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tralac Newsletter • Issue 23 • September 2020

We are pleased to welcome you to the 2020 tralac Annual Conference newsletter

 
We would like to thank you for joining us for our first virtual Annual Conference. Special thanks to our Keynote Speakers – H.E. Amb. Albert Muchanga, Commissioner for Trade and Industry, African Union Commission; H.E. Wamkele Mene, Secretary General, AFCFTA Secretariat; and Ambassador Alan Wolff, Deputy-Director General, World Trade Organisation. To our presenters, panellists and moderators, a very sincere thank you for sharing their expertise and insights on key trade governance matters. The discussion was vibrant, reflecting deep interest in the state of multilateral trade governance and importantly Africa’s trade and integration agenda. Thank you very much for your questions and comments.

Our newsletter provides a brief report on the Conference deliberations. We provide links to the presentations as well as the recordings of all 4 sessions. We also provide feedback on questions that we did not have time to consider at the Conference, with links to tralac’s work where relevant.

The 2020 tralac Annual Conference took place, 21-22 September 2020. The Conference was held under the theme ‘Trade Governance in Africa midst a Pandemic and other Global Challenges’. The Conference brought together hundreds of participants (panellists, moderators and attendees) from multilateral, continental and regional organisations, and the private sector to discuss trade governance matters as they pertain to Africa. The Conference was divided into sessions focusing on specific trade issues.

Mr. George Lipimile, Chair of the tralac Board, opened the Conference welcoming participants. In his opening remarks, Mr. Lipimile reminded participants that the tralac Conference is being held at a very critical and difficult time: a time when the coronavirus (COVID-19) has negatively impacted economies, lives and livelihoods across the world; when there is a wide consensus that the multilateral trading system and the World Trade Organisation (WTO) require reform; and when new generation plurilateral trade-related agreements are being concluded. Mr. Lipimile also underscored that the African Continental Free Trade Area has entered into force but trading under the AfCFTA is yet to commence as rules of origin and tariff negotiations are yet to be completed. He highlighted how COVID-19 has provided a platform for the adoption of digital trade solutions to facilitate trade under the AfCFTA.

H.E. Wamkele Mene, Secretary-General of the AfCFTA Secretariat, gave the first keynote address highlighting what the AfCFTA aims to achieve, the need for inclusive growth and industrial development across the continent, and practical issues that will need to be addressed for successful implementation. He stressed that COVID-19 has exposed Africa’s overreliance on external trade and exports of primary commodities. H.E. Mene accentuated that this has presented Africa with an opportunity to accelerate industrial development action plans; the continent needs to restructure and diversify its industrial base and boost intra-Africa trade as the driver of our economies. He emphasised that industrial development needs to be at the centre of Africa’s recovery plans given the public health and economic crises as a result of COVID-19. This would require African countries to dismantle the colonial model and focus on industrial development, and to attract investment in productive capacity and to establish and implement the required policy and legislative frameworks through the AfCFTA. H.E. Mene said 28 countries have ratified the AfCFTA Agreement, and e-commerce will now be negotiated as part of Phase II negotiations, alongside intellectual property rights, investment and competition policy. Watch the recording of H.E. Mene’s keynote address.

H.E. Amb. Albert M. Muchanga, African Union Commissioner for Trade and Industry, delivered the second keynote address which highlighted, inter alia, the importance of trade, and the need to build trust, transparency and collaboration in ensuring successful implementation of the AfCFTA. Amb. Muchanga pointed out that the AfCFTA is an ambitious project but a necessary undertaking, fit for addressing the trade challenges of the continent. He underlined that trade can be a driver of growth, economic development and poverty reduction, but it is not automatic. Trade policies must be dynamic and inclusive, considering implementation at regional, continental and global levels to produce win-win outcomes. He further elaborated that the implementation of the AfCFTA will be a process of change management: the biggest challenge is a change in mindset – letting go of the status quo and beginning a new era of economic integration. Amb. Muchanga revealed that trading under the AfCFTA will commence on 1 January 2021 upon completion of rules of origin and tariff negotiations. Watch the recording of Amb. Muchanga’s keynote address.

Session 1: Amb. Alan Wolff, WTO Deputy-Director General, discussed the evolution of the multilateral trading system since the GATT, global interconnectedness, and modern issues confronting the WTO and trade governance more broadly. Amb. Wolff underscored that when trade flows smoothly, the global economic engine keeps running. He reminded us that evolution and reinvention have been central to the multilateral trading system since its establishment in the late 1940s, and noted that the WTO is best placed as a forum for addressing global challenges – including food security and access to medical equipment.

