Search News Results
Tanzania restricts sugar imports
Tanzania is expected to release a policy on sugar importation this July that will be aimed at protecting sugar companies in the country as well as ensuring that local sugar companies have access to domestic market.
Speaking recently in Dar es Salaam, the Agro Eco-energy Executive Chairman Mr. Per Carstedt said that Tanzania has seen the need for having the policy that will give way to procuring sugar using the bulk procurement system.
Mr. Carstedt said for years, Tanzania has lacked an instrument to regulate illegal sugar importation in order to give advantage to the locally produced sugar which lacks the market and therefore causing the government to lose million of shillings in tax.
“We need to have one entity which is controlling sugar imports, this will involve all sugar associations in the region, including all producers, sugar boards as well as farmers for the benefit of the region industry and economic development at large.”
According to Sugar Board of Tanzania Director General Mr. Henry Semwanza, the introduction of bulk procurement in sugar importation is expected to spur sugar companies’ development and also encourage investment.
Local sugar industries have often raised their complaints to the government for failing to protect the local sugar cane interest and ensure that the country benefits through both job creation and tax revenues.
According to Mr. Agro Eco-energy the sugar industry in the East Africa region was very diverse and needed to have a voice that would ensure the issues of sugar importation in the region is addressed.
He said there was a wide home market for the sugar industries in the region that is yet to be exhausted and that the 2.5 million tonnes imports of sugar into the EA region meant exporting jobs overseas.
“We are giving jobs to farmers in India, Brazil and other countries which are growing sugarcane due to cheap sugar imports flocking in our domestic countries, Mr. Carstedt said, adding that we need to create jobs in our respective countries by ensuring that sugar imports are regulated.
According to TSB, Tanzania consumes some 590,000 tonnes of sugar annually while the local industry production stands only at 291,000 tonnes a year.
Related News
New Trade Facilitation Programme underway for Customs
The World Customs Organisation (WCO) has announced that a new trade facilitation model, which will be open to all member countries, including Nigeria, would soon be unveiled.
The WCO is the governing body of all customs administrations in the world with about 180 member countries and headquarters in Brussels.
The secretary-general of the organisation, Kunio Mikuriya, disclosed the development while addressing delegates at an information session on supporting the implementation of the world trade organisation (WTO) agreement on trade facilitation, at the WTO Headquarters recently in Geneva Switzerland.
Mikuriya said the new trade facilitation programme is expected to be closely coordinated with the WTO and would be open to all WCO members, offering coherency, continuity, transparency and compatibility.
The need to improve trade facilitation whilst continuously strategising on ways to ensure import, export and transit trade is conducted amongst countries in a risk free manner has been one of the priorities of the WCO. The organisation is committed to ensuring optimum benefit for governments of member countries.
The event was organised with the objective of familiarising the WTO and other international organisation delegates based in Geneva with the work of the WCO in relation to implementation of the WTO Agreement on Trade Facilitation (ATF). Over 80 delegates from the WCO member and observer countries as well as international organisations were attracted to the meeting where critical issues were discussed.
The WCO boss thanked the WTO for hosting the event even as he emphasised the history of the WCO/WTO cooperation and the WCO’s readiness to support the WTO Committee on Trade Facilitation in the same manner as it supports the Agreement on Customs Valuation and the Agreement on Rules of Origin.
The information session, which was moderated by the chairperson of the WCO working group on the ATF, Ms Gugu Dlamini Zwane, from the Swaziland Revenue Authority, provided an overview of the work carried out so far and the plans ahead as well as the technical assistance and capacity building methodology and deliverables.
Addressing the meeting, the WTO director-general, Mr Roberto Azevêdo, congratulated the WCO for establishing its working group on the ATF and stressed that the WTO secretariat will do all it can to support its work.
Azevedo also took the opportunity to welcome the WCO Dublin resolution which was issued in the days after the Bali ministerial and which underscored the WCO commitment to the efficient implementation of the ATF. Speaking further, Azevêdo added that the WTO was counting on the WCO to play a key role in assisting customs in this endeavour.
Meanwhile, the WCO and International Trade Centre (ITC) has concluded a memoradum of understanding (MoU) for the implementation of the WTO agreement on trade facilitation
The WCO secretary-general and the executive director of the ITC, Arancha González, concluded the MoU at the ITC headquarters recently as part of efforts to support the full implementation of the WTO ATF. According to a statement on the WCO official website, the implementation of the ATF will contribute to promote customs modernisation, reduce time and cost for border crossings, and enhance export competitiveness of the private sector, including small and medium sized enterprises (SMEs).
This is further expected to support economic growth and alleviation of poverty in view of the fact that the ITC works to increase the competitiveness of SMEs and improves the business environment for trade.
Remarking on the development, González assured that the ITC will help countries to remove international trade supply chain barriers in order to facilitate cross border transactions and improve the competitiveness of the private sector.
Being a member of the WCO, the Nigeria Customs Service (NCS) which is currently undergoing a massive modernisation exercise will to a large extent benefit from this measure. For his part, Mikuriya specifically underlined one of the WCO’s visions, leading modernisation and connectivity, stating that it will help to bridge the gap between the customs and business communities. He added that the WCO has developed the economic competitiveness package to assist customs administrations to contribute to enhancing national competitiveness.
The WCO and ITC have said that together they will develop greater synergy on trade facilitation by jointly providing technical assistance and capacity building to customs administrations as well as the private sector, in particular SMEs, taking into cognizance the importance of strategic planning. Both Mikuriya and González agreed to explore the concrete projects to support full implementation of the ATF based on the MoU. The MoU will also facilitate customs and business partnerships as well as contribute to economic growth, social protection and stability.
In a related development, the WCO has concluded a workshop on risk-based passenger selectivity for customs administrations in the Asia/Pacific region as part of its continued efforts aimed at capacity development for customs officers.
The workshop was organised following the identification in an annual needs assessment that risk-based passenger selectivity is a common challenge for many administrations. 33 representatives from 28 customs administrations in the Asia/Pacific region participated in the WCO regional workshop on Risk-based Passenger Selectivity earlier this month.
It was held at the WCO Regional Training Centre in Cheonan, Korea, and was organised in cooperation with the Korea Customs Service (KCS) and Asia/Pacific Regional Office for Capacity Building (ROCB A/P) with the sponsorship of the Japanese Customs Cooperation Fund (CCF).
The 5-day workshop covered the main elements of organisational risk management and before focusing on risk-based passenger selectivity, participants were taken through several elements of risk assessment, profiling and targeting, including information and intelligence.
During the opening remarks, the director-general of Customs Border Control Training Center of KCS (Regional Training Center), Mr Jung-il Seo, and representatives of the WCO and ROCB A/P highlighted the importance of adopting a holistic approach when implementing risk management. They also emphasised the relationship between risk-based selectivity and effective resource allocation, facilitation and control.
Some elements of risk management at the organisational level were covered throughout the workshop. Although the main focus was risk management at the operational level (risk assessment, profiling and targeting), with several syndicate group tasks, practical exercises, case studies and country presentations, the spotlight was put on passenger selectivity.
During the syndicate group tasks and country presentations, participants entered into in-depth discussions on how to identify high-risk passengers by utilising the methodology explained in the WCO Customs Risk Management Compendium. Case studies and practical exercises also contributed to deepening participants understanding of the topics.
Related News
Government approves R200-million grant for the Southern African Sustainable Textile and Apparel Cluster (SASTAC)
The Department of Trade and Industry (the dti) has approved a R200-million Grant Fund and a 5-Year Plan for the establishment of a National Cluster to leapfrog local industry's competitiveness capability in global Sustainable Textile and Apparel Manufacturing.
The Minister of Trade and Industry, Dr Rob Davies says the Cluster initiative is funded through its Competitiveness Improvement Programme (CIP) as part of the overall Clothing and Textiles Competitiveness Programme (CTCP). The CTCP is a programme of the dti to stabilise employment and to improve overall competitiveness in the clothing, textile, footwear, leather and leather goods manufacturing industries.
Minister Davies says the main aim of this Cluster initiative is to build and improve the capacity in the South African textile and apparel industry value chain to effectively supply:
- Local and international consumers with fully traceable sustainable apparel and household textile products;
- Local Government with fully traceable sustainable textile and apparel products that adheres to the 100% local content designation as stipulated by the PPPFA Regulation;
- Facilitate the development of sector and/or supply chain specific Sub-National Clusters.
- Minister Davies added that in support of the above, the Cluster has amongst others the following specific objectives:
- Establish and manage shared national resources to provide an enabling environment for cluster members and other sub-national clusters;
- Incubate opportunities for sustainable SMME participation and employment creation – from farm to retail;
- Maximising the production capacity development and beneficiation of local raw materials – starting with cotton and then broadening its scope to include all other natural and synthetic fibres;
- Establish a National Sector Body that represents the entire industry value chain from fibre to end use product – bringing together like-minded sector leaders that work closely with Government to map out the future development of the industry and address mutual issues of national concern.
During its first year of operation, the Cluster will implement a wide range of Competitiveness Improvement Interventions to achieve its objectives.
Related News
Progress and Pitfalls: Development Policy Forum Africa Summit
Speech by Andris Piebalgs, European Commissioner for Development, at the Friends of Europe’s Development Policy Forum (DPF) annual Africa Summit entitled ‘Africa: Progress and Pitfalls’, on Tuesday, 24 June in Brussels.
Ladies and Gentlemen,
Introduction: Africa today
In a matter of decades, Africa has emerged from the shadows of colonial rule, apartheid, crippling debt and economic stagnation. It has entered a new era of unprecedented economic and demographic growth.
Today it is the most dynamic continent, considered the world’s growth “reservoir”. It has a number of assets that will be vital to its ability to unleash its full potential. Let me highlight just two.
1. Economic dynamism
First, there is growth. Between 2003 and 2011, while much of the world was stuck in recession, average GDP in Africa grew by 5.2 percent. In 2012, eight of the ten fastest-growing economies were African.
2. The youngest continent
Second, there is human capital. Africa has the fastest-growing population in the world – and the youngest, too. In 1900, Africa represented 7% of the world population; today it represents 16% and it is estimated that in 2100, it will represent 38%. Between 2010 and 2015, Africa's working age population will more than double. And by 2050, a quarter of the world’s working age population will be African.
Challenges ahead (pitfalls)
You will agree, then, that in many respects Africa’s progress has been astounding. And with much of its potential still untapped, the path ahead looks promising. However, there will be many pitfalls to avoid along the way. For Africa is also a continent of contrasts. A number of huge challenges still prevent it from fully exploiting its potential.
First, governance is still an issue. The 2013 Mo Ibrahim index showed that while most African countries had experienced widespread human development and improved economic opportunities since 2000, average scores in the safety and rule of law category had declined sharply.
