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8 th Session of the Committee on Trade, Regional Cooperation and Integration 6 - 8 February 2013 Addis Ababa, Ethiopia

Developments in International and Intra-African Trade Mr. Siope V. ‘ Ofa Associate Economic Affairs Officer Regional Integration, Infrastructure & Trade Division United Nations Economic Commission for Africa. 8 th Session of the Committee on Trade, Regional Cooperation and Integration

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8 th Session of the Committee on Trade, Regional Cooperation and Integration 6 - 8 February 2013 Addis Ababa, Ethiopia

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  1. Developments in International and Intra-African TradeMr. Siope V. ‘OfaAssociate Economic Affairs OfficerRegional Integration, Infrastructure & Trade DivisionUnited Nations Economic Commission for Africa 8th Session of the Committee on Trade, Regional Cooperation and Integration 6 - 8 February 2013 Addis Ababa, Ethiopia
  2. Outline: Africa’s Trade Performance (Goods and Services) Intra-African Trade: towards a CFTA Status of other Trade Negotiations Aid for Trade in Africa Conclusions and Policy Recommendations
  3. (1). Africa’s Trade Performance (A). Trade in Goods Africa’s trade performance rebounded strongly in 2011, surpassing pre-economic crisis level of 2008. Source: UnctadStat, 2012.
  4. (1). Africa’s Trade Performance (A). Trade in Goods Africa’s strong trade performance in 2010 & 2011 is attributed to; higher primary commodities prices, strong demand from China of African exports and, increased foreign aid inflows. Source: World Bank, Online Source, 2013. Source: OECD Online Source, 2013. Source: UnctadStat, 2013.
  5. (1). Africa’s Trade Performance (A). Trade in Goods Source: UnctadStat, 2012.
  6. (1). Africa’s Trade Performance (A). Trade in Goods Primary Commodities dominate Africa’s total exports, particularly in fuel. Source: UnctadStat, 2013.
  7. (1). Africa’s Trade Performance (B). Trade in Services The Travel sector remained Africa’s biggest service sector export. Source: UnctadStat, 2013.
  8. (1). Africa’s Trade Performance (B). Trade in Services Africa exported 12% more commercial services in 2010 compared to previous year. South Africa experienced a boost in travel receipts (by 24%) due to the large number of foreign visitors attending the FIFA World Cup in 2010.
  9. (1). Africa’s Trade Performance (C). Intra-African and Intra-Regional Eco Communities (RECs) Trade Trade within Africa represented about 12% of the continent’s total trade in 2010, while the major part of the trade (88%) was with the rest of the world. The average level of intra-African trade (2000-2010) has consistently remained under 15%. A positive trend of intra-RECs exports is found during the period 2000-2010 (with the exception of 2009), with SADC (34% of intra-REC exports), CEN-SAD (26%), ECOWAS (15%) and COMESA (11%) being the top four.
  10. (1). Africa’s Trade Performance (C). Intra-African and Intra-Regional Eco Communities (RECs) Trade In 2010, intra-African trade in manufacturewasmore than 40 per cent, while agriculture and food was relatively low (around 15%). On average, countries within CEN-SAD registered the highest exports beyond their borders to the rest of African countries from 2000 to 2007 (an average of USD2,227 millions), followed by SADC and ECOWAS. Source: UnctadStat, Online Source (2012)
  11. (2). Intra-African Trade: towards a Continental Free Trade Agreement (A). Boosting Intra-African Trade Low share of intra-African trade as compared to other regions - % Source: 2010 International Trade Statistics of the World Trade Organization
  12. (2). Intra-African Trade: towards a Continental Free Trade Agreement (A). Boosting Intra-African Trade Factors contributing to low intra-African trade include; African production and export structures are geared towards primary commodities, which demand is externally oriented. (about 88% of Africa’s trade). Source: UNCTADStat, Online Source (2013)
  13. (2). Intra-African Trade: towards a Continental Free Trade Agreement (A). Boosting Intra-African Trade Continent’s structural deficiency with high dependence on external inputs for production. Africa imported 77.5% more of ‘Intermediate Goods’ in 2010, compared to 2000 from the World. Intermediate goodsSum of categories: 111* Food and beverages, primary, mainly for industry; 121* Food and beverages, processed, mainly for industry; 21* Industrial supplies not elsewhere specified, primary; 22* Industrial supplies not elsewhere specified, processed; 31* Fuels and lubricants, primary; 322* Fuels and lubricants, processed (other than motor spirit); 42* Parts and accessories of capital goods (except transport equipment); 53* Parts and accessories of transport equipment. Source: COMTRADE, Online Source (2013)
  14. (2). Intra-African Trade: towards a Continental Free Trade Agreement (A). Boosting Intra-African Trade Inadequate infrastructure and bureaucratic bottlenecks for trade. For example: Only 30% of Africa’s roads are paved (ARIA IV, UNECA) Importing a car from Japan to Abidjan cost an average US$1500, whereas it cost an average US$5000 to import the same vehicle from Addis Ababa to Abidjan (ARIA IV, UNECA) Over a distance of about 500 kilometers between Douala and Bertoua, in Cameroon, up to 47 roadblocks can be found (ARIA IV, UNECA)
