OVERVIEW : Paper _ Implications of External Trade and Investments Agreements on CFTA
The purpose of this paper is to provide an overview of the interaction between Africa’s main external trade arrangements(EPA, AGOA) and the CFTA.
Section A provides an overview of EU trade agreements with Africa and their implications for Africa. Exportoriented industries are likely to benefit or at least stay competitive in the EU market, but various local industriescould be negativelyaffected as a result of the implementationof the EPA.
Subsequently, Section B provides an overview of US trade arrangements with Africa and discusses US trade and investmentpolicy with Africa.
SectionC discussesinteractionsbetween EU and US trade arrangementsand the CFTA.
SectionD concludes with some recommendations.
OVERVIEW : Paper _ Private Sector in CFTA negotiations and Implementation
Section A of this paper describes the state of play of Continental FTA (CFTA) negotiations and possible contours of a deal by the next AU Summit in January 2018. It shows that negotiators have done a lot of work but Phase 1 of the CFTA which focuses on trade in goods has not been fully completed. Thus, the CFTA negotiations remains an on-going process which provides a lot of room for business advocacy .Furthermore, the negotiation mandate for Phase 2 of the CFTA negotiations, which might contain issues of investment policy,e-commerce competitionpolicy,services liberalisationand regulation,has not yet been agreed.
Section B discusses the possible role of the private sector in the CFTA negotiations and implementation. In 2012, Heads of State agreed to the need to immediately establish regular formal platforms for organized private sector for trade policy dialogue, including at the level of African Union. In policy papers leading up to the CFTA negotiations, the African Union Commission had proposed an African Business Council as part of the institutional structure of the CFTA. However none of these decisions or proposals have been implemented and the current draft CFTA text does not contain references to organized private sector nor does not seem to recognize business as a vital partner/stakeholder in the CFTA. Yet, models from other regions suggest that business should be given a formal place in the institutional structure of the AU or CFTA, while at the same time leaving it to business to self-organize themselves. Examples discussed include the ASEAN Business Advisory Council (BAC), MERCOSUR Economic-Social Consultative Forum, Andean Business Advisory Council and the Business 20 (B20).
Finally, Section C provides some recommendations for increasing private sector participation in the negotiationand implementationof the CFTA.
“THERE is life after Buenos Aires,” soothed Susana Malcorra, chair of the 11th ministerial meeting of the World Trade Organisation (WTO). Multilateralism may not be dead, but it has taken a kicking. Expectations were low as the meeting began in the Argentine capital. They sank even lower as it progressed. Delegates failed to agree on a joint statement, let alone on any new trade deals.
Many arrived with a culprit already in mind. Robert Lighthizer, the United States Trade Representative, was the face of an administration that is both questioning the benefits of multilateralism and jamming the WTO’s process of settling disputes. As negotiations progressed, some delegates groused that American leadership was lacking. Some even speculated that the Americans might be happy if multilateral talks foundered. What better proof, after all, that the system is broken?
Ms Malcorra, without mentioning the Americans by name, warned against creating scapegoats out of those who might recently have “shifted gear”. The WTO, after all, had problems before Mr Lighthizer took up his job. Decisions are made by consensus, which leaves deals vulnerable to hostage-takers. In some cases, the victim is the negotiating agenda. Still hanging over the WTO is a 16-year-old negotiating round, in theory meant to further global development. Until that round is concluded, members such as South Africa are reluctant to negotiate on any new issues, like rules on e-commerce or investment facilitation.
Members arrived in Buenos Aires in disagreement, and refused to budge. The Indian delegation wanted to lift restrictions on its government’s ability to distribute stockpiles of food. When the Americans refused, the Indians looked for a way to retaliate. They ended up killing an agreement to ban subsidies for illegal, unreported and unregulated fishing—as national leaders had agreed to do by 2020 as part of the United Nations’ Sustainable Development Goals. Cecilia Malmstrom, the European trade commissioner, called this failure “horrendous”.
Amid the triumph of self-interest over the greater good, there were some grounds for cheer. For now, it seems Mr Lighthizer is planning to influence the multilateral system from within. A joint statement released by America, Japan and the European Union pledged “to enhance trilateral co-operation in the WTO” when dealing with excess capacity, forced technology transfer and local-content requirements.