Second, violent conflict and the threat of extremism continue to dog the continent. The conflicts in Central African Republic, Mali, South Sudan and Somalia in particular have grabbed headlines worldwide.
Third, famines, pandemics and climate change impacts are an ever-present danger.
And fourth, solid economic performance still hides huge inequalities, which may prove destabilising. In sub-Saharan Africa the number of people living on less than 1.25 dollars a day has fallen from 56 to 41 per cent. And yet this is the only region where the number of people living in extreme poverty has risen steadily – from 290 million in 1990 to 414 million in 2010. In all, more than a third of the world’s poor live in sub-Saharan Africa.
In short, today is the time to finally unlash Africa's huge and unrivalled potential. And I am very confident that this can be done. In recent years I have noticed strong willingness among African leaders and citizens alike to change the perception of Africa. They want Africa to become a continent of opportunity and success rather than a land of starving children and poverty. They want former and unjustified stereotypes to disappear once for all. In this regard, the African Union’s long-term strategy, Agenda 2063, sets out a vision and a plan to make full use of Africa’s potential to give its people a brighter future.
More than ever, Africa is taking its destiny in its own hands while Europe is ready to remain Africa’s steadfast and reliable partner to make its vision a reality.
EU-Africa: a privileged partnership
The EU-Africa Summit which took place in last April demonstrated once again the privileged relationship both continents have The EU is Africa’s main development partner. It is its biggest trading partner and its top investor.
Despite the economic crisis, in 2012 the EU as a whole committed 18.5 billion euro, or 45 per cent of global aid, to Africa. Between now and 2020, the Commission alone will provide more than 28 billion euro in development assistance for Africa.
Aid really does work, Ladies and Gentlemen.
Thanks to EU development assistance, since 2004 around 14 million new pupils have enrolled in primary education and more than 70 million people have been connected to improved drinking water worldwide. Over the same period, the EU has helped construct or renovate more than 8 500 health facilities worldwide. Between 2007 and 2012, the EU helped provide access to electricity to over 600 thousand households in Africa, with around 80 thousand jobs being created in the energy sector.
These great results have been possible because donors and partner countries have worked together to achieve them.
And yet, with the MDG deadline only some 500 days away, much remains to be done. Progress has been uneven and most sub-Saharan countries are still lagging behind.
We must all redouble our efforts to finish the unfinished work and put Africa on the road to inclusive and sustainable growth for good.
Inclusive and sustainable development and poverty eradication strategy through the Agenda for Change
The enormous changes in many African and developing countries, and a belief that we could and should get even better poverty eradication results from our development funds were some of the factors in my decision to carry out a fundamental reform of EU development policy to make it even more focused and effective.
With the Agenda for Change the EU has set up a strategy that goes beyond the symptoms to tackle the very root causes of poverty. It is based on three principles: targeting our funds to those countries most in need; concentrating funds on a limited number of strategic sectors where we can have the greatest impact; and placing special emphasis on results.
Over the last three years, we have put these principles in action.
Differentiation
In today’s world, we can’t cooperate with China, India or Brazil as we do with Senegal, Somalia or Bangladesh. In the negotiations on the multiannual financial framework to set the European Union’s budget from 2014 to 2020 we succeeded in maintaining high levels of aid. Our aid budget, amounting to 50.1 billion euro, will be mostly targeted towards the poorest countries where our aid really has an added value. Indeed, 70 per cent of EU bilateral cooperation will be allocated to Least Developed Countries and other low-income countries. With 24 of the 25 poorest countries in 2013 located in Africa, the continent will be our major partner.
Concentration of aid
The focus of our support will be directed to the three critical sectors for development identified by the Agenda for Change. They are, first, human rights, democracy and other key elements of good governance; second, drivers for inclusive and sustainable growth – notably agriculture and energy; and third, human development.
Human development will remain a key feature of our development. We will therefore continue to allocate at least 20% of EU funding on health and education.
This means, for example, that the EU will more than double its funding for vaccines and immunisationworldwide, from 10 million to 25 million euro per year. We also strengthen our support to the Global Partnership for Education, whose objective is to achieve universal education goals by putting all 57 million primary-school-aged children in school and providing good quality learning. The Commission plans to double its contribution to the Partnership at the Replenishment conference on 26 June.
Likewise, to escape poverty, countries must be able to feed their people and secure their energy supply. That is why we see agriculture and energy as catalysts for sustainable growth. For the next 7 years, agriculture and food security will be a focal sector in more than 30 African countries. In today’s world of abundance, it is indeed unacceptable to see starving children, as I have seen in Somalia and Djibouti for instance. More than 3 billion euro will be allocated to support sustainable agriculture activities and around 3.5 billion euro to fight against stunting.
Energy will also be an important focal sector. Under the Sustainable Energy for All initiative the EU will allocate more than 3 billion euro to energy over the next 7 years, which will in turn leverage investments exceeding 15 billion euro. I recently announced the launch of 16 energy projects across 9 African countries under our new rural electrification programme. These actions will translate into projects bringing electricity to more than 2 million people in rural areas and will move us closer to our target of connecting 500 million people by 2030.
So growth is an important factor in development. Yet we must not forget how fragile it can be without solid institutions and governance to support it. The Arab Spring has shown that there is a real thirst for transparency, accountability and respect for human rights. This is the reason why 25 per cent of the funds we allocate will be directed to good governance-related sectors, including support for civil society.
Beyond these three main principles under the Agenda for Change, I must add a word on our support forpeace and security. We all have in mind the terrible images of violence in Central African Republic or South Sudan. The EU is playing a critical role in those countries torn apart by conflicts which destroy any gains made in development and push millions of people back in extreme poverty.
We have contributed more than 1.2 billion euro since 2004 to help finance Africa-led peace support operations, in Somalia, Sudan, Mali or CAR.
Post-2015
Ladies and Gentlemen,
The Africa-EU partnership not only deals with concrete projects and development aid. It is also about cooperating on global political issues – such as the post 2015 agenda.
What is at stake is critical: it is about putting the world on track towards poverty eradication and sustainable development.
The EU made its position clear last year. We believe that the post-2015 framework should have poverty eradication and sustainable development at its core, and include five main elements: basic living standards; inclusive and sustainable growth; sustainable management of natural resources; equity, equality and justice; and peace and security.
When the African Union adopted its common position on the post-2015 framework last January, I was very pleased to see that it is extremely close to the EU position. During the last Africa-EU Summit, African and European leaders recognised that defining the post-2015 agenda provides – and I quote – a “unique opportunity to realise our common vision of a peaceful, just and equitable world that is free of poverty and respects the environment”.
Both sides also committed to “work in partnership to support the definition and of an ambitious, inclusive and universal post-2015 development agenda that should reinforce the international community's commitment to poverty eradication and sustainable development”.
We must now turn these fine words into real action by engaging further in the moves to set up an ambitious agenda ahead of the intergovernmental negotiations in 2015.
Conclusion: future relations with Africa
Ladies and Gentlemen,
The time has come for Africa and Europe to leave behind the traditional donor-recipient relationship and to develop a shared long-term vision for our relations in a globalised world.
That’s why we’ve agreed to build a strong political relationship and cooperate closely in a broad range of priority areas – from peace and security to social and human development and economic and trade cooperation. Our relationship is founded on shared values, shared interests and shared strategic objectives. It strives to bring Africa and Europe closer together through stronger economic cooperation and more sustainable development, with both continents living side by side in peace, security, democracy, prosperity, solidarity and human dignity.
Ours is a partnership of mutual interests. When terrorist activities spread in Africa or migration flows become unmanageable, they threaten Africa and Europe alike. Likewise, when Africa’s growth increases or inter-African trade expands, the opportunities for both Africa and Europe are evident.
We may not agree on everything, but with a sense of common responsibility we can work together to find common solutions. That’s what a partnership of equals is all about. It’s a partnership to which we can and must aspire.
Thank you.
Related News
Schlettwein wants BIPA law promulgated this year
The draft bill on establishing the Business and Intellectual Property Authority (BIPA) is already before the Cabinet Committee on Legislation, said Minister of Trade and Industry, Calle Schlettwein on Friday. He added that everything possible was being done to have the law establishing BIPA promulgated by the end of the current fiscal year.
However, BIPA is already operating with a board, and is implementing some of the reform measures identified in business registration.
“Among this is the introduction of a web-based integrated company registration system in the last quarter of 2013, which has made it possible to register a business or reserve a business name online and without having to go to the registration office,” explained Schlettwein.
The minister made these remarks when responding to some of the recommendations of a report called “Easing the Way for Investment in Namibia”, that was launched on Friday morning by the Institute for Public Policy Research (IPPR).
Schettwein said that while the operationalization of BIPA may bring about some improvements, it is important to note that the process of registering a business does not only involve government institutions such as BIPA but also private “agents”, attorneys, notaries and auditors.
“As such, the envisaged efficiency gains will only be visible if there are improvements in the entire chain, including the private role players. As a matter of fact, the World Bank Reform Memorandum has recommended the introduction of standardized business incorporation forms, which will reduce or remove the need for attorneys and notaries in the company registration process,” noted Schlettwein.
According to Graham Hopwood, Executive Director at the IPPR, “One of the main reasons for Namibia’s decline on the international rankings is that the country has been standing still while other nations have been catching up and overtaking it … Namibia’s problem is implementation. Policy documents are often commendable but, as the history of the 2005 roadmap indicates, concerted action is often lacking.”
Areas where Namibia is ranked to be performing poorly are education and training, health, innovation, research and development. And while the IPPR report also identified “lack of political will” and “lack of coordination”, Schlettwein remarked: “While I agree that there is room for improvement in the way the government conducts its business in some areas, I believe that there is strong political will, and that the gains that have been recognised by this and other ranking publications have come about exactly as result of the commitment and drive by government and its institutions and agencies.”
Also speaking at the launch of the IPPR’s report, British High Commissioner to Namibia, Marianne Young, said the report aims to help reduce obstacles to investment and bring about improved conditions for British and all foreign businesses to invest in Namibia. “The report provides a breakdown of some of the factors that inhibit foreign investment and suggestions for remedial action to be taken. I hope these recommendations will help generate some good discussions between the business community and government representatives,” said Young.
The IPPR report also recommends making a single window approach a reality, which the institutions says will go a long way towards dealing with delays in the registration of businesses and investment activities. Other recommendations include finalizing and introducing the new Investment Bill, making monitoring, evaluation, and performance management a reality, undertaking a nationwide skills audit and ending the mismatch between the education system and job market.
When launching the report Schlettwein agreed with most of the recommendations and re-affirmed the government’s position about the important role of the private sector as the engine of growth and an important partner in national economic development.
“We equally recognize the need for effective public-private dialogue and partnerships not only to create a conducive environment for business to operate and flourish, but equally to ensure that the resultant growth translates into jobs and other positive outcomes as envisaged in our growth at home strategy and NDP4 roadmap. We will thus continue to explore and introduce reforms and invest in public infrastructure that are necessary to ensure and improve the ease of doing business in our country,” said Schlettwein.
