Search News Results
Africa under “unprecedented” pressure from rich countries over trade
African countries are coming under strong pressure from the United States and the European Union to reverse the decision adopted by their trade ministers to implement the World Trade Organization’s trade facilitation agreement on a “provisional” basis.
At last week’s summit of African Union leaders in Malabo, Equatorial Guinea, “there was unprecedented [U.S. and European Union] pressure and bulldozing to change the decision reached by the African trade ministers on April 27 in Addis Ababa, Ethiopia, to implement the trade facilitation (TF) agreement on a provisional basis under paragraph 47 of the Doha Declaration,” Ambassador Nelson Ndirangu, director for economics and external trade in the Kenyan Foreign Ministry, told IPS.
“This pressure comes only when the issues and interests of rich countries are involved but not when the concerns of the poorest countries are to be addressed,” Ambassador Ndirangu said.
“Clearly, there are double-standards,” the senior Kenyan trade official added, lamenting the pressure and arm-twisting that was applied on African countries for definitive implementation of the agreement.
The TF agreement was concluded at the WTO’s ninth ministerial conference in Bali, Indonesia, last year. It was taken out of the Doha Development Agenda as a low-hanging fruit ready for consummation. More importantly, the agreement was a payment to the United States and the European Union to return to the Doha negotiating table.
The ambitious TF agreement is aimed at harmonising customs rules and regulations as followed in the industrialised countries. It ensures unimpeded market access for companies such as Apple, General Electric, Caterpillar, Pfizer, Samsung, Sony, Ericsson, Nokia, Hyundai, Toyota and Lenovo in developing and poor countries.
Former WTO Director-General Pascal Lamy has suggested that the TF agreement would reduce tariffs by 10 percent in the poorest countries.
In return for the agreement, developing and least-developed countries were promised several best endeavour outcomes in the Bali package on agriculture and development. They include general services (such as land rehabilitation, soil conservation and resource management, drought management and flood control), public stockholding for food security, an understanding on tariff rate quota administration, export subsidies, and phasing out of trade-distorting cotton subsidies (provided largely by the United States) in agriculture.
The non-binding developmental outcomes include preferential rules of origin for the export of industrial goods by the poorest countries, a special waiver to help services suppliers in the poorest countries, duty-free and quota-free market access for least developed countries (LDCs), and a monitoring mechanism for special and differential treatment flexibilities.
African countries were unhappy with the Bali package because they said it lacked balance and was tilted heavily in favour of the TF agreement forced by the industrialised countries on the poor nations.
The Bali outcomes, said African Union Trade Commissioner Fatima Acyl, “were not the most optimal decisions in terms of African interests … We have to reflect and learn from the lessons of Bali on how we can ensure that our interests and priorities are adequately addressed in the post-Bali negotiations.”
The African ministers in Malabo directed their negotiators to propose language on the Protocol of Amendment – the legal instrument that will bring the TF agreement into force at the WTO – that the TF agreement will be provisionally implemented and in completion of the entire Doha Round of negotiation.
African countries justify their proposal on the basis of paragraph 47 of the Doha Declaration which enables WTO members to implement agreement either on a provisional or definitive basis.
The African position on the TF agreement was not acceptable to the rich countries. In a furious response, the industrialised countries adopted a belligerent approach involving threats to terminate preferential access. The United States, for example, threatened African countries that it would terminate the preferential access provided under the Africa Growth Opportunities Act (AGOA) programme if they did not reverse their decision on the TF, said a senior African trade official from Southern Africa.
The WTO has also joined the wave of protests launched by the industrialised countries against the African decision for deciding to implement the TF on a provisional basis. “I am aware that there are concerns about actions on the part of some delegations [African countries] which could compromise what was negotiated in Bali last December,” WTO Director-General Roberto Azevedo said, at a meeting of the informal trade negotiations committee on June 25.
The African decision, according to Azevedo, “would not only compromise the Trade Facilitation Agreement – including the technical assistance element. All of the Bali decisions – every single one of them – would be compromised,” he said.
The United States agreed with Azevedo’s assessment of the potential danger of unravelling the TF agreement, and the European Union’s trade envoy to the WTO, Ambassador Angelos Pangratis, said that “the credibility of the negotiating function of this organisation is once again at stake” because of the African decision.
The United States and the European Union stepped up their pressure by sending security officials to Malabo to oversee the debate, said another African official. He called it an “unprecedented power game rarely witnessed at an African heads of nations meeting.”
In the face of the strong-arm tactics, several African countries such as Nigeria and Mauritius refused to join the ministerial consensus to implement the TF agreement on a provisional basis. Several other African countries subsequently retracted their support for the declaration agreed to in April.
In a nutshell, African Union leaders were forced to change their course by adopting a new decision which “reaffirms commitment to the Doha Development Agenda and to its rapid completion in accordance with its development objectives.”
The African Union “also reaffirms its commitment to all the decisions the Ministers took in Bali which are an important stepping stone towards the conclusion of the Doha Round … To this end, leaders acknowledge that the Trade Facilitation Agreement is an integral part of the process.”
Regarding capacity-building assistance to developing countries to help them implement the binding TF commitments, African Union countries still want to see up-front delivery of assistance. The new decision states that African Union leaders “reiterate in this regard that assistance and support for capacity-building should be provided as envisaged in the Trade Facilitation Agreement in a predictable manner so as to enable African economies to acquire the necessary capacity for the implementation of the agreement.”
The decision taken by the African leaders is clearly aimed at implementing the TF decision, but there is no clarity yet on how to implement the decision, said Ndirangu. “We never said we will not implement the TF agreement but we don’t know how to implement this agreement,” he added.
In an attempt to ensure that the rich countries do not walk away with their prized jewel in the Doha crown by not addressing the remaining developmental issues, several countries – South Africa, India, Uganda, Tanzania, Solomon Islands and Zimbabwe – demanded Wednesday that there has to be a clear linkage between the implementation of the TF agreement and the rest of the Doha Development Agenda on the basis of the Single Undertaking, which stipulates that nothing is agreed until everything is agreed!
More than 180 days after the Bali meeting, there is no measurable progress on the issues raised by the poor countries. But the TF agreement is on course for final implementation by the end of 2015.
Related News
Private sector seeks to have bigger say in policies affecting business environment
The private sector in Tanzania is increasingly impacting policy, especially at the national and sectoral levels – a momentum that needs to be driven up.
That is the view of Tanzania Private Sector Foundation (TPSF), which also asserts that ensuring existence of a conducive business environment is a public good and it should be sustainable no matter the level of development in the country.
TPSF Executive Director Godfrey Simbeye said this at the weekend at an event to mark the end of the Business Environment Strengthening Tanzania- Advocacy component (BEST-AC), a programme that has served the country for ten years.
“BEST AC has been here for 10 years now, and we must confess that where the private sector organisations and policy advocacy capacity was in 2004 is not where we are today, thanks to this project,” he said.
The programme will be succeeded by BEST-Dialogue.
He added that BEST-AC has been the most consistently active and sustained part of the bigger BEST programme.
It was truly embedded in the private sector, making close and regular interactions and continuous mutual learning possible, he said.
He commended the decision made by government and specifically President Jakaya Kikwete at the seventh TNBC meeting held on 16th December 2013 to make the business environment a National Key Result Area No.7 under the ambitious Big Results Now (BRN) programme.
However, he said, TPSF was concerned that the issue of bureaucracy has not been discussed as work stream in the big results labs for business environment.
“This problem is increasing day by day as the informal sector is increasing.”
On his side, the acting Director of President’s Delivery Bureau (PDB), Peniel Lyimo, commended BEST-AC for the role it has played in supporting private sector to advocate for improved business environment.
“The government recognizes the important role of the private sector as a driver of the economy. That is creating a conducive business environment has been entrenched in Big Results Now,” he said.
He said BEST-AC supported the private sector despite many challenges, and whenever the sector spoke with one voice, solutions to challenges have been found.
“BEST-AC has done a good job and its contributions are greatly valued by the private sector,” he said. For the last ten years BEST-AC helped to strengthen the private sector through enabling trade associations and membership organisations to lobby government for change on regulations, taxes and levies, he added.
BEST-AC was funded by the British, Dutch, Danish and Swedish governments and provided grants and funding to membership organisations, such as chambers of Commerce and trade associations, such as the Agricultural Council of Tanzania.
These grants enable them to have effective dialogue with government to change policies, laws and regulations.
Related News
SADC Member States to strengthen efforts to address mixed and irregular migration flows in the region
Senior Government officials from SADC member states have concluded a three-day regional technical Migration Dialogue for Southern Africa (MIDSA) Conference at the Bingu International Conference Centre (BICC) in Lilongwe, Malawi, on 2 July 2014. The conference was aimed at taking stock of actions undertaken at national and regional level to address mixed and irregular migration, reflect current trends in the region and share best practices among member states and other regional partners.
The government of the Republic of Malawi hosted the conference with support from the International Organization for Migration (IOM), the Southern Africa Development Community (SADC) Secretariat, United Nations High Commissioner for Refugees (UNHCR) and United Nations Office for Drugs and Crime (UNODC). Members of the diplomatic corps, cooperating partners and other regional and International Organizations also attended the meeting.
The meeting was officially opened by the Minister of Home Affairs from the Government of the Republic of Malawi, Honorable Paul Chibingu, MP.
In his opening remarks, the Minister called upon member states to reflect on the Dar es Salaam Action Plan and take stock of achievements made and gaps in the implementation of the plan. This will enable member states to come up practical interventions to ensure effective and efficient migration management in the region.
Member states reflected on the progress made in the last four years on the implementation of the 2010 Dar es Salaam Action Plan on mixed and irregular migration and related MIDSA recommendations. The action plan contained six key priority areas detailing concrete activities that member states had pledged to pursue.
While notable progress has been made on all six-priority areas, such as the adoption of trafficking legislation in almost all the countries in the region and the adoption of international and regional instruments governing migration related issues; member states recognize more can be done to ensure a better protective environment for refuges, asylum seekers and vulnerable migrants in mixed flows.
Coordinated regional interventions and cooperation in the management of mixed migration are essential parts of a sustainable response to the challenges of mixed and irregular migration in the SADC region. Delegates reached a consensus that a regional action plan to address mixed and irregular migration should be developed in the SADC region.
Member states agreed on a roadmap that will lead to regional coordination and harmonization of approaches on mixed and irregular migration in Southern Africa. The roadmap will outline a series of activities and milestones to guide the successful adoption of the proposed draft Regional Action Plan into an official SADC framework on mixed and irregular migration to ensure ownership and accountability by member states.
Having reflected on previous efforts in the region to address mixed and irregular migration, in particular the Dar es Salaam plan of action, member states agreed that, the plan remains relevant and feasible. Member states underlined the need for concrete set of activities, as well as a clearly defined process for successful implementation of the action plan. Delegates stressed that the SADC Secretariat has a pivotal role to play in facilitating and coordinating the roadmap for the successful implementation of the proposed Plan of Action.
Delegates also affirmed their commitment to the sustainability of the MIDSA forum with the SADC Secretariat taking a leading role towards ensuring synergy with existing official SADC processes.
