greater employment and consumption around the world.
“The B20 has made 20 mutually reinforcing recommendations to the G20, which if implemented, would easily exceed the G20 additional two per cent growth target and create millions of new jobs.
“We have laid a blueprint for business to work with governments to combat corruption and improve transparency, major barriers to growth, which will promote greater integrity in commerce.”
Mr Robert Milliner, B20 Sherpa, said he expected progress to be made when the B20 meets with G20 leaders, particularly on the infrastructure agenda, but that more work needed to be done on labour market reform and to stimulate trade.
“We are encouraged by proposals to establish a Global Infrastructure Hub. Our research shows that establishing a Hub would support an additional $2 trillion in infrastructure capacity, add $600 billion to global GDP and support 10 million additional jobs by 2030,” Mr Milliner said.
“Productive infrastructure investment is the key to sustainable increases in economic growth because it creates permanent direct employment and enhances productivity for the commercial enterprises that use it,” he said.
Trade has slowed since the financial crisis in line with the slowdown in GDP growth, even though import tariffs have remained low.
“Business believes that the focus must now be on tackling non-tariff barriers and making supply chains more efficient if we are to reignite international trade.
“The setback to the Bali Trade Facilitation Agreement was disappointing but we need not be defeated by it. The customs reforms at its centre can be implemented by every country individually and every country will benefit by doing so,” Mr Milliner said.
Mr Goyder said general business investment is hampered by unnecessarily rigid labour market policies and inadequate recognition of the effects of global financial regulation on the availability of finance for Small and Medium Enterprises.
“Labour market policy settings contribute directly to the ability of entrepreneurs to start and grow businesses and to the creation of additional sustainable jobs. Flexibility enhances value by enabling employers to find labour with the right skills.
“On global financial regulation our message has been to pause, take stock and align the regulation introduced since the crisis to ensure it is fit for purpose and that any unintended consequences are identified and dealt with.
“Substantial commitments were made by G20 Finance Ministers and Central Bank Governors in September towards meeting this goal and we want to ensure this momentum continues into next year.”
Mr Goyder said current growth rates will not substantially lower unemployment levels or improve living standards.
“We need a real and measurable improvement in the rate of growth before we will see noticeable improvements in the quality of people’s lives,” he said.
“The B20 believes the G20 remains the most economically significant global institution. It is small enough to be nimble and yet broadly representative, with the power to quickly change the direction of the global economy. We hope to see that translate into commitments for growth in the communiqué on Sunday.”
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Zim ponders the struggle to industrialise
As the world’s least industrialised region with a youthful and fast-growing workforce, African policymakers have for decades put industrialisation at the top of their development agendas. To date, however, industrialisation policies have failed as the share of manufacturing industry in sub-Saharan GDP has declined over the past 35 years to 10 percent from 16,5 percent in 1980.
In two of the few countries that did industrialise rapidly – South Africa and Zimbabwe – manufacturing’s share in GDP has halved from earlier peaks in the 1990s so that today both are striving to reverse this “premature de-industrialisation.” Zimbabwe, though, is hardly typical. Its manufacturing sector took off in the 1960s and 1970s when the government of the then Southern Rhodesia imposed blanket import controls to counter mandatory UN economic sanctions following its unilateral declaration of independence. At the peak of the “sanctions boom” in the mid-1970s, manufacturing accounted for 22 percent of GDP, reaching 27 percent at the start of the 1990s.
Today, it is a mere 13 percent and the sector, which at its peak employed over 200 000 people – one in five of non-farm formal employees – now has 97 000 workers. There is no single explanation for the decline which began after President Robert Mugabe was persuaded to implement an International Monetary Fund (IMF) and World Bank structural adjustment programme in 1991 as a result of which trade was liberalised and manufacturers lost their blanket protection against foreign competition.
Following the demise of apartheid in 1994, potential investors turned to neighbouring South Africa with its more favourable logistics, much larger market and lower unit costs. Mugabe’s fast-track land resettlement programme in 2000 fractured the strong supply linkages between commercial agriculture and manufacturing and as the country slipped into hyperinflation – with inflation running at billions of percent – industrial production collapsed.
Dollarisation at the start of 2009 stabilised the economy, but industry has grown at 4,5 percent annually – less than half the rate of GDP growth – and manufacturing output in 2014 is no higher than in the early 1970s. Hardly surprising then that the 2014 survey by the Confederation of Zimbabwe Industries (CZI) released recently paints a bleak picture of industry’s prospects.
It estimates capacity utilisation at 36 percent, down three points from last year, while over a third of respondents to its survey said they are operating at less 50 percent of capacity. Over half said their businesses were no longer viable – a figure supported by published corporate results showing that half of the firms to report in recent weeks are making losses.
Respondents blame weak domestic demand (28,8 percent), working capital constraints (26,5 percent) and competition from imports (14,2 percent) for this situation. 80 percent said Zimbabwe’s infrastructure is in a “deplorable” state – so poor that without massive investment it would be impossible to sustain economic growth over the medium term.
At the CZI survey launch, industry minister Mike Bimha revealed that his officials had drawn up a plan for industrial recovery which has since been approved by cabinet. Details have still to be published but in the recent budgets the government has increased import tariffs to protect local manufacturers while simultaneously taking a number of items off the open general licence list, meaning that importers must obtain a licence to bring in goods from abroad.
Protection is unlikely to do the trick. At US$14 billion, the domestic market is small and forecast to grow at around 3,5 percent a year for the rest of the decade. In a landlocked country, industry is poorly located geographically with neighbouring South Africa which produces half of the sub-Saharan region’s manufactured goods accounts for 48 percent of Zimbabwe’s imports.
The investment climate is poor as reflected in the country’s ranking (171st out of 189 countries down from 156th in 2010) in the 2015 World Bank/International Finance Corporation Doing Business report, and a similarly dismal place in the World Economic Forum’s Competitiveness Index.
Improving competitiveness will be a tough ask in a dollarised economy where, according to the IMF, the US dollar was 15 to 25 percent overvalued earlier this year since when the US unit has appreciated significantly, while with a sliding rand South African imports become more competitive.
Higher import tariffs are an unpromising avenue too for a country which only this week signed to join the proposed 26-nation Tripartite free trade area, made up of the Common Market for Eastern and Southern Africa, East African Community and the Southern African Development Community, due to launch in 2017.
It is time for policymakers across sub-Saharan Africa, including Zimbabwe to face up to the new realities of industrialisation for late-starters. Some academics and researchers drawing on emerging market experiences believe that the African development path might well bypass manufacturing altogether as countries leapfrog from dependence on agriculture mining or oil to a service-driven economy.
They should take heed of George Magnus who warns that the increased role of industrial supply chains, intangible capital, skills, and services in the structure of advanced manufacturing output is “eroding a past guarantee of successful development” – industrialisation driven by plentiful low-wage labour. If he is right, policymakers and entrepreneurs need to look for new development models rather than seeking to copy what worked in Asia 20 years ago.
This article originally appeared in beyondbrics by The Financial Times.
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‘WTO’s trade facilitation pact not balanced with development agenda’
Tanzania’s senior official at the permanent mission in Geneva, Switzerland, Prisca Mutani, has said that the Trade Facilitation Agreement (TFA) as a legally binding pact is not balanced in a manner consistent with the development agenda.
