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AfDB seeks strategic partnership with Angola
The President of the African Development Bank (AfDB), Donald Kaberuka, was received Monday, July 28 by the President of the Republic of Angola, José Eduardo dos Santos, at the Palácio da Cidade Alta in Luanda, where discussions focused on expanding cooperation between the AfDB and the Angolan Government.
In statements to the press at the end of the audience, Kaberuka said it was his third visit to Angola since he became Bank President and underscored the Bank’s interest in strengthening its “strategic relationship” with Angola given the growing role and importance of the country on the African continent. During his meeting with the Angolan leader, Kaberuka discussed economic reform and development programs in Angola, with a particular focus on the country’s strategy to combat poverty.
The President of the AfDB indicated that, thanks to the deep macroeconomic reforms undertaken in Angola, the country is today one of the three strongest economies of the region, after Nigeria and South Africa, and has made significant achievements in the fight against poverty. Kaberuka said the AfDB is watching and wants to play an active part in this process.
“During the meeting we addressed very specific issues that have to do with job creation, poverty reduction, women’s empowerment and diversification of the economy, but [the focus] was very much in reducing poverty,” the Bank chairman said, noting that the Government of Angola has made a remarkable achievement that cannot be ignored, by reducing the poverty levels in the country from 60 to 38 percent.
The Angolan Government is making progress in economic reforms and infrastructure, with a view to developing industry, diversify the economy, reduce dependence on oil revenues and enhance the well-being and quality of life for the people.
“When we talk about development of infrastructures, we are talking about energy, transport and other vital sectors of an economy. We congratulate the Angolan Government’s efforts in these areas, because they are common problems in most African countries,” Kaberuka said.
Kaberuka visited the Presidential Palace in the Cidade Alta accompanied by Finance Minister Armando Manuel. The two had met hours earlier, having signed an agreement that will make it possible to inject about one billion dollars in the State budget for projects in the fields of energy.
“Today I signed a one billion-dollar agreement to support the reforms of the energy sector so that, in future, Angola can produce efficiently and comprehensively. We will work with the Ministry of Finance to support the financial and institutional reforms,” Kaberuka said. The Minister announced the first disbursement would be in the amount of $600 million.
AfDB supports reforms in Angola and the construction of infrastructure, particularly in the energy sector, acknowledging that a rapidly growing economy such as Angola’s needs reliable energy. The country aims to make reforms in the energy sector to ensure sufficient energy is available to the entire population.
The AfDB President observed that whenever he visits Angola he notes “major transformations” and he welcomed the efforts being made. “The journey is still long. On the macroeconomic front, it is important to remain vigilant to ensure that gains are sustained and there is no slippage, but it’s a good start,” said Kaberuka, who spoke of macroeconomic and fiscal reforms in the oil sector: “Angola still has many challenges, like other African countries, but we can work together to find solutions.”
Indeed, four areas of particular focus include: reducing poverty levels; addressing inequalities and accelerating human development; diversifying the economy to create more jobs; and effective management of the petroleum sector so as to maximize the benefits.
Kaberuka praised Angolan authorities and underscored the Bank’s commitment to a closer relationship and support for further projects in Angola, particularly in the power sector. One clear goal on this issue was to make the energy sector more efficient and more attractive to investment.
“Angola, as other African countries that rely heavily on oil, must step up its pace of reforms,” said the AfDB President. “The wealth of a nation is not necessarily what’s underneath the soil or sub-soil, but rather it is in the knowledge of men and women, children and youth,” he said.
During in visit in Luanda, Kaberuka paid a courtesy call to the Vice-President of the Republic, Manuel Domingos Vicente, and also met the chairman of Fundo Soberano de Angola, José Filomeno Dos Santos, with whom he discussed the Bank’s Africa50 Fund.
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How sugar soured trade ties between Uganda and Kenya
Uganda and Kenya have agreed to lift a ban on cross-border sugar trade, ending a two-year standoff that has threatened to sour bilateral commercial ties. Uganda Revenue Authority Customs Commissioner Richard Kamajugo said last week that sugar dealers could now apply for licences and start exporting to Kenya.
“We have agreed that partner states should stop importing sugar from outside East Africa,” Kamajugo said at a meeting at Serena hotel, attended by officials from Kenya Revenue Authority, Kenya Sugar Board, URA, Uganda Sugar Manufacturers Association (USMA), and Rwanda Revenue Authority.
It all started in 2011, when Uganda was experiencing an acute sugar shortage. Kampala was then allowed to import duty-free sugar to cover up the gulf. Kenyans say Uganda took the chance with two hands, importing more than it needed. A few months later, Ugandans repackaged that sugar to export it to Kenya duty-free, citing the 2010 East African common market protocol, which allows free movement of goods and labour within the region.
Kenya blocked the sugar, saying it should attract a 100 per cent levy. At the meeting last week, Kenyan authorities told Uganda bluntly that they did not trust sugar from here. Beatrice Memo, the KRA commissioner for Customs, told reporters that they wanted to be sure that sugar exported to Kenya was genuinely from Uganda.
“Maybe [there is] mistrust. A lot of sugar comes from outside the region to Uganda and you export that sugar again,” Memo said.
She wondered why, at a time when Uganda was facing a sugar deficit, some Ugandans sought to export sugar. Today in Uganda, sugar producers are reeling with limited market because of the Kenya ban and the conflict in South Sudan.
Surplus production
Annually, Uganda produces 462,500 tonnes yet the country can only consume 300,000 tonnes, according to Jim Kabeho, the USMA chairperson. Sugar prices here have fallen sharply due to surplus production. A kilo now goes for as low as Shs 2300, compared to as much as Shs 6,000 at the peak of the shortage.
An official from Kinyara Sugar told the meeting that his company alone had about 50,000 tonnes in the store with no market. Sugar trade between Uganda and Kenya has for long been a thorny issue in the relations between the two East African Community members.
Kenya says because sugar from Uganda goes there cheaply, it imposes undue competition on the local producers.
“At one moment you say you have a deficit. But soon after you start exporting; we have the reason to question and satisfy ourselves,” said Rosemary Mkok, CEO of the Kenya Sugar Board (KSB).
Uganda, she said, needed a body like KSB, which would issue exporters certificates showing that it’s really sugar from Ugandan factories at Kakira, Kinyara, or Lugazi entering Kenya. Otherwise, it will be hard for Kenya to believe Ugandan traders.
But can this meeting’s resolutions hold?
Kassim Omar, the vice chairperson of the National Monitoring Committee for the Non-Tariff Barriers, told The Observer that there was more to the problem than was being publicly discussed.
“The formation of cartels by very big corporations supported by their governments has had a big impact on the sugar industry,” Omar said. “Kenya’s allegations are based on wrong information. It’s a question of syndicates within the business community to block the other party from trading.”
Nairobi refutes Omar’s claim, with officials insistent on the lack of sector regulator as the major problem. Kenya produces more sugar than Uganda – 600,000 tonnes annually – but not enough for its market. It has been importing sugar from Comesa countries.
“If someone decides to get sugar from somewhere else at a cost two times more than they would have used in Uganda, know there is something sinister,” said Omar, who also heads the Uganda Freight Forwarders Association.
Not new
Such trade wrangles between Uganda and Kenya are not unprecedented. In 2012, more than 1,200 bags of sugar belonging to Minister Kahinda Otafiire were destroyed at Mombasa port. Kenya accused him of using packages of a local producer there in a cover-up to dump sugar in their country.
Earlier in 2008, Kenya blocked imports of Ugandan day-old chicks and chicken products claiming they were not up to their standards. Uganda responded by refusing to lift the ban on the importation of beef, bull semen and other associated products from Kenya.
Some observers argue that such trade disputes are bound to happen anywhere in cross-border trade. Isaac Shinyekwa, a research fellow on Integration at the Makerere-based Economic Policy Research Centre (EPRC), cited the European Union, a fairly-developed common market. There are still disagreements. He is optimistic Uganda and Kenya will finally find a way out.
For now, sheer mistrust, unnecessary regulations, and efforts to protect their own among the EAC partner states will continue to marsh down the sugar sector and sour trade ties.
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The African Growth and Opportunity Act at 14: The road ahead
Testimony of United States Trade Representative Michael Froman Before the Senate Finance Committee on the African Growth and Opportunity Act (AGOA)
July 30, 2014
Washington D.C.
As delivered
Thanks very much Chairman Wyden, Ranking Member Hatch, Members of the Committee, and thank you for inviting me here to today to testify about AGOA.
AGOA, as you’ve noted, has been the cornerstone of America’s economic engagement with sub-Saharan Africa for the past fourteen years. And it has had some very important successes. U.S. imports from AGOA countries have grown from $8.2 billion in 2001 to $26.8 billion in 2013, a threefold increase. Non-oil AGOA trade has increased almost fourfold during the same period from $1.4 billion to almost $5 billion.
U.S. direct foreign investment (FDI) stock in sub-Saharan Africa has also increased from approximately $9 billion to $35 billion. And according to the African Coalition on Trade, AGOA-related investment has resulted in the creation of some 300,000 jobs in sub-Saharan Africa and almost 120,000 jobs here in the United States.
But there clearly is more work to be done. Utilization of AGOA is low and uneven. The bulk of U.S. imports under AGOA come from a handful of countries. And although we are beginning to see increasing diversification, exports under the program are still concentrated in a few sectors. And finally, while the growth in exports has been impressive over the life of AGOA, in absolute terms the level of exports is quite low. We can and must do better.
And to that end, last August I launched a comprehensive review of AGOA to examine both its successes over the last 14 years, as well as areas where it might be improved. And as we undertook this exercise, we were mindful too that the Africa of 2000 is not the Africa of 2014. Six of the ten fastest growing economies in the world are in Africa. And African countries are increasingly moving away from unilateral preference programs and entering into reciprocal trading relationships, including with the European Union. As we think about AGOA’s future, we need to consider how the U.S.-Africa trade relationship should evolve over time as well.
We draw three main conclusions from our review:
First, while tariff preferences are important, they are not sufficient. African countries face constraints to trade that range from inadequate and high cost infrastructure, particularly in the energy and transportation sectors; burdensome customs procedures and other border barriers impacting Africa’s regional and global trade; difficulties complying with agricultural, safety and marketing standards (including sanitary and phytosanitary requirements); limited skilled labor; and low productivity and competitiveness in non-oil, value-added products. And, despite growing business interest in Africa, AGOA countries also continue to face difficulties finding partners in the United States.
For AGOA to reach its full potential, it must be situated at the core of a comprehensive trade and investment strategy, an AGOA compact that targets the full range of the supply-side constraints to trade in Africa that creates new markets for African products, harnesses growing private sector interest in trade and investment, and promotes regional integration and value-added production. Now this also includes moving forward with implementation of the WTO Trade Facilitation Agreement concluded in Bali last year, which, by OECD estimates, could lower trade costs for developing countries in trade by up to 15 percent if fully implemented.
Second, there are some areas in which the AGOA program itself can be updated and improved. This, of course, is the province of Congress, but the findings of our review may be helpful as you consider these issues. For example:
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The Length of Extension. Our research suggests that it is important to extend the program for a sufficient period of time to encourage investment in critical industries in Africa.
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Product coverage: As you said Mr. Chairman, most AGOA beneficiaries enjoy duty-free treatment for virtually all of their products. (97.5 percent of the tariff lines are covered). However, there are still 316 tariff lines that continue to lie outside the program, and we believe Congress should consider whether any new products can now be added to the program keeping in mind domestic sensitivities.
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Rules of Origin: AGOA has some of the most flexible rules of origin of any preference program. There are, however, areas of the program where flexibility has been constrained. For example, there are limits on the “cumulation” of labor costs across AGOA countries and a cap on the use of U.S. inputs in meeting the requisite “regional value content” rules. Elimination of these limits could encourage greater integration into regional and U.S.-Africa value chains.
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Eligibility Criteria: AGOA’s eligibility criteria have played an important role in raising standards and improving rule of law throughout the continent. However, they have not been updated since AGOA was first established. Updating these criteria for example to include provisions relating to eliminating unwarranted SPS barriers and employment discrimination could be an important way to modernize the program.
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Eligibility Review Processes: AGOA’s mechanism for ensuring countries meet eligibility criteria currently is all-or-nothing. An approach that allows for partial and more immediate withdrawal may allow the Administration to take a more tailored and nimble approach to drive positive changes in beneficiary countries.