“IOM and its partners are committed to support Member states in their efforts to develop and implement a formal SADC Regional Action Plan on Mixed and Irregular Migration, and will work closely with the SADC Secretariat to this end ”says Charles Kwenin, IOM Regional Advisor for Africa to the Director General.
The MIDSA conference is supported by the US State Department Bureau of Population, Refugees Migration (PRM) and the Government of the Republic of South Africa.
Related News
Boosting productivity key for developing economies to close income gap with advanced countries, says OECD Development Centre
Income levels in most developing and emerging countries will not catch up with advanced economies for many decades without efforts to boost productivity, according to a new report by the OECD Development Centre.
Perspectives on Global Development 2014 shows that while China, Kazakhstan and Panama are on track to reach OECD levels of average income by 2050, a number of middle-income countries – including Brazil, Colombia, Hungary, Mexico and South Africa – will take much longer at current growth rates.
Labour productivity in most developing and emerging countries is well below half the level of OECD countries, the report shows. Diversification into higher value-added areas in agriculture, manufacturing and services along with economic reforms and a greater focus on innovation could help remedy this.
“Many of the upper middle-income countries we expected would be catching up with advanced economies by the middle of the century will not do so at today’s growth rates,” said OECD Secretary-General Angel Gurría, launching the report at the Organisation’s 6th Global Forum on Development. “Boosting productivity would help enhance growth and narrow the gap in living standards relative to the advanced economies more quickly.” Read the speech here.
The slow pace of economic convergence comes despite high growth rates in developing and emerging countries in recent years that have increased the weight of non-OECD countries in the world economy. Non-OECD countries’ share of global economic output overtook that of the OECD countries in 2010.
The report notes that the service sector can be a key driver of value-added growth in emerging countries. For example, developing high-end services for a growing middle class and value-added services for both domestic and foreign businesses, such as consulting, engineering services or medical analysis, would create jobs with higher returns per worker.
Achieving this kind of diversification will require equipping workers with better education and skills and encouraging innovation. The report recommends countries work to develop new products and processes domestically that would offer a competitive advantage but also that they import the best ideas from other countries.
The report examines overall productivity in more than 40 countries as well as looking more closely at up to 18 manufacturing and 16 service sectors using industry-level data.
Related News
Trade Facilitation Agreement will support regional integration – Azevêdo
Director-General Roberto Azevêdo told the African Union Forum on Industrialization and Inclusive Development in Africa on 1 July 2014 that the Trade Facilitation Agreement “will begin to remove some of the barriers which prevent full integration into global value chains. As such, it will create an added impetus for industrialization and inclusive sustainable development.” This is what he said:
Good morning. I want to thank the African Union for the opportunity to be here today.
I am truly delighted to be here and to have the chance to discuss these very important issues – specifically trade and the central role it can play in industrialization and building productive capacity and inclusive development in Africa.
I’d like to start by putting this in a historical context.
In the 1960s, there were high hopes for the development of the newly independent Sub-Saharan African countries.
However, these hopes were quickly dashed following a series of shocks which began in the mid-70s, with the first oil price spikes, followed by a severe decline in GDP growth and increase in poverty in the 80s and early 90s.
However, by the mid-1990s, economic growth had resumed in certain African countries.
Economic reform, better macroeconomic management, donor resources and a sharp rise in commodity prices were having a positive effect.
In the 2000s, many African countries witnessed high economic growth performance and during that period some of the world’s fastest growing economies were in Sub-Saharan Africa.
Angola, Nigeria, Chad, Mozambique and Rwanda all recorded annual GDP growth of over 7%.
In 2012 Africa’s exports and imports totalled 630 billion dollars and 610 billion dollars respectively – a fourfold increase since the turn of the millennium.
And the long term prospects for growth are good.
The Economist Intelligence Unit has forecast average growth for the regional economy of around 5% a year from 2013-16.
Despite all this, the continent still plays a marginal role in the global market, accounting for barely 3% of world trade.
One significant reason – though of course there will be others – is that African economies are still narrowly based on the production and export of unprocessed agricultural products, minerals and crude oil.
Now, due to relatively low productivity and technology, these economies have low competitiveness in global markets – apart from crude extractive products.
The low productivity of traditional agriculture and the informal activities continue to absorb more than 80% of the labour force.
And growth remains highly vulnerable to external shocks.
So, overall you could say it is a mixed picture. But I think this story of half a century of struggle, set-backs and progress shows two things:
One – the road to meaningful and inclusive development still seems long.
Two – we are in a better position than ever to make real, sustainable progress. So we must make the most of this opportunity.
And I applaud the efforts of many governments to do so.
Many are striving to do more in turning their strength in commodities into strengths in other areas – using commodities as a means of spurring growth across various sectors.
The UN Economic Commission for Africa’s 2013 Economic Report echoes this – calling for the continent’s commodities to be used to support industrialization, jobs, growth and economic transformation.
Indeed, the African Union’s 2063 Agenda calls for the region’s economies to integrate and to join the global economy through the development of human capital, the acceleration of infrastructure development and the fostering of meaningful partnerships with the private sector.
In line with this, I think there are a number of essential steps to take:
- the diversification of economic structure, namely of production and exports;
- the enhancement of export competitiveness;
- technological upgrading;
- the improvement of the productivity of all resources, including labour; and
- the reduction of infrastructure gaps.
Only by delivering in these and other areas can policymakers ensure that growth enhances human well-being and contributes to inclusive development.
But how can we take these steps?
Well, I’m sure it won’t surprise you if I say that I think trade can play a vital role.
Over the next few minutes I would like to focus on how trade – and the WTO – can help African countries to industrialize their economies, with the ultimate purpose of supporting inclusive development.
Of course I should say that although African countries share some common features, no unique set of policies, including those on trade and industrial policy, could ever fit for all in a uniform way.
For example, while almost all African countries are WTO members, some are least-developed countries, and therefore benefit from more flexibilities than those that are not included in this category.
Even among the LDCs, some are already exporters of manufactured products – though often they rely on a single product – while others are more dependent on commodities.
Nevertheless I think it is clear that some preconditions of success are universal. For example:
- political stability;
- a business friendly environment, for both domestic and foreign investors;
- bureaucratic capacity in decision making and in designing, implementing and revising policies; and
- the coherence of these policies with other trade and development policies.
African regional integration is of course very high on the policy agenda. There is little doubt that the regional market offers good scope for African firms to diversify their production and achieve greater value addition.
Already now, manufactures constitute as much as 40% of intra-African exports, compared with 13% of Africa’s exports to the rest of the world.
I recently visited Kenya and Uganda where I heard about some of the excellent work that is going on in East Africa – particularly their efforts to improve their shared trade infrastructure and speed up the transit of goods across borders, which is already reaping rewards.
However, despite the progress made in many areas, the African market as a whole remains quite fragmented.
The Bali package, which WTO members agreed in December last year, will help to resolve some of these problems.
Inclusive, sustainable development was at the heart of the whole Bali project – and our African members played a crucial role in making it a success.
It brought some progress on agriculture.
It delivered a package to support LDCs.
It provided for a Monitoring Mechanism on special and differential treatment.
And, in addition, Bali delivered the Trade Facilitation Agreement – and this is a direct answer to some of the problems of fragmentation that I raised a moment ago.
Costly and cumbersome border procedures, inadequate infrastructure and administrative burdens often raise trade-related transaction costs within Africa to unsustainable levels, creating a further barrier to intra-African trade.
This Agreement will help to address some of these bottlenecks.
It will support regional integration, and therefore complement the African Union’s efforts to create a continental free trade area.
And it will begin to remove some of the barriers which prevent full integration into global value chains.
As such it will create an added impetus for industrialization and inclusive sustainable development.
And it is worth noting here that the Trade Facilitation Agreement broke new ground for developing and least-developed countries in the way it will be implemented.
For the first time in WTO history, implementation of an agreement is directly linked to the capacity of the country to do so.
Previously it was more about giving a few more years – so developed countries implement an agreement immediately and least-developed and developing countries just get a few more years.
Nobody ever talked about whether, when the deadline came, those countries would have the capacity to implement the provisions that were agreed.
So now, and for the first time, we have more than that – we are taking a more dynamic approach.
Under the Trade Facilitation Agreement, not only does a country have to have the capacity before being required to implement the provisions, but technical assistance and support must be provided to help them achieve that capacity.
Moreover, developing and least-developed countries can determine for themselves when they have the capacity to implement each of the trade facilitation measures of the Agreement.
This has never happened before and it did not happen by accident. Members made the decision together. Africa was a big part of that.
Clearly a central element of implementing the Agreement will be ensuring that the assistance that developing and least-developed countries need will be available.
A great deal of very welcome work has already been done. But from my consultations with members, including the coordinators of the African Group, the Africa, Caribbean, Pacific Group and the LDC Group, I know that some real concerns remain on how easy, affordable and accessible the technical assistance will actually be.
We have been working very hard to address these issues and ensure the provision of technical assistance to everyone, without exceptions.
My team and I have been talking to donors and consulting with members to try to find a solution that would allow the WTO to assist those seeking technical assistance and capacity building support. That solution should:
- enable the flow of information between donors and recipients on their needs and options;
- assist members in preparing and updating their needs assessments;
- help members to develop technical assistance projects;
- identify possible development partners for countries that might have had difficulties doing so by themselves;
- and, finally, ensure that resources are available for all those seeking technical assistance.
We expect to be able to set out a new WTO facility along these lines before the summer break.
Another vital issue here is the importance of agricultural development in industrialization, and the role of industrial collaboration through regional cooperation.
The contribution of the agriculture sector is of utmost importance for the establishment of a sound industrial base. It can provide a surplus to invest in industrial capacity building, and supply agricultural raw materials as inputs to the production process, especially for today’s highly specialised food processing industry.
Moreover, it can also significantly contribute to industrialization by providing an ample supply of food products. This is because food constitutes a large share of what wage earners in African countries spend their money on. Its availability at low prices contributes to increase the purchasing power of wages, and therefore raise the competitiveness of a country in international markets.
The importance of agricultural development as an ingredient in development and industrialization policies has been shown over and over again. You can see it in the experience of all industrial, developed countries and in the newly industrializing economies of East Asia.
Because of the momentum generated by our success in Bali, WTO members are discussing these issues again, for the first time in six years. And we have a target of producing a work programme by December this year on the conclusion of the Doha Development Agenda.
I care deeply about the Doha Development Agenda. I have been working on this since 2001 and if there is someone who wants to see it completed, it’s me.
In my conversations with leaders around the world I have detected a new willingness to engage on Doha and give it another chance.
We are working hard on this down the road at the WTO. Just last week I called on all members to redouble their efforts so that we can meet our December deadline.
The conclusion of the DDA would be a huge boost to development. So we must take this opportunity.
Beyond the DDA, the WTO can support the cause of industrialisation and inclusive development in a number of other ways.
Infrastructure is essential for trade – but so too are the necessary back-up services.
Therefore, the implementation of the Bali decision on the LDC Services Waiver is very important.
WTO members will soon consider the preferences they could give to LDCs in this area. And I hope that the timely submission by the LDCs of their request will support this process.
Another area which demands our focus is improving supply capacity and human resources.
Through our capacity building and technical assistance programmes such as Aid for Trade and the Enhanced Integrated Framework for LDCs, the WTO is doing a great deal to support this.