Related News
UNCTAD Trade and Development Board, 59th executive session (Africa)
The fifty-ninth executive session of the Trade and Development Board will be held on 23-25 June 2014 in Room XXVI of the Palais des Nations, Geneva.
A report on UNCTAD’s activities in support of Africa is prepared every year and presented to an executive session of the Trade and Development Board.
The report provides an overview of research and analysis being undertaken by UNCTAD with regard to African development, as well as a summary of specific activities, including advisory services and technical cooperation, in each sector that falls under UNCTAD’s mandate.
This report complements and updates the information in the report on the fifty-seventh executive session of the Board in June 2013.
Under this agenda item, a panel will be convened on the topic of monetary unions and regional trade in Africa.
Activities undertaken by UNCTAD in support of Africa
This year’s report on the activities undertaken by UNCTAD in support of Africa covers the period May 2013 to April 2014. As in previous years, this year’s report is organized around UNCTAD’s three main pillars of work, namely research and analysis, consensus-building and technical cooperation. The report continues to document the impact that UNCTAD’s work has on African development outcomes through three main channels, namely through contributions to policy design, formulation and implementation; through capacity-building of African government officials, institutions, private sector and civil society; and through the facilitation of consensus on issues of interest to Africa.
UNCTAD remains committed towards strengthening its partnerships with key institutions of the African region, such as the New Partnership for Africa’s Development (NEPAD) Planning and Coordinating Agency, the Economic Commission for Africa (ECA) and the African Union Commission. For instance, UNCTAD organized a meeting in 2013 to review the “Report of a study on domestic resource mobilization” which the NEPAD Heads of State and Government Orientation Committee mandated the NEPAD Planning and Coordinating Agency and ECA to conduct. In January 2014, UNCTAD and the Planning and Coordination Committee signed a memorandum of understanding to consolidate collaboration between the two institutions.
UNCTAD’s research and policy analysis contributes to more effective design, formulation and implementation of policies in Africa in four major ways: by helping countries to track their economic performance and progress; by stimulating and shaping debates on policy issues affecting Africa’s development; by advising African Governments on policy reform through national policy reviews; by supporting African Governments in making appropriate decisions through analytical tools that inform technical decisionmaking.
Monetary unions and regional trade in Africa
African Governments are strengthening efforts to build productive capacities and transform their economies with a view to laying a better and more robust foundation for sustained growth, employment creation and poverty reduction on the continent. Regional trade and cooperation is expected to play a crucial role in achieving the transformation agenda. It can unlock Africa’s manufacturing potential through, for example, facilitating the development of infrastructure that would lower trade costs and make manufacturing more competitive. It can also promote economic transformation because the composition of intra-African trade tends to be skewed more towards manufactures than commodities, which dominate Africa’s trade with the rest of the world. But African countries trade very little among themselves, as evidenced by the very low share of regional trade in Africa’s total trade.
One of the main objectives of pursuing monetary unions in Africa is to boost regional integration, particularly intraregional trade and investments. Despite the efforts that have been made to promote regional integration on the continent Africa has not made much progress, particularly in fostering regional trade as evidenced by the low shares of intraregional trade in total trade. Over the period 2007-2011, the share of intraregional exports in total exports was 11 per cent for Africa, 21 per cent for Latin America and the Caribbean, 50 per cent for Asia, and 70 per cent for Europe. In this context, one of the challenges facing African countries is how to foster regional trade.
This paper examines how the establishment of monetary unions in Africa can contribute to the achievement of the objective of promoting regional trade. More specifically, it explores the relationship between monetary unions and regional trade and discusses recent evidence on the relationship based on data for African countries. It also highlights the challenges facing African countries in effectively using monetary unions to promote regional trade and draws useful lessons for Africa from the experience of the EMU.
Related News
Walmart puts faith in SA’s future
Spending a week recently in the US city of Bentonville, Arkansas, to attend Walmart’s shareholders’ meetings, underscored why the company’s investment in South Africa three years ago when it bought a majority stake in Massmart (which I now chair) was a resounding vote of confidence in South Africa that ought to be leveraged to the maximum.
To give a sense of what the investment meant, consider that Walmart is the largest single company on the planet. It had net sales of more than $473bn in the past financial year and 2.2-million employees across the world. South Africa was chosen out of 54 countries in Africa as Walmart’s investment location to grow shareholder value and extend its footprint into Africa.
Massmart, founded by Mark Lamberti in 1990, was chosen as the best platform of all the retailers in South Africa and Africa.
Walmart’s decision was a tribute to Lamberti’s business acumen and entrepreneurial capabilities.
I was privileged to be on the Massmart board of directors when the approach by Walmart was made and stepped down once the transaction was finalised.
That was South Africa’s moment of glory and it will remain so for some time to come. South Africa can – and must – do more to capitalise on this opportunity to articulate and perpetuate a compelling value proposition to other global investors to invest massively in existing and new business ventures.
There can’t be growth without investment. Nor can there be job creation without investment. There can’t be investment without an enabling environment underpinned by smart regulations that achieve the fine balance between the needs of the economy and society.
South Africa needs more local and global investor confidence to unleash its full economic potential and overcome its anaemic economic growth, which underperforms other peer emerging markets.
Massmart will continue to be a major contributor to economic growth and job creation in South Africa and Africa. Furthermore, Massmart’s globally competitive business model enables it to help its customers to save money.
This is achieved by Massmart’s tried and tested “high volume, low price” business model.
Linked to this is a well-coordinated approach to developing and partnering with local suppliers. It makes sense for the sources of supply to be closer to the areas of consumption, and this enables the company to contribute to local economic development in rural and historically disadvantaged communities.
For example, through its Ezemvelo direct farm programme, Massmart has partnered with 164 smallholder farmers who are assisted with input loans for farming vegetables, agricultural extension services, mentorship and basic financial management training. Other local suppliers have been able to join the Walmart global supply chain, which helps us to create and sustain more South African jobs. It is an area of opportunity for continuous improvement.
South Africa needs a targeted, coordinated and sustained campaign to woo massive inflows of foreign investment to the country. This should be one of the top priorities for President Jacob Zuma’s second administration, along with fixing our education system.
However, the government needs the collaboration of business leaders in a sustained campaign to create the right investment climate and position the country as a magnet for the attraction and retention of foreign direct investment.
The key for Zuma to build a legacy is to identify one or two important areas and make a lasting impact that breaks new ground and raises the bar in terms of global excellence.
Turning the economy around to unleash high, job-rich and sustained economic growth as well as fixing our education system are areas of opportunity for a “Zuma moment”.
This is the time for a new, creative and smart partnership between government and business to propel the country to greatness.
The reduced majority the ruling party got from last month’s elections should galvanise it to accelerate the execution of good policies in ways that propel South Africa to sustained global competitiveness and prosperity for all. This requires disciplined, decisive and effective leadership on the big issues that can unleash a turnaround in the country’s pedestrian growth rate and stubbornly high rate of unemployment.
We need Zuma to begin this change by instilling an ethos of a consistently capable state that delivers – and is underpinned by competent and passionate civil servants and credible, respectable and inspiring ministers and politicians.
The effective delivery of social services is as important as creating an enabling world-class environment in which local and foreign investors can deploy their capital. Business thrives in an environment underpinned by social cohesion and solidarity. That is why Finland, Japan, Norway and Sweden rank high on the global competitiveness league tables.
Rustenburg, in North West, has turned out to be one of the most globally uncompetitive places to mine because of the low levels of social cohesion, which are reflected in the protracted strike that has further sullied South Africa’s global rating in labour relations stability.
The challenge now is in finding effective mechanisms to minimise the adverse impact of the strike. This requires joint action by business and trade union leaders, who should put the national economic interest above all else.
It is in the best interests of leaders in the business, labour and government sectors for South Africa to be consistently positioned as an investment location of choice for investors.
We all stand to win in a winning South Africa.
Dlamini is the chairman of Massmart and recently attended the annual Walmart shareholders’ meeting
This article was first published in Sunday Times: Business Times
Related News
Rules to raise value of regional trade
The value of East African Community intra-regional trade is set to rise following the review of the cross-border passage rules of origin on export goods originating from the partner states.
In the revised draft of the rules of origin agreed on by the EAC Sectoral Council of Trade and Finance Ministers, the value threshold has been lowered from 35 per cent to 30 per cent local imports.
Likely beneficiaries of the rules of origin include manufacturers of edible oils, beauty products, milk products, television sets, car assembly and lubricants makers.
Under the current rules of origin, only goods produced wholly from local inputs are allowed to cross national borders without attracting Customs taxes.
Goods produced from imported raw materials also enjoy duty-free treatment, where the exporter can prove that at least 35 per cent of the ex-factory value was added within the region.
The application of this rule has been controversial, with traders claiming it is selectively applied by Customs officials to bar Kenyan products from entering Tanzania, Uganda, Rwanda and Burundi.
Last year, Kenyan manufacturers lost a bid to have the EAC Council of Ministers stop Uganda and Tanzania from charging full duty on imports.
The Kenya Association of Manufacturers had in June written to the Ministry of EAC Affairs, Commerce and Tourism requesting that under the EAC Common Market Protocol, Kenyan firms be allowed into the Ugandan and Tanzania market without paying full duty as demanded by the two countries.
The revised rules are expected to prepare the region for an eventual merger with the Common Market for Eastern and the Southern Africa (Comesa) and Southern African Development Community (SADC) under the Free Trade Area regime.
Also in the new rules is an introduction of specific processes as a qualifying criterion to some goods, such as manufacturing to start from completely knocked down kits for motor vehicles assembled in the region.
The EAC has also introduced a rule for goods sold in sets. In this case, the tax on such goods will be lower than that on goods sold singly.
According to the draft, a central database of registered exporters will be developed at the Secretariat to track the type and number of goods traded within the partner states.
A rule has been introduced on approved exporters, where the competent authorities of the exporting partner states may authorise any exporter who makes frequent shipments of products.
In the new rules, proof of origin shall be valid for six months from the date of issue in the exporting country.
The EAC Sectoral Council for Trade, Industry, Finance and Investment in their meeting in Arusha directed partner states to submit the results of their consultations on the draft rules of origin by end of July for consideration and adoption at the next meeting of the Council in August.
The purpose of these rules is to ensure that there is uniformity among partner states in the application of rules of origin and that to the extent possible, the process is transparent, accountable, fair, predictable and consistent with the provisions of the Customs Union Protocol.
Related News
Argentina once more on the map, invited by BRICS
As Argentina starts to mend fences with the international financial markets, the emerging powers that make up the BRICS bloc invited it to their next summit. This could be a step towards this country’s reinsertion in the global map, after its ostracism from the credit markets since the late 2001 debt default.