We look forward to working with you as you explore these and other issues in the process of moving forward with renewal.
Third, and finally, while the administration remains firmly committed to securing AGOA renewal, we need to begin working with our African partners to develop a vision of a trade relationship that goes beyond one-way preferences in the mid- to long-term. As I said, today’s world is different from the one when AGOA was first enacted, both in Africa and in its relations with major trading partners. Against this backdrop, we need to consider the way ahead and how different tools – from unilateral preference program, to reciprocal trade agreements – might evolve to be used with different partners to help us achieve our goals of broad-based economic growth and prosperity.
With that, let me thank you again with the invitation to testify, and I am happy to take your questions.
Download the Member Statements from the Hearing below:
Wyden Hearing Statement on the African Growth and Opportunity Act
Hatch Statement at Finance Hearing on the African Growth and Opportunity Act
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India’s demands block $1 trillion WTO deal on customs rules
The World Trade Organization failed on Thursday to reach a deal to standardise customs rules, which would have been the first global trade reform in two decades but was blocked by India’s demands for concessions on agricultural stockpiling.
“We have not been able to find a solution that would allow us to bridge that gap,” WTO Director-General Roberto Azevêdo told trade diplomats in Geneva just two hours before the final deadline for a deal (click here to read the speech).
“Of course it is true that everything remains in play until midnight, but at present there is no workable solution on the table, and I have no indication that one will be forthcoming.”
The deadline passed without a breakthrough. WTO ministers had already agreed the global reform of customs procedures known as “trade facilitation” last December, but it needed to be put into the WTO rule book by July 31.
Most diplomats saw that as rubber-stamping a unique success in the WTO’s 19 year history, which according to some estimates would add $1 trillion and 21 million jobs to the world economy, so they were shocked when India unveiled its veto.
Trade experts say Thursday’s failure is likely to end the era of trying to cobble together global trade agreements and to accelerate efforts by smaller groups of like-minded nations to liberalise trade among themselves. India has been vocal in opposing such moves, making its veto even more surprising.
“Today’s developments suggest that there is little hope for truly global trade talks to take place,” said Jake Colvin at the National Foreign Trade Council, a leading U.S. business group.
“The vast majority of countries who understand the importance of modernizing trade rules and keeping their promises will have to pick up the pieces and figure out how to move forward.”
Some nations have already discussed a plan to exclude India from the agreement and push ahead regardless, and the International Chamber of Commerce urged officials to “make it happen.”
“Our message is clear. Get back to the table, save this deal and get the multilateral trade agenda back on the road to completion sooner rather than later,” ICC Secretary General John Danilovich said.
U.S. Secretary of State John Kerry, on a visit to New Delhi, had earlier said he was hopeful that differences between India and much of the rest of the world could be resolved.
But after Azevêdo’s speech, U.S. Ambassador to the WTO Michael Punke was downbeat.
“We’re obviously sad and disappointed that a very small handful of countries were unwilling to keep their commitments from the December conference in Bali, and we agree with the Director-General that that action has put this institution on very uncertain new ground,” Punke told reporters.
India had insisted that, in exchange for signing the trade facilitation agreement, it must see more progress on a parallel pact giving it more freedom to subsidise and stockpile food grains than is allowed by WTO rules. It got support from Cuba, Venezuela and Bolivia.
India’s new nationalist government has insisted that a permanent agreement on its subsidised food stockpiling must be in place at the same time as the trade facilitation deal, well ahead of a 2017 target set last December in Bali.
Kerry, whose visit to India was aimed at revitalising bilateral ties but was overshadowed by the standoff, said the United States understood India’s position that it needs to provide food security for its poor but India would lose out if it refused to maintained its veto.
DEAL WITHOUT INDIA?
Diplomats say India could technically attract a trade dispute if it caused the deal to collapse, although nobody wanted to threaten legal action at this stage. The summer break will give diplomats time to mull options, including moving ahead without India.
Technical details would still have to be ironed out, but there was a “credible core group” that would be ready to start talking about a such a deal in September, a source involved in the discussions said.
“What began as a murmur has become a much more active discussion in Geneva and I think that there are a lot of members in town right now that have reached the reluctant conclusion that that may be the only way to go,” he said.
An Australian trade official with knowledge of the talks said a group of countries including the United States, European Union, Australia, Japan, Canada and Norway began discussing the possibility in Geneva on Wednesday afternoon.
New Delhi cannot be deliberately excluded, since that would mean other countries slowing down containers destined for India, but if it becomes a “free-rider” it will add another nail in the coffin of attempts to hammer out global trade reform.
Trade diplomats had previously said they were reluctant to consider the idea of the all-but-India option, but momentum behind the trade facilitation pace means it may be hard to stop.
Many countries, including China and Brazil, have already notified the WTO of steps they plan to take to implement the customs accord immediately.
Other nations have begun bringing the rules into domestic law, and the WTO has set up a funding mechanism to assist. But WTO head Azevêdo said he feared that while major economies had options open to them, the poorest would be left behind.
“If the system fails to function properly then the smallest nations will be the biggest losers,” he said. “It would be a tragic outcome for those economies – and therefore a tragic outcome for us all.”
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COMESA approves $1billion mergers
Common Market for Southern and Eastern Africa (COMESA) has approved over US$1 billion in mergers in nine member states last year.
COMESA competition commission (CCC) chief executive officer George Lipimile said the regional body was fulfilling its role as a one-stop shop for the assessment of cross-border transactions, thereby reducing the burden and cost of doing business in the economic bloc.
“Therefore, such transactions no longer need to be examined in each member state. Currently, the number of mergers notified with the commission stands at 13, with nine of them having already been approved by the Committee of Initial Determination. The estimated values of these transactions are well over US$1 billion,” he said.
Mr Lipimile said the CCC addresses the challenges posed by the globalisation of businesses and economies that have led to continuous rise in the number of multi-jurisdiction merger filings.
“This led the member states to call for the establishment of a framework for merger review and co-operation among interested agencies,” he said.
Among the key mergers approved in 2013 include one between Koninklijke Philips Electronics NV and Funai Electric Company Limited involving Egypt, Ethiopia, Kenya, Libya, Madagascar, Mauritius, Seychelles, Uganda and Zambia.
Another notable transaction was the takeover of Cipla Medpro, a South African pharmaceutical company by Cipla India involving all the 19 COMESA member states.
The commission is the first regional competition authority in Africa and the second in the world, after the European Competition Authority.
Mr Lipimile said the transactions no longer need to be examined in each member state, hence it has reduced on the burden of doing business.
It also provides the only and most extensive network of national competition authorities in Africa as it plays advocacy role in handling complaints relating to anti-competition business practices.
“In response to requests or where public comments are sought, the Commission has issued advocacy letters, comments and amicus briefs. Further to promote transparency and encourage compliance with law, it has issued guidelines, and also fast-track platform to deal with day-to-day complaints,” he said.
Meanwhile, business communities in COMESA member states have continued to respond positively to the advocacy work carried out by the CCC.
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Statement by regional leaders on LAPSSET
Statement by the Heads of State of Kenya, Uganda, Ethiopia and South Sudan on the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor Project
Today [31 July 2014], we held a Summit of Heads of State and Government at State House, Nairobi to explore joint financing options for the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor Project. I was joined by H.E. Yoweri Kaguta Museveni, President of the Republic of Uganda; H.E. Hailemariam Desalegn, Prime Minister of the Federal Democratic Republic of Ethiopia; and H.E. Salva Kiir Mayardit, President of the Republic of South Sudan.
Our meeting was the latest chapter in a deepening integration agenda that is focused on opening up the region to trade and investment and ensuring that its enterprises are globally competitive. LAPSSET is an integrated and transformative infrastructure project that will provide regional economic integration and interconnectivity that generates the investment and trade flows that are so crucial to ensuring that the region is able to deliver the shared prosperity that is the key to decent livelihoods and sustained peace and security.
The seven project components of the project require an estimated budget of $24.5 Billion (Kshs. 2 Trillion). Lamu Port alone with its 32 projected berths alone will cost $3.1 Billion.
With the large sums involved, it was clear to us that a joint approach that is innovative will be required for implementation. At length, we explored the complexities of shortening the period between project conceptualization and the realization of a sustainable financial model that will deliver implementation. We sought to learn from the African Development Bank’s Africa50 Infrastructure Fund approach, and how our joint efforts can help make a compelling business case to private sector players.
Our discussion was especially informed by the upcoming Africa-USA Summit on 4-7 August 2014 that will allow the leaders a chance to engage with American investors on this project. This being a continuation of similar engagements that are being held with investors from across the Middle East and the Indian Ocean Rim.
We briefly dwelt on the critical necessity of regional peace and security to provide the conditions in which this and other projects will deliver the full benefits of growth and equity to a region hungry for progress.
Thank you.
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Mozambique and Japan meet in Tokyo in 2015 to study investments
Businesspeople from Mozambique and Japan have agreed, at meetings in Maputo, to meet again in 2015 in Tokyo to continue to study increased Japanese investments in Mozambique, according to Lourenço Sambo, the director-general of Mozambique’s director-general of the Centre for Investment Promotion (CPI).
The Japanese government and business delegation, headed up by the deputy Foreign Affairs minister, Norio Mitsuya during meeting with members of the Mozambican government, companies and businesspeople said that Mozambique was the African country that was of most interest to Japanese investors, but noted that development of relations was affected by a lack of infrastructure in the country.
Japan’s interest in the Mozambican economy is currently focused on exploration of natural resources, but Mozambique is also a significant export destination for Japan, mainly for vehicles.
In 2012-2013 trade between the two countries totalled around US$1 billion, according to Mozambique’s Minister for Industry and Trade, Armando Inroga,.
Japan’s biggest investment in Mozambique was made by Nippon Steel & Sumitomo Metal Corporation, which mines coal in Tete province at the Minas de Revobué project.
Documents from the Mozambique-Japan Investment Forum, held on 12 January 2014, may be downloaded here.
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At UN-backed meeting, world’s least developed countries urge partnerships to boost productive capacity
With the kick-off of the United Nations post-2015 sustainable development agenda fast approaching, ministers and senior Government officials from across the globe have gathered in Cotonou, Benin, today to discuss how to strengthen the world’s 48 least developed countries to produce more goods and trade in international markets more efficiently.
“The conference is an invaluable opportunity for Governments, the United Nations, private sector and civil society to come together to strengthen and expand multi-stakeholder efforts towards significant and robust partnerships,” said UN High Representative for Least Developed Countries (LDCs), Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS).
In a press release from his Office, Gyan Chandra Acharya added that traditional development partners, emerging countries in the global South, and the LDCs themselves have a shared responsibility to do more to ensure that partnerships are transformative.
The four-day Ministerial Conference on New Partnerships for Productive Capacity Building in the Least Developed Countries, will identify innovative methods to improve the productive capacity of LDCs – a key priority of the 2011 Istanbul Programme of Action, which charts out the international community’s vision and strategy for the sustainable development of LDCs for the next decade.
Focusing on policy framework and institutions, the development of value chains, infrastructure and access to energy and international support measures, the Benin meeting will also focus on appropriate means of implementation including through addressing cross-cutting issues namely gender and women empowerment, employment and sustainable development.
Increasing productive capacities in the LDCs is a defining challenge and an opportunity to eradicate poverty and achieve and sustainable development in the decade to come.
“Development partners should be encouraged to do more by channelling aid to support productive capacity building in the LDCs, leveraging aid to encourage investment flows and facilitating trade and promoting technology transfer in a coherent manner,” Mr. Acharya said.
In addition to focusing on development partners, the meeting will make policy recommendations on official development assistance (ODA), South-South cooperation, remittance earnings, and domestic resource mobilization. These suggestions are expected to contribute to discussions on the proposed sustainable development goals (SDGs).
As it stands, the majority of LDCs will not meet most of the Millennium Development Goals by 201, according to a UN-OHRLLS report published last September. The survey cautioned that most of those countries continued to face structural challenges, as well as the destructive impact of climate change. The report did have some good news, however, namely that after years of economic stagnation, the LDCs are now achieving progress with some signs of structural transformation.
Also speaking ahead of the meeting, the Director of the Regional Bureau for Africa of the UN Development Programme (UNDP), Abdoulaye Mar Dieye, called for sustained, inclusive and people-centred development in the LDCs.