Amb. Wolff recognised the far-reaching impact of the COVID-19 pandemic, emphasising that this crisis should prompt the pursuit of more multilateralism – with necessary improvements to the global trading system. He underscored the need for WTO reform and discussions to plan for the future of the trading system. He made reference to the WTO Trade Facilitation Agreement and its specific design and approach to accommodate diversity among WTO members. Trade facilitation is a priority for African countries and features prominently in the African Continental Free Trade Agreement. Amb. Wolff noted that the AfCFTA holds great promise not only for Africa’s intra-regional and intra-continental trade and integration but also for global economic integration. Watch the recording of Session 1.

Session 2: The panel deliberated the lessons from COVID-19 and what needs to be done to facilitate Africa’s trade. The panellists – moderated by tralac’s Executive Director, Trudi Hartzenberg – comprised Lily Sommer from the African Trade Policy Centre, UNECA; Jason Blackman from DHL Express Sub-Saharan Africa, Etiyel Chibira from the Cross-Border Road Transport Agency, South Africa; and Mena Hassan from the WTO Secretariat. Sommer focused on the impact of COVID-19 on informal cross-border trade in Africa and recommended the need for digital solutions to trade facilitation, effective border management, and simplified trade regimes to incorporate informal traders into the formal trading system. Blackman spoke about COVID-19 and trade facilitation issues in Africa, emphasising the importance of Single Window capabilities, the digitalisation of customs and border controls and procedures, and the increasing need for electronic documentation to facilitate smooth goods clearance processes. Chibira discussed the lessons learnt during the COVID-19 pandemic for cross-border road transport, particularly within the southern African region. He noted the fragmentation of regulatory regimes, unharmonised standards and authorisation systems, and lack of coordination in law enforcement. Chibira recommended the implementation of short- and long-term interventions to address the impact of border closures, bottlenecks and logistical challenges on cross-border trade in Africa that have occurred as a result of COVID-19. Hassan’s interventions focused on the implementation of the WTO Trade Facilitation Agreement (TFA) in Africa to address the trade facilitation issues that have resulted from the COVID-19 pandemic. She provided policy recommendations for Africa’s implementation of the WTO TFA including political commitment to change, engagement with the business community, digitalisation, and support from international partners. A key point was that African countries have already undertaken commitments (self-designated) that are key to addressing many of the continent’s trade facilitation challenges – but that implementation is still very low. Watch the recording of Session 2.

Session 3 provided an overview of the scope and structure of the African Continental Free Trade Agreement, highlighting outstanding issues. We were reminded that although the AfCFTA has entered into force on 30 May 2019, there are still outstanding negotiations in Phase I. The two minimum requirements for a free trade area (in goods) are tariff concessions (substantially all trade must be liberalised for the FTA to be WTO-compatible) and preferential rules of origin. The AfCFTA is a flagship project of the African Union along with other initiatives such as BIAT, AIDA and PIDA. Together these projects are complementary to achieve the African Union’s Agenda 2063. The Preamble of the AfCFTA contains its broad development objectives. They are aspirational and remind us of the connections between trade and sustainable development, trade and industrial and development, and very importantly, trade and gender. These are vital to drive the developmental agenda of the AfCFTA; also, initiatives to boost intra-Africa trade, investment and infrastructure development are important to support the AfCFTA to achieve its objectives.

Although much has already been achieved in Phase I of the AfCFTA negotiations in areas such as trade facilitation, non-tariff barriers and dispute resolution, there are still three outstanding issues which must be completed before trade under the AfCFTA can begin. Consequently, the AfCFTA, although in force, is yet to be implemented.
  • Rules of origin: Specific rules of origin pertaining to clothing and textiles, automobiles, edible oils and sugar are still being negotiated. The primary purpose of rules of origin is to prevent transshipment, but they can also be used to protect domestic industry from import competition. Complex rules of origin can impose significant costs on producers and may therefore, even with tariff liberalisation, inhibit intra-Africa trade. The AfCFTA does provide for safeguard measures which can be used to protect a specific domestic industry from an increase in imports of a product which is causing, or threatening to cause, serious injury to that industry. Although concerns about capacity to use such measures have been expressed, two least developed African countries – Zambia and Madagascar – have recently used these measures under WTO rules.