Despite continued pressure on donor budgets as a result of the economic crisis, Aid for Trade commitments have risen by 20% since 2011. In 2012 they stood at 54 billion dollars.
Most of this increase has gone to Africa whose share of Aid for Trade has risen to 40% of the total flows – which is the largest share overall.
Significantly, the majority of these commitments have been directed to improving Africa’s economic infrastructure and building its productive capacity. Over 20 billion dollars were directed at these two priorities in 2012.
These resources finance cross-border road projects, private sector development funds for the region, and basket funds for trade facilitation, agricultural development and support for fair-trade products.
So I think this is an important contribution to the challenges we are trying to address here today.
These issues are undoubtedly complex. Success – will involve a large number of policies: economic, social and political – domestic, regional and multilateral.
But, despite this complexity, it’s clear that an essential component in the policy mix is trade.
I hope I have illustrated this point today – including how trade is already making a difference, and what more we can potentially achieve if we continue to work together.
As I have indicated, I believe we are in a better position to make real progress now than ever before – particularly when it comes to trade.
This is why I believe that trade must be fully reflected in the post-2015 development agenda – and why I hope that the WTO will be a vital forum for achieving everything that is on our agenda here today.
So let’s make sure we deliver.
Thank you.
Related News
EAC states should harmonise work permits
The East African Community (EAC) partner states established the EAC Common Market on July 1, 2010 which was a significant step in the EAC integration process.
In establishing the common market, the EAC expected to remove barriers and restrictions to facilitate free movement of labour, goods, and services across the region. However, three years since the signing of the common market protocol, the EAC is yet to experience free movement of labour goods and services, as earlier envisaged.
However, nationals of EAC partner states are still subjected to lengthy and often frustrating procedures of acquiring work permits. The five partner states (Burundi, Kenya, Rwanda, Tanzania, and Uganda) still have different policies and procedures of acquiring work permits. The classification structure, application documents and fees required are all different. This has further complicated the administration of work permits and further prevented East Africans from enjoying the benefits of a common market. While commendable steps have been taken by some countries especially Kenya and Rwanda to waive work permit fees for all East Africans, the process of acquiring work permits is still cumbersome in some cases taking up to six months. In addition, immigration procedures in most of the East African Partner States obligate employers to explain why they need to hire foreigners (East Africans in this case) at the expense of the local citizens. Therefore, hiring of East Africans beyond their national borders has remained unattractive to most employers.
The current challenges facing the region stem from the fact that EAC Partner States have not yet realigned national immigration laws and policies to reflect provisions and requirements of the Common Market Protocol. Therefore, to the average East African citizen, the benefits of a common market have only remained a distant dream.
The Common Market Protocol compels all EAC Partner States to harmonise classification of work permit and forms, fees and procedures. However, more than three years since the protocol came into force, all EAC Partner states have been slow to harmonise relevant laws and policies to facilitate free movement of labour. For instance, partner states still have different classification for work permits. Tanzania has a total of 13 sub-classes, Uganda has nine, Kenya has nine, Rwanda has two, and Burundi has two. Work permit fees also vary from one Partner State to another. In Tanzania, for instance, work permit fees range from $200 (about Shs520,000) for missionaries, volunteers and students to $3,000 (about Shs7.8m) for the miners Large scale trade and business. In Kenya work permit fees range from $60 (about Shs155,000) for Non-Governmental Organisations (NGOs) to $3,000 for miners. In Uganda work the fees range from $250 (about Shs649,000) for missionaries up to $2, 500 (about Shs6.4m) for miners. In Rwanda the fees range from $16.5 (about Shs42,000) for ordinary workers to $82 (about Shs213,000) for government diplomatic services while in Burundi work permit the fees range from $60 (about Shs155,000) for students to $84 (about Shs218,000) for regular workers. To make the common market a reality, partner states need to deal with disparities in wok permit requirements, administration, and application procedures. Absence of a uniform regime for administration of work permits in terms of classifications, fees, procedures hampers the proper functioning of a common market. EAC Partner States should establish a common work permit fee for non-EAC citizens and other foreign workers.
Mr Luzze is the executive director of East African Business Council
Related News
E.A partner state laws derail Common Market Protocol
Four years into the establishment of the East African Common Market Protocol, its implementation is expected to be close to the final stages, according to experts.
However, the process which is in its fourth year of implementation, has suffered a slow pace of the amendment of laws, rules, policies and procedures with just a year left to the intended actualisation of a fully-fledged Common Market.
The Protocol that calls for free movement of goods, labour, capital and services among East African Community (EAC) member states, came into effect on July 1, 2010 and was meant to be implemented over a five-year period.
According to the current status report on the Common Market, partner states have undertaken numerous initiatives through their relevant sectors and National Implementing Committees (NICs) to implement the EAC Common Market Protocol.
One of the EAC principal planning officers, Mr David Sajjabi, notes that there are three major challenges that are slowing down the implementation of the Common Market.
One, member states are taking long to amend national laws, Non-tariff Barriers (NTBs) are still a problem and there are delays to ratify other Protocols that contribute to the implementation of the EAC Common Market Protocol.
Laws
Uganda is said to be lagging behind on the implementation of laws that conform to the Common Market Protocol.
In an interview with Prosper magazine, on Uganda’s status of compliance, the director EAC Affairs at Ministry of East African Affairs (MEACA), Mr Lawrence Mujuni Mpitsi, said they are moving fast on amending the laws and hopefully target to be compliant by December this year.
He said MEACA will present the identified laws to other stakeholders in the relevant departments for debate on July 3.
“We have already identified more than 20 laws and are working with the law reform commission. Hopefully, by December this year we shall have amended them to suit the Common Market protocol,” Mr Mpitsi said.
NTBs
The recurring NTBs make business costly in the region.
“Partner states have maintained and in some cases, introduced new NTBs that hinder the smooth movement of goods and services in the region,” Mr Sajjabi mentioned.
The updated EAC Time Bound Programme shows that 24 NTBs were unresolved; three were reported as new, 61 were resolved and eight new NTBs had been introduced.
The report shows that the five member-states imposed NTBs with Uganda carrying the majority ranked at nine, Kenya and Tanzania both imposed seven NTBs, Burundi imposed five, while Rwanda had the least imposed NTBs ranked at four.
Expounding on the issue of NTBs, Mr Andrew Luzze, the executive director of East African Business Council – a regional private sector umbrella body, says: “Member countries need to establish committees to address these NTBs and explain why they have been introduced.”
Movement of persons/labour
To facilitate trade in the region, free movement of people is a key component of the Common Market Protocol. However, this is still a challenge.
Work permits that should enable people from the member states to work within the region have not been harmonised four years since the Common Market enactment.
“Movement of people is a key component in the production chain and once facilitation is not done, it greatly impacts the growth of the member states. We need to see member countries harmonise work permits,” Mr Luzze said.
According to the status report, only Rwanda allows citizens of partner states to enter their country without restrictions, granting them up to a six-month stay period, which is renewable upon justification.
In Uganda, the Citizenship and Immigration Act is under review. Although the existing law does not guarantee a six-month stay for a visitor, there is an administrative circular that allows visitors from EAC partner states to stay for six months.
Burundi enacted an administrative procedure that guarantees a six-month stay for EAC citizens and also reported that the Immigration Act is currently under review so as to comply with the Common Market Protocol.
Uganda, Kenya and Tanzania have a circular in place directing immigration officials to automatically issue a six-month visitors pass to citizens of EAC partner states.
Trade
Experts appreciate that since 2005 when the region entered into the Customs Union – the first stage of the integration – there has been growth in intra-regional trade from Shs4 trillion ($1.6 billion) to Shs8.8 trillion ($3.6 billion) as of 2010.
Also, total intra-EAC trade has grown from 7.5 per cent in 2005 to 11.5 per cent in 2011.
“However, this is far from the true potential of the EAC which boasts of a 140 million people market,” Ms Catherine Masinde, the World Bank’s head of investment climate in East and Southern Africa, notes.
Ms Masinde adds that close to Shs55.7 trillion ($22.7 billion) in inter-regional trade was lost to other regional trading blocs such as Southern African Development Community and Common Market for East and Central Africa between 2005 and 2012.
Infrastructure
There has been tremendous cooperation amongst the member states which saw the inaugural Tripartite Summit held in Entebbe in June 2013, leaders of Uganda, Kenya and Rwanda spearhead different components of joint projects.
Uganda committed to lead the railway development and political federation sector; Rwanda on customs, single tourist visa and East African Community e-identity card; and Kenya on the implementation of the oil pipeline and electricity generation.
Because of this, according to Mr Luzze, the number of days spent along the northern corridor to transit goods has reduced to five days from seven.
“We have seen the implementation of the Single Customs Territory, the efficiencies at the Mombasa Port and the One Border Stop Point.
All these measures have reduced the cost of doing business in the region,” Mr Luzze noted.
National Identification Documents
Burundi has initiated a system for issuance of machine readable and electronic national ID cards which was started in September 2013. Kenya has been issuing ID cards to nationals since the colonial period. Rwanda has been issuing machine readable and electronic national ID Cards to her nationals.
While in Tanzania, the process of issuing machine readable national identities by the National Identity Authority started in February, 2013. In Uganda, the process of ID registration kicked off in April this year.
Early this year, Kenya, Uganda and Rwanda started using of national ID cards as travel documents among the three countries.
Related News
FG to generate jobs through services industry – Jonathan
President Goodluck Jonathan hinted yesterday that the federal government was shoring up investments in the service industry to generate more job opportunities for Nigerians.
Jonathan, said, “The recent gross domestic product (GDP) rebasing result reveals that the services industry constitutes about 51 per cent of our GDP and employs many more Nigerians than we previously thought.
“Therefore, we are investing in sectors such as the Information and Communication Technology (ICT) and creative industry to generate more of such jobs which will be key to making our impressive recent economic growth record more inclusive.”
The president said this at the 16th meeting of the Honourary International Investment Council (HIIC) held the Presidential Villa, Abuja. He also identified the ICT and creative sectors of the industry as key areas of focus.
Jonathan was represented by Vice President Namadi Sambo at the meeting with the theme “The Role of Skills, Education and Capacity Building for Economic Development in Nigeria.”
Reiterating his administration’s resolve to make Nigeria one of the world’s 20 most industrial nations by 2020, the president said the administration had significantly improved the country’s investment climate and would continue to take all necessary steps to enhance the competitiveness of local enterprises.
“We will continue to eliminate, as much as possible, distortions and privileges to create a sustainable level playing ground for all investors,” Jonathan said, adding that Nigeria’s position as the preferred destination for investment in Africa was being maintained despite security challenges.
Noting that within the last two months, the country had played host to several business delegations around the world who came to explore investment opportunities, Jonathan listed some of the delegations to include a Chinese delegation of 100 businessmen, 75 Kenyan businessmen, and 18 prospective investors from Switzerland.
He hinted that the second largest government enterprise in China, made up of 500 companies, also visited and pledged to invest in the power generation and transmission sector. He said the visits by the United States’ commerce secretary, accompanied by a delegation; a team from Pakistan and a delegation from the Netherlands were also worthy of note.