The key for LDCs is to “diversify into new, sustainable, job-rich, productive sectors so as to transform the structure of their economies, while building an environment in which development gains are broadly shared,” he said.
Read the Statement by the Chairperson of the African Union Commission, H.E Dr. Nkosazana Dlamini Zuma to the Ministerial Conference on New Partnerships for the Development of Productive Capacities in Least Developed Countries (LDCs) - 28 July 2014, Cotonou, Benin.
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Growing the development dividend: U.S. trade policy and global development in the 21st century
Remarks by Ambassador Michael Froman at the Brookings Institution, 29 July 2014
A Shared History
Martin Luther King Jr. once said, “Human progress is neither automatic nor inevitable.”
And nowhere is that more clear than in the world of development. We need to work at it. That’s why, for the last 70 years, the United States has consciously opened up its market – even at times asymmetrically – to help war-torn countries rebuild and poor nations develop. We have done this not only because it is consistent with our values, but also because we have an interest in the stability that comes with poverty alleviation and the new markets that come from the emergence of a global middle class.
But much has changed over this period, and we face a host of consequential choices about the future of U.S. trade policy and global development, including updating and renewing preference programs such as the African Growth and Opportunity Act and the Generalized System of Preferences.
With stakes this high, the time is right to reexamine the relationship between trade and development and recommit to a U.S. trade policy that will drive broad-based global growth in the 21st century.
And no time is more appropriate than now – as we prepare to host 50 African heads of state and government for the first-ever U.S.-Africa Leaders Summit – to discuss how we can work together to boost growth and prosperity on both our continents.
And as we seek to move beyond the barriers that divide our nations, it is worth remembering that trade is part of a history that we all share. According to anthropologists, the ability to trade across long distances is one of the traits that separate us from other species. From the laying of the Silk Road to the rise of great trading states like the Ghana Empire to the discovery of the New World, trade has always been central to development.
An Era of Unprecedented Progress: Trade and Development since WWII
Now the link between trade and development has never been stronger than during our most recent chapter of world history. Since World War II, the United States has been one of the principal architects of a global trading system founded on the principles of openness, fairness and freedom. Through that system, we’ve seen time and again how trade advances global development by promoting growth and alleviating poverty.
Here are a few of the more recent milestones from what has been an era of unprecedented progress: Between 1991 and 2011, developing countries’ share of world trade doubled, rising from 16% to 32%. During the same period, nearly 1 billion people were lifted out of poverty. In the mid-1990’s, foreign direct investment flows to developing countries grew to surpass official aid flows. And last year ushered in another first: the value of trade between developing countries exceeded that between developing and developed countries.
Looking at the historical record, it is clear that while trade alone cannot solve every development challenge, it is a necessary part of any successful and sustainable development strategy.
And the literature on this is clear:
Trade fuels faster growth, facilitates investment, and reduces poverty in developing countries, which translates into more jobs and increased incomes for the poor.
Trade allows countries to import cutting-edge technologies and inputs at lower prices, it drives domestic firms to become more competitive, and encourages efficient resource allocation and specialization.
For small countries with no trade, there is very little scope for large-scale capital investment and limited prospects for specialization. Without export markets, the production of many goods are economically unviable, but with trade, these countries have broader possibilities.
Higher growth, more employment and higher incomes also create more resources with which to finance investments in anti-poverty programs and provide citizens with better access to public services. This virtuous cycle depends on a number of other factors such as institutions, rule of law, investment in infrastructure and education, but it breaks down when trade is not part of the equation.
Take Singapore’s remarkable rise. When it became independent in 1965, Singapore had a small domestic market, little or no natural resources, and a GDP per capita of $516. Today, Singapore is consistently ranked among the least-corrupt, most-open, and most business-friendly economies in the world. And contrast this path with the choices of Venezuela, which in 1965 had a GDP per capita more than twice that of Singapore, but is now one of the least-open economies in the world. Last year, Singapore’s GDP per capita was around $55,000, a roughly 100-fold increase since 1965, while Venezuela’s was less than $13,000, notwithstanding its abundant resources. Now there are a lot of factors that go into this but open trade is certainly among them.
Moreover, as Chile’s experience demonstrates, openness to trade makes firms more competitive by encouraging efficient resource allocation both within firms and within the greater economy. During the late 1970’s and early 1980’s, Chile opened its economy to trade and, as a result, Chile’s export and import-competing sectors increased their aggregate productivity by roughly 20% and 25% more than the non-traded goods sectors over a period of seven years. Between 1980 and today, Chile has reduced its poverty rate by 75% and raised its life expectancy at birth by a decade.
In recent years, of course, the biggest development story of all has been China. After China began opening to international commerce, its annual GDP growth increased from 4% between 1949 and 1978 to an average of nearly 10% since 1979. This sustained growth lifted 680 million people out poverty between 1981 and 2010, roughly three quarters of the world’s total poverty alleviation during that period. We welcome the rise of a stable, peaceful and prosperous China that upholds the rules-based trading system, not only because human welfare rises with it, but also because as China’s domestic demand grows and as it continues to open its economy to fair competition, American workers, farmers, ranchers and businesses will find more customers among China’s 1.3 billion population and burgeoning middle class.
Take the first class of graduates from the GSP Program: South Korea, Hong Kong, Singapore, Israel and Mexico. Despite their differences, each of these nations chose trade as a key part of their economic strategies. A few decades later, all are development success stories, they’re all significant markets and close partners of the United States. Their citizens enjoy higher standards of living, their industries are more competitive, and they are better able to contribute as responsible members of the international community.
Indeed, witness the distinction between Asia and much of the Middle East. One region has seen an explosion of trade and integration – and significant achievements on virtually all indices of development. Over the same period of time, the other remained one of the most autarchic, least economically integrated regions of the world and has seen much less pronounced progress on the various dimensions of development.
Of course, in seeking development, it is not enough to push just for increased growth. We must seek development that is broad-based and inclusive. We must seek development that is sustainable. And that’s why raising standards is a key objective of our trade policy. Our preference programs are conditioned on the beneficiaries having the rule of law, fundamental protections for workers and basic good governance principles in place. And our efforts to negotiate high-standard agreements with Asia Pacific and European partners are focused on securing the strongest labor and environmental provisions of any agreements ever signed.
Examples like the garment sector in Bangladesh are a cautionary tale, reminding us that trade works for development when its benefits are broadly shared. If workers have no voice and toil in desperate and unsafe conditions, whether in Dhaka or Phnom Penh, the promise of trade will remain unfulfilled.
A World in Flux: Rising Economies, New Trade Dynamics
Clearly, more must be done. Extreme poverty persists for more than 1.2 billion people. Inequality has increased within developing countries even as average incomes have increased. And population growth threatens to outpace the ability of some governments to provide basic services and of some economies to provide sufficient opportunities for its people, particularly for its young.
Moreover, any path forward must account for three changes that are reshaping the world we share and revising the relationship between trade and development.
The first of these changes is the rise of emerging economies. They have benefitted enormously from the openness and predictability of the global rules-based trading system, and as their role in that system increases, it is only appropriate that their responsibilities for maintaining it do as well. With the increasing importance of South-South trade and global investment flows, not only are these countries better able to provide for their own citizens, but they also have an increased role to play in contributing to the development of their poorer neighbors as well.
Second, as it has throughout history, technological change is presenting new challenges and opportunities for global trade and development. Even excluding China, developing-country Internet usage has risen by over a billion users since 2000, and mobile-telephone use has grown even faster. In a world of increased connectivity, farmers and small businesses in remote areas are more able to access market information and reach foreign customers than ever before. And this creates new opportunities to expand trade, promote inclusive growth and address major development challenges.
The third and related change is the importance of looking broadly at all the factors that impact trade. During 1990-2010, through multilateral and plurilateral tariff negotiations and as a result of the WTO accession process, average MFN applied tariff rates decreased by roughly two-thirds. Add to that the development of preference programs and the proliferation of FTA’s that eliminate tariffs, and it’s clear that non-tariff barriers to trade and supply-side constraints on competitiveness play an increasingly important role in determining whether and how trade will contribute to development and poverty alleviation.
When held up against the long arc of history, it is clear that change is occurring at an unprecedented pace. Yet the potential for trade to drive global development remains as strong as ever. To better realize that potential, we need to update our approach to trade and development as well.
The Next Chapter: Beyond Market Access
President Obama’s trade agenda brings traditional policy tools into the 21st century and offers a more comprehensive look at development. This agenda is informed by a hard-headed, honest assessment of trade’s potential to contribute to development as well as its limits.
To begin with, we’re working with Congress to reauthorize GSP and to update and extend AGOA, which has been the cornerstone of our trade policy with sub-Saharan Africa since 2000. Under AGOA, total exports from sub-Saharan Africa to the United States have tripled and, as AGOA countries improved their business and investment climates, the stock of U.S. FDI has almost quadrupled. AGOA has also supported the diversification of Sub-Saharan African economies; since 2001, non-oil, non-mineral exports under AGOA to the United States have increased almost four-fold, but at only $5 billion, there is much room for growth.
Twenty-three hundred years ago, Aristotle observed that “there is always something new coming out of Africa.” And over the last 14 years, thanks in part to AGOA, we’ve seen a lot that’s new coming out of Africa. To name just a few: Between 1999 and June 2011, Lesotho expanded its manufacturing jobs almost threefold. Between 2011 and 2013, Ethiopian shoe exports under AGOA increased more than thirtyfold. And last year, South Africa exported more than $2.2 billion in AGOA motor vehicles and parts.
AGOA has been good for America, as well. Since 2000, U.S. goods exports to sub-Saharan Africa increased fourfold, from $6 billion to $24 billion. Last year, U.S. exports to sub-Saharan Africa supported nearly 120,000 jobs here in the United States. Given that Africa is home to the world’s fastest-growing middle class and six out of the top ten fastest-growing economies in 2014, it’s easy to see why global companies like GE, Caterpillar, and Procter & Gamble increasing view engaging with Africa not as a choice, but as a necessity.
Behind the growing commercial ties between America and Africa are real people – countless families and communities who have benefited from AGOA. There is the story of fashionABLE – a Nashville-based company that employs vulnerable women in Ethiopia, many of them former sex workers, to produce high-quality scarves and leather products.
According to Barrett Ward, the company’s founder, “[t]he solutions to poverty do not lie in developing a business model that gives 10 percent of its profits to charity – the solutions are in developing businesses that do trade with Africa, tying them into the worldwide economy and giving them manufacturing opportunities.”
FashionABLE has relied on AGOA to reduce the costs of selling its products in the United States, in the highly-competitive fashion industry. And for the remarkable women behind these products – who are able to support themselves and their loved ones in a life of dignity – AGOA is much more than trade policy.
There’s Randa Filfili from Senegal, who has expanded her family’s company, Zena Exotic Fruits, to sell processed fruit to over 200 wholesale companies to serve markets in Europe and the United States. Ms. Filfili takes pride in producing a competitive product while giving her 40 employees, 90% of whom are women, a safe and non-discriminatory workplace.
Ms. Filfili’s story – and the numerous others like hers – are to be celebrated. But there is much more work to be done. For too many African businesses, regulatory complexity, weak infrastructure, and other capacity challenges have kept the prospect of exporting under AGOA out of reach.
That’s why we have been involved in a comprehensive review of AGOA, and why I have traveled to Africa four times over the last two years. We have been talking with African and U.S. leaders, ministers, large and small businesses, academics, think-tanks and NGOs to determine what’s worked well and what needs to be changed. As a result of this review, we believe there may be ways to upgrade AGOA, including:
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renewing AGOA and its third country fabric provisions for a sufficient period of time to encourage meaningful investment and sourcing;
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expanding AGOA’s coverage while taking into account sensitivities here at home;
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simplifying the rules of origin to make it easier for African firms to export to the United States while promoting further production in Africa; and
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updating AGOA’s eligibility criteria and review processes to ensure that we are raising standards in Africa and have greater flexibility to enforce those standards.
The specific parameters of AGOA are, of course, are ultimately a prerogative of Congress, and we look forward to working with them to put in place a program that reflects the reality of Africa’s rise.
But perhaps the clearest lesson from AGOA over the past 14 years is that market access – while important for spurring trade and development – simply isn’t enough. For sub-Saharan Africa to deliver on the promise of being an emerging economy, we must deal with the supply-side constraints that infringe on Africa’s ability to compete and integrate successfully in the global trading system. Here too the academic literature is clear: Tariff preferences are not enough; we must address the impact of surrounding constraints.