Perhaps more importantly, members are actually moving ahead on some issues. A coalition of countries ranging from America and the EU to Cambodia has signed up to negotiate new rules on e-commerce on a plurilateral, rather than a multilateral, basis. As long as enough members agree among themselves for the deal to be worthwhile, and do not discriminate against other members of the WTO, a deal is possible. The message was clear: if some members want to block discussion, then they will be left behind.
It seems unlikely that a surge of plurilateral agreements will be enough to jolt the WTO into life. For that, the organisation’s members will need to show more commitment to it—and to learn the art of compromise. Roberto Azevêdo, the WTO’s director-general, wrapped up the conference by reminding members that “multilateralism doesn’t mean that we get what we want. It means we get what is possible.” (The Economist)
The EPAs are ongoing negotiations expected to create a free trade area between the European Union and African, Caribbean and Pacific Group of States (ACP).
Although they are a response to rules set by the World Trade Organisation (WTO) to enforce reciprocity in trade with the European Union, the African continent has been indifferent over them.
Several countries in blocs such as the Economic Community of West African States (ECOWAS) signed the agreement on the conviction that it would boost their exports to new European markets. While other countries, particularly in the East African Community, have been indifferent over the deal arguing that it does not offer enough protection for local industries against goods imported from Europe.
While discussing his paper titled "Economic Interactions Based on Free Trade Agreements between European and African Countries", Leleng Kebalo argued that African states should consider ratifying agreements that include technological factors that improve the quality of their exports.
"If the agreement includes technological transfers, then this can lead to economic transformation. Free trade with Europe or any developed region, without technological transfers is harmful for the evolution of less competitive economies in Africa," he told a session at the African Economic Conference in Addis Ababa on Tuesday, December 5.
"We advise African leaders to improve competitiveness of their economies through a gradual opening of their economies to European goods, in return for freedom of learning and adapting innovations," the researcher from the University of Lomé added.
Another researcher from the Food and Agriculture Organization of the United Nations (FAO), Davide Del Prete, said that trade policies and agreements must be analyzed deeply because they impact food and agriculture global chain participation in Sub-Saharan Africa.
"We find that trade policies are key determinants of the heterogeneity of the quality of agricultural transformation across the Sub-Saharan region. Policy-makers should test alternative trade policy measures on bilateral trade relationships, including agricultural value chain interactions," he said.
The research papers were commended by John Anwanyu, Lead Research Economist in the Macroeconomic Policy, Forecasting and Research Department at the African Development Bank (AfDB).
He encouraged the researchers in the session and asked them to continue their role in advancing fact-led policy implementation of trade agreements.
"Political will and evidence-based implementation are encouraged by facts and quality research that is specific and relevant to the African situation. With vast majority of African economies advancing free trade and pursuing overseas markets, research is a vital key that will ensure positive policies," he said.
The AfDB has supported the growth of exports and trade for countries across the Africa continent.
The Bank has also advanced intra-African trade as a sure channel with the greatest potential for building sustainable economic development and regional integration.
The Bank's flagship report - the African Economic Outlook 2017 - cited that trade among African countries expanded from a mere 10% in 2000 to 14% in 2014, reflecting gains in policies advancing intra-African trade. (African Development Bank)
The Dangote group has opened a $300 million cement production plant in the Republic of Congo. The facility which has a capacity of 1.5 million metric tonnes per annum is expected to be the biggest such facility in the Central African country.
The plant is located at the Mfila area of the capital Brazzaville. The event which was graced by Congolese president Denis Sassou Nguesso brings to five the Dangote Group’s African footprints in the cement production business.
The Nigerian president Muhammadu Buhari was represented by a government delegation led by the Mines and Steel Development Minister, Kayode Fayemi. He emphasized the Buhari administration’s desire to help indigenous companies to thrive.
Africa’s richest man Aliko Dangote who was present for the event also commended the Congolese government for its economic decisions in the wake of fall in global commodity prices. He also announced that the group was aiming at becoming one of the top global 10 producers of the product.
Speaking on the new plant Dangote said: “It is envisaged that this will contribute substantially to the availability and affordability of cement in the country and the Republic of the Congo will no longer need to depend on imports to bridge the gap between demand and supply.
“It is our hope that the inauguration of the plant will boost Congo’s economy, conserve foreign exchange that would otherwise have been spent on imports for the country, and create employment opportunities down the value chain.”