Related News
Swaziland loses AGOA benefits from January 1, 2015
Related News
Chicken producers want anti-dumping tariffs
The possible imposition of anti-dumping tariffs on certain chicken cuts is unnecessary, the Association of Meat Importers and Exporters (Amie) said on Monday.
Local producers had appealed to government to apply anti-dumping duties on certain cuts from the United Kingdom, Germany, and the Netherlands, CEO David Wolpert said in a statement.
The International Trade Administration Commission (Itac) started investigating the matter in October last year.
“The whole exercise is nothing more than another attack on a relatively small import industry representing less than 10% of the chicken market in an effort to boost prices at the tills,” Wolpert said.
The investigation covered 2012, when “exceptional circumstances” affected the local poultry industry.
These included major regulated cost increases in labour, power, and fuel, plus high maize prices of around R3 000 per metric ton, compared to the current price of around R1 800 per metric ton.
“The investigation period of 2012 is so far removed from current actual market conditions that any investigation over that period would not bear any resemblance to the current market situation,” said Wolpert.
SA Poultry Association CEO Kevin Lovell said the dumping of certain poultry parts was unfair trade.
“No one ever wins a trade war, it is just a series of skirmishes. Whatever Itac do decide, it won’t resolve the question posed by a global economy to a local market,” he said.
The fundamental difference was South Africa was a balanced market, where all parts of the chicken were used, except the blood and feathers, while in Europe only selected parts were eaten.
“They sell that [unused] product at whatever price they could get and that’s where the dumping originates,” said Lovell.
“Itac are well positioned to make the distinction of the effects caused by dumping and the effects caused by other factors.
“The action is still going for a number of months. What is expected is a temporary or provisional measure.”
Following this, all parties would have a chance to present new arguments.
Related News
Madagascar back in the US trade fold
As anticipated, the US government has reinstated preferential trade status for Madagascar on its 54th independence day anniversary, providing hope for the country’s embattled economy.
The 2000 African Growth and Opportunities Act (AGOA) offers developing countries duty-free access to some US markets, with the strict proviso that their governments show progress on enhancing democracy and human rights and upholding fair labour practices.
“The decision to reinstate Madagascar’s AGOA eligibility recognizes the nation’s return to democratic rule, as well as President [Hery] Rajaonarimampianina’s commitment to promote transparency, combat corruption, and begin rebuilding Madagascar’s economy,” said a US government statement.
The US government suspended Madagascar’s free trade status at the beginning of 2010, following a coup in March 2009 and the failure of the transitional president, Andry Rajoelina, to make progress towards holding elections.
The holding of elections in late 2013 and the swearing-in of new President Rajaonarimampianina in January 2014 looks to have put Madagascar on the road to rehabilitation.
Until the suspension, Madagascar had been an AGOA success story. The country exported on average over US$200 million worth of goods a year under the agreement, with a peak of over $300 million in 2004, according to Zenia Lewis, a researcher with the Brookings Institution’s Africa Growth Initiative. Half of all textile exports from the country, amounting to $600 million, went to the US, and the textile sector was responsible for up to 8 percent of the country’s GDP.
The textile industry also played an important role in poverty reduction in urban centres. In 2008, it employed more than 100,000 workers, according to Takahiro Fukunishi of the Institute of Developing Economies at the Japan External Trade Organization (JETRO).
In a paper published by JETRO in 2013, Fukunishi said Madagascar’s suspension from AGOA had a larger impact on the economy than the political turmoil. Exports from Madagascar to the US fell by around 70 percent, and over 26,000 jobs were lost between 2008 and 2010.
Most of those laid-off were unskilled workers, who subsequently sought to make a living in the informal sector, hence the sudden growth in the number of street vendors in the capital Antananarivo.
Painful readjustments
“When AGOA was suspended, we said ‘AGOA or no AGOA, we will go on.’ I have over 200 mouths to feed,” said Voahangy Ramananaherisoa, owner of the Kaliana textile company.
Ramananaherisoa started her garment factory, which produces high-end embroidered girls’ dresses, 10 years ago, when she found a US client who offered to work with her. The enterprise flourished under AGOA. Suspension meant some painful readjustments. In its heyday, the Kaliana factory employed 250 permanent workers, working for a minimum salary of about $49 a month. That number is now down to 130, with Ramananaherisoa employing casual workers when there are extra orders.
“Overnight, our products became 30 percent more expensive. Many factories, especially those who paid the taxes themselves, closed their doors. It wasn’t worth producing any more. Last year, 2013, was so bad that I thought we wouldn’t make it through another year without the agreement.”
Ramananaherisoa cut a deal with wholesale agents, bringing down her own margins by15 percent; but she has had to cope with diminishing orders, rising costs and a brake on expansion and investment.
Access to European markets is still there under the interim Economic Partnership Agreement (EPA) since 2008, but Ramananaherisoa says her company depends overwhelmingly on US markets, stressing that even without AGOA, 80 percent of their exports went to the US.
After presidential elections and the forming of a government earlier this year, Madagascar had been asking to be restored to AGOA. “There is positive momentum: a key criterion for AGOA is governing justly’, and the replacement of the coup regime of 2009 – by a diverse government appointed after internationally observed elections – is a very positive step,” said Eric Wong, chargé d’affaires at the US embassy in Madagascar at a ceremony in Antananarivo in April.
Even with AGOA reinstatement, textile industry insiders warn recovery will not be immediate. Ramananaherisoa talks of a six-month wait before a positive impact is felt, as prices have been fixed and it takes time for new orders to come in. But she remains confident. “The potential market is still there, so I’m sure the investors will come back under AGOA.”
Announcing the reinstatement decision, US Trade Representative Michael Froman said: “We are hopeful that Madagascar will take advantage of AGOA’s potential to create employment, expand bilateral trade, and contribute to the economic well-being, security, and health of its people.”
Swaziland goes the other way
As expected, the AGOA status for Swaziland was revoked for not having “demonstrated progress on the protection of internationally recognized worker rights. In particular, Swaziland has failed to make continual progress in protecting freedom of association and the right to organize. Of particular concern is Swaziland’s use of security forces and arbitrary arrests to stifle peaceful demonstrations, and the lack of legal recognition for labor and employer federations.”
“The withdrawal of AGOA benefits [from Swaziland] is not a decision that is taken lightly. We have made our concerns very clear to Swaziland over the last several years and we engaged extensively on concrete steps that Swaziland could take to address the concerns. We hope to continue our engagement with the Government of the Kingdom of Swaziland on steps it can take so that worker and civil society groups can freely associate and assemble and AGOA eligibility can be restored,” said Froman.
Related News
Building a region coast-to-coast – SADC strategy for economic transformation
The vision of southern Africa as an emerging economy with infrastructure that works coast-to-coast will be closer to reality after the regional Summit hosted by Zimbabwe in August.
The momentum is building towards the 34th summit of the Southern African Development Community (SADC) when the leaders of 15 member states will meet in Victoria Falls with Zimbabwe’s President Robert Mugabe chairing.
The Summit is preceded by a meeting of the Council of Ministers and preparatory meetings of officials. A series of key sectoral meetings are already
Tourism ministers from the region met recently in Livingstone, Zambia during the airlines Routes conference held at Victoria Falls, and the infrastructure ministers met on 20 June in Harare, Zimbabwe.
While these meetings may seem routine, without resonance to a wider community, the Summit in Victoria Falls promises to be a milestone for SADC and a life-changing event for southern Africa.
The meeting of infrastructure ministers held in Harare and chaired by the Minister of Transport and Infrastructure Development, Obert Mpofu, was a game-changer for the region.
The meeting was opened by the Vice President of Zimbabwe, Joyce Mujuru, who told the ministers that adequate infrastructure is the “bedrock of economic development in any economy”.
What’s in it for us who are not in these meetings and why should we be excited about infrastructure development?
The short answer is that infrastructure touches every aspect of our daily lives, including transport, energy, information technology, water, meteorology and tourism.
These sectors impact on our daily lives and how we go about our work and play, in families, in communities and in businesses.
The opportunities being unpacked in this sector across a region that stretches from Namibia to Mozambique, and from South Africa all the way to the United Republic of Tanzania are almost as endless as the imagination.
Imagine what you could do if there was a train from Windhoek to Beira, or from Durban to Dar es Salaam, both through Harare, of if you could fly direct to Maputo. Or if the roads were good on those routes, or if the electricity and water worked all the time in all of those places?
When the infrastructure works, it lays the basis for other opportunities, such as a uni-visa to ease the movement of visitors across borders, and one-stop border posts to ease the passage of goods – or a Grand Free Trade Area of 26 countries stretching along the whole of the eastern side of Africa from Egypt to South Africa.
Already most SADC member states have removed visa requirements for their own citizens to move more easily across borders, and more even development would keep more people and skills at home, while generating a perspective that anywhere in the region is “home”.
What the ministers were doing in Harare, and what the Heads of State and Government will be doing in August, is to set clear plans towards implementation of regional policy with regard to infrastructure and related priorities.
The Infrastructure ministers meeting approved the SADC Declaration on Regional Infrastructure Development to present to the SADC Council of Ministers and then Summit. This follows the Regional Infrastructure Master Plan approved previously.
The declaration urges SADC countries to implement regional agreements and protocols to facilitate development of infrastructure, as well as create the necessary conditions to attract investment and promote industrialization through strong regional infrastructure projects, while encouraging the participation of the private sector in construction of dams, roads and other facilities.
Other key issues include the need to collaborate with international cooperating partners, multilateral financial institutions such as the African Development Bank, and the private sector and other stakeholders to secure funding for the SADC infrastructure programme.
Particular attention will also be put on the transport needs of landlocked SADC countries such as Zimbabwe who because of “their geo-political circumstances have special needs for transport and transit services and bear high costs for capacity and access to external markets.”
The new SADC Executive Secretary, Dr. Stergomena Lawrence Tax from Tanzania, is pleased with progress during her first year in office, but always with her eye on the many targets still to be reached.
At least seven priority areas have been identified for implementation this year as southern Africa intensifies efforts to deepen integration for socio-economic development.
The priority areas were adopted by the SADC Council of Ministers, which met in March in Lilongwe, Malawi.
The ministers agreed to intensify efforts towards finalizing the review of the Regional Indicative Strategic Development Plan (RISDP) and consolidation of the SADC Free Trade Area launched in 2008.
Other key priorities are conclusion of negotiations to establish a single market covering 26 countries in eastern and southern Africa; fast-tracking implementation of the Regional Infrastructure Development Master Plan; strengthening measures to improve food security; and implementation of the HIV and AIDS cross-border initiatives.
The seventh priority is on peace building and consolidation of democratic practices in the region.
The SADC Council of Ministers that oversees the functioning and development of SADC is made up of ministers of Foreign Affairs, Economic Planning or Finance from the 15 Member States. Zimbabwe will also chair Council for the coming year.
The theme of the 2014 Summit on 17-18 August is “SADC Strategy for Economic Transformation: Leveraging the Region’s Diverse Resources for Sustainable Economic and Social Development”.
Zimbabwe is well prepared for the event and for chairing SADC for the next year. The Ministry of Foreign Affairs started preparations last year, and the President’s office has established a National Steering Committee chaired by the Deputy Chief Secretary to the President and Cabinet, Dr. Ray Ndhlukula.