For the United States, this requires a comprehensive, whole-of-government trade and investment strategy with a renewed AGOA at its core and the support of both the public and private sectors on both continents – an “AGOA Compact” that brings together our collective resources and puts us on a common course to trade-led growth and development.
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It requires hard infrastructure: roads, ports and very importantly, access to affordable, reliable electricity. USAID, MCC, OPIC, Ex-Im and TDA are active in this area, including by driving Power Africa.
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It requires trade capacity building: technical assistance to implement critical standards, including by training local laboratories and inspectors to meet SPS standards, so that African farmers can export more of their product to global markets.
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It means providing training and support for young entrepreneurs, such as the participants in the Young African Leaders Program and the African Women’s Entrepreneurship Program, and for small businesses through enhanced Trade Hubs so that they can take better advantage of market opportunities.
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It requires soft infrastructure, or trade facilitation: single border crossings, consistent customs procedures, IT systems that allow customs organizations to share information so that when a shipment is cleared in Mombasa or Dar es Salaam, it doesn’t have to be re-cleared by the customs officials of each country in the East Africa Community whose territory it traverses.
Unfortunately, a couple countries now appear to be revisiting their commitment to implement the WTO Trade Facilitation Agreement later this week. The first fully multilateral trade agreement in WTO history, the TFA would make border procedures more efficient, and in doing so, cut trade costs by almost 14.5 percent for developing countries and 10 percent for developed countries.
We are hopeful about achieving a consensus, because alongside the economic stakes, the credibility of the WTO as an institution rests on the swift implementation of the Trade Facilitation Agreement. Bali breathed new life into the multilateral trading system; it would be short-sighted – especially for a couple developing countries – to block the implementation of the Trade Facilitation Agreement this week, putting at risk again the continued viability of the multilateral system and undermining the development efforts of so many countries reliant on that system.
Addressing Africa’s supply-side constraints is critical, but there is more that can be done to create demand and build markets as well. Creating market demand at scale by deepening regional integration is important, and our support for those efforts, including through our work with the East African Community to develop a regional investment arrangement, is key. Demand can also be promoted through the type of public-private partnerships we’ve developed in the context of Power Africa and the New Alliance for Food Security and Nutrition.
Of course, we are not operating in a static world. As Africa enters into reciprocal trade arrangements with the EU, for example, trading relationships begin to change. European companies have preferential access to Africa’s markets while we are giving African firms preferential access to the U.S. market. In addition, the EU and Canada have each revised their GSP program to adjust to the rise of emerging markets. We need to take these developments into account as we consider our approach going forward.
Indeed, as we look to the next chapter of U.S. trade and investment relations with Africa, and as Africa itself furthers its efforts to deepen its integration – first as regional economic communities and ultimately in the context of a continent-wide free trade area – we need to think through how our trade relationship with Africa might evolve from one built around a unilateral preference program to a more reciprocal set of arrangements over the medium and long-term.
This isn’t every country’s approach to trade and development. Some go into developing countries more focused on taking resources out of those countries than on investing in human resources in them. It’s important that we remain fully engaged and deliver on this comprehensive trade and investment strategy to demonstrate that there is a better way.
As President Obama said in Africa last year, we seek “a new kind of relationship – a partnership rooted in equality and shared interests.” Next week, when the President gathers 50 heads of state and government for an historic U.S.-Africa Leaders Summit, defining the next generation of trade and investment relations will be at the center of their discussion. It’s an important moment – for Africa, for the United States, and for our continuing efforts to further development through trade and investment.
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Is a monetary union necessary for East Africa?
It is credible to claim that among initiatives for economic integration in sub-Saharan Africa, the East African Community (EAC) is the finest example.
Not only does it have the most developed institutions, but it may also be the most ambitious in terms of the degree of social and political integration envisaged by its founding treaty.
For countries at the development level of the EAC member states, it is expected that the negotiations required for completion of the Customs Union and the Common Market will be politically risky and prone to stalemates and reversals.
Indeed, this has been the experience of the EAC since 2005, when big decisions on the Customs Union were first made.
Presidents of the EAC member states at the end of November last year signed a protocol to establish monetary union (download below). At the time, the major preoccupation was the degree to which Tanzania was committed to the EAC.
Much less attention was dedicated to asking about prudence and the pragmatic requirements for the establishment of a common central bank and a single currency. It is not self-evident that the process towards establishing monetary union comprised of common monetary policy, a single currency and one central bank is justifiable for individual members of the EAC at all.
LEARNING FROM GREECE
The first point of contention comes from the implementation status of the common market and the customs union. Any observer who is sufficiently separated from the exuberance would ask whether the sequence is correct. This is because the progress towards a monetary union and a single currency presumes a far higher degree of institutional development and integration than is the case in the EAC today.
Members of the EAC have been working at making the customs union a reality for nearly a decade, and are not yet there. In other words, they have lots of work to do in ensuring that the customs union and common market are real before going to the more complicated task of working out a single currency.
Second, the advisory documents that formed the basis for the design of EAC’s monetary union were based on the European Union (EU). Given the recent history of the effects that a currency union has had on countries that needed currency flexibility such as Greece, it’s prudent to ask what insurance individual member states retain.
Conversations at the national level should be informed by the reality that autonomy in exchange rates policy would not be available. Considering the tendency for governments in this region to assert sovereignty in economic policy, the decision to surrender a degree of autonomy will have both economic and political consequences.
For Kenya, this is a decision that ought not to conclude without broader discourse with informed public participation. To the extent that I can tell, this has not happened. Monetary union should not be concluded by stealth.
The stated objective of the protocol is “to maintain monetary and financial stability aimed at facilitating economic integration to attain sustainable growth and development.” While it is difficult to disagree with the long-winded objective, it does not follow that a monetary union is a superior policy choice for attaining stable and sustainable growth.
NO CLEAR LEADER
Important policy changes that could bring that stable and sustained growth include unilateral liberalization by Kenya. This would inspire the confidence of its partners that the logic of integration is not just to advance national interests or secure economic domination.
That does not require establishing complex institutions, and would do far more for growth and economic efficiency than a monetary union today. That this has not been done is clear evidence that the EAC spaceship is trying to move at warp speed when the ingredients are not in place.
An advantage of the region is that though its members may all be classified as poor countries, they are also diverse in terms of structure of the economy. Kenya may have a decent industrial base compared with its partners, but no partner in the EAC has a sufficiently diversified economy to act as the anchor economy.
No EAC country is a clear leader, with a dominant economy to act as the buffer in the event of a financial crisis such as that faced by the EU recently.
Further, in spite of the commitments to ensure a strict adherence to a target of inflation of eight per cent and a fiscal deficit of three per cent of Gross Domestic Product, no country is sufficiently dominant to enforce compliance with these ambitious targets.
While the advantages of the monetary union are overstated, its real risks are being downplayed.
Kwame Owino is the chief executive officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi.
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FG resolves to boost domestic trade
The federal government has re-affirmed its commitment towards facilitating the growth and development of domestic trade across the country.
The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, gave the assurance during a Town Hall Meeting with Traders in the South-west geo-political region, in Lagos.
The meeting was attended by traders and representatives of market associations from Lagos, Ogun, Oyo, Osun, Ondo and Ekiti States, as well representatives of the Nigeria Customs Service, Immigration and the Police.
The minister explained that the meeting was necessitated by the Federal Government’s recognition of the importance of domestic trade in achieving its inclusive and sustainable economic growth and development in line with President Jonathan’s Transformation Agenda.
The minister said: “This is the first ever town hall meeting and also the first in the series that the Ministry of Industry, Trade and Investment will be organising as part of our deliberate strategy to develop and grow domestic trade across the country. As part of our domestic trade strategy, the federal government wants to bring policy formulation and implementation down to the grassroots and ensure that traders are carried along.
“Statistics have shown that domestic trade have a strategic role to play in achieving inclusive and sustainable growth and development in the country. After the rebasing of the country’s Gross Domestic Product, agriculture contributes about 22 per cent to the GDP; industrial sector contributes about 26 per cent, while services sector accounts for about 52 per cent. When you look at the services sector’s contribution, retail and wholesale trade is about one third of that 52 per cent.”
The minister added that the federal government would partner traders and other regional organisations to provide the conducive environment for the development of domestic trade.
He said: “Nigerians are very enterprising and hardworking people. All they need is the enabling environment. Our job as a government is to provide them with the conducive environment to do their businesses so that they can create jobs and drive inclusive and sustainable economic growth and development. In order to achieve this, we are working both with state governments and ECOWAS to tackle the bottlenecks inhibiting free movement of goods across the country and the sub-region.”
Speaking during the meeting, the National Coordinator, Traders’ Rights Protection Initiative, Mr. Christopher Okpala, commended the federal government for organising the interactive town hall meeting, adding that there was an urgent need for the government to come up with a legislation to protect local traders.
He said:”This meeting has given us a sense of belonging by involving us in government policies and implementation. However, there is the need to for the Ministry of Industry, Trade and Investment through the collaboration with other relevant agencies and traders, as well as the National Assembly to come up with legislation that would protect traders in their local markets and daily transactions anywhere in Nigeria.”
He added: “There is the need for the ministry and all relevant government parastatals and agencies with the active involvement of foreign missions to develop a template that will ensue that Nigerian traders are protected abroad. In addition to this, we want the government to whittle down the excesses of law enforcement agencies against the average trader”.
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ILO and World Bank Group to enhance access to index insurance in rural areas in Africa and Asia
The International Labour Office’s Microinsurance Innovation Facility (the Facility) and World Bank Group Global Index Insurance Facility (GIIF) launch a dynamic partnership to enhance knowledge and capacity for index insurance.
The International Labour Office (ILO) and the World Bank Group (WBG) have signed a memorandum of understanding that aims to provide access to improved insurance products to hundreds of thousands of smallholder farmers, small businesses and individuals in Asia and Africa. The three year partnership is the first-of-its-kind within the rapidly evolving index insurance industry.
The Facility and GIIF combine their strengths to improve the delivery of index insurance to farmers and their families as well as businesses, through extraction, dissemination and promotion of lessons coming from grantees supported by the GIIF and to strengthen microinsurance markets in countries where GIIF operates.
“The ILO’s Facility is a knowledge hub for inclusive insurance, and we are excited to leverage our expertise in research and capacity building to improve index insurance in collaboration with GIIF. With the improved availability of quality insurance, low-income people will increase their resilience to risk, enabling them to adopt improved production processes to help break the poverty cycle of low investment and low returns,“ said Craig Churchill, Team Leader of the Facility.
As part of the partnership, the Facility will bring the GIIF partners into a Community of Practice that will provide a venue for knowledge sharing and experience exchange. Publications and interactive events will be used to capture and share the latest knowledge of good practices and successful strategies in making index insurance work. To ensure that insurance is valuable for beneficiaries, a series of capacity building interventions and consumer awareness events are also lined up in five countries in Africa and Asia.
“GIIF is pleased to further extend its commitment to the use of index insurance as a prudent and necessary risk management tool for agriculture, food security and disaster risk reduction. However, regions where index insurance is particularly relevant in serving as a hedge against climate-related risks – including Sub-Saharan Africa, the Caribbean and Asia Pacific – are in need of accurate data and innovative frameworks to sufficiently address local market conditions,“ said Gilles Galludec, GIIF Program Manager. “The partnership with the Facility will enable GIIF’s grantees and partners from the private sector to share their knowledge and develop best practices within index insurance. We are confident of identifying innovative index insurance solutions that are practical, effective and financially viable for smallholder farmers, businesses and indivituals, and that will make a lasting impact,“ he concluded.
This partnership with the Facility is an important complement to the recent funding support from the Dutch Ministry of Finance to GIIF and is in line with the Facility’s five-year programme of “building quality microinsurance at scale” to accelerate the adoption of good practices by key stakeholders to dramatically expand access to better insurance services.
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UNCTAD experts meeting puts spotlight on competition law and policy
Intergovernmental Group of Experts meeting hears about the importance of international cooperation in the functioning of effective competition laws and policies.
The fourteenth session of the Intergovernmental Group of Experts (IGE) on Competition Law and Policy was held 8-10 July, with the participation of experts from 83 countries, 11 intergovernmental organizations and 21 non-governmental organizations, as well as representatives from the International Trade Centre (ITC), the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO).