For now, there is no letter “A” in the BRICS acronym, which stands for Brazil, Russia, India, China and South Africa. But in Buenos Aires speculation is rife about whether it should be called BRICSA, ABRICS or BRICAS, if Argentina is admitted.
The invitation for President Cristina Fernández to participate in the group’s sixth summit, scheduled for Jul. 15 in the northeast Brazilian city of Fortaleza, is seen as another sign that Latin America’s third-largest economy may be incorporated, after India, Brazil and South Africa indicated their interest.
“This is very significant for Argentina,” Fernanda Vallejos, an economist at the University of Buenos Aires (UBA), told IPS.
“It not only points to the recognition by the rest of the members of Argentina’s importance and potential, but also opens a door for our country to gain greater political and economic clout on the international stage.”
Vallejos stressed the key role played by BRICS over the last decade in the growth of the global economy at a time of financial crisis in the industrialised North.
The term BRICS was coined for the world’s major emerging markets in 2001 by economist Jim O’Neill of investment bank Goldman Sachs. Together, these countries represent around one-quarter of global GDP, 43 percent of the planet’s population, and 20 percent of global investment.
In addition, as Argentina’s foreign ministry stressed, the five countries account for 45 percent of the world’s labour force, hold over three trillion dollars in combined foreign reserves, and produce two billion tonnes a year of agricultural products.
Vallejos said that in a world where blocs are playing a bigger and bigger role, BRICS has a growing voice in international forums, where the members are “demanding participation in accordance with the weight of their economies.”
“The proposal set forth by India – with which bilateral trade expanded 30 percent in 2013 – and backed by Brazil and South Africa also puts paid to the opposition’s tired complaint about our country supposedly being isolated from the world,” said Vallejos, who is also a researcher at the Energy, Technology and Infrastructure Observatory for Development (OETEC).
The formal invitation to Fernández was issued by Russia, which also thus confirmed its support.
“I think this shows that Argentina is fully inserted in international relations, not ‘isolated from the world’,” Nicolás Tereschuk, a political scientist at UBA, told IPS. “It simply doesn’t toe the line with the policies of the central countries at just any cost or in any circumstances, as it used to do at other times in its history.”
Argentina’s invitation from BRICS came almost simultaneously with the May 28 announcement of an agreement reached by the Fernández administration and the Paris Club, which this country owed 9.7 billion dollars since the default 13 years ago.
Some political sectors here see the public debt contracted by the 1976-1983 military dictatorship as illegitimate. But the centre-left Fernández administration hopes the agreement with the Paris Club will facilitate the renewed flow of international credit and investment.
Economist Diego Coatz said the agreement and other measures adopted by the government such as “improving” its economic data, whose reliability was questioned by the International Monetary Fund (IMF), point to a “shift” by the authorities aimed at “reintegration in the world in financial terms…and at positioning the country better on the international front.”
Coatz, with the research centre of the Argentine Industrial Union – the country’s leading industrial employer federation – said that if Argentina is admitted to the BRICS bloc, “it will once more be seen as an emerging developing country with great potential.”
In addition, incorporation in the bloc would open a new window for external financing, when Argentina is in need of foreign exchange and investment, he said.
At the Fortaleza summit a formal decision could be reached on creating a regional development bank as an alternative to international financial institutions like the IMF, World Bank or Interamerican Development Bank.
The new bank would have a 50 billion dollar fund for financing infrastructure in the bloc’s member countries. It would also establish a joint foreign exchange reserves pool of 100 billion dollars, “which would serve as insurance against the volatility of the markets,” Vallejos said.
“Argentina could access financing at very beneficial rates compared to the heavy interest rates of other international institutions” in order to finance infrastructure for development, she underscored.
“The strengthening of international trade by the possible admission to BRICS means important possibilities for Argentina to make significant progress towards a more developed industrial sector, with insertion in global production chains, the development of strategic sectors and the industrialisation of the countryside,” Vallejos said.
The interest would appear to be mutual.
“The invitation came after the turmoil in emerging markets early this year, after which the ‘establishment’ international financial press talked about a ‘decline’ of BRICS,” Tereschuk said.
In addition, “growth in China is slowing down, India is at a decisive moment, with the dilemma of faster growth or stagnation, and the Brazilian economy is not really flourishing at this time,” the economist said.
So for them and the rest of the members of the bloc, “joining together with a periphery country that makes up the G20 [Group of 20] would seem to be a decision of interest to the BRICS countries,” he said.
The G20 block of leading industrialised and emerging economies “is in somewhat of a crisis itself, because of the crisis that the central countries are still immersed in.”
For that reason, according to Tereschuk, Argentina would be useful to the BRICS so that the voice of their two South American leaders, Argentina and Brazil, “would be heard in unison in the greatest number of places possible.”
The political scientist said Brazil and Argentina have led a “shift to the left with growth, reduction of poverty and inequality in a framework of democracy and greater political, civilian and social rights for their citizens.
“The other members of BRICS cannot offer all of these characteristics combined,” he said.
Vallejos, for her part, stressed Argentina’s role as a supplier of raw materials. “We are an agricultural powerhouse,” she pointed out.
In addition, “Argentina has the world’s second-largest reserves of lithium, one of the biggest reserves of gold – nearly 10,000 tonnes – 500 million tonnes of copper, and 300,000 tonnes of silver, while we are becoming the third-largest global exporter of potassium,” she said.
“We are sitting on the world’s third- largest platform of unconventional fossil fuels. And to that you have to add our technological development, and the development of nuclear energy for peaceful purposes,” she added.
So would it be “BRICAS”, “ABRICS” or “BRICSA”? At any rate, what is at stake is a bit more than deciding on a new acronym.
Related News
Igniting agricultural growth and transformation in Africa
At the African Union (AU) summit in Maputo, Mozambique in 2003, African Heads of State and Government made a resolute and resounding commitment to tackle food insecurity and to accelerate growth of the continent’s food, agriculture and rural sectors.
Through the landmark Maputo Declaration, they adopted the Comprehensive Africa Agriculture Development Programme (CAADP) as their continent-wide blueprint for agriculture, pledging to allocate at least 10 per cent of national budgets to agriculture, adopt sound agricultural development policies and achieve at least 6 per cent growth in agricultural production per year.
Since then, we have seen how countries that have followed through on the Maputo Declaration and successfully implemented CAADP compacts have seen greater progress in the development of their agriculture sector, and in the improvement of their food security. To date, 40 countries have signed CAADP Compacts and 28 countries have already developed National Agriculture Investment Plans to operationalize the Compacts, in a process that has brought together governments, civil society, private sector, small-scale producers and family farmers, women and youth.
The AU African year of Agriculture and Food Security together with the UN International Year of Family Farming makes 2014 a good year to take stock of the CAADP framework and galvanize efforts aimed at increasing agricultural growth and transformation across the continent. We need to seize this opportunity to focus our attention, our policies and our advocacy actions in promoting agriculture as well as increasing social protection and support for the communities, which, despite general paucity of resources, contribute so much to food security in the continent.
At the AU summit on 20-27 June 2014 in Malabo, Equatorial Guinea and dedicated to Agriculture and Food Security in Africa, African leaders will be presented with the historic opportunity to take bold decisions and make new policy commitments as they commendably did 11 years ago, in Maputo.
Africa is witnessing a period of unprecedented economic growth and the region can be proud to have seven out of the ten fast growing economies in the world; paradoxically, it is also the only continent in the world where the total number of hungry people has gone up since 1990. Sub-Saharan Africa remains the region with the highest prevalence of undernourishment with one in four people estimated to be hungry.
The challenge now is to match the vision of a hunger free Africa with this sterling economic growth, and translate it into reality by tackling the multiple causes of hunger and undernutrition through partnerships and innovative financial solutions.
Recent discoveries of oil, gas and other new mineral deposits by a number of African countries provide a viable and diversified source of financing for Africa’s development. If well managed and properly channelled, some of the revenues from these resources can be invested in the agricultural sector through innovative mechanisms helping fulfil the promise of agriculture as the motor for African development.
Moreover, the continent is experiencing an unprecedented effort to support regional integration and solidarity that we salute. In this regard, the Africa Solidarity Trust Fund for Food Security is a unique initiative for mobilizing resources from Africa for Africa with potential to help wipe out extreme hunger and build resilience of vulnerable people. The Fund aims to strengthen food security across the continent by assisting countries to eradicate hunger and malnutrition, eliminate rural poverty, tackle climate change issues and manage natural resources across the continent in a sustainable manner.
This and many other African-led initiatives being implemented across the continent need to be shared, adapted, up-scaled and replicated across the continent. Achieving food security in Africa is a momentous challenge too great for any one entity to overcome alone. It must involve civil society, private sector, international agencies, and the governments of developing and developed countries. Above all, the people themselves need to be empowered to manage their own development.
As we move towards 2015 deadline of the Millennium Development Goals, 20 countries in Africa have reached before target the first Millennium Development Goal hunger target of halving the proportion of undernourishment or have kept undernourishment levels below 5 percent since 1990.
The focus has now clearly shifted from reducing hunger to eradicating it altogether. Already this progressive shift has been demonstrated by the high-level meeting held in Addis Ababa Ethiopia, in July 2013 through an initiative led by the African Union Commission, FAO, and the Lula Institute. Delegates at the meeting agreed on a roadmap to end hunger by 2025 through better policies, increased resource allocation to fight hunger and renewed partnership with a wide range of state and non-state actors.
At the upcoming African Union Summit, African leaders are set to formally adopt this 2025 zero hunger goal. Food security for all is the stepping stone to make African economic growth inclusive and share the prosperity the region is facing. Investing in agriculture and in the youth can help ‘ignite the spark’ to make this happen.
José Graziano da Silva is the Director-General of the Food and Agriculture Organization of the United Nations. Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.
SA fails to clarify its domestic and foreign polices
Though Africa is rhetorically South Africa’s first foreign policy priority, in reality it runs a poor second to the rest of Brics (Brazil, Russia, India and China), the former Business Leadership SA chief executive Michael Spicer believes.
And the government’s theoretical commitment to African regional integration is contradicted by the protectionism inherent in its Industrial Policy Action Plan – a subset of its development state concept.
Many people traced the country’s “reputational decline” to Polokwane, the 2007 ANC conference at which Jacob Zuma wrested party leadership from then president Thabo Mbeki, Spicer said in a keynote address to the SA Institute of International Affairs at its 80th birthday celebration.
But “the seeds of today’s parochialism and narrow racial nationalism can be traced back to the second Mbeki term, and particularly to the 2004 10-year review, which brought to the fore the ideology of the developmental state”, said Spicer, who is on the institute’s council.
Although never clearly defined, the developmental state was “essentially a garbled form of the south-east Asian experience of the post-war period without some of the key drivers, such as a professional, competent state”.
South Africans had always been guilty of exceptionalism, believing the country was unique and could not learn from others, Spicer said.