In her presentation paper at the Third Regional Meeting of the PACT EAC Project in Bujumbura, Burundi, Mutani said that the TFA has no binding commitment on the question of technical assistance and capacity building as it lacks clarity on source of funds, and terms of accessing the same.
“[The] Trade Facilitation Agreement Facility was launched by the WTO but it only addresses assistance on soft projects such as workshops, needs assessments and other related aspects,” she said. She went on to say that the system must work for all and not just for selected few and for the timely correction of any imbalance or abnormalities in the system or its rules is critical.
“If the system fails to function in a fair and just manner then the most vulnerable sections of the world’s population would be left behind.
She added: “The other challenge that is emerging is the Plurilateralisation of the TFA due to the failure to adopt the Protocol of Amendment of which this is being opposed by some of the developing countries including the African Group and the LDCs claiming that these are isolationist in nature and undermine multilateralism”.
She pointed out that the African ministers in various African Ministerial Conferences took a stand against plurilateral approaches and so far there has been no consensus on these issues and consultations are still going on.
She concluded that the biggest challenge with the architecture of negotiations within WTO is the inability of members to meaningfully address issues of specific importance to developing countries and LDCs. ”The notion of the winner takes all is supreme and the principle of consensus still remains to be the biggest gift to weak and poor countries and must be safeguarded,” she said.
WTO members formally agreed to launch negotiations on Trade Facilitation in 2004 pursuant to the July 2004 Framework Package. This was part of the four Singapore issues along with Investment; Government Procurement and Competition Policy. Main Proponents were the major Developed Countries while many Developing Countries took a defensive position.
The TF negotiations focused on measures and policies intended for simplification, harmonization and standardization of boarder procedures The negotiations did not address priorities for increasing and facilitating trade infrastructure, building productive and trade capacity, marketing networks and enhancing inter regional trade Instead the negotiations were geared towards facilitating imports for countries that upgrade their facilities as an expansion of exports capability that require a different type of facilitation involving improving supply capacity and access to markets.
The TFA was adopted as part of the Bali package at the conclusion of the 9th WTO Ministerial Conference on 07 December 2013 in Bali Indonesia. The TF Prepcom met thrice to consider this matter: 26-28 of May, 02-03; 10 -11 July 2014 before summer break, and once thereafter on 29 September 2014. It could not reach consensus in all these meetings.
Members agreed to finalize work related to the Agreement by establishing a Preparatory Committee on Trade Facilitation. Ministers directed that the Protocol shall enter into force in accordance with Article X: 3 of the WTO Agreement. Some Members have already notified Category A commitments while others are still making the submissions.
Ministers in Bali had the chance to draft a full Protocol of Amendment and open it for acceptance. However, the PACT EAC project consists of two separate but synergetic segments for human and institutional capacity building of East African Community (EAC) stakeholders. The two segments focus on issues related to trade-climate change-food security linkages and WTO discussions/negotiations, respectively.
Through research-based advocacy, networking, training and by linking grassroots with Geneva, the project assists EAC stakeholders in better understanding and dealing with the critical challenges of climate change on food security, and effective participation in the multilateral trading system, with the ultimate objective of alleviating poverty in the EAC.
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Expert Group Meeting on Investment Policies and Bilateral Investment Treaties Landscape in Africa
The Economic Commission for Africa’s Regional Integration and Trade Division, has undertaken a field study on Investment Policies and Bilateral Investment Treaties Landscape in Africa. Part of the analysis of the study was based on consultations with, and responses to questionnaires administered to, relevant stakeholders in member States including Ministries of Trade, Industry and Finance, as well as Investment Promotion Agencies, Chambers of Commerce, and other departments in charge of investment issues.
Many African governments have rushed into signing bilateral investment treaties to encourage FDI. Some countries are now calling for a review or even renegotiation of existing BITs in order to replace them with new models. The main objectives of the study were therefore to take stock of these agreements including their prevalence, scope, application and contribution to investment, identify key issues, concerns and challenges arising from them, examine their regional integration dimensions, and come up with appropriate policy recommendations. The study, which is on the agenda of the upcoming AU Conference of Ministers of Trade in December 2014, will help shed light and contribute to the policy dialogue on the experience with BITs in Africa.
In order to enrich the report, RITD is organizing an expert group meeting, which is scheduled to take place at the Balalaika Hotel in Sandton, South Africa from 25 to 26 November 2014. The meeting is expected to be attended by about 20 experts drawn from member States, RECs and academia.
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Uganda asks world trade body to make markets available
The Least Developed Countries (LDCs) have expressed the need to trade more freely with developed members in the World Trade Organisation (WTO).
In an annual report which the WTO Secretariat presented to the sub-committee on LDCs’ market access last week, Uganda, presently the coordinator of the LDCs, said WTO member countries – mostly the wealthy ones, need to open up their markets for products from poor economies.
Uganda also suggests that there should be more trading between each other as it is a far better alternative compared to relying on aid from the Most Developed Countries (MDCs).
“Uganda (representing the LDC group) highlighted the challenges faced by LDCs, and called upon members to open up markets for LDC products and to increase aid for trade to LDCs,” reads the report which provides an overview of the market access for LDC products in developing and developed economies as well as the non-tariff measures that affect access to these markets.
The report further indicated a good reception from LDCs such as Uganda, the analysis of LDCs’ trade in services and urged members to put the WTO 2011 LDC Services Waiver decision into action as LDCs and others called for the full and timely implementation of duty-free and quota-free market access.
The sub-committee also underlined the importance of simplified rules of origin to facilitate LDC exports. LDCs are currently facing challenges in complying with preferential rules of origin.
Rules of origin are the criteria needed to determine the national source of a product. To benefit from the duty-free and quota-free access, exporters from an LDC need to comply with the criteria set by the importing country to determine where the product was from.
The Bali decision of preferential rules of origin provides a set of guidelines for members to formulate their rules of origin for LDCs in a transparent, simple and objective manner.
Uganda also welcomed the Standards and Trade Development Facility (STDF’s), funding which is meant to assist LDCs in articulating their development needs.
Uganda’s Export Trade
According to the Trade minister, Amelia Kyambadde, in 2013, Uganda recorded total export earnings of $ 2.82 million, which is a 2.4 percent increase from $2.81 million of 2012.
The total value of imports declined by 3.7 per cent in 2013 from $ 6.0 million to$ 5.8 million.
“Our trade deficit improved from $ 3,284.6 million in 2012 to $ 3,042.1 million in 2013. The Asian continent remained the major source of Uganda’s imports while the COMESA regional bloc maintained its lead as the main destination for Uganda’s exports,” Trade minister Amelia Kyambadde said.
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India: Statement on WTO made by Commerce and Industry Minister
Commitment to Multilateralism
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India is a strong supporter of the multilateral trading system and is committed to strengthening it and ensuring that the WTO remains a key pillar of the global economic edifice. The WTO is in the best interest of developing countries, especially the poorest, most marginalized ones among them and we are determined to work to strengthen this institution.
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The principles of non-discrimination, predictability, transparency and, most importantly, the commitment to development underlying the multilateral trading system are too valuable to lose. Plurilateral trading arrangements, among a few, cannot substitute the multilateral system and are also against the spirit of the fundamental WTO principles of transparency and inclusiveness.
Reasons for India’s Stand
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The Doha Development Agenda which was agreed in the year 2001 is the very first round dedicated to development. The agenda is a fine balance between market access and development issues.