“UNCTAD has a long history of working with developing countries in tackling restrictive business practices,” UNCTAD Secretary-General Mukhisa Kituyi, told the opening session. “We believe that without effective implementation, competition policies and laws do not necessarily lead to a more competitive market structure. Looking ahead, considerable challenges remain in promoting a fair, open and competitive environment that is necessary to developing and maintaining dynamic and innovative economies.”
In his message, Dr. Kituyi also highlighted the importance of international cooperation for competition law and policy to be effective.
Participants in the IGE discussed the benefits of competition policy for consumers and underlined the complementary nature of competition and consumer policies. They addressed main challenges of and possibilities for informal cooperation among competition authorities in specific cases.
Participants also drew attention to how communication strategies can improve the effectiveness of competition agencies, and heard examples from several jurisdictions. The experts reviewed the capacity-building efforts undertaken by UNCTAD in the area of competition law and policy and exchanged ideas on how to strengthen these efforts.
In addition, this session of IGE undertook the peer review of competition law and policy of Namibia, the Seychelles and the Philippines. UNCTAD presented its proposals for technical assistance to implement the peer review recommendations for each of these countries.
The full list of documents, presentations and contributions from the IGE may be downloaded here.
Preceding the IGE was the Ad Hoc Expert Meeting on the Role of Competition Law and Policy in Fostering Sustainable Development. A number of other international organizations were invited to contribute to address different perspectives of the relationship between Competition and Development, and Intellectual and Industrial Property Rights in the case of WIPO, International Trade in the case of WTO, and Competitive Neutrality in the case of the OECD. The UNCTAD Secretariat will focus on the contribution of Competition to Resource-based development, and the role of Competition policy in Global value chains. Click here to find out more.
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India has to decide on trade: Kerry
India’s willingness to support a rules-based trading order and fulfil its obligations would help to welcome greater investment from the U.S., Secretary Kerry said.
While India and the U.S. have one of the most important relationships internationally, “India has a decision to make about where it fits in the trading system,” U.S. Secretary of State John Kerry said on Monday.
India’s willingness to support a rules-based trading order and fulfil its obligations would help to welcome greater investment from the U.S. and from around the world, he said.
With a strong thrust on prospects for economic cooperation Secretary Kerry said, “If India’s government delivers on its plans to support greater space for private initiative, if it creates greater openness for capital flows, if it limits subsidies that stifle competition, if it provides strong intellectual property rights, believe me, even more American companies may come to India.”
Speaking at the Center for American Progress on ‘The U.S. and India: A Shared Vision for 2020 and Beyond’ Mr. Kerry said that the fact that Indian Prime Minister Modi put in place greater transparency and accountability during his time as Chief Minister of Gujarat “tells us he has already provided a model of how raising standards can actually increase economic growth.”
Mr. Modi drew upon the energy of the youth during his campaign, the Secretary noted, and his historic mandate to deliver economic growth was captured in the motto sab ka saath sab ka vikas.
Ambitious trade targets achievable
Under a growing U.S.-India partnership the “ambitious target” of reaching a bilateral trade level of $500 billion per year could be achieved, Mr. Kerry said.
In that regard he noted the economic contributions of the Ford motor company, which he said was doubling production from plants in Gujarat and Chennai and investing $1 billion to make India a global hub for exports.
Similarly, Mr. Kerry noted, Tata was creating jobs for Americans by expanding auto design and sales in the U.S., adding to its 24,000 employees already in this country, to the nearly to 100,000 jobs that Indian investment has created here.
Strategic-economic connectivity
“Prime Minister Modi understands the opportunities that regional connectivity provides,” Mr. Kerry said in this regard, highlighting the former’s invitation of SAARC leaders for his swearing-in ceremony as an important step towards India playing a leadership role in the region.
Specifically underscoring trade with Bangladesh, Burma and through the Indo-Pacific Economic Corridor, strategic progress with Pakistan and Afghanistan and India’s role in providing maritime security in the Strait of Malacca and off the Horn of Africa, Mr. Kerry promised that U.S. Defence Secretary Chuck Hagel would explore how to deepen ties with India in this context.
Counterterrorism a challenge
On counterterrorism, “There is obviously room for us to be able to do more,” the Secretary however noted, despite the U.S. and India continuing a “very close partnership” that began after the Mumbai attacks, and was followed by training for first responders to help protect citizens.
Although terrorist attacks took 400 Indian lives in 2013 alone, Mr. Kerry said, the challenge could be met by addressing the conditions that allowed extremists to thrive in the first place.
‘Saffron revolution’
Finally touching upon climate change, clean energy and nuclear power, Mr. Kerry said that Mr. Modi was “absolutely right,” in calling for a Saffron Revolution, because “the saffron colour represents energy,” and that could herald the beginning of a “new constructive chapter in the U.S.-India climate change relationship.”
The Secretary flagged Mr. Modi’s commitment to electrify every home in India by 2019, noting however that this goal would be aided by both the $1 billion in bilateral financing for renewable energy projects, and the hope for clean power that U.S. companies could provide by building on the U.S.-India Civil Nuclear Agreement.
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Extend Agoa, urges SA
South Africa wants the African Growth and Opportunity Act (Agoa) to be extended for a 15-year period.
“Our views as South Africa are very similar to the views of Africa, Agoa eligible countries. We believe that Agoa has been a useful platform for cooperation between Africa and the US, and we are calling for an extension for 15 years,” Trade and Industry Minister Dr Rob Davies said on Monday.
Briefing reporters ahead of next week’s United States-Africa Leaders’ Summit (USALS), Minister Davies said the summit will be held in two parts, with one aspect focusing on trade and investment and the other focusing on security and human development.
President Jacob Zuma will lead a delegation to USALS, which includes Minister Davies and International Relations and Cooperation Minister Maite Nkoana-Mashabane, among others. USALS will take place from 4 - 6 August and will include an Agoa ministerial meeting.
Agoa provides trade preferences for quota and duty-free entry into the United States for certain goods.
South Africa would like to see itself included in the rollover of Agoa, which expires in 2015.
The extension, said the minister, should be for a 15-year period as a shorter timeframe will create uncertainty.
“An extension of 15 years will allow certainty for investments that are going to be made in African countries to take advantage of the Agoa opportunities. We believe that a rollover for that period of time on more or less the existing architecture would be a mutually beneficial and developmental decision that could be taken by the US,” he said.
On a question of South Africa’s possible exclusion from Agoa because of its perceived middle income status, Minister Davies said government is arguing for South Africa’s inclusion.
“At this point in time, we are arguing for South Africa’s inclusion. One of the points we’ve made is that what will be the alternative if we are left out? As SACU [Southern African Customs Union] some years ago, we explored the possibility of a Free Trade Agreement (FTA) and we all decided, including the US, that that wasn’t really going to work, given the different levels of development and the non-existence of policies in some of our fellow SACU countries on some of the matters that the US was seeking commitments on,” he said.
The impact of South Africa’s exclusion from Agoa – which was signed into law in May 2000 – would not be a “train smash”, but there would be a jobs capacity in some parts of the South African economy that would be affected.
“We sometimes do confront the reality that people at the level of [US} Congress won’t look at this line by line and our approach has always been to suggest that people look at this holistically. The existing trading relationship with the US, including Agoa, has supported a growing, diversified and relatively balanced trading relationship.
When negotiating any kind of trade agreement, South Africa does so as SACU.
“We don’t do it as South Africa on its own. Our argument would be that this is big differentiation between us and will undermine the coherence of SACU if there are to be suggestions that we have a supposedly a bigger and stronger economy. We have an economy that is characterised by high levels of unemployment, poverty and inequality,” said Minister Davies.
Future of Agoa
At the summit, South Africa will be expecting to hear the US views on the future of Agoa, which is the decision of the US Congress.
Figures of bilateral trade between SA and the US have shown consistent growth. In 2009, the combined trade between the two countries was R88 billion and increased to R130 billion in 2013.
“It’s reasonably balanced. Our view is that this relationship has been underpinned by Agoa and therefore this is an arrangement that isn’t broken and doesn’t need fixing. It needs to be continued,” Minister Davies said.
There are about 600 US companies that are active in the South African market.
On the question of labour unrest in the country, Minister Davies said he doesn’t think the issue will directly be dealt with in Agoa.
“In terms of investments and not just US investors but other investors, it is an issue that we have to talk to from time to time. Mostly in the manufacturing space that we are involved and where we look at value added activities, I haven’t seen a single investor that has said that because there is a labour situation in South Africa, we are withdrawing,” said the minister.
His comments come on the back of the five-month-long strike in the platinum sector.
“That has not happened and instead, the pipeline has been increasing. We had one extraordinary strike in SA, in the platinum sector, [but] it doesn’t mean that when we have other strikes [they] are going to be five-month strikes. The government seeks to do what can be done to facilitate the conclusion of strikes. We are monitoring them,” he said.
The summit will include a Congressional Reception and a Business Forum culminating in the heads of state meeting.
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Economic policy threat to trade deal
South Africa risks being left out of the lucrative African Growth and Opportunity Act – a preferential trade programme, writes Peter Fabricius.
US ambassador to South Africa Patrick Gaspard has warned that the country’s economic policies and chronic strikes are discouraging American investors and traders, and could jeopardise its participation in the lucrative African Growth and Opportunity Act (Agoa) preferential trade programme.
He was speaking on the eve of US President Barack Obama’s US-Africa summit in Washington next week, which President Jacob Zuma and 49 other African leaders are due to attend.
Creating the right climate for investment in Africa will be high on the summit’s agenda and there will be a separate forum on Agoa, which gives duty-free access to the US market for most products of most African countries. Trade and Industry Minister Rob Davies will participate prominently in this forum.
Agoa has helped South Africa to substantially boost exports to the US including considerable volumes of manufactured goods, notably about 60 000 vehicles a year.
But some US legislators and businesses are increasingly demanding that South Africa should amend trade and investment policies if it wants to remain part of Agoa when or if it is renewed next year.
In a tough letter to South Africa’s ambassador to the US, Ebrahim Rasool, last month, Senator Orrin Hatch, the most senior Republican on the powerful finance committee, said although he supported the renewal of Agoa, “South Africa’s recent move away from participation in the global economy and violation of its international trade commitments severely complicates that task”.
He cited the Private Security Industry Regulations Amendment Bill – which restricts foreigners to minority ownership of security companies; South Africa’s recent termination of several bilateral investment treaties with European states and problems with aspects of the general 2013 Promotion and Protection of Investment Bill which will replace the treaties; the draft Intellectual Property Policy which he said would not protect innovative pharmaceuticals adequately; and the stance by African governments as a group that the World Trade Organisation’s Trade Facilitation Agreement should not be implemented until the Doha international trade negotiations had been completed.
Hatch asked the South African government to revise these measures. Charles Rangel, a veteran Democrat in the House of Representatives, also wrote to Rasool proposing that the government remove the restrictions in the Private Security Industry Bill regarding foreign investment
In an interview last week Gaspard said Hatch’s letter “just amplifies the concerns that we have consistently raised for some time now”.
He added that US agribusinesses had also written to the US Congress recently, raising concerns about the renewal of Agoa “based on the lack of market access for beef, poultry and pork to South African markets for reasons that we deem to be completely unscientific”.
Asked if he believed South Africa’s participation in Agoa was really in jeopardy, Gaspard said that Hatch was “a serious member of the US leadership” and that he and agribusiness leaders should be taken seriously.
He stressed that Obama had pledged the administration’s support for the renewal of Agoa as a whole and also for South Africa’s continued participation, but that it was Congress and not the administration which would decide.
Gaspard said part of the problem was that South Africa’s free trade agreement with the European Union was giving the EU “pronounced advantages” in market access over US companies.
“And given the tens of millions of dollars of duty-free access of South African products entering the US market (through Agoa), it seems altogether reasonable that we would ask for some consideration.
“You know that Agoa has been chiefly responsible for the success in the manufacturing sector in the last decade in South Africa.
“Particularly in Port Elizabeth where you’ve got factories that are employing thousands of South Africans that are churning out, last year alone, 60 000 automobiles which made it into US markets.
“So there’s thousands of direct jobs from Agoa. And then there’s all kinds of peripheral economic benefits for the surrounding communities because those workers have disposable income that goes right back into the South African economy.