“The full flowering of this parochialism and exceptionalism, with the added ingredient of celebrating mediocrity and scorning clever (read educated) South Africans, black and white, has been a product of the post-Polokwane years.
“The contradictions of this posture are nowhere more clearly to be seen than in relation to South Africa’s Africa policies.
“The natural market and hinterland for South Africa, the mother continent, is rhetorically first in South Africa’s foreign policy commitments, but runs practically well behind the obsession with the Brics nations.
“First embraced as a counterweight to the West and as a political device to help rebalance the global institutional architecture – certainly in need of reform in the much-changed circumstances 60 years after the founding of the UN and the Bretton Woods institutions – the global financial crisis has cruelly exposed the economic limitations of the Brics.
“Not only [do] the members [have] competing trade and economic interests, but India, Brazil and South Africa have all turned out to have deep economic structural problems, which must be faced before their growth engines can be re-ignited.”
Spicer said it looked, though, as if newly elected Indian Prime Minister Narendra Modi might be setting out to tackle his country’s structural problems.
“Meantime, South Africa’s claim to leadership in Africa has not been matched by a determined attempt to root out the xenophobia that has been stoked by our regrettably low post-2008 economic growth.
“That, in turn, owes something to South Africa’s confused posture on regional integration: the purpose of such steps in economic terms is to facilitate the easier, quicker and cheaper flow of factors of production across boundaries in order to create larger markets, which more compellingly attract investment and production, thereby benefiting the population of the larger whole,” Spicer said.
South Africa’s market was only 52 million, versus Brazil’s 200 million, India and China’s 1.3 billion each, Indonesia’s 247 million and Nigeria’s 173 million. But the Southern African Development Community (SADC) countries together constituted a market of over 250 million.
“Unfortunately, while there are welcome steps to bring together the southern and eastern African countries represented by SADC, Comesa (Common Market for Eastern and Southern Africa) and the East African Community into one larger regional entity, business people are often struck by the fact that this is essentially the product of political rather than economic thinking.
“Certainly, many of South Africa’s economic policies seem to be going in the opposite direction. To take just one example, the protectionism inherent in the Industrial Policy Action Plan, a key subset of the developmental state concept, is essentially antithetical to regional integration.
“And… too little attention is paid to the nuts and bolts of regional integration – common visas, open skies and trade facilitation.”
Spicer said the anti-business stance of much of the ruling alliance was preventing the government and business from joining forces to present a “Team South Africa” project in Africa, rooted in clear economic diplomacy.
This contrasted with the co-ordination between business and political elites in many of the other countries that South Africa was competing with in Africa, as well as China, India, Brazil, Russia and Australia.
Despite this lack of co-ordination and the confusion of policy, South African businesses had invested extensively in the rest of Africa. But they could have done much better with a clear economic diplomacy strategy.
Spicer warned that South Africa now needed to confront the challenge of Nigeria, which had just overtaken it as Africa’s largest economy.
Nigeria had a naturally more dynamic and entrepreneurial culture, an unashamedly capitalist orientation and a much larger and rapidly expanding population, which is forecast to reach 440 million by 2050 – although South Africa was fortunate not to face the same religious terror and conflict.
“The question is whether South Africa’s leadership is up to the challenge or whether it will retreat into a myopic parochialism,” he said.
He also blamed business for the failure to establish an effective Team South Africa.
“Aside from the legacies of the past and the racialisation of business organisations, often driven by crony capitalism and the vested interests of narrow black economic empowerment, business leaders and… organisations have failed to articulate clearly their interests and a domestic and foreign strategy, notably an African strategy, that would help grow the South African economy in the interests of all South Africans.”
Spicer acknowledged that he shared some of the blame because of his leadership positions in companies and business organisations. “With few exceptions, business leaders have failed to find the right balance between courageous frankness and empathetic engagement. Too many have either given up and tuned out, or been drawn into sycophantic co-option and cronyist patronage relations.”
The concepts of business unity and business leadership “seem oxymoronic”, Spicer said.
Related News
New rules of origin to boost regional trade
Regional trade and the logistics industry could be boosted further following the revision of the rules of origin on exports originating from the East African Community bloc.
According to the revised draft of the rules of origin, all local imports will now attract 30 per cent of the value of threshold (the minimum threshold below which import taxes are waived), down from 35 per cent.
Products made from raw materials imported within the region will also be duty free.
Other preferential treatment, according to the East African Sectoral Council on Trade and Finance, will include manufacturers of edible oils, beauty products, milk products, television sets, car assembly and lubricants makers.
“These products will now be traded in the East African region minus customs taxes,” the council said last week.
“The EAC secretariat will now take charge of the central database of registered exporters,” according to the new rules.
Andrew Luzze, the executive director of the East African Business Council, said harmonising rules of origin will, not only spur cross border trade with in the region, but will also boost economic growth by attracting more investments in the region.
“It is within our mandate to ensure that a conducive business environment is created to reduce the cost of conducting business across the region. This includes calling for the removal of all non-tariff barriers to trade,” Luzze said.
Adrian Njau, a trade economist at East African Business Council (EABC), urged businesspeople in the region to study and understand the rules of origin policy, arguing that that’s when they will be able to produce profitably for global market.
Fiona Uwera, the EABC technical liaison officer for Rwanda, said the revised rules are expected to prepare the region for an eventual merger with the Common Market for Eastern and the Southern Africa (Comesa) and Southern African Development Community (Sadc) blocs under the free trade area regime.
Related News
UN Climate Talks shift to negotiating mode toward 2015 deal
The latest round of UN climate talks saw countries move into negotiating mode on some of the substantive details that will need to be hammered out over the next 18 months in order to successfully deliver a global climate deal by end-2015.
Meeting from 4-15 June in Bonn, Germany for their annual mid-year session, delegates to the UN Framework Convention on Climate Change (UNFCCC) made progress on defining the scope of national contributions, which would serve as the building blocks of a new multilateral agreement on climate change.
The idea of national contributions, or “intended nationally determined contributions” (INDCs), emerged after a protracted 38-hour negotiating session at the end of last year’s annual Conference of the Parties (COP) held in Warsaw, Poland.
Sources say that the exchanges seen during these past two weeks in Bonn demonstrated a decided shift towards more formal negotiations on the scope, content, and timing of countries’ 2020 contributions, as well as on other draft elements of the new climate agreement. A number of parties also provided written submissions outlining their views before and during the meeting.
At the 2011 COP in Durban, South Africa, parties to the UN climate convention agreed to negotiate international climate rules aimed at keeping the world below a two degree Celsius temperature rise from pre-industrial levels by the December 2015 COP, due to be held in Paris, France.
Countries have decided that the new deal will scale up ambition on tackling climate change over the coming years, as well as define action beyond 2020, with the latter serving as a replacement to the current Kyoto Protocol. Kyoto, signed in 1997 and implemented from 2005, commits only industrialised nations to various reductions in greenhouse gas (GHG) emissions.
The division of responsibility between developed and developing countries has since proved to be a highly sensitive issue in the talks, often setting big players such as the US and China at loggerheads with one another. In Durban, parties agreed that the new deal would have legal force under the UNFCCC and be applicable to all parties, thus engaging developing countries in mitigation efforts. Even so, the extent to which the latter will be required to contribute remains a contentious issue.
The latest talks in Bonn, however, received a much-needed boost following the Obama Administration’s release of plans to slash emissions by 30 percent from 2005 from all existing American power plants. Hints also emerged around the same time of willingness from Beijing to limit China’s absolute zero emissions in the future.
Getting to text
The fortnight of meetings began with the co-chairs of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP) – the primary negotiating track for the 2015 deal – issuing a draft text on the information parties will be required to include in their post-2020 plans for national contributions.
The draft text move initially proved controversial, with some countries questioning whether the co-chairs had the mandate to put forward such a document. Others viewed it as a useful facilitator of discussion. The co-chairs repeatedly stated during the sessions that they wished to maintain a party-driven process.
Some observers suggested that the draft text nevertheless facilitated a shift towards more detailed discussions. For example, among the thornier debates in this round of talks was what to concretely include in countries’ INDCs. Some parties would like to see a focus on both adaptation and mitigation, while others argue that the former could be more difficult to incorporate. The question of whether financial commitments would be offered up in the INDCs was also raised.
Another heavily discussed topic was whether or not to review the national contributions. Certain countries have called for a review process prior to the Paris COP, which would give some room for improving contributions that fall short, while also providing parties the opportunity to call out any free-riders. Others are less enthusiastic about a strong pre-deal assessment, with the rationale for reluctance varying between different parties.
Timing, finance
Closely tied to the review question is the timeline for the coming months. In Warsaw, parties decided that countries in a position to do so would file their INDCs by the first quarter of 2015 and that an initial draft text of the overall 2015 deal would be tabled by December 2014. In Bonn, key players such as the US and the EU indicated they would meet the March 2015 contribution deadline, while China said it would do so by June. Other countries have indicated they need more time.
Regarding efforts to scale up pre-2020 climate ambition, a number of parties said that this was necessary to generate trust and confidence for sealing a new deal. Developing countries have also warned that finance will be a game changer.
At the 2009 climate meet, developed countries agreed to provide US$100 billion per year by 2020 to help poor countries cope with climate change. Observers have suggested that the level of finance received by the recently operationalised Green Climate Fund (GCF) in the coming months will colour the tone of negotiations at this December’s COP in Lima, Peru.
To prepare for that meeting, ADP Co-Chairs Kishan Kumarsingh and Artur Runge-Metzger indicated that they will produce a “non-paper” containing a summary of parties’ current views on the draft deal, as well as new draft proposals on INDCs and pre-2020 ambition. This document will be ready by July, and will be considered at a resumed session of the ADP from 20-25 October in Bonn.
In a press statement released on Sunday, the Least Developed Countries (LDC) Group said that the progress in Bonn was welcome, but more work was needed on the road ahead.
“We hope that we will advance on elements for a draft negotiating text to be agreed in the major climate change meeting later this year in Lima, Peru. This means that the coming months of climate change talks are critical,” said LDC group chair Prakash Mathema. “We must put our heads together and start drafting the new agreement,” he continued.
Review of response measures forum concluded
At this month’s meeting, negotiators also advanced their work across a range of other issues – including some relevant to the trade community – in the context of the Subsidiary Body for Scientific and Technological Advice (SBSTA) and Subsidiary Body for Implementation (SBI).
Towards the end of the second week, a joint SBSTA-SBI contact group on response measures reached conclusions welcoming its previous work, while leaving the door open for further discussion on how to take the subject forward in the climate talks.
At the Durban COP, parties had established a forum and work programme on the “Impact of Implementation of Response Measures” with a two-year mandate. These would serve to address the impacts of measures that countries take to mitigate climate change. Among the issues that have been touched upon in the forum is the concern that export opportunities will be hampered by “unilateral action” to mitigate climate change.