Dangote cement has so far commissioned cement plants in four African countries namely: Ethiopia, Zambia, Cameroun and Tanzania. The Congo-Brazzaville plant, which began operations in the third quarter of 2017, will be the fifth cement plant that would be inaugurated in the last two years. (Africa News)
An effort that hopes to draw billions in investment in Africa from Europe wrapped up at the Palace of Culture in Abidjan this week. In many ways, there couldn’t have been a better place for talk of a free market drive to revive the economies of Africa.
For Cote D’Ivoire, for all its economic difficulties, scarce capital and heavy taxes, has a claim to being an economic phoenix rising from the ashes of a violent civil war. Ever since the Ivorian army marched back to its barracks, in 2011, the country has seen signs of an economic revival akin to that of post-Genocide Rwanda and post-war Singapore. In fewer than seven years of peace, Cote D’Ívoire has thrown its doors open to foreign investors on its way to a growth rate of more than 8%, albeit from a very low base.
The European Union-Africa Forum, in Abidjan this week, was here to discuss an ambitious plan to help unleash the entrepreneurial spirit of Africa to create jobs and wealth. The EU is pushing a plan to prise investment out of a tight European financial market – especially from the big pension funds – to plough into entrepreneurs with emphasis on women and the youth.
The plan revolves around a fund of around $4 billion. The EU hopes to leverage this money up to around $44 billion by encouraging powerful financial institutions and pension funds in Europe to get behind it in the hope of high returns. In achieving this, around $1.5 billion of this money will be used as investment guarantees to take the risk out for foreign investors.
“It is done. We passed everything through our legislators in September and you will see the first projects taking shape next year,” says Roberto Ridolfi, in Abidjan, one of the technocrats at the EU who helped guide the plan.
At the conference, young entrepreneurs were given the chance to pitch their ideas to earn the chance of a sliver of the seed capital.
Academic and director general of DEVCO at the European Commission, Stefano Manservisi, is an expert on international and economic integration. He says the EC is in discussions with African nations in a bid to ease the flow of goods and services across borders to encourage investment.
One of the areas that the EU scheme is targeting is technology. I put it to Manservisi that these kinds of investments do not create many jobs in a content that needs about 20 million in the next 20 years.
“You have to remember that Facebook was created in a garage. There are many garages in Africa and people can create wealth and jobs in them if they are given the support and capital,” says Manservisi.
There are also reservations among African leaders about a lack of consultation over plans in this effort to create jobs. People on the ground in Abidjan question whether the benefits will trickle down to the millions living in poverty.
In a year when thousands of Africans died trying to flee this poverty – heading for Europe on leaky boats across the Mediterranean – the EU admits this investment effort may not be a quick fix, but at the very least it is a start. (CNBC Africa)
African Union Ministers of Trade (AMOT) will meet in Niamey, Niger, on 1 and 2 December in a bid to finalize negotiations on the Continental Free Trade Area (CFTA) by the end of 2017, as directed by the African Union (AU) Heads of State and Government in June 2015.
David Luke who coordinates the African Trade Policy Centre at the Economic Commission for Africa (ECA) said that the month of November was characterized by a series of meetings by the CFTA Technical Working Groups, the CFTA Negotiating Forum, and the African Union Senior Trade Officials.
“The objective of these meetings is to conclude the outstanding issues of the Modalities for Tariff Liberalization that were adopted at the 3rd Meeting of the AU Ministers of Trade in June 2017; and to consider the draft Texts of the CFTA Agreement, its Protocols and its Annexes and Appendices,” added Mr. Luke.
The ECA official expressed optimism about the December deadline for the establishment of the CFTA, stating “Given the momentum behind the negotiations thus far, we are confident that there will be the essential substance of an agreement to come out of the ministerial meeting in Niamey."
He cautioned, however, that some technical work will be needed during the first half of 2018 to finalize tariff schedules and rules of origin arrangements.
Mr. Luke added that "ECA is advocating for implementation of the agreement to begin early in 2018 on the basis of the level of ambition of tariff liberalization that has been agreed and with interim rules of origin pending the finalization of the outstanding technical issues."
The main objective of the CFTA negotiations is to achieve a comprehensive and mutually beneficial trade agreement among the Member States of the African Union.
The trade ministers are expected to consider the Report of the 4th meeting of the Senior Trade Officials, which took place on 27 - 29 November in Niamey; and approve the Text of the Agreement establishing the CFTA, Protocols on Trade in Goods and Services and any other Annexes deemed as early harvests.