“We think this is really central in the bilateral relationship. And so we hope we’ll all find the right kind of condition for renewal and continue the success and investment there.”
Gaspard said he had also frequently raised concerns about the South African investment climate more generally, especially the protracted strikes.
Gaspard, who was himself once a trade unionist in the US, said he was “profoundly sympathetic” to the demands of workers still struggling to overcome the legacy of apartheid.
“But one would hope that there would be responsible leadership in organised labour, in industry and in government who would have the ability to communicate in a transparent forthright way around these issues, and would be working diligently to resolve them at the bargaining table in advance of the employment of the ultimate tool which is a strike.
“We all know what just happened in Rustenburg with thousands of workers out of work for five months. And the calamitous impact that has had on industry and that ultimately threatened the sustainability of the very jobs that are the real economic engines in rural parts of the country in particular. So it’s right that everyone ought to be concerned about the long-term impacts of some of these protracted strikes.
“It’s clear that the labour situation here in South Africa is already having an impact on the investment decisions of major US companies. For example, the US automaker Ford has had to close its plant in Silverton during this Numsa (National Union of Metalworkers of SA) strike. That’s over 2 000 Ford Rangers that have been lost so far to this strike. This labour volatility may have a negative impact on Ford’s decision to expand production of their Everest SUV here in South Africa.”
Gaspard said that for a long time international investors had been “rooting for the success of South Africa” because of the goodwill which the late Nelson Mandela inspired. “A lot of industry leaders put a stake in the ground here into South Africa as a port of entry for the rest of the continent.”
But the Mandela goodwill was fading and now manufacturing had become more mobile than ever before. And there were many foreign competitors who were more than happy to absorb investment that was deterred from entering – or staying in – South Africa.
The surest way to the transformation of society which the government was promoting in its National Development Programme was though investment, Gaspard said.
He suggested the problem around these issues had been exacerbated by a lack of transparency in making policy and a lack of access to the right people in government to discuss them.
But he had been encouraged by recent meetings he had had with Davies on the Private Security Industry Bill and other concerns.
“There’s been a recognition that the concerns raised in the States are not superfluous and there’s an understanding that we need to get to resolutions on some of these matters.
“We’ve heard a little bit more flexibility in the conversations that we’ve had around market access for our agribusinesses. So that’s given us some real encouragement.” Though Gaspard would not elaborate, Davies told Independent Newspapers a few months ago that his government was ready to address the US grievances about lack of access to the South African market if that was what it would take to save South Africa’s participation in Agoa.
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EPA talks collapse, need ‘political solutions’
The East African Community and the European Union have yet again failed to agree on the long awaited Economic Partnership Agreements, putting the principal market for Kenya fresh produce exports including cut flowers in jeopardy.
The collapse of the talks held in Kigali, could see the exports – currently accorded duty free access to the EU – being taxed at between eight and 12 per cent when the current interim arrangement lapses, making them uncompetitive in the face of intense competition from Tanzania, Ethiopia and Colombia.
The two trade blocs disagreed on provisions for agricultural subsidies that farmers in the EU benefit from, duties and taxes on EAC exports and non-trade issues such as good governance and transparency.
The two parties blamed each other for the deadlock, with some officials of the EU delegation accusing the EAC members of coming up with new demands in the negotiation meetings.
Negotiators from the two trade blocs had also failed to reach a deal on the EPA negotiations during the January talks in Belgium.
EAC duties
On taxes on exports, the EAC maintained that it should have the authority to determine when to impose the duties without seeking authorisation from the Economic Partnership Agreement Council as demanded by the EU.
The EAC members maintained that taxes on exports of raw materials were critical in developing the region’s agriculture-based industries and also maintaining currency stability especially when global commodity prices surge.
“Export taxes are used by countries when they want to stabilise their currencies, when faced with situations of food shortage so that you do not sell food simply because you are expecting higher prices abroad, leaving your home country without food,” said Dr Karanja Kibicho, Principal Secretary in Kenya’s Ministry of Foreign Affairs and international Trade, who was the head of the EAC negotiating team in Kigali.
The EU, however, insists that such taxes should be imposed with the authorisation of the Economic Partnership Agreement Council and that when duties are effected under special circumstances with regard to revenue, food security and environmental protection, EAC should only do so after notifying the EU.
“The EAC wants to have the express authority to impose the export taxes, while EU insists on its position, which is viewed as a way of helping it predict the availability of raw materials once the agreement comes into force,” said Kenya Flower Council chief executive officer Jane Ngige, who also attended the Kigali meeting.
On subsidies, the EAC team expressed fears that allowing in subsidised agriculture produce from the EU would destabilise the local market and choke the growth of agriculture-based industries, which are the source of livelihood for thousands of citizens.
EAC members insisted there must be a provision in the EPA that restricts such products’ access to the EAC market or excludes the EAC as a destination for agricultural exports benefiting from subsidies.
“Allowing in those products will end up killing our agriculture because we are not at the same level of development, and we do not have the same level of support to offer to our farmers,” said Dr Kibicho.
The head of the EU delegation to Rwanda, Michael Ryan, disagreed with Dr Kibicho, saying the EU made an offer to the EAC to guarantee that no export refunds would be applied to EU exports to the EAC.
“Unfortunately, this offer was neither acknowledged nor reciprocated. We tried to explain to the EAC negotiators that the EU does not provide domestic agricultural support for exports. The EU of today is not the EU of 20 years ago.
“There is no trade-distorting effect of the EU’s current agricultural policy. Agricultural support is an issue for discussion at the WTO level in Geneva, and not in bilateral arrangements,” said Mr Ryan.
He also dismissed remarks that the EU was opposed to the EAC imposing taxes on EU exports to protect its young agriculture-based industries terming it a complete fallacy.
“The EU has agreed with the EAC several types of safeguards for domestic business, one of which was specific to infant industries. Products from infant industries in the EAC are protected from liberalisation in the EPA text we have on the table. On top of that, we have agreed to include export taxes imposed by EAC to give further protection to infant industries. The EU has shown a great deal of flexibility on this point,” said Mr Ryan.
The two blocs also failed to agree on whether to include or exclude non-trade issues, mainly transparency and good governance, in the agreement. While the EAC wants any reference to the Cotonou Agreement removed from the document, the EU is insisting on its retention.
The EAC team accuses the EU of pushing for the retention of sections of the Cotonu Agreement in the final document, terming the latter’s insistence on non-trade issues suspicious.
The EAC is particularly uncomfortable with sections of the Cotonou Agreement that touch on countering proliferation of weapons of mass destruction, protecting and promoting human rights and fighting corruption.
“We do not know what their intentions are,” said Dr Kibicho.
The deadlock, according to the EAC negotiators, can only be resolved at an EU-EAC ministerial level. Ms Ngige said a ministerial meeting could be organised in September to iron out the issues before the October 1 deadline for concluding the EPA.
“The meeting was for senior government officials and since we did not agree, it will have to be referred to the ministerial level. The disagreements need a political solution,” Ms Ngige said.
However, both sides expressed hope that the pending issues will be resolved.
“There is no question at all of collapse of EAC exports to the EU. Four of the five EAC states enjoy ‘everything but arms’ trade arrangements with the EU; this means, they will continue with duty free and quota free access to EU markets, just as they do now,” said Mr Ryan.
According to him, only Kenya will suffer on its cut flower sales to the EU.
“From October 1 exports of cut flowers from Kenya will fall under the GPS (Generalised System of Preferences) regime, and even then it will still benefit from certain duty discounts into the EU through having MFN (most favoured nation) status. But, it will pay duties on its cut flower exports to the EU, inevitably, as a result of the absence of an EPA with the EU,” Mr Ryan added.
Kenya exports flowers to the EU worth Ksh46.3 billion ($537 million) and vegetables worth more than Ksh26.5 billion ($307 million) annually. The EU takes about 40 per cent of Kenya’s fresh produce exports.
A recent report by the EAC Sectoral Council on Trade, Industry, Finance and Investment showed that senior officials had by the end of May reached an agreement on the rules of origin text as well as the most favoured nation (MFN) clause.
The MFN clause would bar EAC members from entering into bilateral preferential trade arrangements with countries that have no similar arrangements with the EU.
Additional reporting by Jeff Otieno.
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SADC Gender Protocol 2014 Barometer
In August 2008, Heads of State of the Southern African Development Community adopted the ground-breaking SADC Protocol on Gender and Development. This followed a concerted campaign by NGOs under the umbrella of the Southern Africa Gender Protocol Alliance. By the 2013 Heads of State summit, 13 countries had signed and 12 countries had ratified the SADC Gender Protocol. The Protocol is now in force.
With one year to go, time is ticking to 2015, when governments need to have achieved 28 targets for the attainment of gender equality. In keeping with the Alliance slogan: Yes we must! this 2014 Barometer provides a wealth of updated data against which progress will be measured by all those who cherish democracy in the region. The SADC Gender and Development Index (SGDI), introduced in 2011, complements the Citizen Score Card (CSC) that has been running for five years to benchmark progress. The world, and SADC is also looking to the future with the post 2015 agenda.
Now is the time to strengthen resolve, reconsider, reposition, and re-strategise for 2030.
Alliance calls for a strong post 2015 agenda
The Southern African Gender Protocol Alliance has called on gender ministers to craft a strong rights based approach to gender equality for the region post 2015. Speaking at the annual meeting of gender ministers in Malawi ahead of the Heads of State (HOS) summit in Zimbabwe mid-August, Alliance Chair Emma Kaliya stressed that: “We are counting down to 2015. We must not let up the momentum. At the same time we must plan, re-strategise and reprioritise for 2030, in line with the global agenda.” (Download Alliance Chair Emma Kaliya's speech below)
Senior officials meeting here ahead of the gender ministers meeting noted that “the 28 targets of the SADC Protocol on Gender and Development lapse in 2015. It is likely that most member states will not achieve them by that date. Therefore the targets will have to be reviewed.” The senior officials note that amendments will need to be submitted to the Council of Ministers in 2015.
The Alliance is calling on strong leadership from Zimbabwe, the new chair of SADC, in taking forward this critical agenda that forms the centre piece of the 2014 Barometer, due to be launched in Harare on July 28 at the SADC Council of NGOs forum ahead of HOS. The Barometer uses two measures for progress – the SADC Gender and Development Index, based on empirical data for 23 indicators that can be measured across the region, and the Citizen Score Card, based on citizen perceptions of all 28 targets. The 2014 Barometer puts the SGDI at 67% and the CSC at 66%. Both indicate that the region has a long way to go in fulfilling the original targets of the 2008 Protocol.
In her submission to gender ministers, Kaliya noted that with less than a year left before the deadline of the targets for the gender protocol and the Millennium development Goals (MDGs), “we are called upon to revision our future direction in line with the draft Sustainable Development Goals…voice, choice and control are the key watchwords in the post 2015 gender agenda.”
The Barometer proposes 150 potential targets for 2030, accompanied by 300 indicators, 100 of these on gender violence, the major manifestation of gender inequality in the region. This would involve all member states undertaking GBV baseline studies, using an agreed set of indicators, and benchmarking progress. The Barometer also proposes the incorporation of a new section on sustainable development (weak in the current Protocol), and strengthening of sexual and reproductive rights provisions.
Citing the reviewing of 11 constitutions to strengthen gender provisions as a major success of the past six years, the Barometer highlights key areas for ensuring that these are not undermined by culture, custom, tradition and religion. With 26% women in parliament and 24% in local government, the region is unlikely to achieve the original 30% target for women in decision-making, let alone the gender parity target, by the end of 2015. The 2014 Barometer argues that the post 2015 agenda needs to make sure these numerical targets are met, but also move beyond that, to measuring gender responsive governance.
The individual chapters may be downloaded at this link.
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U.S.-Africa Civil Society Forum: Recommendations for engagement on the U.S.-Africa Leaders’ Summit
The upcoming U.S.-Africa Leaders’ Summit, taking place from August 4-6, provides an important opportunity for the United States government and African heads of state to engage in discussions that will shape the future of U.S.-Africa relations. While topics of trade, security, and economic development will feature prominently on the agenda, it is critical that Leaders attending the Summit also use the opportunity as a platform to address the human rights and democratic governance challenges that beset Africa. Given that these issues underpin longtime and broader development concerns in Africa, we believe that civil society must be given the opportunity to participate in the official Leaders’ Summit proceedings as equal stakeholders in Africa’s future.