  15. (2). Intra-African Trade: towards a Continental Free Trade Agreement (A). Boosting Intra-African Trade Measures undertaken to boosting Intra-African Trade; 18th AU Summit (January 2012) - African Heads of State and Government endorsed theAU Action Plan on “Boosting Intra-African Trade (BIAT) and the Establishment of the Continental Free Trade Area (CFTA)” In particular, to expand intra-African trade by eliminating tariffs and non-tariffs barriers. Fast-tracking a CFTA is necessary but not a sufficient condition to address Africa’s weak internal trade performance. Need to develop the productive capacity and industrial sophistication of African countries.
  16. (2). Intra-African Trade: towards a Continental Free Trade Agreement (B). Trade Facilitation and export competitiveness in Africa Trade Facilitation plays major role in boosting intra-African trade Intra-African Trade (% Share): If trade facilitation (reformed custom procedures and port handling) become twice more efficient in a CFTA, it is estimated that intra-African trade would double to 21.9% by 2022. Source: UNECA, AU & AfDB (2012)
  17. (3). Status of other Trade Negotiations (A). Doha Round Modalities and Africa’s prospects in regard to achiveing the MDGs The outcome of a regional workshop organised in Nov 2011 by UNECA (RITD) highlighted the following issues: Recognized the need for Africa to be proactive in response to multilateral and bilateral issues to minimize negative impacts on the African region. Despite its shortcomings, the Doha Development Agenda negotiations is anticipated to provide benefits for Africa and therefore the support it requires. Recognized the importance of addressing supply-side constraints of Africa to build capacity and thereby increase exports.
  18. (3). Status of other Trade Negotiations (B). Economic Partnerships Agreement (EPAs) with European Union Africa is engaged or currently negotiating the Economic Partnership Agreement (EPA) with the European Union since 2000.
  19. (3). Status of other Trade Negotiations (B). Economic Partnerships Agreement (EPAs) with European Union At least three main outstanding issues deters African countries from officially engaging into or finalizing EPAs: The Most Favored Nation (MFN) clause which requires preferences granted outside EPAs to, will also be granted within the agreement; 2) Export taxes are prohibited in EPAs, while this is not specifically required by WTO; 3) The non-execution clause which envisages unilateral trade sanctions in case of political violations (such as no respect of human rights or democratic principles);
  20. (3). Status of other Trade Negotiations (C). African Growth and Opportunity Act (AGOA): future prospects beyond 2015 A continental survey conducted in 2011 on the experiences of Sub-Sahara Africa with AGOA. The survey found that: Only half of the signatories to the AGOA have really benefitted from AGOA preferences (hence, need to look at realistic options) Rules of origin and requirements on third-country sourcing of yarn and textile inputs needs to be flexible. Need more technical assistance and capacity building on SPS testing and certification bodies.
  21. (3). Status of other Trade Negotiations (D). South-South Cooperation: Africa’s diversification of trade relationships Emerging economies such as China, India and Brazil continues to play important role in Africa’s trade and investment relationships. Percentage Share of Africa’s Total Exports Percentage Share of Africa’s Total Imports Source: UNCTAD(2011) Source: UNCTAD(2011)
  22. (4). Aid for Trade in Africa Trade facilitation measures as well as improving infrastructure are extremely costly. For instance, the Programme for Infrastructure Development in Africa (PIDA) has identified 51 priority projects, 2012-2020, with estimated total cost of about US$70 billion. The need for external resources is paramount to reach such objective. AfT is therefore one credible source of funding.
  23. (4). Aid for Trade in Africa Source: OECD, Online Source (2013)
  24. (4). Aid for Trade in Africa Since 2002/5, commitments to: Africa + 180% to USD 16.7 bn. LAC + 100% to USD 3.2 bn.Asia + 34% to USD 17 bn.Europe + 80% to USD 2.8 bn.Oceania + 100% to USD 0.5 bn. Source: W. Hynes, OECD (2012)
  25. (4). Aid for Trade in Africa Source: OECD, Online Source (2013)
  26. (4). Aid for Trade in Africa Source: W. Hynes, OECD (2012)
  27. (4). Aid for Trade in Africa Top 20 recipients include; • Africa (11) • Asia (8) • Europe (1) Source: W. Hynes, OECD (2012)
  28. (4). Aid for Trade in Africa Source: W. Hynes, OECD (2012)
  29. (5). Conclusions and Policy Recommendations African countries trade in more sophisticated products among themselves, compared to the rest of the world. The experience from Aid for Trade initiative in Africa is shown to be positive, however, need for better monitoring and evaluation of AfT to assess impact on of AfT on desired outcomes, such as poverty reduction and overall socio-economic development. Africa faces numerous supply-side constraints and needs to take expeditious actions in diversifying exports into higher value-added products.
  30. Thank You!Trade & International Negotiations SectionRegional Integration, Infrastructure & Trade DivisionUnited Nations Economic Commission for Africa
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