The regional economic communities such as SADC are building blocks towards an African economic community, and by early next year when Zimbabwe also becomes the chair of the African Union.
Related News
Cotton development meeting focuses on regional efforts to make aid more effective
Regional African organizations are increasing their involvement in developing the continent’s cotton sector to ensure aid reaches farmers who really need it, and strengthen production from the field to the clothing market, WTO members heard in a meeting on the development aspects of cotton on 20 June 2014.
Presentations by several of these organizations were made as the WTO Secretariat reported a slight decline in assistance for cotton – current and future – as a number of projects have been completed.
And members were urged to be more active in consultations on reviving the stalled negotiations on reforming trade in agriculture and cotton. In his latest report, the negotiations’ chairperson, Ambassador John Adank of New Zealand, said “the level of engagement among members is still clearly not as advanced as it needs to be.”
Members have discussed the pros and cons of sticking to the current draft text (the draft “modalities”), which has been on the table since 2008, but no specific proposals have been made, he said. A meeting on the cotton in the agriculture negotiations was held that same afternoon.
Consultative framework. This meeting on development was the 21st in a series of consultations held regularly since 2004, formally called the WTO “Director General’s Consultative Framework Mechanism on Cotton”. The current chairperson is Deputy Director-General David Shark, on behalf of Director-General Roberto Azevêdo.
Although the official focus is primarily on development assistance, the meeting also receives regular updates on the separate negotiations on cotton, and the agriculture negotiations as a whole, and on world market trends.
South-South cooperation. “South-South cooperation continues to emerge as an important aspect of the implementation of the mandate on the development assistance aspects of cotton and our work in this forum,” chairperson David Shark said.
“There is wide recognition of this important dimension of our work. The significant contributions of Brazil, China and India as well as Pakistan, are acknowledged with appreciation. This is an area of the work which Members and participants are encouraged to continue to deepen and extend.”
He concluded: “Director-General Roberto Azevêdo will continue to place a full spotlight on the cotton issue, building on the momentum of this collaborative process, where all parties are engaging in partnership, enhancing the dialogue and improving the exchange of information. All this makes this process a positive example of constructive engagement in the development dimension of the work in the WTO.”
Regional efforts: presentations
The regional organizations presenting their work in cotton development were:
- The Economic Community of Central African States (Communauté Économique des États de l’Afrique Centrale, CEEAC-ECCAS) (presentation in French)
- The Common Market for Eastern and Southern Africa (COMESA) (presentation in English)
- The West African Economic and Monetary Union (Union économique et monétaire ouest-africaine, WAEMU or UEMOA) (presentation in French)
They presented in some detail the conditions in their regions and their approach to developing the cotton sector. These included policies to deal with the problem of poorer farmers not receiving aid, increasing productivity, boosting production further along the value chain so that countries no longer rely on exporting raw materials, and involving the private sector.
Development assistance
he value of completed development assistance projects benefiting cotton – directly or through broader agricultural or infrastructure assistance – has increased since the last meeting in October 2013 by about $369m, which partly explains the slight decline in actual and intended spending on current projects (see table below) – a fall that disappointed some African delegations.
Members heard that $489 million in development assistance has been disbursed specifically for cotton – $397m in completed projects and $92m in on-going activities. This is a slight increase over the $459 million total disbursement reported at the last meeting.
However, the amount spent so far on current projects that are specific to cotton is 28% of the $336m committed. Donors have in the past explained that the apparently low proportion is partly because of timing: when the commitments were made, how long the projects last, what stage they are in, and when payments are made.
A further $4.4bn – a $700m increase since October – has been spent on completed or continuing projects for agriculture and infrastructure, which also benefits cotton, in these cotton producing countries.
“The reason behind these figures is that new projects have been initiated and many others have been completed,” the WTO Secretariat observed. Improved reporting and the how the compiled data evolves “have resulted in an increase in the gap between commitments and disbursements” in programmes that are specific to cotton, it said.
“It is useful to note that the widening gap is a consequence, not only of new projects having been initiated, but also because we have not received any updates on long-standing projects from certain donors,” the Secretariat said, reminding the donors that the information is crucial to make the compilation as meaningful as possible.
Amounts committed and spent
Development assistance for cotton and agriculture, US$m
Active And Ongoing |
Completed | |||
Committed | Spent | Committed | Spent | |
Cotton specific development assistance | US$335.6 | US$92.5 | US$420.1 | US$397.4 |
Agriculture and infrastructure-related development assistance | US$4,784.0 | US$2,624.3 | US$1,854,1 | US$1,822.2 |
Total | US$5,119.6 | US$2,716.8 | US$2,274.2 | US$2,219.6 |
The information is compiled in a document that is regularly updated, an “evolving table” now in its 17th version (26 May 2014).
Market situation
In its latest assessment of the cotton market, the International Cotton Advisory Committee (ICAC) included an analysis of technological development and technology transfer, cotton logistics in Africa and world cotton production and stocks.
ICAC said the increase in yields in cotton has been slower than in other crops, and technology transfer has lagged behind developments in research. Despite that, farmers are receptive to learning new methods. Therefore a number of issues need to be tackled, ranging from training trainers and better communications to improved collaboration between the private and public sectors and a new focus on the interaction of inputs, it said.
On logistics, ICAC said inland transport and transit costs tend to be higher in Africa than in competing areas. The costs and transit time are the two key issues hindering the efficient movement of cotton and cotton products, and therefore further research is needed on these costs from farm to gin, ICAC said.
Meanwhile, in world markets, cotton prices have stabilized compared to the peak of 2010/2011. The high level of world cotton stocks, particularly in China are having an impact on global price, and world production continues to exceed mill use, ICAC said. The presentation is here.
Trade negotiations
Meanwhile, Ambassador John Adank of New Zealand, the chairperson of the negotiations on agriculture and cotton reported on consultations he has been holding on a number of issues in the agriculture negotiations before specifically addressing cotton. These are his speaking notes:
“As is customary, I will start with a brief state of play in agriculture in general.
As you are all aware, in Bali Ministers issued one declaration and four decisions on agriculture, dealing with: Export Competition, General Services, Public Stockholding for Food Security Purposes, Tariff Rate Quota Administration Provisions, and Cotton.”
At its January and June 2014 meetings, the regular Committee on Agriculture started discussing the implementation of the decisions on TRQ administration and on public stockholding. In the case of export competition, the first dedicated discussion foreseen in the Bali Ministerial declaration took place during the 5 June 2014 meeting of the Committee on Agriculture.
The Bali Ministerial Declaration also instructed the Trade Negotiations Committee to prepare within this year a clearly defined work programme on the remaining DDA issues. It is in that context that I have undertaken consultations in various configurations, including an open ended informal meeting of the Special Session on Friday, 28 March 2014. I circulated a report on 14 March that provides a summary of the feedback I received up to that date in my consultations along with my observations.
More recently, the Chair of the Trade Negotiation Committee summarized the state of play of the negotiations during the General Council of 12 May. Discussions have taken place in various formats since then, and the Trade Negotiation Committee scheduled on 25 June will be the next occasion to have an overall debate on the state of play of the post Bali negotiations.
Overall, my consultations have shown a general willingness to work constructively. However, there is still not yet sufficient engagement on concrete issues. The level of engagement among Members, or at least those whose interests are most directly involved, is still clearly not as advanced as it needs to be to have a clear understanding of both the issue and what members are seeking in regard to it.
As I already indicated several times, that will only come with further direct engagement between Members. And whether any agreed pathway forward emerges will again be dependent on the willingness of Members to consider options for dealing with these issues.
Let me comment briefly on the three pillars of the agriculture negotiations. Export Competition remains an area where I think the range of questions or concerns appears to be somewhat less than in other areas. This does not mean it is easy. However we do have agreed direction for ongoing work from Ministers at Bali, and my consultations have not shown any questioning whatsoever of the political commitment that Ministers have repeatedly reiterated to the “parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect”.
On Domestic Support, points that have come up in the consultations include: (i) the relationship of an overall agreement on domestic support to the work for a permanent solution to the public stockholding for food security issue which was mandated at Bali for decision by 2017; (ii) the changing patterns of domestic support and subsidisation in the years since the negotiations were last active, and particularly the increased role that domestic support now plays in some emerging economies.
Concerning Market Access, some Members have indicated that they do not see the framework discussed in the past – in terms of the results arising from the formula and flexibilities provided under it – as delivering an acceptable landing zone in terms of improved market access.
More generally, some Members have indicated that a less complex approach, which accommodates appropriate ambition and flexibilities, would be desirable. Some other members insisted on the fact that, no matter the approach, it had to deliver real and significant improvement in market access. At this stage, no one has in fact come forward with a specific alternative here.
As against all of this, some other Members have indicated a concern to keep any focus on market access issues on the resolution of the “outstanding issues” identified in this area back in the Chair’s 2011 Easter report, including the unresolved issues around sensitive/special products and the SSM. There is now an urgent need to be moving into the less comfortable, but hopefully more productive, zone of testing each other’s – and our own – capacity to contribute to putting forward more concrete suggestions and proposals, with a view to agreeing on a clearly defined work programme by the end of the year.
I will continue to work in full respect of transparency and inclusiveness. I will schedule a further informal meeting of the Special Session at an appropriate time to report, and I remain available to any delegation that wishes to contact me in the meantime.
State of Play in the Cotton Negotiations
Let me now turn specifically to cotton. As you are all aware, thanks to substantive preparatory work with the participation of several key players, and based on a proposal tabled by the Cotton‑4, cotton was the subject of a specific decision by Ministers in Bali.
The Bali Ministerial Decision on Cotton addresses both the trade and development aspects of the WTO mandate on cotton, and constitutes a step in the right direction in our ongoing efforts to meaningfully reform cotton trade in the context of the DDA agriculture negotiations.
Indeed, Ministers reaffirmed their commitment to address cotton “ambitiously, expeditiously and specifically” within the agriculture negotiations and to increase Members’ work towards reform as per the August 2004 Decision, the 2005 Hong Kong Ministerial Declaration and the 2011 Ministerial Conference. While Ministers regretted the failure so far to reach an agreement on a final outcome, they remain committed to further work and progress in cotton, based on the above-mentioned frameworks, with the 2008 revised draft agriculture modalities providing a reference point for that work.
In this context, Ministers agreed to enhance transparency and monitoring in relation to trade related aspects of cotton. To that effect, Ministers agreed that twice a year, Members will discuss, within the special session of the Committee on Agriculture, trade-related developments for cotton particularly in the areas of market access for LDCs, domestic support and export competition. The dedicated discussions will be based on factual information and data compiled by the WTO Secretariat from Members’ notifications with, as appropriate, additional relevant information provided by Members.
As you know, the first such dedicated discussion is scheduled for this afternoon in this room. Hence my intention is to keep any discussions of the trade aspects this morning brief since we will have an opportunity to discuss in detail the trade aspects of cotton during our dedicated discussion this afternoon.
You will all have seen my invitation fax of 20th May and the proposed agenda contained therein namely: (i) Introductory Remarks by the Chairman; (ii) General Statements from Members; (iii) Discussion of Trade-related Developments in Market Access, Domestic Support and Export Competition for cotton (Background Paper by the Secretariat and Information and Submissions from Members); and (iv) Any Other Business. Please note that the Secretariat background paper was circulated to all Members in the 3 working languages on 10 June.