In order to advocate for the inclusion of civil society voices in the Leaders’ Summit, Amnesty International USA, Freedom House, Front Line Defenders, Open Society Foundations, and the Robert F. Kennedy Center for Justice and Human Rights organized the U.S.-Africa Civil Society Forum, which convened leading African human rights defenders in Washington, D.C. from June 18-20. Forum participants focused on three broad themes: the rule of law, transparency and accountability, and discrimination against marginalized groups. Participants then formulated the following Plan of Action, which both highlights key concerns that should be integrated into the Leaders’ Summit and offers concrete policy recommendations that recognize the inherent links between respect for human rights and broader development objectives.
The Rule of Law
Establishing and defending the rule of law is a critical part of Africa’s social, political and economic development. Countries that foster the creation of just legal environments ensure predictability in the enforcement of laws and afford confidence that the rights of individuals and communities will be respected. This in turn encourages investment and spurs economic development. Independent judiciaries and legal systems also allow marginalized citizens to seek redress through legal means rather than through violence and unrest, thereby decreasing instability. Recognizing these factors, it is imperative that the United States and African governments work to promote, enforce, and comply with the principles and commitments they have made to promote a strong rule of law throughout Africa.
Priority Issue 1:
Compliance by African governments with local, sub-regional, continental, and international norms and obligations.
Recommendations to U.S. Government:
As part of the African Growth and Opportunity Act (AGOA) reauthorization, include eligibility criteria regarding judicial and legislative independence, support for regional court bodies and acceptance of their decisions, and harmonization of local laws with international and regional human rights and good governance norms/treaties. These include the Protocol on the Establishment of the African Court on Human and Peoples' Rights and the African Charter on Democracy, Elections and Governance.
As part of counterterrorism assistance, ensure that assistance promotes the rule of law and condition all U.S. counterterrorism assistance on security forces’ adherence to rule of law. This includes ensuring recipients of assistance are not using counterterrorism laws to willfully impinge on the rights of citizens.
Be more transparent about where U.S. counterterrorism assistance is going, its intended purpose, and who the specific recipients are.
Include compliance with human rights and good governance norms/treaties as part of the Public Financial Management Risk Assessment Framework.
Recommendations to African Heads of State:
Domesticate and give full effect to local, regional, continental, and international human rights conventions, protocols and treaties to ensure enactment of laws that are just and further the collective interests of the people.
Demonstrate strong Leaders’hip at the regional level to ensure all regional and continental courts in Africa are empowered to uphold the rule of law and unencumbered by political interference. For instance, members of the Southern Africa Development Community (SADC) should restore the SADC Tribunal to its former status as an operational court.
Comply with and enforce mutually agreed upon rulings from local, regional and continental courts, including the African Court and sub-regional courts of the Southern Africa Development Community, Economic Community of West African States, and the East African Community.
Ratify the Protocol on the Establishment of the African Court on Human and Peoples' Rights and submit the Article 34(6) declaration allowing access to the Court for individuals who are the victim of the human rights abuses.
Recommendations for Civil Society:
Review gaps in legal frameworks in terms of state compliance with local, regional, continental, and international treaties/commitments and collaborate with legislatures and judicial bodies to help domesticate these treaties/commitments into national law.
Monitor state implementation of local, regional, continental, and international treaties/commitments in order to better advocate for state compliance.
Priority Issue 2:
Strengthen independence of African judiciaries.
Recommendations to U.S. Government:
Provide multi-year, sustained support for access to justice/judicial independence programs both for state bodies and civil society.
In conjunction with counterterrorism and military/police assistance, provide support for justice and accountability mechanisms, such as human rights commissions, parliamentary oversight committees, and ombudsmen.
Recommendations to African Heads of State:
Protect the administrative, budgetary, operational, and political autonomy guaranteed to judiciaries under constitutions and legal frameworks.
Empower judiciaries to develop and enforce ethical standards for judicial officers and candidates without executive interference or political pressure. These efforts will help reduce levels of corruption among judiciaries.
Establish and safeguard independent systems for vetting judicial candidates to ensure professional and ethical standards within the judiciary.
Recommendations for Civil Society:
Engage in monitoring of judicial vetting processes and advocate for broader societal representation on bodies appointing judges.
Become more systematic and fact based when analyzing performance of the judiciary. This will enable civil society to advocate for the integrity of the judiciary, and, when needed, defend unpopular court decisions that demonstrate judicial independence.
Advocate for national support of regional and continental courts and their decisions.
Priority Issue 3:
Increase access to justice for all people.
Recommendations to U.S. Government:
Provide financial and technical support for regional courts to strengthen the rule of law and legal predictability. This will assist with financial and trade integration within sub-regions as well as afford additional protection against human rights abuses.
Provide financial and technical support for civil society to engage in monitoring and reporting on judicial independence and increasing access to justice for individuals.
Recommendations to African Heads of State:
Support functional regional courts with individual human rights mandates.
Repeal archaic and repressive laws and introduce and enforce positive legislation that protects non-state actors, including civil society, media, and human rights defenders.
Domesticate and implement the African Union’s guidelines on ‘The Right to Fair Trial and Legal Assistance in Africa.’
Strengthen state provisions on legal aid and support complementary initiatives by civil society and independent watchdog institutions, such as human rights commissions and ombudsman’s offices, to provide legal assistance to people in need.
Recommendations for Civil Society:
Provide legal assistance to expand existing state legal aid programs and encourage the provision of pro-bono legal aid and legal community service by lawyers.
Support alternative justice mechanisms, such as traditional courts, and help ensure that these mechanisms comply with human rights norms.
Corruption and Transparency
Effectively managing Africa’s public wealth requires transparent, inclusive, and well-performing institutions. This is particularly true in natural resource sectors, where revenue streams are central to many of the continent’s economies and help to fund important poverty alleviation programs. Many African governments have demonstrated their commitment to improving governance through the ratification of transparency and anti-corruption mechanisms, including the African Mining Vision (AMV), the African Union Convention on Preventing and Combating Corruption, and the African Peer Review Mechanism. Despite such commitments, there remains a need to move from rhetoric to effective implementation. Poor Leaders’hip and lack of political will to implement reforms hold a number of states and their populations back. Africa has registered tremendous growth, but it has at the same time recorded limited prosperity, due largely to opacity of public institutions, a lack of accountability, and poor governance.
Priority Issue 1:
Strengthen governance architecture through the African Peer Review Mechanism (APRM) and other continentally driven initiatives.
Recommendations to U.S. Government:
Add indicators of APRM to Millennium Challenge Corporationcriteria and push for reviews of national implementation action plans of the APRM.
Provide financial and techncial support to local civil society groups to better enable them to engage in APRM review process.
Include African Mining Vision in trade policy relating to Africa including AGOA renegotiation, regional trade policy and bilateral investment treaties.
Recommendations to African Heads of State:
Revive the APRM process and resume country reviews.
Redesign the APRM questionnaire with explicit involvement for civil society organizations.
Commit to implementing and monitoring progress towards implementation of APRM national action plans.
Recommendations to Civil Society:
Commit to deeper involvement in, and monitoring of, the APRM process.
Break down barriers between sectors and promote linkages between social justice, human rights, development planning and economic development.
Priority Issue 2:
Combat corruption in trade and investment.
Recommendations to U.S. Government:
Require U.S. registered companies to disclose payments to governments on a project-by-project basis.
Create a public registry of beneficial ownership of U.S. registered corporations.
Provide increased finanical resources and assistance to support African governments on Anti-Corrpution Commissions and strategic planning on natural resource governance.
Support targeted sanctions for officials indicted for corruption.
Recommendations to African Heads of State:
Sign and ratify the AU Convention on Preventing and Combating Corruption (AUCPCC) and implement through corresponding legislation.
Establish and support independent and effective Anti-Corruption Commissions as articulated in the AUCPCC.
Enact and implement access to information legislation in accordance with standards establsihed by the African Commission on Human and Peoples’ Rights.
Develop and implement legislation on asset disclosure for public officials.
Ensure the active and meaningful participation of civil society and affected communities in development planning.
Recommendations for Civil Society:
Support the use of freedom of information laws where they exist and push for passage where they do not.
Commit to building capacity to implement and monitor the AUCPCC.
Transparently, effectively, and inclusively manage program resources.
Discrimination against Marginalized Groups
Human rights violations against marginalized groups in Africa often occur because of the failure of governments to act or prevent abuses, violating their duties of due diligence. In other instances, governments are directly involved in discrimination and incite the public to actively marginalize certain populations, often in violation of both their constitutions and regional and international human rights obligations. Discrimination in law and fact against people based on their gender, race, religion, ethnicity, migrant status, sexual orientation, and gender identity remains prevalent throughout Africa, leading to entrenched inequalities and continued violations of human rights. These abuses often lead to social and political instability and have led to rising economic inequity across Africa, as marginalized groups are frequently denied economic opportunities.
Priority Issue 1:
Promote diversity and secure the safety of the individual.
Recommendations to U.S. Government:
Allow U.S. ambassadors to play more of a Leaders’hip role and provide specific instructions for them to work publicly with human rights defenders and state institutions that are designed to protect human rights. Ambassadors should also encourage these institutions to engage with and work more constructively with domestic civil society.
Encourage countries that have poor human rights records at home, but which are supporting the U.S. in the fight against terrorism in their regions, to uphold basic human rights through both public and diplomatic channels.
Target perpetrators of serious human rights abuses by means of “smart sanctions” that are targeted and do not affect ordinary citizens; for example, recent U.S. sanctions on Ugandan officials and long-standing sanctions against Zimbabwe.
USAID should increase long-term support to access for justice initiatives. Funding must be increased in order to boost civil society capacity and thus strengthen the rule of law.
Recommendations to African Heads of State:
Pass and enforce laws that recognize diversity in society, which is particularly important in the case of transitional societies and emerging democracies involved in constitution-making processes. In addition, repeal all laws that encourage discrimination, for example, laws that target sexual minorities in the cases of Uganda, Nigeria and others.
Institute social programs that lead to the social recognition of marginalized groups and minorities, for example, by introducing relevant education measures in schools.
Ensure defense against hate crimes; this issue needs to be interrogated and mechanisms need to be established so as to prevent these crimes in the future.
Ensure that governments and heads of state meet their regional and international legal obligations to protect the security of the individual, as guaranteed in the African Charter on Human and Peoples’ Rights and a host of international legal conventions, including the International Covenant on Civil and Political Rights.
Recommendations for Civil Society:
Advocate on behalf of an individual’s right to choice and to be treated with dignity.
Collaborate to educate populations about the importance of protecting equality of the person. Civil society must demand that individual choice is respected and hold political Leaders’ to account for deviating from this responsibility.
Priority Issue 2:
Ensure inclusion and equality in decision-making processes, including participation in security and peace, growth and development, anti-corruption and good governance initiatives.
Recommendations to U.S. Government:
Recognize that discrimination and marginalization of minorities is a symptom of a lack of good governance. Similarly, the U.S. must help ensure participation of marginalized groups in broader development and governance conversations, taking into account civic voices outside of capitals and those from under-resourced groups.
Ensure that the issue of marginalized groups is mainstreamed in all instruments of political, technical and financial cooperation with African governments; for example, by means of targeting projects that enhance gender equality during AGOA renewal.
Support initiatives that better protect economically disadvantaged populations and mitigate rising inequality, which often leads to social and political instability.
Increase USAID technical support and capacity building efforts to local civil society actors and the media to help these stakeholders unpack the budgeting process, so that authorities are held accountable and marginalized communities better protected.
Support and better publicize projects through local embassies and USAID Missions that ensure equality; for example, the annual International Woman of Courage Award
Recommendations to African Heads of State:
Guarantee that human development initiatives fulfill social safeguard standards; for example, indicators used by the World Bank. Social safeguards must be fully enacted with the full and equal participation of impacted communities.
Enact specific policies and laws that are targeted at the inclusion of marginalized groups; for instance, ensuring the full participation of women in all governance and political processes, as well as appointments to Leaders’hip positions.
Improve transparency by holding one another accountable, on both the local and national level, so that state expenditures on development programs are transparent and measurable.
Recommendations for Civil Society:
Engage more constructively and proactively with traditional Leaders’ to assert the importance of “living law”; this conversation should inform traditional authorities about international human rights norms and how they might complement customary law at the local level.