  • Tariff concessions: Determining who will negotiate tariff concessions with whom in accordance with Article 19(2) of the AfCFTA and Article 8(2) of the Protocol on Trade in Goods is a complex issue and will depend, inter alia, on the level of integration achieved in the existing regional economic communities (RECs), regional trade arrangements and customs unions. The AfCFTA will co-exist with existing RECs requiring countries to distinguish between existing intra-REC preferences and new AfCFTA preferences. The AfCFTA will, in terms of tariff liberalisation, open new opportunities among those RECs and individual countries where there are currently no preferences in place – including trade between southern, west, central and north African countries and among east, central, west and north African countries. Negotiations on tariff concessions and rules of origin are of course done in tandem – since the preferential rule of origin is the gateway to the tariff concession. It is not surprising that these negotiations are taking so long – these are complex issues; some countries have expressed concerns about revenue losses, many have raised concerns about transshipment. All aim to develop and diversity their productive capacity, specifically in industrial sectors, and looking for options to protect their domestic industries.

  • Services: Services trade (imports, exports and inputs into the production process) are becoming increasingly important as a percentage of merchandise trade. Both developing and least developed countries have shown a significant increase in the growth of services exports and imports over the last 12 years. But African countries still import about 50 percent more services than what they export. The focus of the AfCFTA services negotiations is currently on negotiating sector specific commitments for 5 priority sectors (financial services, transport, communication, business services and tourism). Commercial presence (foreign affiliates trade in services) is the greatest component of services trade and becoming increasingly important in global trade, but also for attracting investment to African countries.

Countries are now preparing for phase two of the negotiations pertaining to competition policy, intellectual property rights and e-commerce. Although e-commerce was originally included under Phase 3, the COVID-19 pandemic has highlighted the importance of this sector. Subsequently, the intention is to move the e-commerce negotiations to Phase 2. An important question to ask is: what are some key issues which could and should be covered by a protocol on e-commerce? Any protocol on e-commerce must take cognisance of what already exists at the national level and the work being done at the World Trade Organisation (in the e-commerce joint sector initiative) to ensure that there is not duplication and policy coherence. This can also identify the gaps where the AfCFTA can add the most value. Accordingly, careful consideration of the scope and purpose of the protocol is required to determine what must be included to address issues such as duties, trade facilitation, technology infrastructure, transparency and the protection of information in a sensible manner which can enable e-commerce to be a significant driver of intra-Africa trade.

The potential of the AfCFTA to meets it objectives can only be attained through effective implementation by the state parties of the agreement and the obligations in the protocols and annexes. Furthermore, the way the AfCFTA addresses key business concerns like prohibitive tariffs and non-tariff barriers, and the manner in which the agreement is implemented, is vital for attracting investment. If the AfCFTA can deal with key concerns in a pragmatic and practical way leading to an integrated market, regional supply chains and increased intra-Africa trade, it can be a catalyst for increased investment for industrial development and enhancing productive capacity. Watch the recording of Session 3.

Session 4: In this session the focus was on the private sector – what are they expecting of the AfCFTA and how can these expectations can be achieved? The panellists highlighted some challenges businesses face when doing business in Africa – lack of transparency in trade rules and regulations, limited access to necessary information, lack of harmonised standards and automation. The hopes of the private sector are that the AfCFTA will be fit for business and fit for purpose with rules and regulations which are business effective – predictable and transparent trade rules, harmonised customs operations and documentation requirements, inter-agency and intra-agency cooperation and data exchange, trade facilitation provisions which deals with non-tariff barriers in a practical way, and a digital and paperless process. The private sector hopes the AfCFTA will enhance their competitiveness – increase intra-Africa business opportunities and investment by reducing the cost of doing business through tariff reductions, sensible rules of origin, trade facilitation measures and enhanced customs cooperation. To achieve this, it is not just about the obligations and commitments negotiated and included in the agreement, but ensuring implementation, compliance and enforcement of these obligations. Enacting national laws to give effect to the AfCFTA, training and capacity building of officials (including customs officials), awareness creation, accountability and collaboration (among agencies at national level, between business and government, and at regional and continental levels) are essential for the AfCFTA to work for business, and to deliver real benefits.