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We supported the Bali Package but when subsequent developments belied that hope, India had no option but to seek a course correction. India, therefore, took the stand that till there was an assurance of our concerns being addressed, it would be difficult to join the consensus on the Protocol of Amendment for the Trade Facilitation Agreement.
WTO Rules and Food Security
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The relationship between international trade and food security has been the subject of debate; so also, the role of WTO rules in enabling and promoting food security.
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While the relevant WTO rules recognize food security concerns, their primary focus is to liberalise agricultural trade rather than to ensure food security. However, the fact is that some of these rules are proving to be a hindrance to food security efforts.
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We believe that the rules of the WTO should support the food security efforts of countries “rather than policies having to tiptoe around WTO rules,” as the former UN Special Rapporteur on the Right to Food said.
Commitment to the Trade Facilitation Agreement
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India has repeatedly reiterated its commitment to the Trade Facilitation Agreement.
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We recognise its value for trade and for that very reason we agreed to it in the larger interest of global trade.
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However, for developing countries the benefits may not be commensurate with the associated costs. Implementation of the rest of the Bali Decisions will give some comfort to the developing countries and LDCs, even though most of the non-binding decisions do not hold out the promise of substantial gains for these countries. We will continue to work for the implementation of the Bali Package and the DDA.
Broader Understanding of India’s Position/Resonance in the Developing World
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While there was much media debate and concerns expressed regarding the impact of India’s stand in the WTO, it has undeniably resonated across the world. Many countries saw merit in what we wereasking for. India was never alone or isolated. Others were unfortunately simply not speaking up.
Call to WTO Membership to Take this Forward
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We are extremely happy that India and the US have successfully resolved their differences relating to the issue of public stockholding for food security purposes in the WTO in a manner that addresses our concerns.
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This will end the impasse at the WTO and also open the way for implementation of the Trade Facilitation Agreement.
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We are confident that the membership will take the matter forward in the WTO in a constructive spirit. This would be an important contribution by the WTO reflecting its commitment to development.
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We urge the WTO membership to take this forward in the General Council on behalf of the Ministerial Conference and pave the way to spurring the WTO to more such successes.
» See also Statement by Ambassador Froman on U.S.-India WTO Trade Facilitation Agreement
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Statement by Ambassador Froman on U.S.-India WTO Trade Facilitation Agreement
U.S. Trade Representative Michael Froman released the following statement welcoming an agreement between the United States and India on elements aimed at unlocking progress at the World Trade Organization (WTO).
The agreement announced today between the United States and India paves the way for full implementation of the WTO’s Trade Facilitation Agreement (TFA), the first multilateral trade agreement to be concluded in the history of the WTO. The agreement also reflects shared understandings regarding the WTO’s work on food security.
“A year ago at the WTO Ministerial Conference held in Bali, all WTO Members, including the United States and India, celebrated the achievement of the TFA and a broader package of measures addressing concerns of all WTO Members. Efforts to put the TFA in place were dealt a setback in July, when a small group of countries, led by India, raised concerns about the status of the WTO’s work on food security issues and blocked consensus on implementing the TFA. We have overcome that delay and now have agreement with India to move forward with full implementation.”
“With the WTO confronting a mounting crisis of confidence, President Obama and Prime Minister Modi held productive discussions on this issue, including during the Prime Minister’s visit to Washington in September. In recent days, officials of both governments worked intensively and reached an agreement that should give new momentum to multilateral efforts at the WTO. In doing so, the United States and India reaffirm their joint commitment to the success and credibility of the WTO.
“On the basis of this breakthrough with India, we now look forward to working with all WTO Members and with Director-General Roberto Azevedo to reach a consensus that enables full implementation of all elements of the landmark Bali Package, including the Trade Facilitation Agreement.”
“This has been a good week for trade and the growth and jobs it supports here in the United States. The U.S. worked with China to achieve a breakthrough on the Information Technology Agreement, worked with India to move forward with the implementation of the Trade Facilitation Agreement, and worked with our TPP partners to bring the end of these landmark negotiations clearly into sight. Together, these will provide a major boost to the global trading system at a critical time in the world's economic recovery, a central focus of the upcoming G-20 Summit.”
To learn more about the U.S.-India agreement on Trade Facilitation, please click here.
» See also India: Statement on WTO made by Commerce & Industry Minister
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SA rejects hazardous waste treaty
THE South African government does not intend ratifying an international treaty aimed at banning the importation of hazardous waste into Africa, saying it wants to protect SA’s own waste disposal industry. This is according to a parliamentary reply by Environmental Affairs Minister Edna Molewa to a question from Congress of the People MP William Madisha.
According to the Department of Environmental Affairs, SA generates about 46-million tonnes of waste annually. Eskom’s nuclear power plant at Koeberg, near Cape Town, generates about 32 tonnes of spent radioactive fuel each year. Over a 40-year design lifetime of the plant, this adds up to 1,280 tonnes.
SA’s mines, research institutions and hospitals also generate radioactive and hazardous waste. However, the figures for this from the Department of Environmental Affairs were last compiled 16 years ago. The department said the total waste disposal industry employed about 65,000 people and had an annual turnover of about R10bn.
In her reply, Ms Molewa said the hazardous waste industry had great potential to create jobs. "It is for this primary reason that SA does not intend to ratify the Bamako Convention, in order to ensure that SA’s recycling industry is protected and encouraged to grow."
The convention is an international treaty that prohibits the import of any hazardous waste. The convention was initially negotiated by 12 African nations in 1991 and came into force in 1998.
The need for the convention came after the realisation that firms were exporting dangerous and, at times, highly radioactive waste from developed countries to Africa. According to international media reports, the dumping of such waste has been going on for about 40 years, starting in the early 1970s.
Ms Molewa said that the industry was encouraged to use the opportunity, which contributed to job creation and enterprise development.
She said SA accepted hazardous waste from other Southern African Development Community countries at its licensed facilities due to the lack of capacity in those countries to dispose of such waste in an environmentally acceptable manner.
"The proximity rule is applied, where wastes are to be treated as close as possible to the source of generation. Furthermore, the recycling of hazardous waste in an environmentally sound manner is also encouraged," Ms Molewa said.
She said waste disposal facilities should ensure that the working environment was safe and that the workers were informed of possible health and safety dangers.
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Developing countries to play greater role in OECD/G20 efforts to curb corporate tax avoidance
The OECD released on 12 November 2014 its new Strategy for Deepening Developing Country Engagement in the Base Erosion and Profit Shifting (BEPS) Project, which will strengthen their involvement in the decision-making processes and bring them to the heart of the technical work. The BEPS Project aims to create a coherent set of international tax rules to end the erosion of national tax bases and the artificial shifting of profits to jurisdictions solely to avoid paying tax.
The strategy has three key elements:
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Building on their engagement in the earlier phase of the BEPS Project, about 10 developing countries, including Albania, Jamaica, Kenya, Peru, Philippines, Senegal and Tunisia, will be invited to participate in meetings of the key BEPS decision making body – the Committee on Fiscal Affairs (CFA) – and its technical working groups. Several other developing countries are expected to confirm their participation in the CFA or the technical working groups in the coming weeks.
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Five regionally organised networks of tax policy and administration officials will be established, to coordinate an ongoing and more structured dialogue with a broader group of developing countries on BEPS issues. Building on the effective BEPS consultations that took place in 2013 and 2014; these networks will strengthen the involvement of developing countries in Asia, Africa, Central Europe and the Middle East, Latin America and the Caribbean, and Francophone countries.
