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tralac Newsletter • Issue 7 • December 2018
Where do we stand on trade policy matters at the end of 2018?
Welcome to tralac’s final newsletter for 2018.

The past year has been a tumultuous one for trade policy and governance. Not only has trade policy been in the news headlines almost on a daily basis, but we have also seen reflection on, and interrogation of the very model of trade policy upon which the current global trading system is anchored. tralac’s work this year has been interesting and challenging – this is just a brief note on some of the issues that have kept us very busy, and are likely to continue to do so, in 2019.

There is now open discussion of the specific dimensions and depth of the crisis in the World Trade Organisation. The trade war between the United States and China has drawn in many other trading partners and is but one manifestation of the pervasive protectionist sentiment that now guides many trade policy decisions. We really do need to revisit the experience of the Great Depression, to appreciate the consequences of beggar-thy-neighbour policies. We also need to appraise the current and emerging landscape of the global economy, the significant industrial and broader economic reorganisation that has taken place, midst the important geo-political shifts that have not yet produced new global leadership configurations. 21st century capitalism in its many guises prompts a thorough rethink of economic policy for effective governance of the various levels of integration across the global economy. At the same time policy space for national development agendas and aspirations has to be accommodated. We need to examine the impact of digital technologies on how we work, where we work and how we connect with the global economy. How do we engineer the transformation of our education and training systems to meet the skills deficits especially among the youth in developing regions, such as Africa? There is clearly much work to be done to recalibrate global trade and broader economic governance.

Brexit continues to make headlines. Uncertainty is the nemesis of good economic decisions – to invest, to produce, to trade and to consume – and it has become the only certain feature of this complex process for the United Kingdom to decouple from the European Union. Currently in the headlines are efforts by the British government to prepare for a ‘no-Brexit’ scenario. Budget allocations to buy fridges to store medication, and many other frantic attempts to prepare for this situation are in the news. As time ticks by, the probability of a ‘no-deal’ exit rises. Brexit reminds us that undoing deeply integrated economic arrangements is complex and costly in terms of the adjustment that will ensue. It is also a reminder that access to information is key to good policy (and other) decisions. For us in Southern Africa, Brexit is material to our relationship not only with the United Kingdom, but also the European Union. The Southern African Development Community Economic Partnership Agreement (SADC EPA) was a long time in negotiation with an important investment, trade and development partner. How Brexit turns out, is very important for this region.

Brexit is also an important reminder that the Southern African Customs Union (SACU), which is also a deeply integrated region, deserves careful appraisal. Discussion about a review of SACU (or parts of the SACU Agreement) has been on the cards for some years. Careful scrutiny of what works for each of the partners, investors, producers, traders and consumers, is essential. The smaller member states have ambitions to expand and diversify their industrial structures. South Africa wants to retain policy space, especially as regards the import tariff to support its industrial development plans. All members are facing stringent fiscal challenges. The future of SACU has to be handled very carefully to retain what works, to provide policy space for all to pursue industrial development ambitions and to manage the complex country-level and regional fiscal challenges. And very importantly the tricky issue of decision making among unequal partners in such an arrangement has to be addressed.

African integration enjoyed a significant resurgence of interest and political support during 2018. The African Continental Free Trade Area (AfCFTA) was the focus of an Extraordinary Summit on 21 March in Kigali, Rwanda. The Agreement was tabled for signature on this occasion. Since then more African Union Member States have signed and twelve have now ratified the Agreement. Twenty-two ratifications are necessary for the Agreement to enter into force. At a meeting of the African Ministers of Trade (AMOT) on the sidelines of the first Intra-African Trade Fair, held in Cairo, this past week, several important decisions were taken. For the tariff concessions, negotiated market access offers are expected to be adopted by January 2020. For services, negotiated market access offers are also expected to be adopted by January 2020. Rules of origin negotiations are expected to be concluded by June 2019. Notably some inconsistencies in the legally scrubbed Annex 9 on Trade Remedies have been identified. The Technical Working Group has been directed to meet early in 2019 and provide feedback on the way forward. Phase 2 of the negotiations (investment, competition policy and intellectual property matters) are to be concluded by June 2020. It is now clear that even if (as is likely) the threshold of 22 ratifications is attained by the end of January 2019, when the African Union Assembly meets, there is still important outstanding work. An incomplete agreement may well enter into force. Keep all stakeholders informed about this process and the uncharted territory we have entered is critical. Many private sector participants are keen to benefit from enhanced market access and better trade facilitation arrangements. This is now the time to start preparations for the implementation phase so that trade under the AfCFTA can start as soon as possible after completion of the negotiations.