Valentina Mintah presented a Private Sector Perspective on AfCFTA Critical Success Factors. We thank her for sharing the Press Release from the UN SDG Business forum (23 September), launching the COVID-19 Global Facility that she had referred to, focusing on SMEs. A short Launch Video is available at: https://youtu.be/7NzFEgf8LmI

The role of Special Economic Zones (SEZ) was discussed in the context of Africa’s industrialisation agenda, and the ambition to attract foreign direct investment. The discussion about rules of origin to identify goods produced in SEZs has featured in the AfCFTA discourse, but as yet there is no indication that this will be included in the Annex on Rules of Origin to the Protocol on Trade in Goods. Watch the recording of Session 4.

Concluding Remarks

In his concluding remarks, Mr. George Lipimile noted that the COVID-19 pandemic has not only created many challenges for African countries, but also showed us the potential for a new way to conduct business. Learning lessons from the pandemic, African countries will have to determine how they can prepare for the recovery and reconstruction of their economies, and to adapt and prepare for future shocks and challenges. He noted that the successful implementation of the AfCFTA can assist African economies to mitigate some of the negative effects of the pandemic by decreasing trade costs and increasing regional trade, and improving Africa’s resilience in the face of economic shocks supporting long-term growth.

We provide a brief selection of the feedback we have received and also of media coverage of the Conference.

We would like to invite you to register for tralac’s monthly newsletter and also for the tralac Daily News. We’d very much like to continue discussing trade governance matters with you.

Thank you again for joining us for the 2020 tralac Annual Conference. We look forward to your feedback and to meeting again soon at another tralac event.
 
With sincere thanks from the tralac Team
 
 
Select feedback from participants
 
Prof. Caroline Ncube: ‘I have always wanted to attend these annual conferences, but I have been unable to travel to attend, so I am grateful for the opportunity to attend virtually this year. Very strong start with Amb. @MeneWamkele ’s keynote which stresses how the AfCFTA has to be inclusive to succeed’.

Susan Isiko Strba ‘The morning session was great, informative and raised a lot of questions. …… Thanks all of you at TRALAC for your dedication and work.’

Ivan Ojakol ‘I loved listening to the tralac team and their expert knowledge and experiences with the AfCFTA thus far. As a trade lawyer from Uganda, my knowledge was enhanced.’ 

Mokom Marcel: ‘It is a once in a lifetime event. Great Speakers on board. I am glad to be part of the conference.’

Varsha Mooneeram-Chadee: ‘First of all, convey my congratulations to all the tralac team for the successful and insightful presentations and conference. All the presentations have been so enriching.’
 
Select media reporting on the Conference
 
WTO News ‘DDG Wolff: WTO reform crucial to restoring confidence in the trading system’ https://www.wto.org/english/news_e/news20_e/ddgaw_21sep20_e.htm

Prinesha Naidoo, Bloomberg News ‘Africa Trade Pact Negotiators to Fast-Track E-Commerce Talks’ https://www.bnnbloomberg.ca/africa-trade-pact-negotiators-to-fast-track-e-commerce-talks-1.1497040

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We do apologise to those of you who attended the Annual Conference and are also registered for our newsletter – you may receive this twice.
 

Questions and Answers


We have put together some questions and answers that we were not able to address during the webinar sessions using the Zoom Q&A feature. These are available to download.
 

Background material


tralac has prepared several short briefs on topics relevant to the Conference sessions:

Our Annual Conference webpage is being updated with keynote remarks and presentations, session recordings, and other relevant background material. To find out more about the issues discussed, see our list of tralac resources available for your perusal.
 


An updated guide to the African Continental Free Trade Area


This booklet offers a guide to the African Continental Free Trade Area (AfCFTA) and how it fits within Africa’s broader development agenda – the architecture of the AfCFTA Agreement and what it covers; institutional arrangements, committees and other AfCFTA initiatives; as well as intra-African and intra-REC trade and tariffs at a glance.

DOWNLOAD THE BOOKLET


tralac Alumni Workshop 28-29 September

tralac’s Alumni from across the continent contribute in various capacities to Africa’s trade governance – working at national, regional and continental levels. At this annual Workshop they share their insights and experiences. Download the programme.