The dedicated discussion on cotton of this afternoon is the first concrete step of one clear deliverable from the Bali Ministerial outcome. It will therefore constitute an important event in the context of the wider post Bali agenda. Cotton will of course be an important element of the reflection on the possible way forward for our unfinished DDA business, and I will continue to reach out to concerned Members to see how best deliver on the cotton mandate within the framework of the Doha agricultural negotiations.
I thank you for your attention and look forward to seeing Members and Observers governments this afternoon for our First Dedicated Discussion of Cotton Trade-related Developments.
Related News
Status of Integration in Africa (SIA V)
The fifth edition of the Status of Integration in Africa report (SIA V) contains information on the implementation process of the integration agenda by the Regional Economic Communities (RECs) and the African Union Commission.
The overall objective of this report is to inform the political decision makers of the Continent on the status of integration in Africa and provide some recommendations on how to speed up the economic and political integration of the continent.
The RECs are undertaking various activities and programmes in many areas of integration. The report is intending to capture the progress made in key integration areas, such as, Trade, investment promotion, infrastructure, free movement of persons, macroeconomic convergence, agriculture and food security, peace and security, social affairs, tourism, industry and planning, monitoring and evaluation.
In this regard, analysis of the progress, the challenges and the future outlook of each of the abovementioned sectors are presented. The Report is also assessing the status of integration at Continental level, especially at the AUC level by capturing the progress made regarding the implementation of the key African Union Integration programmes and initiatives.
What is the status of integration in the Regional Economic Communities?
Trade
The African countries, as an economic bloc, occupy a very low position in the global economic classification. The African continent is home to 14% of the global population; it accounts for less than 3% of the global GDP and receives only 3% of foreign direct investment. As regards to global goods trade, the continent accounts for only 1.8 % of imports and 3.6 % of exports. These rates are even lower in the services sector: 1.7% and 1.8% of imports and exports, respectively.
Beyond the relatively unfavourable general positioning, the situation is quite mixed if the countries are considered on individual basis. Intra-African trade stands at around 12 per cent compared to 60 per cent, 40 per cent, 30 per cent intra-regional trade that has been achieved by Europe, North America and ASEAN respectively. Even if allowance is made for Africa’s unrecorded informal cross-border trade, the total level of intra-African trade is not likely to be more than 20 per cent, which is still lower than that of other major regions of the world.
The African Union recognises eight RECs, which consist primarily of trade blocs and, in some cases, involve some political cooperation. All these Communities form the 'pillars' of the African Economic Community (AEC). The RECs are moving towards implementing the Abuja Treaty with different rhythms. EAC is the most advanced Community which have launched its Common Market in 2010. COMESA has launched its Customs Union on June 2009. ECOWAS and SADC have made progress in building their FTAs. ECCAS have launched its FTA in 2004 but is facing enormous challenges in implementing it. UMA, CEN-SAD and IGAD are moving slowly and still in the stage of cooperation amongst their Member States.
Non-Tariff Barriers (NTBs)
Apart from the problems in implementing the agreed FTAs, RECs are also facing Non-tariff barriers to trade. In this regard, RECs have different approaches in dealing with NTBs. The three RECs composing the tripartite arrangement have adopted one programme on elimination of NTBs which is an internet based system for use by stakeholders in the Member States to report NTBs as well as monitor the processes of their elimination.
For example, the online system has been in place since 2009 and between that time and 2013, a total of 338 NTBs had been reported in SADC region, out of which 300 have since been addressed. ECOWAS has put in place National Committees to deal with problems of NTBs and complaint desks in the borders, whereas, the rest of the RECs are yet to establish such a system to eliminate NTBs.
One-Stop Border Posts (OSBPs)
Few RECs have elaborated competition policies and generally these are the Communities either moving towards the Customs Union and Common Market or have reached these stages. One of the main tools for trade facilitation is the initiative of One Stop Border Posts (OSBPs). The concept is used to minimize delays at cross border points on major transport corridors in the region, often as a result of poor facilities, manual processes, lengthy and non-integrated procedures and poor traffic flow.
Under the OSBP concept, all traffic would stop once in each direction of travel, facilitating faster movement of persons and goods, and allowing border control officers from the two Partner States to conduct joint inspection. The concept was first used at the Chirundu OSBP between Zimbabwe and Zambia which was judged successful. The establishment of the OSBPs is now widely adopted in various RECs such as, COMESA, EAC, ECOWAS, SADC and ECCAS.
Competition policies and investment promotion
Few RECs have elaborated competition policies and generally these are the Communities either moving towards the Customs Union and Common Market or have reached these stages. The COMESA competition Commission commenced its activity and aim to facilitating notification and acquisitions in the region. A COMESA Regional investment Agency has been created and is located in Cairo, Egypt. It has a role to coordinate and strengthen the activities of the COMESA national investment promotion agencies.
In addition, several COMESA investment fora were held, aiming at promoting COMESA as an investment destination and creating business linkages between COMESA and non COMESA business actors. The positive impact of the COMESA Micro Small and Medium Enterprises (MSMEs) Cluster Programme has contributed towards national and regional value chains and business partnerships among MSMEs. The COMESA had recently adopted the COMESA Micro, Small and Medium Enterprises (MSME) Strategy.
EAC has a model Investment Code in place and plans underway to upgrade it into an EAC Legislation/Protocol promoting EAC as an investment destination. The East African Business Council (EABC) is the apex body of business associations of the Private Sector and Corporates from the five East African Countries. The East African Business Directory is the first and the most comprehensive business directory in East Africa. SADC has finalized a Protocol on Finance and Investment in 2006 and entered into force in April 2010.
ECOWAS is working in three areas, namely: creation of the ECOWAS Common Investment Market (ECIM), investment climate promotion and financial market integration. ECCAS is working on putting in place a Regional Strategy on investment promotion and establishing a Small and Medium Enterprises (SMEs) Guarantee Fund.
Related News
AU proposes $522.12 million budget for 2015
The African Union (AU) has proposed 522.12-million-dollar budget for 2015, the News Agency of Nigeria (NAN) reports.
According to documents made available to NAN in Malabo on Friday, the draft budget is expected to be adopted at the 23rd Ordinary session of the Assembly of Heads of States and Governments of the AU.
The 2015 budget proposal, which is 32 per cent higher than that of 2014, had already been discussed and debated at the Executive Council meeting of the AU earlier this week in Malabo.
Nigeria is responsible for about 17 per cent of the operational budget of the AU.
An overview of the proposed budget indicates that 142.6 million dollars was budgeted for operational cost and 379.4 million dollars for programmes.
It is proposed that the 54-member states of the AU would finance 28 per cent while their partners would be responsible for 72 per cent of the budget.
Some observers decried the AU’s over-dependence on partners to fund its budget, saying that it would expose the continental body to unnecessary control from external bodies.
The AU had constituted a Panel on Alternative sources of Funding presided over by former President Olusgeun Obasanjo.
The report of the panel was adopted since May 2013, and some of their recommendations to raise additional funds for the AU included hospitality tax on hotel bookings and tax on airline tickets.
However, the AU Ministers of Finance, who met in Abuja in March 2014, were not able to reach a consensus on the operationalisation of the recommendations of the Obasanjo panel.
A Nigerian diplomat, who is familiar with the recommendations of the panel, said many countries, especially those who are dependent on tourism, were working to derail a speedy conclusion of the consideration of the panel’s recommendations.
“Nigeria is demanding that the summit take a definitive stance on the report of the Obasanjo Panel. This is to enable it to give AU the independence, flexibility and ownership of its projects and programmes, devoid of unnecessary outside interference,” the diplomat said.
Related News
‘Bilateral trade between Nigeria/Britain to exceed £8bn target this year’
The Nigerian-British Chamber of Commerce (NBCC) says it expects bilateral trade between both nations to exceed its targets this year.
Prime Minister David Cameron and President Goodluck Jonathan in 2010 had resolved to double trade between the two countries from £4 billion to £8 billion by 2014.
“By the end of 2012, the figure already stood at £7.2 billion and there is no doubt that the target of £8 billion would have been exceeded well before the end of this target year of 2014,” said Adeyemi Adefulu, president, NBCC, recently in the Chamber’s trade mission to Britain.
“It is my considered opinion that with the right policies and incentives, the trade between our two countries could hit £20 billion within the next five years,” he said further.
Nigeria has been attracting investor interest recently as a result of positive indices of growth and demographics.
The Nigerian National Bureau of Statistics recently announced a rebasing of the Nigeria’s GDP figures that put the value for 2013 at $490 billion, as against the World Bank’s GDP figure of $263 billion for Nigeria, and $384 billion for South Africa for the same period.
The rebasing has made the Nigerian economy the largest in Africa and the 26th in the world and more attractive for investors.
Nigeria on May 7 – 9, 2014, also hosted a very successful World Economic Forum for Africa – WEFA – under the theme “Forging Inclusive Growth, Creating Jobs” without incident, despite the menacing terrorist activities of Boko Haram in the North East of the country.
WEFA was attended by a record breaking over 1000 delegates from all over the world.
The meeting achieved important milestones, some of which were – aggregating $68 billion funds for investment in Africa, especially, Nigeria in healthcare, agriculture, energy, infrastructure and education, commendation of the Nigeria’s privatisation of its power sector, unarguably, the largest power privatisation that has been undertaken in the world, and endorsement of the Nigerian economy as the investment destination of choice in Africa.
Related News
Azevêdo warns against revisiting Bali decisions
Director-General Roberto Azevêdo, at the Trade Negotiations Committee meeting on 25 June 2014, noted concerns about efforts by some delegations to revisit the Trade Facilitation Agreement agreed in Bali. He warned that “everything we worked together to achieve in Bali would potentially be lost”. He assured members that the WTO Secretariat is “working hard” to ensure the provision of technical assistance to developing countries in trade facilitation.
Chairman’s statement and Oral Reports by the Chairs of the Bodies established by the TNC
Good morning everybody.
As I outlined at the meeting of the TNC in April and the General Council in May, we are now in the second phase of our discussions on the DDA work programme.
This second phase is focused on resolving the problems that we have been outlining, testing what went wrong and putting forward potential solutions.
The work is taking place at three levels:
- First, through the negotiating group chairs
- Second, in conversations between Members, which I hear are beginning to develop and deepen – and this is very welcome.
- And third, through my own consultations.
In a moment I will give you my overview of how I see this work progressing. But I will start by asking the Negotiating Group Chairs to give their reports on how the discussions have developed in their respective areas.
Before I turn to the main focus of my remarks, I would like to raise something which is not an immediate part of our TNC work – but which could be of great relevance to our chances of making progress here. This relates to the implementation of the Trade Facilitation Agreement.
I am aware that there are concerns about actions on the part of some delegations which could compromise what was negotiated in Bali last December. As Chair of the Trade Negotiations Committee, I have no doubt that you are all very much aware of the implications of revisiting what was agreed in Bali. It would not only compromise the Trade Facilitation Agreement – including the technical assistance element. All of the Bali decisions – every single one of them – would be compromised. Everything we worked together to achieve in Bali would potentially be lost.