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Support for capacity building to address BEPS issues in developing countries is imperative. The regional networks will play an important role in the development of toolkits needed to support the practical implementation of the BEPS measures and as well as some of the priority issues for developing countries (tax incentives and transfer pricing comparable data) which are outside the BEPS Action Plan. The regional networks will also be a forum for interested developing countries to discuss the negotiation and implementation of the multilateral instrument under Action 15 of the BEPS Project.
The African Tax Administration Forum (ATAF) and the Inter-American Centre for Tax Administration (CIAT) will continue to play a critical rolein leading regional discussions on the BEPS priority issues for developing countries. They will help ensure those views are reflected in discussions on the development of the BEPS measures and the practical tools for supporting implementation. They will also be invited to join the meetings of the CFA and the technical working groups, together with the international organisations (the IMF, the World Bank Group and the UN), which already participate.
A two-part report from the G20 Development Working Group shows that BEPS issues pose acute problems for developing countries, most of which have lower tax bases than advanced economies and raise a far higher share of tax revenues from corporate taxes than developed countries. The report drew extensively on engagement with developing countries: more than 80 developing countries and other non-OECD/non-G20 economies were consulted through four in-depth regional consultations and five thematic global fora in the first phase of the BEPS Project.
The report was presented last September to the G20 Finance Ministers who called on the OECD to develop a new structured dialogue process for deepening developing country engagement in tackling BEPS issues and ensuring that their concerns are addressed. Developing countries have consistently recognised the importance of addressing base erosion and profit shifting as part of wider measures to increase domestic resource mobilisation, in order to promote stable economic growth and invest in infrastructure, education and health, among other government priorities.
A two-day workshop in December 2014 will allow developing countries interested in participating in the BEPS work of the Committee on Fiscal Affairs (CFA) and its technical working groups to discuss the practical aspects of deepened engagement in the Project, as well as their priority issues. At the same time, the donor community will meet to discuss plans to ensure that developing countries have the resources necessary to engage in the BEPS project effectively.
The OECD released last September its first recommendations towards coherent international tax rules to end the erosion of national tax bases and the artificial shifting of profits to jurisdictions to avoid paying tax. The recommendations were endorsed by G20 Finance Ministers during a meeting in Cairns, Australia last September and will be discussed during the Leaders’ Summit that will take place on 15-16 November in Brisbane.
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G20 leaders meet to discuss global economics
The weak global economic climate will come under the spotlight when members of the Group of 20 countries meet in Brisbane, Australia from 15 to 16 November.
The G20 Leaders’ Summit will take place at the Brisbane Convention and Exhibition Centre where 4 000 officials from member countries, including a delegation from South Africa led by President Jacob Zuma, will thrash out a wide range of global economic issues to try and find solutions to improve people’s lives.
According to a statement from The Presidency of South Africa, the focus of the summit will be on how the G20, both collectively and individually, can take additional measures to significantly raise global growth by implementing policies aimed at lifting GDP by more than 2% over the next five years.
G20 to promote collective growth
“The G20 member countries have agreed to take concrete actions to promote this collective growth ambition, including measures on investment, competition, trade and employment.
“To achieve this, individual G20 member countries have developed country-specific growth strategies, which will form the basis of a proposed G20 Brisbane Action Plan, to be submitted to Leaders for endorsement,” according to the statement.
A day before the start of the official summit, CEOs of major companies from G20 countries will engage with G20 leaders to discuss economic issues. On the first day of the summit Australia’s Prime Minister Tony Abbott will host an informal retreat where leaders from the G20 countries will deliberate on current challenges and economic reform priorities.
BRICS leaders meeting
On the sidelines of the G20 Leaders’ Summit, BRICS Leaders are expected to meet “to reflect” on the progress made with regard to the implementation of the 2014 Fortaleza Declaration. The meeting is expected to focus on the establishment of the New Development Bank and its Africa Regional Centre.
South Africa (the only African member of the G20) will use the opportunity presented by both the G20 Leaders’ Summit and the BRICS Leaders meeting to issues of particular concern to South Africa and the rest of Africa.
Of note, South Africa has set a national growth target of 5% by 2019 and is implementing various measures and interventions “to jump-start the economy”, according to The Presidency. “In particular, the implementation of a National Development Plan is key to achieving South Africa’s own national growth target and also in addressing the challenges of poverty eradication, job creation and inequality,” The Presidency said.
About Group of 20
According to the G20 website the G20 is the premier forum for its 19 countries plus the European Union. Each year, the G20 president invites several guest countries each year to its annual meeting.
The G20 was formed in 1999 as a meeting of Finance Ministers and Central Bank Governors in the aftermath of the Asian financial crisis. Later on in 2008, the first G20 Leaders’ Summit was held and the forum played a key role in helping member countries respond to the global financial crisis. Since then, G20 leaders have met eight times.
In the last five years, the G20 has played a critical role in restoring economic stability in the world economy and is fully working on growing national economies. “With the world now free from immediate economic crisis, the G20 can increasingly shift its attention to driving practical actions that will lead to sustained global growth,” says the website.
The G20 is supported by international organisations, including the Financial Stability Board, the International Labour Organisation, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the United Nations, the World Bank and the World Trade Organization.
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Five countries bid to host SADC renewable energy centre
At least five countries are vying for the right to host the proposed regional centre for the promotion of renewable energy in southern Africa.
According to a recent meeting of the Southern African Development Community (SADC) Energy Thematic Group held in Botswana, bids to host the proposed SADC Regional Centre for Renewable Energy and Energy Efficiency (SACREE) have been received from Botswana, Mozambique, Namibia, South Africa and Zimbabwe.
South Africa’s bid is, however, subject to parliamentary approval.
Head of the SADC Directorate on Infrastructure and Services, Remigious Makumbe said establishment of SACREE, including the choice of the host country, was awaiting the holding of the annual SADC Energy Ministers meeting.
The SADC Energy Ministers meeting was scheduled for September, but was postponed after Malawi said it was not able to host the meeting due to various challenges. Mauritius has been approached to serve as alternative host.
The decision of the ministers would be forwarded to the SADC Council in February 2015, which would give final approval.
The establishment of SACREE is expected to increase the uptake of clean energy in southern Africa, enabling the region to address its energy challenges.
SADC has been experiencing power shortages dating as far back as 2006 due to a combination of factors, including the lack of investment in the energy sector.
This is despite the fact that the region has an abundance of energy sources, particularly renewable energy, which, if fully harnessed, could greatly boost power generation in the region.
In this regard, SADC countries have intensified efforts on how to exploit renewable energy resources such as wind, hydropower and solar.
The proposed centre would, among other things, promote market-based adoption of renewable energy and energy efficiency technologies and services in SADC member states.
The centre is expected to contribute substantially to the development of thriving regional renewable energy and energy efficiency markets through knowledge sharing and technical advice in the areas of policy and regulation, technology cooperation, capacity development, as well as investment promotion.
Various cooperating partners such as the Austrian Development Agency and the United Nations Industrial Development Organization (UNIDO) have pledged to provide financial support to the centre for the first three years. After that, the centre should be self-sustaining.
Establishment of the centre is expected to be carried out in three phases, the first of which involves the selection of a host country and establishment of the SACREE Secretariat.