If you would like to join us, please contact Madeleine (Madeleine@tralac.org)
 

AfCFTA Stakeholder Webinars (October) 

Webinar 1: Overview of the AfCFTA, update on the negotiations and the institutions of the AfCFTA
15 October (10:00 – 11:30 followed by open discussion 15:00 – 16:30 GMT+2)

Webinar 2: The AfCFTA and the Regional Economic Communities
22 October (10:00 – 11:30, followed by open discussion 15:00 – 16:30 GMT+2) 

Webinar 3: Preparing for trade under the AfCFTA regime – implementation matters
29 October (10:00 – 11:30 followed by open discussion 15:00 – 16:30 GMT+2)

If you would like to participate, please do contact us (info@tralac.org)
 

Short course: Reading and Interpreting International Trade Agreements – case study of the AfCFTA

Due to the demand for this short course, we are presenting the course three times this year. The final offering will take place in November, and is fully subscribed. We will offer the course again in 2021.

Publications

tralac promotes active debate on trade law and policy issues in Africa and engages in applied trade law and policy analysis with the aim of addressing the most pressing trade matters for countries in the region. Our research is presented in trade briefs, working papers and books, among others. View more here.

Trade-related policy responses to COVID-19

 
tralac is monitoring trade-related policy measures and responses to the COVID-19 pandemic, adopted and implemented by African countries and beyond. Take a look at our resources pages to find out more:

Latest AGOA news

Key trade stats for AGOA beneficiaries to end July 2020

 
Aggregate exports to US: 2020 YTD to end July:
 
  $ 10.44 billion
 
(Share) of AGOA exports: 2020 YTD to end July:
 
  $ 1.79 billion (represents 20.3% of total exports)
 
Total US import tariffs on aggregate imports from AGOA beneficiaries: 2020 YTD to end July   $ 23.95 million (0.23% of value of total US imports from AGOA beneficiaries)

Aggregate exports from AGOA beneficiaries to the United States are down 11.7% year-to-date to the end of July 2020, compared the comparable previous period. A decline in the value of oil exports to the US from Nigeria and Angola (lower demand combined with lower oil prices) remain important factors, as well as contracted demand resulting from the economic impacts of the Covid-19 pandemic. Exports from some AGOA beneficiaries remain stable or have grown year on year, including from Kenya, Ethiopia, Madagascar Côte d’Ivoire and Tanzania. Mali recently completed the AGOA apparel visa requirements and is now eligible to export under AGOA’s wearing apparel provisions, supported by favourable rules of origin provisions.
 

Updated annual apparel quota cap published

The AGOA legislation imposes a quantitative limit on the annual amount of clothing that may be imported into the United States. This quota changes annually and is a fixed percentage (7% and a sub-quota of 3.5% for apparel utilising third country fabric) of total US imports of apparel during the previous year; the quota period runs from October to September. Owing to lower US imports, the AGOA quota has also been reduced. However, the volume of apparel being exported from AGOA beneficiary countries to the US has always been well below this limit, and the quota has thus been of no practical consequence to date. See related article here.
 

Kenya – US Free Trade Agreement

On 6 February 2020, US President Trump announced that the United States intends to initiate trade agreement negotiations with the Republic of Kenya following a meeting at the White House with Kenyan President Uhuru Kenyatta. The announcement came while the US-Kenya Trade and Investment Working Group held its third meeting in Washington (see inaugural meeting, second meeting) – having been established earlier by President Trump and President Kenyatta in 2018 in order to lay the groundwork for a stronger bilateral trade relationship. On 18 March 2020, the Trump Administration, through the USTR, formally notified the US Congress in line with the Bipartisan Congressional Trade Priorities and Accountability Act (Trade Promotion Authority) which, inter alia, subjects “trade agreements to congressional oversight and approval, consultations…”. In May and June respectively, the United States and Kenya published their negotiating principles. The negotiations began on 7 July 2020.

AGOA Business Connector

 

The AGOA Business Connector is an online facility on AGOA.info to help enable trade and business connections between producers, exporters, importers, sourcing agents, trade-related service suppliers including trade finance, logistics and related services, support organisations (such as business chambers and exporter associations and others), both from within sub-Saharan African AGOA beneficiary countries and the United States. Registered users are also able to list their businesses or professional trade-related service on the platform, and to communicate with other listings through a messaging facility.

> Download the AGOA Business Connector Brochure at this link

Download: AGOA guides and info-graphics

tralac has produced a number of info-graphic type brochures (see section on AGOA.info / Exporter Toolkit) covering a range of AGOA-related topics, including on AGOA’s legal provisions with regard to eligibility and annual/out of cycle reviews, rules of origin, AGOA FAQs, sector-focused brochures (textiles and clothing, agriculture), as well as national AGOA brochures relating to Botswana, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Mauritius, Namibia, Nigeria, South Africa and Tanzania.
 
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