Recognize fully and publicly the equality of the person within civil society and undertake efforts to promote the voices of typically marginalized groups, even within civil society, including women and LGBT rights activists.
Priority Issue 3:
Guarantee freedom of expression and association.
Recommendations to U.S. Government:
Increase funding for civil society organizations whose mandate is specifically to promote human rights, democracy and good governance.
Promote public solidarity with marginalized groups and the civil society organizations advocating on their behalf; for instance, including civil society as equal stakeholders in the U.S.-Africa Leaders’ Summit, as well as all future official gatherings.
Encourage U.S. ambassadors and embassy staff to play more of a Leaders’hip role in promoting basic human rights. Ambassadors should have a public mandate to work with civil society, implement that mandate, and provide development support directly to civil society.
Recommendations to African Heads of State:
Protect the enabling environment and respect the legitimacy of civil society and marginalized groups by removing restrictive legislation that violates international legal standards.
Address manipulation by means of government organized non-governmental organizations (GONGOs), which serve to discredit the independence of civil society.
Increase access to information and create protection mechanisms for both lawyers and journalists; in other words, for those who defend human rights defenders.
Work with the African Union to publicly and consistently acknowledge the sanctity of diversity and explicitly recognize the equality of all citizens – regardless of gender, sexual identity, or otherwise – in its charter and public statements.
Recommendations for Civil Society:
Listen to people on the ground; for example, those working at community-based organizations in order to build awareness and better enable grassroots participation in decision-making processes.
Facilitate responsiveness to local voices, thereby cultivating better solidarity and cooperation across traditional civil society sectors. Civil society should be proactive, and not only convene when invited by donors or the international community.
Work together on the national stage to not allow a given country’s human rights and broader development agendas to be donor-driven, or otherwise manipulated.
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The U.S.-Africa Leaders Summit: Deepening trade and commercial ties
The U.S.-Africa Leaders Summit blog series is a collection of posts discussing efforts to strengthen ties between the United States and Africa ahead of the first continent-wide summit.
Trade and investment will be an important topic at this year’s U.S.-Africa Leaders Summit. However, while the fact that the annual U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum, often called the AGOA Forum, is folded into the summit will ensure that the trade relationship is on the agenda, it also means that the trade forum is getting less individual attention than normal. With the African Growth and Opportunity Act (AGOA) legislation expiring at the end of next year and other major players such as China constantly enhancing and adjusting their trade and investment policies as they relate to the continent, the U.S. administration must use the summit and the forum as opportunities to ensure that it isn’t simply rehashing the old stories of the past decade, but announcing new, improved and meaningful strategies for trade and commercial engagement with African leaders.
Trade Trends with Africa’s Leading Partners
Over the past decade, the U.S. has gone from a leading trading partner with Africa to being far surpassed by the European Union and China. The EU has been a major traditional trading partner of Africa, and over the last decade its trade with the continent has more than doubled: In 2013 it amounted to over $200 billion. China started from a smaller base but has seen much more explosive growth – moving from $10 billion in 2000 to over $170 billion in total trade in 2013. Japan trails the U.S. in its total trade with Africa but, unlike Japan, the U.S. has actually seen its total trade decline in recent years, in 2013 amounting to about $60 billion – importing about $40 billion from the continent and exporting around $20 billion. In 2011, the U.S. imported close to $80 billion from African countries – most of which entered duty-free under AGOA or the Generalized System of Preferences – and exported around $20 billion consistently for the last five years. The decline and flat lining in U.S.-Africa trade begs the questions for the administration: What more can be done to see an increase in this commercial partnership similar to what the EU and China are experiencing? What has the U.S. done and what should the U.S. be doing to be a better partner to sub-Saharan Africa?
U.S. Trade and Commercial Engagement Strategy
Right now the U.S. has a variety of strategies, preferences, programs and people on the ground in Africa to promote commercial engagement. AGOA is a trade preference that allows for duty-free export access to the U.S. market for around 6,000 products in eligible sub-Saharan African countries. The USAID trade hubs work to help exporters in sub-Saharan Africa utilize AGOA, but are located in only three different countries (though the West Africa Trade Hub has an additional satellite location and smaller resource centers in many countries in the region). U.S. Foreign Commercial Service Officers (CSOs), which assist U.S. exporters in targeting African markets, are based in four countries on the continent: Ghana, Kenya, Nigeria and South Africa. The U.S. Department of Commerce also announced in April 2014 plans to expand several of its existing offices and double its presence in Africa by opening its first-ever offices in Angola, Tanzania, Ethiopia and Mozambique.
The U.S. also has the Trade Africa initiative, which is a partnership between the U.S. and sub-Saharan Africa to increase both internal and intra-regional African trade, and “expand trade and economic ties among Africa, the United States, and other global markets,” though with an exclusive focus on the East African Community. In 2012, the U.S. Commerce Department launched its Doing Business in Africa campaign to encourage and support U.S. business engagement with the region. The U.S. is working to deepen its commercial engagement with the continent in many ways including integrating the private sector in three of its key initiatives: Feed the Future, Power Africa and the Young African Leaders Initiative. The new CEO Summit, which will include CEOs from Africa and the U.S. in a day long conversation with President Obama and African leaders, should also be a new, helpful strategy for identifying key obstacles to trade and investment as well as identifying strategies for removing those obstacles. These new U.S. approaches could pay significant dividends in the coming years.
Enhancing the U.S.-African Trade Relationship
Both sides stand to gain from a more cohesive and substantial commercial strategy. African exports make up around 2 percent of total world trade and increasing this number (including exports destined for the U.S.) will be positive for African countries. On the other hand, African countries represent an important market for U.S. products and exporters – as the continent’s middle class is growing, there’s more spending power and more growth – meaning more potential for exports in not only consumer goods but also construction, infrastructure, energy, health care, transportation equipment and sectors, where U.S. companies have a lot to offer. In fact, the current level of U.S. exports to Africa, just over $20 billion, translates into support for more than 100,000 American jobs.[1] There is a win on both sides if both sides are interested in making the relationship work with ease.
Changing Paradigm of Partner Engagement with Africa
It’s obvious that the U.S. is not the only partner that has seen the great market potential of Africa, and many others have adapted quickly to engage. China is always the example, with its higher risk appetite, innovative financing and fewer restrictions on its loans and assistance strategies than OECD Development Assistance Committee (DAC) countries like the U.S., and it has managed to engage all over the continent. The Chinese government’s website indicates that it has over 150 commercial attaches located on the continent –making identifying opportunities, partnerships and markets easier than for the U.S., which has a fraction of this number doing the same work (with only four countries housing Department of Commerce offices, holding no more than two officers each). Its Export-Import Bank even has an office on the continent, while the U.S. Export-Import Bank has to watch its reauthorization debated by Congress.
The EU is also changing its strategy with regards to Africa, as evidenced by the Economic Partnership Agreements (EPAs) that it wants to implement with Africa. The EPAs are reciprocal trade preferences that, unlike AGOA, would give the EU an advantage when exporting to African countries – preferences that the U.S. and other regions wouldn’t have. This has been a point of contention for many African countries because EPAs undermine regional integration in the sense that they give European countries even greater trade preferences than afforded to other African countries. The EPAs also give EU exporters preferential access to the disadvantage of U.S. companies and exporters. In July 2014, the first-ever EPAs between the EU and African regions were concluded with six of the 15 countries in the Southern African Development Community (SADC) signing the EPA, and the Economic Community of West African States (ECOWAS) and Mauritania endorsed for signature by ECOWAS heads of state. The U.S. must consider how the EU’s implementation of the EPAs may influence its own trade strategies with African countries and regional organizations.
The Opportunity for Promoting Deepened Trade and Commercial Ties Through the Summit
As the U.S. prepares for the U.S.-Africa Leaders Summit, the importance of their trade partnership is apparent, and the U.S. is clearly attempting to increase its efforts to engage, so having a clear message on what the next steps are for increasing this trade relationship will also be important. The U.S. should focus on announcing and acting on three items: extending the AGOA legislation; clarifying the country’s interests in external trade policy that relate to Africa; and having a more ambitious and cohesive agenda for promoting U.S.-Africa trade.
Expressing a clear commitment to extending AGOA
The renewal of the AGOA legislation prior to its pending expiration will be a major talking point for African leaders during the summit. Legislation is in the process of being drafted on the hill, but hearing from both the administration and Congress that they will support it as well as make efforts to increase the effectiveness of it in promoting African exports will be critical. Trade capacity building, monitoring and reporting, and AGOA country strategies are all items that new legislation should consider. There should also be a clear commitment to extend the legislation for a period long enough to promote investment – 10 or more years being a critical requirement for reassuring new investors and getting positive trade development. Announcing this at the summit will show clear signs of the U.S.’s interest in continuing to promote growth, industrial development and deepened commercial ties.
Promoting increased utilization of AGOA through targeted strategies with African countries
AGOA has been a useful tool in promoting trade through allowing sub-Saharan African countries duty-free access to the U.S. market, but many countries are exporting little to nothing to the U.S. using these benefits. Encouraging countries to create AGOA export strategies – for those who have not already – will be important. Finding ways to increase support for trade capacity building efforts and regional integration could be achieved through dialogue initiated at the summit with African leaders that also includes regional organizations and the United Nations Economic Commission for Africa and the African Development Bank. Strategizing with these groups could have powerful effects for enhancing renewed legislation.
Indicating interest in supporting Africa’s trade development without reciprocal arrangements
The EU wants African countries to sign on to the EPAs, as indicated, but the possible negative consequences for the continent have been well documented and the advantage it would give to EU countries is counter to U.S. interests. While such agreements can’t be considered off the table in the future, noting that the U.S. is dedicated to increasing Africa’s trade capacity in the medium term through AGOA and not EPA-like agreements sends a strong signal to African countries.
Pushing forward trade facilitation efforts
The U.S. should also make a point at the summit to reinforce its commitment to supporting a better trade environment in Africa by agreeing to contribute more to the trade facilitation enhancements that are part of the Bali agreement. In essence, the Bali agreement requires countries to make certain changes to increase trade facilitation – create one-stop border shops, increase transparency in the legal and regulatory framework, and increase efficiency regarding processes and fees, and the like. This agreement has become a point of contention in Washington as those who are interested in renewing AGOA want to see African countries do as much as possible to make trading with the continent easier, and do not understand hesitation from African countries to make relevant reforms. Some African countries and other developing countries have expressed concern about the reform obligations placed upon them under the agreement, with worries that the cost of implementing them could be great, and the lack of funds could constrain them in other areas. They want to have specific funding in place to ensure that this will not be an issue.
The U.S. has a clear opportunity to support these efforts. Ensuring that the Bali agreement is effectively implemented would be beneficial to African countries trading with one another and the U.S. as well. The U.S. already provides some assistance through the USAID Partnership for Trade Facilitation, which was launched in 2011 and works to help countries prepare for implementing the agreement. A recent USAID publication, A Comprehensive Approach to Trade Facilitation and Capacity Building (download below) provides an impressive and detailed strategy for further engagement. It also recognizes concerns about sufficient donor support. The U.S. could make a great difference through increasing technical support geared towards implementing the agreement and providing increased funding to address African countries’ concerns about the Bali agreement, through vehicles like the African Development Bank’s Trade Fund, for example. The summit could serve as an excellent forum at which to announce specific plans like this that would show a serious commitment to enhancing U.S.-Africa trade.
Moving towards a more cohesive African trade and investment strategy
Lastly, as we can see, the U.S. has multiple programs, preferences, agencies and initiatives working to promote enhanced U.S.-Africa trade, but making a clearer channel of engagement seems to make sense for both sides. Navigating the different programs and initiatives that exist can be daunting for U.S. businesses looking to break into African markets and understanding the assistance available for African exporters in eligible countries under AGOA can be equally unclear. Creating both an online hub for directing businesses on available resources and programs as well as housing a U.S.-Africa trade promotion authority within a specific department could simply make engagement easier for both sides. Announcing and following through on such a plan at the Leaders Summit could be an exciting next step in deepening commercial ties.
The summit will prove an excellent opportunity for so many levels of engagement, and obviously all African countries will come with their own agendas and interests as well. Conversations surrounding trade will take place, but clear and detailed ideas for moving towards an enhanced trading relationship is what will be needed.
[1] “U.S. Export Fact Sheet,” U.S. Department of Commerce, International Trade Administration, May 2011 Export Statistics Released July 12, 2011. Available online.