The meeting is organized by the African Union Commission’s Department of Trade and Industry. (UNECA)
At the invitation of the African Union, WCO Secretary General Mr. Kunio Mikuriya attended the 9th Meeting of the African Union (AU) Sub-Committee of Directors General of Customs, held in Yaoundé, Cameroon from 13 to 17 November 2017.
The theme of the Meeting was “The contribution of Customs to the analysis of international trade data, for security and the boosting of intra-African trade”.
During the opening ceremony, Mr. Fongod Edwin Nuvaga, Director General of Cameroon Customs, welcomed delegates and updated them on current developments in his Administration.
H.E. Ambassador Albert Muchanga, the African Union’s Commissioner for Commerce and Industry, outlined the AU’s current activities, including its work on the introduction of the African Free Trade Area.
Secretary General Mikuriya highlighted the main priorities of the WCO, and urged AU Members to draw on the content of WCO instruments to bring about, inter alia, the implementation of the African Continental Free Trade Area and the WTO Trade Facilitation Agreement. He emphasized that the WCO offers assistance in many relevant areas, mentioning seminars on transit and origin conducted recently for the benefit of AU Members as examples of such support.
Mr. Alamine Ousmane Mey, Cameroon’s Minister for Finance, welcomed the representatives of the 54 AU Members present at the meeting, and emphasized the central role of Customs in ensuring a safe and secure trade environment and facilitating trade.
The Directors General heard and debated the reports of several Working Groups, and provided orientation for future work based on the outcomes and analyses of the Expert Working Group which had met prior to the Meeting. Issues addressed included the Interconnectivity of Computerized Customs Transit and Clearance Systems, and the outcomes of the Regional Economic Communities Sub-Committee on Customs Cooperation, the 3rd AU Customs Experts Trade Facilitation Forum, and the 1st Extra Ordinary Meeting of the AU Sub-Committee of Directors General of Customs.
The Directors General discussed and adopted a number of recommendations, relating in particular to: how to increase the number of accessions to the WTO TFA; the setting up of National Committees on Trade Facilitation as foreseen in the TFA; and issues related to the further development and implementation of AU objectives and programmes, notably those aimed at boosting intra-Africa trade which continues to show very low levels of improvement. Delegates also endorsed the need for enhanced consultations with Trade, as well as the sharing of information and best practices.
The Meeting elected Cameroon as Chair of the Bureau (Chair of this Group) for 2017/2018, with Comoros, Uganda, Benin, Côte d’Ivoire and Morocco completing the Bureau’s membership.
Secretary General Mikuriya joined delegates in congratulating Cameroon Customs on the excellent arrangements for the Meeting; he also met bilaterally with Cameroon’s Minister of Finance Mr. Alamine Ousmane Mey, to discuss issues of mutual interest. (World Customs Organization)
Facebook will open a “community hub space” in Nigeria next year to encourage software developers and technology entrepreneurs and become the latest technology giant to pursue a training program in fast-growing Africa.
The U.S. social media company said the center would host an “incubator program” to help develop technology start-ups, while it will also train 50,000 Nigerians in digital skills.
Africa’s rapid population growth, falling data costs and heavy adoption of mobile phones rather than PCs is attracting technology companies looking to attract more users.
Facebook did not provide details of the period over which its planned training would take place in Nigeria, which is Africa’s most populous country with 180 million inhabitants.
“We understand the important role Facebook plays here in Nigeria with developers and start-ups and are invested in helping these communities,” Emeka Afigbo, its regional head of platform partnership, said in a statement on Wednesday.
Facebook said the training – aimed at software developers, entrepreneurs and students – would be offered in cities including the capital, Abuja, Port Harcourt in the south, Calabar in the southeast and Kaduna in the north.
Last year Facebook founder Mark Zuckerberg visited technology companies in Lagos and his charitable foundation provided $24 million to Andela, which trains developers.
Google’s chief executive in a July visit to Lagos said the company aimed to train 10 million people across the continent in online skills over the next five years. He also said it hoped to train 100,000 software developers in Nigeria, Kenya and South Africa.
Although Africa may not offer as much opportunity to add consumers as China or India, because large wealth gaps mean that many people in places like Nigeria have little disposable income, Facebook said more than 22 million people already use its social media website every month in Nigeria.
Widespread poverty means mobile adoption tends to favor basic phone models. That, combined with poor telecommunications infrastructure, can mean slow internet speeds and less internet surfing, which tech firms rely on to make money. (CNBC)