The management team will be headed by an executive director appointed by the executive board and will consist of various levels of permanent staff to be complemented by consultants and seconded international staff as may be deemed necessary from time to time.
The Preparatory Phase, that was initially expected to run from January-October 2014, would also see the creation and inauguration of the SACREE executive board and technical committees.
The composition of the executive board and technical committee will be agreed upon by member states.
The First Operational Phase is now expected to run from the end of 2014-2017 during which the centre will primarily focus on developing renewable energy programmes for the region and resource mobilisation.
The Second Operational Phase, from 2018-2021, will focus on activities to ensure sustainability of the centre after the exit of international cooperating partners such as UNIDO.
Establishment of the SACREE is expected to see a gradual increase in the uptake of cleaner energy sources that could result in reduced carbon emissions in line with the global trends towards clean and alternative energy sources.
Renewable energy sources are less polluting to the environment compared to fossil fuels such as coal.
Furthermore, fossil fuels will not last forever, hence the need for southern Africa to prepare for the future by intensifying efforts to harness its huge renewable energy resources.
According to the African Development Bank (AfDB), the region has the potential to become a “gold mine” for renewable energy due to the abundant solar and wind resources that are now hugely sought after by international investors in their quest for clean energy.
For example, the overall hydropower potential in SADC countries is estimated at about 1,080 terawatt hours per year (TWh/year) but capacity being utilised at present is just under 31 TWh/year. A terawatt is equal to one million megawatts.
The SADC region is also hugely endowed with watercourses such as the Congo and Zambezi, with the Inga Dam situated on the Congo River having the potential to produce about 40,000 MW of electricity, according to SAPP.
With regard to geothermal, the United Nations Environment Programme and the Global Environment Facility estimate that about 4,000MW of electricity is available along the Rift Valley in the United Republic of Tanzania, Malawi and Mozambique.
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US and China strike deal on carbon cuts in push for global climate change pact
Barack Obama aims for reduction of a quarter or more by 2025, while Xi Jinping sets goal for emissions to fall after 2030
The United States and China have unveiled a secretly negotiated deal to reduce their greenhouse gas output, with China agreeing to cap emissions for the first time and the US committing to deep reductions by 2025.
The pledges in an agreement struck between President Barack Obama and his Chinese counterpart, Xi Jingping, provide an important boost to international efforts to reach a global deal on reducing emissions beyond 2020 at a United Nations meeting in Paris next year.
China, the biggest emitter of greenhouse gases in the world, has agreed to cap its output by 2030 or earlier if possible. Previously China had only ever pledged to reduce the rapid rate of growth in its emissions. Now it has also promised to increase its use of energy from zero-emission sources to 20% by 2030.
The United States has pledged to cut its emissions to 26-28% below 2005 levels by 2025.
The European Union has already endorsed a binding 40% greenhouse gas emissions reduction target by 2030.
Speaking at a joint press conference at the Great Hall of the People, Obama said: “As the world’s largest economies and greatest emitters of greenhouse gases we have special responsibility to lead the global effort against climate change. I am proud we can announce a historic agreement. I commend President Xi, his team and the Chinese government for their making to slow, peak and then reverse China’s carbon emissions.”
He said the US emissions reductions goal was “ambitious but achievable” and would double the pace at which it is reducing carbon emissions.
“This is a major milestone in US-China relations and shows what is possible when we work together on an urgent global challenge.”
He added that they hoped “to encourage all major economies to be ambitious and all developed and developing countries to work across divides” so that an agreement could be reached at the climate change talks in Paris in December next year.
Xi Jinping said: “We agreed to make sure international climate change negotiations will reach agreement as scheduled at the Paris conference in 2015 and agreed to deepen practical co-operation on clean energy, environmental protection and other areas.”
China’s target to expand energy from zero-emission sources to around 20% by 2030 was “notable”, a White House statement said. “It will require China to deploy an additional 800-1,000 gigawatts of nuclear, wind, solar and other zero-emission generation capacity by 2030 – more than all the coal-fired power plants that exist in China today and close to total current electricity generation capacity in the United States.”
The UN’s climate chief, Christiana Figueres, said: “These two crucial countries have today announced important pathways towards a better and more secure future for humankind.”
Herman Van Rompuy, the president of the European Council, and Jean-Claude Juncker, the European Commission president, urged other countries to show their hand on emissions cuts: “We welcome the announcement today by the presidents of the United States and China on their respective post-2020 actions on climate change.
“The announcements to date cover around half of the global emissions. We urge others, especially the G20 members, to announce their targets in the first half of 2015 and transparently. Only then we can assess together if our collective efforts will allow us to fulfil the goal of keeping global temperature increases well below 2C.”
The new US goal will double the pace of carbon pollution reduction, though the Republican-controlled Congress is likely to oppose Obama’s climate change efforts.
The US Senate’s new Republican leader, Mitch McConnell, was quick to criticise the Beijing pact. “This unrealistic plan, that the president would dump on his successor, would ensure higher utility rates and far fewer jobs,” he said.
Administration officials argue the new target is achievable under existing laws.
Emissions of G20 countries. Photograph: Nick Evershed/Guardian Australia
Frances Beinecke, president of US-based environmental group the Natural Resources Defence Council, said: “These landmark commitments to curtail carbon pollution are a necessary, critical step forward in the global fight against climate change. We look forward to working with both governments to strengthen their efforts because we are confident that both can achieve even greater reductions.”
Senior US administration officials said the commitments, the result of months of dialogue between the world’s top two carbon emitters, would encourage other nations to make pledges and deliver “a shot of momentum” into negotiations for a new global agreement set to go into force in 2020.
Tao Wang, climate scholar at the Tsinghua-Carnegie Center for Global Policy in Beijing, said: “It is a very good sign for both countries and injects strong momentum [into negotiations] but the targets are not ambitious enough and there is room for both countries to negotiate an improvement.
“That figure isn’t high because China aims to reach about 15% by 2020, so it is only a five percentage point increase in 10 years, and given the huge growth in renewables it should be higher.”
Andrew Steer, president of the World Resources Institute, which promotes sustainable resource management, said the announcements would “inject a jolt of momentum in the lead up to a global climate agreement in Paris”.
“It’s a new day to have the leaders of the US and China stand shoulder to shoulder and make significant commitments to curb their country’s emissions,” he said.
Li Shuo, of Greenpeace East Asia, said the announcement showed that the world’s “two biggest emitters have come to the realisation that they are bound together and have to take actions together”.
At the Warsaw climate talks in 2013 nations were encouraged to draw up post-2020 climate plans by the first quarter of 2015, ahead of the final negotiations for a post-2020 global pact late in the year.
The White House statement said: “Together the US and China account for over one-third of global greenhouse gas emissions. Today’s joint announcement, the culmination of months of bilateral dialogue, highlights the critical role the two countries must play in addressing climate change.
“The actions they announced are part of the longer range effort to achieve the deep decarbonisation of the global economy over time. These actions will also inject momentum into the global climate negotiations on the road to reaching a successful new climate agreement next year in Paris.”
» Fact Sheet: U.S.-China Joint Announcement on Climate Change and Clean Energy Cooperation
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Lower trade and higher poverty rate are cousins
“Nigeria is not just a place to set up a business. The country is a big and growing market. Investing in Nigeria is tantamount to connecting to a big market.”