Although the most recent COP in Warsaw saw parties agree on the usefulness of discussion in this area, divisions emerged on an appropriate format for next steps. A final text was ultimately rejected by the G77 and China, which called for the mention of a “mechanism.” Developed countries remained opposed to that idea, arguing that the forum would be flexible enough to address concerns raised by developing countries.
The Bonn text, secured after some drawn-out haggling between parties and a brokered compromise on problematic language, includes an annex with submissions from the EU, the G77 and China, and the US reviewing the work of the forum. A second annex lists separate proposals from the EU and the G77 and China on the structure of future work.
With two draft proposals now on the table, work will continue in Lima towards reaching an agreement on the best way to address the subject in the climate negotiations. The UNFCCC Secretariat will prepare a technical paper on areas of convergence, as well as a synthesis paper of all documents prepared in the course of the forum’s work these past two years. An invitation has been extended to both parties and observers to submit their views by 22 September on options to strengthen cooperation related to response measures.
Progress on technology, agriculture
Negotiators in Bonn also successfully adopted the joint annual report of the Technology Executive Committee (TEC) and the Climate Technology Centre and Network (CTCN) for 2013, which are the policy and implementation arms of the UNFCCC’s Technology Mechanism, respectively. A synthesis report on technology needs assessments was also adopted.
The 2013 joint annual report was originally scheduled to be wrapped up in Warsaw, but some problematic language around intellectual property in the report’s conclusions scuppered a positive outcome at the time.
The transfer of clean energy technologies has been deemed an important part in helping developing countries reduce their emissions, but certain aspects in this area – such as intellectual property rights (IPRs) – have emerged as particularly contentious in the climate talks.
On the agriculture front, after some wrangling between the EU and the G77 and China, parties decided on the scope of the work in this area for the next two years.
This includes four more workshops to be held at SBSTA sessions in June 2015 and 2016. These will focus on the development of early warning systems and contingency plans in relation to extreme weather events; assessment on the risks posed to agriculture from various climate change scenarios; the identification of adaptation measures; and the identification and assessment of farm practices and technology to enhance sustainable farming with regard to food security.
Although climate threats to food systems are an increasingly discussed topic, the issue is not yet a formal part of the UNFCCC negotiations. Moving ahead, questions remain as to whether agriculture will be part of the 2015 agreement, and if so, whether it will be addressed as a separate issue or in a land use cluster.
High-level summit ahead
While delegates left Bonn with a cautious sense of optimism, given the reportedly constructive nature of the talks, the next major pit stop on the road to Paris will be UN Secretary-General Ban Ki-moon’s high-level climate summit scheduled for 23 September in New York. The summit aims to allow heads of state to provide a boost to the climate talks in the form of capitalising the GCF or commitments on INDC submissions.
“Though the progress here in Bonn by negotiators was heartening, there’s not enough on the table,” said Martin Kaiser, Head of International Climate Politics at Greenpeace. “Heads of Governments need to get involved to make the tough choices negotiators can’t,” he continued.
Corridor conversations in Bonn also frequently referred to the ongoing negotiations towards a proposal for a set of sustainable development goals (SDGs), another UN process. The latter began its penultimate session this week, also in New York. A “zero draft” put forward in late May includes two alternatives for a stand-alone climate goal, with reports indicating this area has proven to be one of the trickier topics in the discussions. A proposal on the SDGs is expected by mid-July, in time for consideration by the UN General Assembly in September.
Related News
Azevêdo reports trade restrictions down slightly, urges G-20 leadership on post-Bali agenda
The WTO’s report on G-20 trade measures, issued on 18 June 2014, said that “G-20 members put in place 112 new trade restrictive measures during the period mid November 2013 to mid-May 2014 – slightly down from the 116 new restrictive measures introduced in the previous period from mid-May to mid-November 2013”. Director-General Roberto Azevêdo said that “it is clear that the coat of trade restrictions has grown a bit thicker over this period… this will not help our efforts to support growth and development around the world – and therefore we must remain watchful”.
“Over the six months to May, G-20 members have continued to introduce trade restrictions – albeit at a slightly slower rate than before,” said WTO Director-General Roberto Azevêdo. “While some liberalising measures have also been introduced, it is clear that the coat of trade restrictions has grown a bit thicker over this period. This will not help our efforts to support growth and development around the world – and therefore we must remain watchful,” said DG Azevêdo. “One way to reverse this trend is to make progress on the WTO’s post-Bali agenda, aiming at two things: full implementation of the Bali decisions and rapid conclusion of the Doha round negotiations. On these issues, as on so many others, the leadership of the G-20 will be essential.”
Summary of WTO Report on G-20 Trade Measures
World trade growth in 2014 is expected to be higher than in 2013, but below the historical average
World trade and output have continued to grow inconsistently since the December 2013 G-20 trade report, with expansions in the fourth quarter of 2013 followed by setbacks in the first quarter of 2014. If the most recent GDP growth forecasts hold, the volume of world merchandise trade is expected to grow by 4.7% in 2014 and by 5.3 % in 2015, significantly larger than in 2013. The projection for 2014 is below the 5.3 % average of the last 20 years and the 6% average of the 20 years leading up to the financial crisis. Most of the risks to this trade outlook are on the downside.
G-20 members continue to introduce trade restrictions, but at a slightly slower rate
G-20 members put in place 112 new trade‑restrictive measures during the period mid‑November 2013 to mid-May 2014 – slightly down from the 116 new restrictive measures introduced in the previous period from mid-May to mid-November 2013 (Table 2). As in the past, trade remedy actions account for more than half of the number of new restrictive measures applied during the period under review. New import restrictive measures applied by G-20 members during the period under review affect 0.2% of world merchandise imports or 0.3% of G-20 merchandise imports (Table 3).
The vast majority of trade restrictive measures taken since the global financial crisis remain in place
1,185 trade restrictive measures have been recorded since October 2008, with only 251, or roughly one-fifth, of these having been removed by mid-May 2014 making the total number of measures still in place 934 – up by 78 from the end of the last reporting period. The relatively low removal rate and the continuing addition of new restrictive measures have resulted in a continuing upward trend. Looking specifically at import restrictive measures, excluding those measures that have been reported as terminated, they are estimated to cover around 4.1% of world merchandise imports and around 5.2% of G-20 imports.
Encouragingly, the number of trade liberalizing or facilitating measures has increased
As in the past, the number of trade restrictive measures applied by G-20 members during the period under review exceeds the number of liberalizing measures. However, the number of liberalizing measures taken during this period is significantly larger than in the previous period both in absolute and in relative terms. The number of such measures taken in the most recent period is 93, compared with 57 in the period mid-May to mid-November 2013. The liberalizing measures now represent a larger share of all recorded measures (45%) than in the previous period (33%). Looking at import facilitating measures introduced during the period under review, they cover around 0.4% of world merchandise imports or 0.6% of G-20 merchandise imports.
Lack of information persists in respect of certain types of measures
Although the information presented in this report covers a wide range of measures affecting trade in goods and services, the observations made in the December 2013 G-20 trade report on the lack of adequate data regarding certain types of measures remain valid. This is the case in particular with respect to subsidies and other support measures. As reflected in Annex 2 to this report, the information made available by G-20 members on such measures is very limited. How to ensure greater transparency with respect to subsidies and other types of behind-the-border measures is an important matter that requires further attention.
The important role of the G-20 members in reinvigorating the multilateral trading system
The multilateral trading system remains the best defence against protectionism and an important driver of economic growth, sustainable recovery and development. The successful outcome of the WTO’s 9th Ministerial Conference has provided an important opportunity to strengthen and reinvigorate the multilateral trading system. Implementation of the decisions reached in Bali and developing a work programme by the end of this year on the conclusion of the Doha Development Agenda are the next steps in strengthening the multilateral trading system. This will deliver a boost to trade around the world and help to alleviate the concerns regarding obstacles to global trade flows. It will also help to deliver global growth, though protectionist pressures are bound to remain in a context of slow uneven recovery and persistent high levels of unemployment. G-20 members need to remain vigilant and show leadership in combatting such pressure.
Related News
Hailing 50 years of UN work on trade and development, Ban looks to the challenges ahead
Arriving in Geneva to mark the 50th anniversary of the United Nations body that promotes international trade to fight poverty, Secretary-General Ban Ki-moon said today that the complex effort needs to meet current and future goals in development, and sustainability requires innovation and stepped-up international partnership.
“We must look for transformative solutions that expand the boundaries of opportunity for people while respecting the boundaries of our planet,” Mr. Ban said at a special session of the UN Conference on Trade and Development (UNCTAD).
Mr. Ban noted that the UNCTAD milestone was being observed at a significant time in development planning, as the world strived to achieve the Millennium Development Goals by their deadline of 2015 and to create a new agenda for sustainable development after that date.
An organ of the UN General Assembly, UNCTAD was convened in Geneva in 1964 to address inequalities in a global trading system that left newly independent nations and those of the global South at a disadvantage to the rich, industrialized countries.
Conceived as a negotiating platform and policy shop that gave a “voice to the voiceless,” UNCTAD went on to identify practical outcomes based on multilateral consensus in areas such as commodities, investment, debt and finance, technology transfer, customs and shipping, entrepreneurship and the green economy.
Reviewing advances of the past decades, Mr. Ban said, “Some developing countries have emerged to become economic powerhouses and global players. Hundreds of millions have been lifted out of extreme poverty. There has been progress along a range of socioeconomic fronts.”
Noting that much difficult work, however, lies ahead, he stressed that the complexity of the tasks required greater international cooperation: “We need to pursue this transformative agenda in an increasingly interconnected world,” he said.
“Problems and challenges cross borders and policy disciplines with a tremendous speed and ease. We face the threats of environmental degradation. We also face dangers from conflict, food and energy crises and deadly diseases,” he said. “UNCTAD will continue to play an important role,” he affirmed.
Mr. Ban welcomed the broadened focus of UNCTAD from the trade issues of 1964 “to embrace a bigger, and more complex, set of questions.
“Your work has evolved from North-South relations and problems to today's greater emphasis on interdependence between countries and between economic sectors,” he said. That emphasis would be crucial in facing all current and upcoming challenges, he stressed. “If we are to succeed in our quest for sustainable development, we will have to strengthen multilateral cooperation and global partnerships.”
In his remarks, UNCTAD Secretary-General Mukhisa Kituyi also stressed the watershed moment that the anniversary represents, “UNCTAD’s fiftieth anniversary falls at a time when the global economy needs rebalancing and its governance structure redefining,” he said.
“This year – 2014 – marks an important moment in the multilateral system and offers the international community the chance to reflect on its origins and on our collective accomplishments,” he added.
To encourage such reflection, a five-day programme of events kicks off today that includes the participation of veteran trade negotiators from UNCTAD I in 1964 and global thought leaders on trade and development questions, as well as high-level diplomatic, civil society and private sector representation.