On Section 2 of the Trade Facilitation Agreement I know from my consultations that there are concerns among developing and least-developed Members about accessing the necessary support. So we have been working very hard to address these concerns and ensure the provision of technical assistance to everyone, without exceptions.
My team and I have been intensely talking to donors and consulting with the Coordinators of the ACP, African and LDC Groups to try to find a solution that would allow the WTO to assist those seeking technical assistance and capacity building support. Such a solution should:
- create the best possible conditions for the flow of information between donors and recipients on their needs and options;
- assist Members in preparing and updating their needs assessments;
- help Members to develop technical assistance projects;
- identify possible development partners for countries that might have had difficulties doing so by themselves;
- and ensure that resources are available for all those seeking technical assistance.
We expect to be able to set out a new WTO facility along these lines before the summer break.
I need not point out that most likely all of this would be lost if we compromise what was negotiated in Bali. And I am afraid a similar outcome could be expected for the work programme on the DDA. Revisiting the Bali agreements would not improve our chances of getting the DDA done. In fact it would have precisely the opposite effect. This is a serious issue for our work here. While I have stressed that this is not strictly a TNC issue, it does have implications for our work.
However, not least because the consequences would be so significant, I am confident that we will find a way forward which allows us to honour what was agreed in Bali and deal with any specific concerns. Clearly this is something which we will need to watch very closely.
Turning back to the focus of this meeting, from the chairs’ reports and from what I hear in my own consultations with individual delegations, it seems to me that we are now firmly into the second phase of discussions on the DDA work programme.
Members are engaging at a more substantive and strategic level. You have begun to talk about substance. In the first phase we were talking more about process and how to reengage, and we agreed on some broad principles.
- To keep development at the heart of our efforts
- To balance realism and ambition by focusing on what is doable
- To be creative and open-minded
- To recognise that the big issues are interconnected so must be tackled together
- To be inclusive and transparent
- And to maintain our sense of urgency
These principles have been widely adopted by Members, and they should continue to guide discussions in this second phase. I think we heard this in the chairs’ reports today.
But, it seems to me that while Members are observing the principles, we are still not at a point where the conversations actively and resolutely seek potential solutions. We are still in a different type of conversation that is more concerned about pointing to the problems that we find in each other’s positions. Members are ready to point fingers at insufficiencies in other Members’ positions. Members are also quick to say that they cannot do this and that, and to mark out their red lines. But I am not hearing – not from anyone – about what they can do. I am not hearing what they can put on the table that would make trade-offs possible.
On the positive side, all of you have indicated that you are ready to contribute. But our dialogue is falling short of determining more precisely where and how that contribution would take shape. This is the next step we will need to take if we are to look at what the solutions might be and find where the balance between the different positions may lie. So this is what we are now beginning to explore. It is hard work. And it means that Members will need to ask themselves some tough questions. But there is no other way of doing this.
I believe it is useful to dispel certain rumours that I have heard in the corridors. One of them concerns a paper that is supposedly going to come from me, or from someone else, which would provide a magical path forward. Let me clear yet: this is not going to happen. I don’t know how much more clear I can get! This will be a bottom-up process. Any roadmaps will have to come from Members – they will have to come from you. There are no magic solutions or short-cuts here.
Another rumour is that I have been holding meetings with a small group of countries. And so, again, I want be clear – I am not holding meetings with small groups of delegations. Indeed, there have been no group meetings whatsoever with me. I am talking to delegations individually – this is no secret. And not just to a small number of specific delegations, but to many different delegations on many different issues. If and when I hold meetings with some delegations, it will be in a transparent fashion and you will be the first to know. I will try to help and facilitate the conversation and I am willing to intensify my consultations if it is helpful. But this is your process – it has to be led by you. That is why it is so important that you continue to deepen your conversations with each other in this second phase.
Clearly we are in a very different scenario from when we were preparing for Bali with open-ended meetings in Room W – all-nighters – you remember how it was. We will get to that stage in due course – you will get your sleepless nights! But we are not there yet – we have some way to go. As I see it, we are still at the stage of laying the foundations.
A lot of work needs to be done in setting the terrain and preparing the ground before we can begin to build. People may not see concrete things happening at the moment – you cannot yet see the edifice rising. Some may find it frustrating, and it may well be. But this is essential work. If we do not do it right then the building will never go up – or it will fall before it is complete. But, if we prepare the ground correctly and construct solid foundations then, when we are ready, I think the building will go up fairly quickly. So I believe that this kind of work is critical. The conversations you are having with each other to test positions and test ideas are critical; as is the work of the negotiating group chairs – and as, I hope, are my own consultations. So we need to continue this work and to redouble our efforts.
What is important to remember is that work is being done, we have genuine engagement, and we are talking substance. We are sowing the seeds. They need time to germinate.
I am sure that we all feel the presence of the December deadline, just beyond the horizon. But I think there are reasons for a positive attitude. In recent weeks we have moved from talking about process, to talking about substance – with a focus on the three pivotal and interlinked areas of agriculture, NAMA and services. And let us remember that this is something that hasn’t happened for 6 years. Moreover, we have defined a set of clear principles for the conversations ahead.
And Members have been very open and constructive. We are not throwing away the work that was done before. This is extremely important – it must be emphasized. But we are being open-minded about how to close the existing negotiating gaps.
So let us continue developing our work at each of the three levels – with a renewed focus on what Members can do. And let us keep preparing the ground. If we do this properly, we will be able to construct the clearly defined work programme that we were tasked to deliver by the Bali declaration. Thank you very much for listening.
Related News
Manufacturing pharmaceuticals: An untapped opportunity
Ever since the high tech generic drug production facility, Cinpharm-Cameroon, was set up, it is relatively easier for Cameroonians to have access to medicines. Now a low wage earner can access a course of antibiotics at a lower price than a Kenyan counterpart. According to the World Health Organization a 7-day course of treatment with ciprofloxacin could cost in Kenya close to a month’s wages. Unfortunately, this scenario is not uncommon across Africa. In Uganda, it could cost about 11 days of a household income to purchase a single course of artemisinin-combination therapy used to treat malaria for an under five-year-old child.
Africa carries 25% of the world’s disease burden but consumes less than 1% of global health expenditure. It manufactures less than 2% of the medicines it consumes. Over 70% of the world’s HIV/AIDS cases and 90% of the deaths due to malaria currently occur in Africa. In addition, the continent bears 50% of the global deaths of under five children mainly due to neonatal causes as well as pneumonia, diarrhoea, measles, HIV, tuberculosis and malaria. The tragedy is that these diseases are treatable: most related deaths could be prevented with timely access to appropriate and affordable medicines.
Africa’s capacity for pharmaceutical research and design (R&D) and local drug production is amongst the lowest in the world. The problem of inadequate investments in this area, unfortunately, continues. Overall, thirty seven African countries have some pharmaceutical production, although only South Africa produces some active pharmaceutical ingredients. Where there is local production in Africa, normally there is a reliance on imported active ingredients. As a result, the supply of African pharmaceuticals remains highly dependent on foreign funding and imports. The pharmaceutical market in Africa is now 70% imported. According to trade data, India alone accounted for 17.7% of African pharmaceutical imports in 2011. Estimates further suggest that more than 80% of antiretroviral drugs (ARVs) across the continent are imported.
The poor access and affordability of medicines is compounded by factors that include long lead times for international orders; infrastructure gaps such as poor logistics and storage capacity, as well as high transport and distribution costs. In addition, there have been scarce public finances and deficient public health procurement systems. It is estimated that there is scarcity of essential medicines both in the public and private sector. People are also often being forced to buy medicines that may not be certified.
Many African governments spend a disproportionate amount of their scarce resources on procuring medicines. For instance, in 2006, Mali and Burundi, spent 2.3% and 2.9% of their GDP on such imports. Trends now indicate that new health challenges facing the continent will generate for their demands. Non-communicable diseases, like heart disease, lung disorders, diabetes and cancer, are rising due to demographic and lifestyle changes. These conditions will account for half the deaths in Africa, surpassing those provoked by infectious disease.
An additional difficulty results from the excessive use of originator brands, with much higher prices than the lowest-priced generic equivalents. To add to this concoction, the poor quality of drugs and their regulation not only fuel illicit transactions but also contributes to health problems. It was not long ago that 64% of antimalarial drugs in Nigeria were found to be counterfeit!
The benefits of scaling up local production of medicines
To pave a sustainable path for Africa’s health systems , scaling up pharmaceutical production is essential. It can increase the share of population with access to vital medicines, including in rural areas at a lower cost. Better health is central for people’s opportunities and contributes for them to be more productive. The economic cost of disease is well known for families and the national economies. The direct and indirect impact of malaria alone is estimated at US $12 billion annual African income. Local production of medicines is possible and has become imperative.
With economic growth projected to keep growing and the continent pursuing an agenda for economic transformation, there is a huge market opportunity. Local manufacturing would create modern jobs, stimulate economic activities and many ways increase productivity.
The pharmaceutical industry involves legal, scientific, technical, fiscal and financial aspects. In order to step up their production capability, countries need to tackle challenges on a variety of fronts. These range from R&D and exploring the full utilization of the Trade Related Aspects of Intellectual Property Rights (TRIPS) flexibilities, tax and tariff policies, drug regulatory and registration systems and, of course, building infrastructure.
In some pockets of the continent, predominantly in North Africa and in South Africa, the status of local manufacturing of pharmaceutical products has gained a sturdy foothold. For example, Egypt and Tunisia produce, most of their national requirements for essential medicines. Morocco, the second largest African pharmaceutical producer, after South Africa, has 40 pharmaceutical industrial units supplying 70% of domestic demand and exporting 10% of their production, particularly to neighbouring African countries. Significant production capacity is being developed and enriched in Tanzania, Kenya, Uganda, Ethiopia, Ghana, and Nigeria. Mozambique has just commissioned an ARV plant with the help of Brazil.
Africa hosts some of the leading global innovators and generic manufacturers. Starwin in Ghana, Saidal in Algeria, Universal in Kenya, Aspen in South Africa, or Cipla in Nigeria are home grown manufacturers. This just demonstrates that Africa is producing medicines that meet international standards.
In order to enhance the pharmaceutical industry, there is a need for fewer structures and harmonization of policies through regional integration. Intra-Africa trade offers the prospect of strengthening and better exploiting regional supply chains and expanding economies of scale. This would also make larger investments attractive.
To be able to generate wealth and give its future generations a chance, Africa must take ownership of its health.
Related News
TTIP and the Investment Dimension: What is the state of play?
Speech by Karel De Gucht, European Commissioner for Trade
British American Business Event
London, 24 June 2014
Ladies and gentlemen,
We are meeting in an impressive place today, where the financial institutions in the buildings all around us in Canary Wharf fund much of the world’s foreign direct investment.
And the 19th century beginnings of the Thomson Reuters news network – a carrier pigeon link between the historical capital of Europe in Aachen and today’s European capital of Brussels – are an example of how multinational companies built up in the continent.
Foreign direct investment is a growing part of the economies everywhere in the world – and particularly so for the European Union:
- The EU harbours a total of almost 4 trillion euros in investment stock by third countries. Our best estimates of the annual turnover of foreign controlled companies in the European Union is somewhere in the region of 3 trillion euro.