The relationship between trade and poverty is inverted. Countries with higher proportions of global trade tend to have less of poverty. Conversely, countries which contribute the least to global trade have higher poverty rates. This shows the importance of good trade policies in reducing poverty rates and increasing prosperity. Also, this shows why there is intense competition for export markets even by countries that already control significant share of global trade. Little wonder trade facilitation has become an economic policy of great importance.
Development experts can’t agree more. Jim Yong Kim, the World Bank president, said in a recent statement that “trade is a critical component to ending poverty and boosting shared prosperity”. The foregoing therefore suggests that developing countries have to trade their way out of poverty. For African countries to reduce poverty, they must increase their share of global trade. But how to bring this about is anything but easy.
Trade challenge
Sub-Saharan Africa is reputed to be the least developed region of the world. The SSA region is also the least integrated into the global economy through trade. Since the 1960s, the share of sub-Saharan Africa in international trade has become progressively smaller: less than 5 percent for all merchandise and 3 percent for agricultural products in 2010 (World Foundation for Agriculture and Rurality 2012). Trade within the SSA region is also dismal. Tariff and non-tariff barriers have been obstacles to intra-regional trade. Although the higher hurdles are non-tariff barriers, the ECOWAS goal of free movement of person and goods across member countries remains more of a wish than reality.
Exports from Africa are mainly mineral resources and agricultural produce. With very low industrial base, the commodities are exported to other regions of the world and returned later to the continent as costlier finished products. This trade pattern results in “jobless growth” in the exporting countries when the prices of the commodities are high in the international market. The jobs that are created and sustained during commodity boom are mainly in the countries that “refine” and turn the commodities to finished products through industrial activities.
But when prices of commodities are depressed, fiscal shocks are transmitted through the trade channel to the exporting countries, with severe human and economic implications. Apart from being pro-cyclical, trade in commodities is generally noted for volatility of current account positions and exertion of pressure on the exchange rate. The persistence of weak or negative growth in Europe and slower growth in China has dented economic growth in countries that depend very much on the export markets including Germany. But this does not build a case against active play in the export markets; it probably asserts the importance of domestic consumption as a cushion during a period of weaker exports.
Export diversification
Having established the role of trade in reducing poverty on the one hand, and the deleterious effects of export of mainly primary products on the other, it therefore means that the way to reduce poverty in developing countries is through export diversification by boosting industrial activities. Gaining a mileage in export diversification does entail formalisation of informal trade. To achieve this, empowerment of small- and medium-scale enterprises (SMEs) is of utmost importance, both in itself and in gaining more share of global trade.
The key problem with informal trade is that it deprives policymakers of the major tool of policymaking, which is data. Informal trade usually takes place off the radar, making data gathering and processing virtually impossible. But policymakers need to know areas where it is important to scale up positive results in trade activities. Understanding the obstacles that confront informal sector operators will aid intervention and eventually prepare the operators toward making due contribution to fiscal policy by coming under the tax net.
SME incubation
Evidently, the President Goodluck Jonathan administration has identified the SME sector as critical for boosting economic growth and job creation. On its part, the Nigerian Export-Import Bank (NEXIM Bank) is aware of the potentials of Nigerian SMEs. They can leverage domestic consumption using access to over 170 million population to harness opportunities in foreign markets. Accordingly, our interventions are now geared towards such firms that we believe are relatively well-structured to be able to stabilise their operations and then foray into external markets.
Several programmes under this administration are incubating the SME segment for a major turnaround. In the traditional areas of providing infrastructure and electricity power, the country is seen to have made big leaps in policy formulation and execution, notwithstanding the milestones that are yet to be reached. Most recent perhaps is the launch of the N220 billion SME fund in August by the Central Bank of Nigeria (CBN). Specific programmes under the Agricultural Transformation Agenda, infrastructural development for ICT utilisation, local content development in oil and gas, the programme of industrialisation as encapsulated in the National Enterprise Development Programme (NEDEP) and the Nigerian Industrial Revolution Programme (NIRP) all speak of the resolve of President Jonathan to use the instrumentality of state policy to mediate market performance and SME growth. On-going implementation of the programmes is concomitant with job creation, which is vital for eradication of extreme poverty.
Unmasking poverty
Poverty eradication has once again climbed to the top of global development policy agenda. The World Bank and the International Monetary Fund (IMF) have announced twin programmes of ending extreme poverty and boosting shared prosperity by 2030. Feelers from post-2015 policy debates suggest that global development goals will focus on eradication of extreme poverty, going forward, from next year. In the meantime, reports from some global institutions are making some important prescriptions on poverty reduction.
A recent publication by United Nations Conference on Trade and Development (UNCTAD) – ‘Trade Policies, Household Welfare and Poverty Alleviation: Case Studies from the Virtual Institute Academic Network’ – strongly associates trade and poverty, offering policymakers insights on what it called “pro-poor trade policies”. Another new literature which focuses on economic growth – a sine qua non for poverty reduction – reaffirms what we already know: that export diversification is the “gateway” to higher growth. To achieve export diversification, however, Chris Papageorgiou, Lisa Kolovich and Sean Nolan, all of the IMF, identify manufacturing of high quality products as a necessity. They suggest therefore that the world has gone past the Chinese industrialisation model of producing cheap and low quality products to unleash price competition in the export market. Accordingly, Papageorgiou and his colleagues listed human capital, infrastructure, institutional quality, financial deepening and proximity to markets as drivers of export diversification. These are very important recommendations which are familiar but which cannot be overemphasised. I will therefore run commentaries on them in the context of the Nigerian policy environment and readiness for trade as I conclude this piece.
Quality products: The Nigerian middle class and wealthy Nigerians are noted to be pretty sophisticated. As such, an industrial development model that manufactures cheap and inferior products would be mis-targeted at Nigerians with means. Nowhere is this recognised more than in the cable manufacturing industry where Nigerian cables are noted for higher quality than some imported brands. Once known for exporting inferior products, China has been reforming its industrial policy to emphasise the manufacturing of high quality products. This is the direction Nigeria should go to ensure we can trade in the global market of today and not of yesterday.
Human capital: Within a practical framework, multi-level support for human capital development has been a key goal of this administration. School enrolment has improved generally. Specific programmes have targeted areas that had lagged behind due to past neglect. Tertiary education is being strengthened to be able to absorb more university candidates.
Another area that has benefitted from government’s programme of industrial development is vocational education. For example, there are ongoing efforts to develop skills that will support growth in the power sector and automobile production and assembly plants. Also, the Subsidy Reinvestment and Empowerment Programme (SURE-P) embeds training for skill acquisitions in the areas of public works, including road construction and maintenance, railway rehabilitation and dredging.
Infrastructure: The foregoing already highlights the fact that the country is moving in the right direction with infrastructure development. The pace may be slow, but there is no doubt that we will attain a tipping point sooner than later. At that point, it will become more obvious to global investors that so-called infrastructure deficiency in Nigeria represents investment opportunities which are being harnessed. This is a key lesson we have taken from the implementation of the power sector reform.
Institutional quality: The truth is evident that Nigeria is building and strengthening its institutions again. As a constitutional democracy, the governance framework is stable and predictable. Market regulators do their jobs without the fear of any political backlash. This is what has helped to put in place a sustainable path for the turnaround of our financial market, since the introduction of reforms in 2004. NEXIM Bank itself is an institution that has been revamped as part of government decision to strengthen public sector institutions and support private sector actors.