Related News
China to nix rare earth export restrictions following WTO ruling
China is said to be planning to get rid of strict export quotas and duties on certain rare earth elements, media reports indicated late last week. The rumoured move comes shortly after a March 2014 ruling by a WTO dispute panel, which deemed these measures to be in violation of global trade rules and Beijing’s accession commitments.
The 17 rare earths in question, as well as tungsten and molybdenum, are used in high-tech and green energy products like wind turbines and engines used in electric and hybrid vehicles. They are also featured in goods used in the defence sector and in medical equipment.
China has long dominated the rare earths industry, being responsible for 90 percent of global production, according to the US Geological Survey, while holding just under a quarter of the world’s supply of these minerals.
Beijing imposed the controversial quotas and duties in 2010 as part of a broader effort to regulate the sector, which is rife with illicit production and has seen serious environmental impacts resulting from the extraction and production processes.
The dispute against the export quotas and duties on rare earth minerals was first lodged at the WTO in early 2012, when the US, EU, and Japan submitted nearly identical complaints against China claiming that the measures were geared toward increasing global prices and favouring domestic industry.
This past March, a WTO dispute panel ultimately found these measures to be in violation of international trade rules, deeming that there was “no basis” in China’s accession protocol for justifying the use of export duties until Article XX of the General Agreement on Tariffs and Trade (GATT). Furthermore, the panel found, the export quotas appeared to be geared more toward meeting industrial goals than the conservation objectives that Beijing had claimed.
“China has every right to charge whatever the market will bear for rare earths but they should not use them to advantage their own end-product producers or extort foreign companies into manufacturing in their nation,” said Michael Silver, chief of American Elements, in comments reported by Reuters.
In the weeks following the dispute panel ruling, the US filed a conditional appeal, in anticipation of a submission from China. The US’ conditional appeal focused primarily on procedural concerns regarding the panel’s review of evidence and less so on the substance of the ruling.
Beijing subsequently lodged its own appeal, requesting the Appellate Body – the WTO’s highest court – to review certain facts of law and legal interpretation in the panel ruling, such as how China’s accession protocol ties into the WTO Agreements overall.
The Asian economy has also asked WTO judges to reverse the panel’s findings that the export quotas were not sufficiently linked to conservation.
Domestic measures
Aside from the export duties and quotas, China is also reportedly looking at alternative means of regulating the industry at home. According to a 21 May article in China Daily, China’s official English-language newspaper, these measures may include imposing a value tax on natural resource producers or requiring a valid environmental compliance certificate in order to be eligible for export.
“What they need to do in the long-term is to take what was once an export tariff and turn it into a resource tax so the net result is positive,” said Ryan Castilloux, founding director of Adams Intelligence, a leading mining and metals consulting firm.
“The tools of the day are now taxes, exchanges, and regulations to consolidate companies into a few champions,” said David Abraham, an independent resource analyst.
Alternative supply sources?
Beijing’s plans to increase its regulation of the rare earths industry at the domestic level could spur rare earths production abroad, experts say.
“Higher prices may spur the development of overseas rare earths’ mining projects,” said Chen Huan, a rare earth analyst with Beijing Antaike Information Development Co, in comments reported by Bloomberg. This association estimates that prices could rise by one-fifth of their current levels as a result of the new rules.
At least 18 companies are reportedly planning to begin production outside of China by the end of this decade, the news agency said. Greenland, Australia, Namibia, and Malaysia are among some of the development sites.
Related News
SACU considering proposals on revenue sharing
Paulina Elago, the newly appointed executive secretary of SACU, tells The Namibian’s Chamwe Kaira about her appointment, the future of SACU and her love for salsa dancing.
CHAMWE KAIRA (CK): Ms Elago, you take over at Southern African Customs Union (SACU), when there is a lot of speculation about the future of SACU, with reports that South Africa is considering to pull out of SACU, because it receives little benefits from SACU. With this in mind, what is the future of SACU?
PAULINA ELAGO (PE): Indeed, there has been a lot of speculation in the media on this issue. It is however important to clarify that the SACU secretariat has not received any information or indeed any indications that may point to the conclusions reached in the media regarding this matter. All member states of SACU remain committed to the attainment of the objectives of SACU and the success of the organisation. In his inaugural speech, president Zuma specifically underlined South Africa’s commitment to championing African growth, development and prosperity by supporting regional integration, intra-African trade and infrastructure development. In a recent speech, on the occasion of the presentation of credentials by heads of missions accredited to South Africa, on 14 May, president Zuma pledged South Africa’s commitment to nurture regional integration at three levels, namely SADC, SACU and the Tripartite Free Trade Area and noted that “our country will continue working even harder to realise the developmental goals of the continent through these important continental structures”. This, to me, clearly reaffirms South Africa’s stance with regards to SACU. In addition, SACU heads of state have agreed on a set of clear priorities that aim to drive the agenda to a deeper level of integration; focussing on a regional industrial development policy; trade facilitation; review of the revenue-sharing arrangement; development of SACU institutions; and unified engagement on trade negotiations.
CK: What are your immediate tasks at hand, now that you have taken over?
PE: My immediate tasks include in-depth understanding of the organisation , its culture, working modalities and institutional structures; work undertaken to date; and getting to know my team, my principals, member states and key partners. As such, I have been busy, as part of my induction, visiting member states to meet members of the council of ministers who comprise ministers of finance and trade and industry, and also meeting commission members who are permanent secretaries of finance and trade and industry to gain better insight of their priorities and expectations.
As you know, the SACU secretariat has been in existence for 10 years, and thanks to my predecessor and her team, a lot of good work has been achieved including setting up an effective and fully functioning secretariat from scratch, in addition to defining and implementing a work programme in line with the 2002 SACU Agreement.
My focus, going forward, is to build on that strong foundation with a view to scaling up the implementation of the 2002 SACU Agreement in order to achieve deeper levels of integration based on SACU’s priorities which include: review of the revenue- sharing arrangement, development of an industrial development policy, establishment of institutions, trade facilitation, trade in services, engagement of the private sector and unified engagement on trade negotiations. Additionally, I will focus on developing a long-term strategic plan and strengthening relationships with our partners; raise awareness and publicity on SACU among key stakeholders; and last, but by no means least, the completion of the new SACU head quarters, including relocation to the new building.
CK: What is the latest with regards to a new revenue-sharing formula and will this disadvantage smaller states as it is being feared?
PE: Work on the review of the revenue-sharing arrangement is underway and is being carried out by a task team, which is constituted at the level of permanent secretaries of finance of the five member states. The task team has considered proposals from all member states on their preferred revenue-sharing formulae. These have subsequently been narrowed down to fewer proposals that will be submitted to the council of ministers for further consideration. The ultimate goal of this review process is to come up with a formula that is acceptable to all member states. One of the key principles agreed by the council of ministers is that ‘no member state should be worse off.’
CK: There is talk of new member states joining SACU. Will SACU expand in the near future?
PE: The SACU Agreement of 2002 contains provisions on the admission of new members. However, there are currently no formal submissions from countries that intend to join SACU.
CK: What is SACU’s position on the EPA with the European Union?
PE: The EPA presents an opportunity to harmonise the trade relationship SACU member states have had with the European Union until now. It will ensure the integrity of the SACU common external tariff (CET) is maintained and at the same time, it will bind the duty-free, quota-free market access for Botswana, Lesotho, Namibia and Swaziland to the EU, thereby creating certainty for economic operators.
Secondly, it will now make it possible for economic operators to source inputs for manufacturing from any SACU member state and then export the end product to the European Union, thereby creating the possibility of establishing cross-border value chains in favour of all SACU member states and their citizens. There are however still some sensitivities that remain even at this advanced stage of the negotiations. This includes the possible loss of policy space for SACU countries to advance their own internal industrialisation programmes, for example in the area of export taxes. Furthermore, it is important to ensure that the EPA supports and does not in any way undermine regional integration initiatives, aimed at increasing intra-African trade and investment. Any trade agreement, including the EPA, should therefore contribute to the deepening of regional integration. We are encouraged by the good progress made recently and are positive that an agreement could be reached within the next few weeks.
CK: Why did you take up this job?
PE: As a former chief trade negotiator for Namibia, with over 20 years’ experience on trade and regional integration issues, I have the qualities, skills and expertise required for the job. Having been involved in the re-negotiations of the 1969 agreement,I have a very good understanding of SACU, its dynamics and history. Most importantly, I am a strong believer and am passionate about regional integration, given the benefits and opportunities for our economies of increased trade, competitiveness and economic growth. Additionally, I have gained a wealth of experience, skill and exposure over the past 14 years having worked in different parts of the world including across developing member countries in the Commonwealth, and most recently, eastern and southern Africa. All these, together with my passion, commitment and strong belief in the ideals of the organisation, have motivated me to take up this job.
I am doing what I love and for one to excel, I believe, one has got to love what one does. This is one of my guiding principles.
CK: What are your hobbies?
PE: Traveling to explore and learn about other people and their cultures. I have a passion for arts and culture, especially African cultures. I enjoy working in a multicultural environment, I like music, reading, and dancing, especially salsa and spending time with friends and family. I like sports, especially football, but I am not a die-hard fan of any particular club and I look forward to watching the 2014 World Cup which kicks off this week in Brazil. (The interview took place last week)
CK: What do you read?
PE: A mixture of stuff, a lot about leadership, women empowerment and economic and current affairs. I am currently reading “The Art of being brilliant” by Andy Cope and Andy Whittaker.
CK: Tell us about your family?
PE: Born and bred in Windhoek, I grew up in Katutura. I am the youngest from a family of nine out of which six are women and three men. It’s a big but also very close family. Very much female dominated. I draw my inspiration from my mother who is an amazingly strong and God-fearing woman as well as from my older sisters. My mom has always been my inspiration and source of strength and courage; thanks to the values she and my late father have instilled in us right from an early age. My parents have been there for us and sacrificed a lot for us. Those values have pretty much influenced and shaped who I am today: humility, trusting in God, believing in myself, hard work, to love what you do and to always do it to the best of your ability, honesty, the importance of education, sharing and caring for others and respecting oneself and others. I feel truly blessed to have a very loving and supporting family who have always believed in me and have been my source of support throughout my life.
Related News
Swaziland braces itself for AGOA exit
The threat of Swaziland being suspended from a US preferential trade agreement for poor progress in meeting democratic norms is threatening the livelihoods of tens of thousands of worker in a country where unemployment is already above 40 percent.
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.
AGOA and the absolutists
Often referred to as sub-Saharan Africa’s last absolutist monarch, the powers and prerogatives enjoyed by King Mswati III and the conduct of his government are jeopardising Swaziland’s membership of AGOA.
In recent months, the authorities in Mbabane have faced increasing criticism from human rights organisations, with security forces accused of breaking up political marches and journalists and pro-democracy activists being arrested and put on trial.