- Conversely, EU companies’ investment stock abroad amounts to a total 5 trillion and generate a yearly turnover of almost 4 trillion.
When we talk about investment in the context of the Transatlantic Trade and Investment Partnership between the European Union and the United States, it’s worth reminding ourselves of these figures.
Because while we know that companies’ investment decisions are complex, we also know that certainty about the safety from expropriation of their new factory, or office, or power grid is a very basic requirement.
- This is why the world’s 3000 inter-governmental investment protection agreements exist.
- This is why the Member States of the European Union have signed more than 1400 of them.
- And this is why those same Member States unanimously asked the European Commission to tackle investment protection in the Transatlantic Trade and Investment Partnership.
This is my basic perspective on this question.
However, if there were only one perspective on this issue, we wouldn’t be here.
And the reality is that others see this issue from a very different viewpoint indeed.
In this view investment protection agreements grant unreasonable special privileges to multinational companies. They reduce governments’ freedom to make policy in the interest of their citizens and they ultimately undermine the foundations of our democracy.
It’s because of this difference of views that I decided to launch a public consultation on exactly how the EU should approach these discussions:
Before we negotiate a deal it’s important to understand all the points of view and – just as importantly – to use the debate to try to develop a shared set of facts about what an EU-US investment protection agreement can do, should do and should not do.
The consultation is still open. I cannot, today, prejudge the outcome.
But I do think I can make a contribution to the goal of establishing facts – about the Commission’s approach to this issue so far and about the practice of investment protection to date.
The first thing to note is investment protection has become an EU competence since the Treaty of Lisbon. So, all EU nations agreed that we should complement our trade policy with an investment policy to achieve a level playing field for European companies abroad.
Accordingly, the democratically elected governments of EU Member States unanimously asked me to negotiate investment chapters in all our ongoing free trade agreements and to start self-standing investment negotiations with China.
During the process, the Council and the European Parliament will supervise any negotiations on investment protection that do take place – as they are doing with all the other parts of the talks.
Moreover, both institutions would have to approve any final deal before it became law.
So the process is extremely democratic and the public consultation is further proof of our wish for it to be open.
My second point is that investment protection is not something brand new that didn’t exist before. As I have already suggested, international investment agreements – including the ones people are worried about - already exist in their thousands. And despite their existence we have been able to put in place all the regulations of the EU’s Single Market.
Third, investment protection agreements are much more limited than some critics would have us believe. They do not constitute a license to print money – to use an expression coined by Roy Thomson the founder of one half of our hosts’ media business.
The truth is rather that we are dealing with a narrow set – four, roughly speaking – of common sense rules. Let me explain them.
In an agreement like this, a state makes the following promise to potential investors:
If you invest in my economy:
- I will not discriminate against you, compared with domestic or other foreign companies who are in similar situations;
- I will honour specific contracts I may conclude with respect to your investment;
- I will not expropriate your assets without fair compensation;
- And I will treat you in a fair and equitable manner, for example by making sure you get basic due process in case of a problem.
I think you will agree that there is nothing shocking here. These are in fact basic principles of the rule of law. Versions of them can be found in the legislation of the EU and its Member States and also in the United States.
So there is no reason of principle why any of them should get in the way of making policy in the public interest.
However, we do need to make sure that none of these rules stops us from making necessary and justified public policy in practice.
And I strongly believe there is room for debate, interpretation and improvement in that area. Because the way you formulate the basic rules can mean real differences in outcomes.
For example, the legal concept of expropriation does not only cover the outright seizure of property rights from the investor by the state. It also covers other actions by government that would have an equivalent effect. This is called “indirect expropriation.”
And here, we must take care to set very clear boundaries in order to fully protect governments’ right to regulate in the public interest.
That is why I have proposed to bring more legal clarity to Europe’s future investment agreements by reforming clauses like this. I also want to do so by clarifying the definition of the concept of “fair and equitable treatment”.
Beyond the actual rules, I also think we can do better on enforcement through the investor-state dispute settlement mechanism. There are procedural loopholes in the current system that are creating problems. That is why I propose, to give one example, to improve the existing system on transparency in international arbitration tribunals. I also think that creating a standing appellate mechanism will improve consistency in the rulings of the arbitrators.
The public consultation is about getting help for defining our response to all of these issues.
However, my final point is clear, I do not believe we should abolish the system altogether.
More than half of the investment cases world-wide are brought by European investors. That’s because governments around the world can and do undermine European companies and workers by unfair treatment.
What we have in TTIP is an opportunity to make sure those investments are protected but at the same time set a high benchmark in terms of the protection of our society’s right to regulate.
Why? Because the United States and the EU have a similar understanding of the right balance between investor protection against arbitrary state measures and preserving the right to regulate in the public interest.
So what we have before us is an opportunity to establish a common approach that respects that balance – an approach that will have enormous influence around the world, as it may become the source of reference for investment treaties globally.
And we need to remember, as we proceed, that our choice is not between a world where each does as he pleases and a nightmare scenario where we are ruled directly by multinational corporations.
The status quo is that eight EU Member States are already bound by investment agreements with the United Sates. They do not have the clarifications and improvements we are proposing.
So what we would be doing here is improving on the present.
Ladies and gentlemen,
International agreements on investment – no matter how technical they seem –touch on a very important political issue of our time: how to reconcile our global economy with our more local political structures.
So they – and other international economic agreements – will always be about finding a balance.
The European Union needs to make the most of the economic opportunities of international investment – inward and outward. That means we have a strong interest in rules that encourage all governments, to make decisions in a fair and reasonable way that doesn’t discriminate against outsiders.
But as much as we need to take account of interdependent economies, we also need to be able to use our own political structures to solve the problems our societies face.
The last few years have shown us what happens when we don’t regulate the financial system properly. And other risks – to the environment or to our health and safety – are present right across the board.
I personally believe that it is possible to reconcile these two objectives in a good TTIP agreement on investment protection. But I also know that there are many other views on this.
So I look forward to reading the responses to the public consultation.
And I look forward to hearing your views over the course of our discussion now.
Thank you very much for your attention.
Related News
India should seal trade pact with EU
It will be a win-win deal. The crux, of course, is for the Government to make it happen
Despite several rounds of the negotiations which started in 2007, the proposed EU-India Bilateral Trade and Investment Agreement (BTIA) covering trade in merchandise, services and investment is far from concluded. The recent EU ban on the import of mangoes from India will further strain the bilateral commercial relationship, already troubled by a series of tax disputes involving European companies.
Given the subdued sentiment on foreign investment and trade, restoring activity to its normal level will be one of the top priorities of the Narendra Modi government. What is holding back the conclusion of the pact?
India’s interests
Considering the contribution of the sector to GDP (57 per cent), it is natural that India would seek improved market access in services. India’s offensive interests lie in Mode 1 that covers ITES/BPO/KPO and Mode 4 that covers movement of skilled professionals such as software engineers. A recent RBI survey on computer software and information technology enabled services export shows that Europe’s share in India’s software export declined from 27 per cent in FY08 to 20 per cent in FY13. The share of Mode 4 services in overall software service exports declined from 25 per cent in FY08 to 14 per cent in FY13.
Improved market access in Mode 4 will allow skilled professionals such as software engineers to temporarily reside and work in EU countries. The barriers to Mode 4 include work permits, wage parity conditions, visa formalities and non-recognition of professional qualifications.
India also seeks data secure status from EU as the high cost of compliance with existing data protection laws and procedures renders many of its service providers uncompetitive.
EU’s thrust areas
The EU’s demand in India’s Mode 3 services includes further liberalisation in FDI in multi-brand retail and insurance and presently closed sectors such as accountancy and legal services. European banks have been eyeing India’s relatively undertapped banking space. However, the surrender of banking licences by Goldman Sachs, Morgan Stanley and UBS shows that the burden of priority sector lending and financial inclusion has discouraged foreign banks.
India’s IPR regime is another impediment. India fears that any commitment over and above WTO’s intellectual property right rules will undermine India’s capacity to produce generic formulations. Further, data exclusivity protection measures (that allows pharmaceutical companies to exclusively retain rights to their test results for a certain time period) would delay the supply of generic medicines. That explains India’s opposition to the proposal. European pharmaceutical companies are wary of India’s patents law which prevents evergreening, which allows companies to renew patents on old drugs by making incremental changes.
Duties and tariffs
India has reduced duties on parts and components but maintains 60 per cent import duties on fully-assembled cars. It is75 per cent in the case of cars with fob value above $40,000 and engine capacity 3000cc for petrol and 2500cc for diesel. This over-protectionism with respect to fully assembled cars remains the most contentious issue in the BTIA negotiation.
The EU also seeks deeper cuts in India’s tariffs on wines and spirits. They feel high effective duty and additional state-level taxes escalate the price of imported liquor in India. However duties on wines and spirits are a critical source of tax revenue for the Government.
Agricultural trade is highly distorted in both the EU and India. Even though average MFN (most favoured nation) import duties on agricultural commodities in EU (13 per cent) are much lower than in India (33 per cent), EU’s peak tariff rates on certain products such as dairy (650 per cent), fruits and vegetables (156 per cent), and sugar and confectionary (133 per cent) are more than those in India.
Again, the fishery and dairy sectors in the EU are highly subsidised. There is fear of EU dairy products flooding Indian markets after the FTA. India wants the EU to cut its agricultural subsidies while the EU has interests in India reducing its duties on dairy products, poultry, farm and fisheries. Thus, both India and the EU have strong defensive interests with respect to agriculture trade negotiations.
Reconciling differences
To be fair, EU does not have a single market for labour mobility. Regulations related to work permits and visas differ across members. There were efforts to harmonise the EU market through various directives but they have met with limited success. Moreover, EU’s continuing unemployment problems have reduced policy space for ceding ground on Mode 4.
India’s demand for greater market access in Mode 1 and 4 is dependent on its ability to meet EU’s demands in Mode 3. Lack of political will on FDI in retail and insurance or willingness to open its legal services for European law firms undermine India’s negotiating capacity on other critical issues.
Domestic car manufacturers fear that reduced duties on cars under the EU-India BTIA will impact their market share and flood India with European cars. Besides, European automakers will have no incentive to set up a local manufacturing base in India. This is debatable as almost all major European automakers have a manufacturing presence in India.
Can European carmakers compete in the Indian small car segment (comprising 80 per cent of India’s market) by producing in Europe? Studies show that it’s difficult to succeed in India without a strong dealer network and reliable after-sales service. Prohibitive duties on cars are unjustified when duties on non-car automobile segments have been substantially reduced. This also deprives consumers of choices.
Improving India’s investment climate is a better way to promote investment and job opportunities. Similarly, allowing exclusive rights to commercially exploit patents will incentivise R&D and bring in more FDI. Thus, going forward, India would need to strengthen its IPR regime.
A trade pact is about give and take. Failing to conclude the EU-India BTIA will be a lost opportunity when trade pacts such as the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership (that together account for two-third of world GDP and one-third of world imports) are moving global trade away from MFN routes to bilateral/regional routes. They are setting new trade rules that would be far more difficult to comply with. On the other hand, a badly negotiated trade pact can hurt India’s long-term trade interests. With the change of guard in New Delhi, are India’s trade negotiators ready for a tightrope walk?
The writers are corporate economists based in Mumbai. The views are personal.