Financial deepening: There is perhaps no other country or jurisdiction that has introduced more far-reaching reforms in its financial market than Nigeria over the past 10 years. The proliferation of marginal banks has given way to stronger and sounder private sector financial institutions including “mega” banks. A poorly-organised and unfunded pension system has given way to the contributory system that has exceeded N4.5 trillion ($24 billion) in pension asset. Yet regulation and innovation have continued to characterise the Nigerian financial system, including the capital market.
Proximity to markets: Nigeria is not just a place to set up a business. The country is a big and growing market. Investing in Nigeria is tantamount to connecting to a big market. Nevertheless, the country is also well-linked to the sub-regional markets by all popular means – road, sea and air – except by rail.
As the country continues to develop capacity for trade through economic diversification, it is expected that the poverty rate will continue to fall.
Roberts U. Orya is the CEO of the Nigerian Export Import Bank (NEXIM)
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For up to 800 million rural poor, a strong World Bank commitment to agriculture
Close to 800 million people around the world – or 78 percent of the world’s poor people – live in rural areas and rely on farming, livestock, aquaculture and other agricultural work to put food on their plates and make a living. One of them is Adekalie Kamara, a rice farmer in Sierra Leone who is counting on more productive farming methods to “give me hope of a good reward for my hard work.” Meanwhile, Jan Agha, an Afghan farmer is improving his livestock business to help feed his eleven children. “We are learning better ways to feed, protect and clean our animals. We are getting richer, too.”
For Adekalie, Jan Agha, and millions of others, agriculture is the starting point for their pathway out of poverty. Long acknowledged as one of the most powerful tools for raising the incomes of very poor people, agriculture is integral to ending poverty and boosting shared prosperity for the world’s poorest.
But agriculture is not just important to the rural poor. It is also critical to fighting hunger, tackling malnutrition and boosting food security for a population that is expected to reach 9 billion by 2050. Agriculture also creates jobs – on farms, in markets, and throughout the farm-to-table food chain. And because agriculture is one of the sectors that is most vulnerable to extreme weather and one of the largest contributors to greenhouse gases – it is also important in the fight against climate change.
The World Bank Group has steadily increased its investments in agriculture over the years. In 2014, the Bank Group made $8.3 billion in new commitments to agriculture, establishing itself as a leading financier of the agriculture sector. The majority of Bank lending goes to increasing productivity, food security and improving access to markets. The Bank’s work in agriculture is also aimed at helping farmers cope with risks, reducing gender inequality, making agriculture more environmentally sustainable and advancing climate-smart agriculture.
“Agriculture must become part of the solution to many of the world’s most pressing development problems,” said Juergen Voegele, Senior Director of the World Bank’s Agriculture Global Practice. “It is important for developing countries because of its potential positive impact on everything from job creation and food security, to fighting climate change. When done sustainably, agriculture not only grows economies, but also improves the daily lives of the world’s poorest people.”
» Related: The West Africa Agricultural Productivity Program: A Major Boost for Agriculture in Mali
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Record number of new trade concerns raised in standards committee in 2014
A record-breaking number of new trade concerns, mostly dealing with issues such as the protection of health and the environment, were raised by WTO members at the Technical Barriers to Trade Committee on 4-6 November 2014 – more than at any other meeting since 2009. For 2014, more new trade concerns have been raised than in any other year since the establishment of the WTO in 1995 and three-quarters of the concerns were expressed by developing countries.
Specific trade concerns
Since its first meeting, members have used the WTO Technical Barriers to Trade (TBT) Committee as a forum to discuss issues related to specific measures (such as technical regulations, standards and other requirements) maintained by other members. These “specific trade concerns” (or, simply, “STCs”) take up most of the Committee’s agenda. Essentially, members raise STCs to find out more about the scope and implementation of each other’s regulations in light of the core TBT obligations (for example, regulating health without unnecessarily disrupting trade). The discussion is mostly about measures in the pipeline, but can also be about the implementation of existing measures.
This multilateral review of measures is an example of how the WTO’s regular work can have a positive, and sometimes relatively quick, impact on everyday life. Members often express their concerns based on the impact that a proposed regulation by another member may have on their consumers and companies. And it is not uncommon for such concerns to be heard and taken into consideration. STCs are, in a sense, a bridge between the WTO and the “real world”.
Many such “real world” discussions were highlighted during last week’s TBT Committee meeting. For example, nutrition labelling, present in the everyday life of consumers, was in focus - in particular, various proposals relating to health claims such as “traffic-light” nutrition labelling, consisting of adding a label with a red or green “traffic light” according to the healthiness of the content of food products. Tobacco was also high on the agenda, with a record number of four measures on so-called plain packaging being discussed. Discussions also addressed a wider range of products, including electronics, automotive parts, chemicals, food and beverages, alcohol, cosmetics and pharmaceuticals, and toys. Of the 53 concerns raised in this meeting, 18 were new, with the others recurring from previous meetings.
Number of trade concerns raised per year in the TBT Committee
Note: The number of “new concerns” is the total number of distinct STCs raised for the first time during the year. “Old concerns” is the total number of distinct concerns that have been raised in previous years and reverted to during the year.
The TBT Committee meetings are also an important opportunity for cooperation between WTO members’ regulatory counterparts on approaches to address shared policy objectives, including the protection of health and the environment (to name two of the most frequent types of measures dealt with by the Committee). Discussions help members consult and align standards and regulations before they become entrenched in legislation. Members also use the Committee to raise the “heat” on certain matters, to seek alliances or otherwise simply to provide an early warning that a measure currently being envisaged is likely to be problematic. The subject matter is detailed and technical in nature and driven by capital-based experts. Hence, the approach is rather more practical than legal. Engagement is wide – particularly by developing countries. Out of the 85 measures addressed in the 2014 discussion, developing countries expressed concern with respect to 63 of them (around 75 per cent). Although STCs are resolved in the TBT discussions, there is no formal procedure for the reporting on settlements, unlike in the WTO Sanitary and Phytosanitary Measures (SPS) Committee.
Currently, TBT Committee meetings span almost a full week, including bilateral consultations, thematic sessions on specific subjects and the formal meeting itself. Members have three regular meetings per year, and, interspersed between these, at least three informal preparatory meetings – usually about a month before the formal meeting.
Good practices in regulation
In this meeting, although they came closer to finalizing a voluntary list of steps and mechanisms that may be used in developing and applying regulations – known as “good regulatory practices” – WTO members could not resolve the difference that emerged in June 2014 about whether a detailed disclaimer is needed to ensure countries are shielded from legal challenge in the WTO’s dispute settlement system.
Information sharing via thematic session
Information is a vital part of dealing with technical barriers to trade. This latest in a series of “thematic” discussions (document G/TBT/GEN/174) included presentations on practices in conformity assessment – the various measures taken by manufacturers, customers, regulatory authorities and independent third parties to assess that a product or service meets standards or technical regulations.
An EU representative noted that in the European Union, conformity assessment and market surveillance – activities and measures taken by public authorities to ensure that products comply with the requirements set out in the relevant legislation for the protection of health, safety or other public interests – functions are strictly separated and the manufacturer or importer holds responsibility for the product liability.
A representative from South Africa reported on recent developments in Africa in the field of quality infrastructure, including the Pan-African Quality Infrastructure, which coordinates regional efforts on metrology, standardization and accreditation of conformity assessment services.