A recent open letter to King Mswati signed by Nobel Prize laureate Archbishop Desmond Tutu, universities and NGOs, noted “a disregard for legal procedures and basic human rights” and warned of “lasting damage to your country’s standing with potential international investors and ....economic and political isolation,” if there was not change and dialogue.
Warnings from Washington
The US has issued a series of warnings, setting a deadline of 15 May, by which time Swaziland was meant to have met several key conditions. These included amendment of the Industrial Relations Act, allowing for the registration of trade union and employer federations and the removal of bans on worker protests.
The US also proposes amendment of the Suppression of Terrorism Act, described by critics as a weapon to harass and detain pro-democracy activists, and amendment of the colonial-era 1963 Public Order Act, used to suppress anti-government dissent. The US recommends the dissemination and implementation of the Code of Good Practice on Protest and Industrial Action.
Heading a US delegation to Swaziland in April, Deputy Assistant Trade Representative for Africa, Constance Hamilton, said it was up to the Swazi government “to decide whether they want to be part of the AGOA family”, stressing: “it is all about political will.”
US Ambassador to Swaziland Makila James was blunter, hinting at past frustrations and stressing that non-compliance with US recommendations would mean “on January 1, 2015, goods coming into the United States from Swaziland will be assessed duty because there will no longer be a trade preference to allow them duty-free entry.”
IRIN has reliable information that the review process has now ended and an announcement is expected in the coming weeks.
Swaziland’s wilting economy
An AGOA suspension will hit hard. Swaziland has one of the worst performing economies in southern Africa and according to the United Nations Development Project (UNDP) about two thirds of its 1.2 million population live below the poverty line.
Swaziland’s membership of the Southern African Customs Union (SACU) has provided the state with an economic lifeline. But South Africa’s weakening economic performance has had severe repercussions for its neighbours, severely reducing Swaziland's share from the world's oldest customs union.
If AGOA close the door...
Swazi business leaders understand the pressure for change from Washington and its implications. “Swaziland was put on notice that certain laws must be changed,” an official with the Federation of Swaziland Employers, who declined to be identified, told IRIN. “King Mswati depends on these laws to suppress dissent and remain in power.”
The official pointed out that suspension from AGOA would mean serious contractions in the garment industry and the loss of about 17,000 jobs.
In anticipation of Swaziland being struck from AGOA, one major garment manufacturer in Matsapha has announced its closure as all its products are shipped to the US to take advantage of AGOA.
Workers at risk
“Government is playing politics with our lives,” Angela Dlamini, a garment worker at the Matsapha Industrial Estate near the commercial city of Manzini, told IRIN.
“I have two children, aged two and five. We live in a one room flat with a toilet and a water tap in the yard. My family helps me feed and clothe my children, because I earn so little. But we will starve without my job,” she said. Dlamini earns R800 (about US$75) a month from her factory job.
None of the factory workers interviewed by IRIN knew that Swaziland’s membership of AGOA was under threat and instead complained about low wages.
“If we are to continue working we must be paid more,” Thab'sile Magongo, a seamstress at a Matsapha factory, told IRIN.
“We are starving. The factory owners say they will have to move to Asia where the wages are lower, but we don't believe them. What human being can survive on wages lower than what we get?”
When warned that Swaziland’s suspension from AGOA could result in the closure of many of Swaziland's textile factories, Magongo replied: “we must then turn to prostitution; what choice do we have?”
Related News
Obama’s free trade strategy falters in Asia
Amid simmering territorial conflicts across the Western Pacific, specifically between China and its neighbours in the South and East China Seas, coupled with China rising to the rank of top trading partner with Japan, South Korea, Australia and the Association of Southeast Asian Nations (ASEAN), the Obama administration has been hard-pressed to re-assert its strategic footprint in the region.
Since 2009, Obama has turned Washington’s strategic focus towards the Asia-Pacific region, which has gradually emerged as the global center of gravity in both economic and geopolitical terms.
The “Pivot to Asia” (P2A) policy, formally announced in late-2011, represents Washington’s renewed attempt to tap into booming markets of Asia and check China’s rising territorial assertiveness in the East and South China Seas.
The P2A policy contained both trade as well as security pillars, designed to maintain the U.S.’ strategic primacy in Asia and aid its post-recession economic recovery. The cornerstone of the Obama administration’s economic policy in Asia is the proposed Trans-Pacific Partnership (TPP) agreement, which excludes China and covers 12 Pacific Rim countries that collectively account for about 40 percent of the world economy.
In security terms, the Obama administration has sought to deepen the U.S. military footprint across Asia by exploring new basing agreements and gradually redeploying 20 percent of its naval assets from the Atlantic to the Pacific theatre.
Obama’s latest trip to Asia, however, underlined the inability of Washington to balance its economic and geopolitical initiatives in the region. While Obama managed to strike new strategic agreements with leading Southeast Asian countries, namely Malaysia and the Philippines, and strengthen bilateral military alliances with Japan and South Korea, there was, in turn, no concrete development vis-à-vis the ongoing TPP negotiations.
“I’ve been very clear and honest that American manufacturers and farmers need to have meaningful access to markets that are included under TPP, including here in Japan,” said Obama during his trip to Tokyo, hoping to encourage Japan to make necessary concessions in the TPP negotiations.
“That’s what will make it a good deal for America — for our workers and our consumers, and our families. That’s my bottom line, and I can’t accept anything less.”
As the world’s third largest economy, with a GDP of six trillion dollars, Japan is central to the conclusion of the TPP negotiations, which missed its late-2013 deadline and has struggled to gain momentum in recent negotiation rounds. But Japanese Prime Minister Shinzo Abe only promised to “energetically and earnestly continue the talks.”
The disagreements were initially over Japan’s trade barriers on agricultural imports; but the U.S. has increasingly focused on Japanese restrictions on the imports of beef and pork and the opening of Japanese automobile market to American manufacturers.
Amid rising territorial tensions in Asia, Obama went the extra mile to reassure Japan of Washington’s full military commitment if a war were to erupt between Tokyo and Beijing over the disputed Senkaku/Diaoyu Islands in the East China Sea.
In Malaysia, Obama oversaw the formalisation of a bilateral “comprehensive partnership” agreement, which marked the end of decades of frosty relations. Above all, Obama’s visit to the Philippines coincided with the signing of a new security pact, the Enhanced Defense Cooperation Agreement (EDCA), which grants the U.S. military 10 years of access to the Philippines’ top five military bases, namely the three former U.S. bases of Clark airfield, Subic bay, and Poro Point as well as Camp Aguinaldo and Fort Magsaysay in Metro Manila.
On the TPP front, however, Obama faces tremendous opposition at home and across Asia. Long shrouded in secrecy, a growing number of businesses, concerned citizens, and civil society organisations have come to oppose what they see as a lopsided free trading agreement (FTA), which grants multinational companies (MNCs) extensive control over public services such as healthcare and internet.
Among developing countries in East Asia, particularly Malaysia and Vietnam, there is a growing fear over the potential impact of the TPP on the production and importation of cheap, generic drugs, with global pharmaceuticals poised to more vigorously protect their Intellectual Property Rights (IPR), which have contributed to the exorbitant costs of conventional drugs across the wold.
In the industrialised world, especially the U.S., many labour unions and big businesses are worried over the proposed reduction of strategic protectionist barriers, especially in the automobile manufacturing sectors, allowing export-driven countries such as Japan to displace domestic manufacturers.
Japan, for instance, has insisted on retaining high tariff barriers on its agricultural sector, while Vietnam has resisted the proposed privatisation of state-owned textile companies.
The late-2013 revelation of the draconian IPR provisions of the TPP by the anti-secrecy group Wikileaks dealt a huge blow to the ongoing negotiations, further strengthening opposition to the proposed trading regime.
Among the most worrying provisions are proposals that allow MNCs to sue sovereign governments in international courts and override domestic laws on both trade and non-trade matters; relaxation of environmental regulations; greater policing and monitoring of internet; and restrictions on access to public services due to more strict investment rules in utilities and strategic sectors of the economy.
Fearful of domestic backlash, Asian countries such as Japan and Malaysia have hardened their negotiating positions, more explicitly demanding trade concessions from the U.S. In fact, leaked documents reflect the growing isolation of the U.S. within the ongoing negotiations, with Obama struggling to gain enough support within his own party over the proposed Fast-Track Trade bill to expedite the trade negotiations with limited legislative scrutiny.
“Japan’s aim is geopolitical in the first instance, i.e., contain China. I doubt if the leadership has really thought [the TPP] through economically,” Walden Bello, a leading expert on trade issues and co-founder of the organisation Focus on the Global South, told IPS, underscoring how the TPP lacks any compelling economic rationale and is “doomed to fail.”
“Once [Japanese] corporations encounter the same old hard-nosed demands of the U.S. for structural reform…the Japanese government will hem and haw, as it did with the APEC free trade area in the 1990′s.”
Meanwhile, an economically-ascendant Beijing has managed to progressively eclipse Washington in trade and investment terms, with China pushing for an alternative Free Trade Area of the Asia-Pacific (FTAAP), which is increasingly seen as a more viable and inclusive alternative to the TPP.
“China does not even have to initiate a counter-bloc. It just needs to sit quietly and see the TPP fall apart,” said Walden Bello, dismissing the TPP as an ineffectual attempt to counter growing Chinese economic influence in Asia “The benefits of trade accruing to corporations…with what will soon become the world’s biggest economy [China] will undermine the US’s geo-economic objective.”
Aside from being the top trading partner of almost all countries in East Asia, China has emerged as a major source of development aid and soft loans in recent years, contributing as much as 671.1 billion dollars in the 2001-2011 period.
Given China’s continued economic expansion, the country is expected to accelerate its development assistance to neighbouring countries. China is already establishing a 50-billion-dollar Asian Infrastructure Investment Bank, which is poised to directly compete with the Japan-dominated Asian Development Bank (ADB).
Overall, the poor prospects of the TPP underline the U.S.’ weakening economic influence in Asia, with the Obama administration primarily occupied with strengthening Washington’s military footprint in the Pacific waters to hedge against a rising China.
Related News
June 2014 Graduation: Master of Commerce in Management Practice specialising in Trade Law and Policy
tralac wishes to congratulate all the students that graduated with the degree of Master of Commerce in Management Practice specialising in Trade Law and Policy from the University of Cape Town on 13 June 2014. The graduate programme is presented by tralac in collaboration with the Graduate School of Business, University of Cape Town. This postgraduate qualification is accredited and awarded by the University of Cape Town.
We would like to congratulate the following graduates on their success:
-
Elisha Tshuma
-
Amina Mohamed
-
Emmah Monyanga
-
Siyathaba Muremba
-
Mamosa Molapo Mosito
View photos from the Graduation ceremony below.