The National Institute of Standards and Technology (NIST) presented the Quality Infrastructure Council of the Americas launched by the Organization of American States (OAS) to ease access for OAS member states to internationally recognized quality infrastructure services.
The Bureau International des Poids et des Mesures (BIPM) presented the role of metrology in conformity assessment procedures as the “science and practice of measurement” and the importance for international trade of a common understanding and application of metrology worldwide.
Presentations were also made on regional and international initiatives to underline the importance of working together in various fora to promote good practice in regulatory cooperation and technical assistance.
The Asia-Pacific Economic Cooperation (APEC) reported on advancements in e-rulemaking, particularly the APEC Leaders’ 2011 call for strengthening the implementation of good regulatory practices by conducting public consultations, ensuring internal coordination of regulatory work and assessing the impact of regulations.
A representative from New Zealand presented APEC’s efforts to improve regulatory coherence, thus facilitating trade in wine across APEC countries, including a joint initiative by the World Wine Trade Group and the APEC Wine Regulatory Forum.
The WTO Secretariat made a presentation on the Standards and Trade Development Facility (STDF), a global initiative to help developing countries establish and implement SPS standards towards health protection and increase their ability to gain or maintain access to international markets.
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Russia authorizes several SA firms to resume seafood exports
South Africa will be able to restart seafood exports to Russia, which had been suspended over two decades ago, after several seafood companies have been granted rights by Russian authorities to supply canned and frozen fish.
A total of 12 companies have been authorised to export their products to the Russian market, as it was posted in the Russian veterinary and phytosanitary service’s website.
The firms being allowed to supply seafood are: Abagold Ltd, Compass Challenger, GSA Trades Pty Ltd, Harvest Atlantic Peace, Irvin & Johnson Limited, Kaytrad Coldstore, Laverne, Marine Products, Pioneer Fishing Pty Ltd, Sea Vuna Fishing Company Pty Ltd and Viking Fishing Co Pty Ltd, SouthAfrica.info informed.
Some news sources relate this decision to Russia’s needs to look elsewhere for food sources following the trade ban imposed on several Western countries as a response to the sanctions it received over Ukraine.
“Since the late 1990s, this is the first time South African fish will be exported to Russia on a commercial basis,” chief executive of the Cape Town-based Sea Harvest Felix Ratheb told Reuters.
Ratheb added that the first exports to Russia were expected in early 2015 and would begin at about 500 tonnes a year, worth between ZAR 25 million-ZAR 40 million (USD 2.2 million-USD 3.5 million).
Both countries have held trade relations since 1990s and exports-imports have been strengthened.
Bilateral trade in the January to November 2013 period increased by 22.1 per cent to USD 998 million, compared to USD 817 million from January to November 2012.
Meanwhile, Russia’s exports increased by 59.1 per cent to USD 260.5 million from USD 163.7 million in January to November 2012, and imports grew by 12.9 per cent to USD 737.5 million.
Mutual investments between the two countries are also massive. Russian investments in South Africa reached over USD 1 billion in the last year.
Major Russian exports to South Africa comprise chemical and agro-industrial products, precious and base metals, coking coal, fertilisers, machinery, equipment, vehicles, tools, textiles, footwear and mineral products.
On the other hand, South African exports to Russia are dominated by fruit, mineral products, machinery, equipment, vehicles, chemical products, precious and base metals, raw hides, textiles and footwear.
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US and China agree to eliminate technology trade tariffs in landmark Beijing deal
China and the US have agreed to eliminate tariffs on a host of technology products – a move which could add $190bn to global GDP.
The two trading powers overcame a succession of longstanding disagreements over the Information Technology Agreement (ITA), an existing trade deal which represents 97% of the world’s trade in IT products.
The 78-nation ITA has been in existence since 1996, but efforts to expand it had been frustrated by Chinese resistance. It’s thought that with China and the US coming to what President Barack Obama described as “an understanding” in Beijing overnight, the rest of the WTO members signed up to the ITA will move swiftly to approve measures to reduce trade tariffs.
Obama said the understanding would “contribute to a rapid conclusion to the broader negotiations in Geneva”.
The agreement, signed at the Asia-Pacific Economic (Apec) Summit in Beijing, was described by the US Trade Representative Michael Froman as the first major WTO tariff cutting initiative in 17 years.
“We’re going to take what’s been achieved here in Beijing back to Geneva to work with our WTO partners. While we don’t take anything for granted, we’re hopeful that we’ll be able to work quickly,” he told reporters.
Talks had broken down in 2013 after China refused to remove tariffs on up to 200 kinds of technology products. It’s understood that most of these will now be removed, after US negotiators convinced China, by some distance the largest exporter of technology goods, that it stands to benefit greatly from the deal.
The USTR website says that among those technologies included in the agreement are “medical equipment, GPS devices, video game consoles, computer software and next generation semiconductors”.
Froman described the ITA development as “encouraging” for US-China relations and said it could be make sales worth $1tn tariff-free and create 60,000 jobs in the US. The deal could be ratified by December.
In a statement welcoming the agreement, the executive vice-president of the US Chamber of Commerce Myron Brilliant said: “With so many new products created since the ITA was concluded two decades ago, expanding the agreement’s coverage is imperative. With trade in tech goods surpassing $4tn annually, the commercial significance of these negotiations is obvious.”
This is likely to be viewed as one of the most substantive outcomes of the Apec Summit in Beijing. In the weeks preceding it, there had been much speculation as to how much trade liberalisation could be achieved, with many plurilateral discussions reaching stalemate.
Dieter Ernst, senior fellow at the East West Centre, a research organisation based in Hawaii, had warned of the importance of making a breakthrough, writing: “The stalemate in ITA-2 negotiations signals a possible roadblock to progressive trade liberalisation in high-tech industries.
“Mega-developing countries like India and China have enough resources to cope with a possible stalemate of ITA-2 negotiations... but for the majority of developing countries, such stalled and incomplete trade liberalisation could have quite serious consequences, depriving them of speedy access to critical productivity-enhancing information technologies.”
The news from Beijing, then, will be welcomed by those keen to see a more liberal trading environment.
» Azevêdo hails breakthrough on the WTO’s Information Technology Agreement
WTO Director-General Roberto Azevêdo praised Chinese and US negotiators for reaching an understanding that paves the way to an expeditious conclusion of the expanded Information Technology Agreement. He said: “I strongly welcome the announcement of this breakthrough, which represents a significant step forward in the negotiations on an expansion of the ITA.” Read more here.
Highlights of the understanding to develop the Information Technology Agreement (ITA):
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Next generation semiconductors – Tariffs up to 25% reduced to zero.
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Magnetic Resonance Imaging (MRI) machines – Tariffs up to 8% reduced to zero.
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Computed Tomography (CT) scanners – Tariffs up to 8% reduced to zero.
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Global Positioning System (GPS) devices – Tariffs up to 8% reduced to zero.
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Printed matter/cards to download software and games – Tariffs up to 10% reduced to zero.
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Printer ink cartridges – Tariffs up to 25% reduced to zero.
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Static converters and inductors – Tariffs up to 10% reduced to zero.
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Loudspeakers – Tariffs up to 30% reduced to zero.
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Software media, such as solid state drives – Tariffs up to 30% reduced to zero.
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Video game consoles – Tariffs up to 30% reduced to zero.
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An expanded ITA would also eliminate import duties on a range of additional technology products including high-tech medical devices, video cameras, and an array of high-tech ICT testing instruments.
Source: USTR website