South Africa finds itself in a very precarious economic and political time. Economic growth remains elusive and competitiveness erosion runs deep. President Ramaphosa appears to be cautiously and mindfully negotiating his way through a very long list of important reforms and changes. We, and many others, have been taken aback by the depth and pervasive nature of state capture. It will take strong leadership and concerted effort to get government departments and other agencies working efficiently and effectively again.

Valiant efforts on the part of the President to lure investors to South Africa and to encourage domestic investors to commit to the future, are facing the challenges of economic and political realities. Without political and policy certainty (and clear policy direction) this is a herculean task. Together with the myriad challenges that bedevil the state-owned enterprises, which should be delivering quality, competitively priced and reliable infrastructure services such as energy, investment will be difficult to attract. Education must be a priority, with a focus on school-level education. Recent attempts to improve access to tertiary education, are on a shaky foundation. The real problems are to be found much earlier in the lives of our youth. Quality education – education for a 21st century digital economy – is what we need. South Africa’s already sizable budget allocation to education is a strong reminder that new approaches to the delivery of quality education are required; more spending without this, may well be wasting scare resources.

South Africa, as in the immediate period after the democratic transition, again needs a comprehensive policy overhaul. This makes the May 2019 election perhaps the most important since 1994.

On the trade policy front, a new Minister of Trade (after the May election) may well bring a new approach, including a clear strategy for trade in services, which we do not have yet. New thinking on industrial policy and development is also required; current approaches are not able to support economic transformation and reallocation of resources to new areas of industrial and broader economic development. The reality of our global trade relations is important for review of our trade and industrial policy. China became in 2017 South Africa’s most important import source and export destination (see the Overview of South Africa’s trade below). The United States is in the top three for both export destination and import source. Three African countries are among the top 10 export destinations. Two of them (Namibia and Botswana) are members of the Southern African Customs Union. This is very important for the future of SACU. And what of the future trade relation with the United States, post the Africa Growth and Opportunity Act? A trade deal with China seems very unlikely – what are the implications?

We would like to thank you for your support during 2018; it has indeed been an interesting year for trade policy matters. We wish you all the very best for a peaceful and reflective holiday season.

We look forward to meet in 2019, to continue to work on trade policy for Africa’s development.

Trudi Hartzenberg and the tralac team

Please note that tralac’s offices will be closed from Friday, 21 December 2018 until 4 January 2019. The office will re-open on Monday, 7 January 2019.

Regional Roundtable – Cape Town, 5 February 2019 (by invitation only)

tralac Annual Conference – Nairobi, 21-22 March 2019

Overview of South Africa’s recent trade relationships

While the rest of Africa is acknowledged as important export market destinations, it is notable that the share of exports to Africa (as a percentage of South Africa’s total trade) has been declining and stood just above 26% in 2017.

tralacBlog is a forum to share and engage with the views of tralac researchers and Associates, as well as guest contributors, on pressing regional integration and trade policy issues affecting African countries in order to encourage relevant, topic-related discussion and debate.

On the tralac website

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. This involves monitoring trade negotiations, interpretation of agreements, contribution to debates and discussions on trade developments.

Our research is presented in various different formats, including Trade Briefs, Working Papers and Books.

tralac maintains a collection of regional (covering SADC, SACU, EAC, COMESA, TFTA, AfCFTA, the AU and various external trade relationships) and national trade-related resources, including the texts and annexes of regional and bilateral trade agreements, various regional protocols, MoUs and tariff offers, and national legislation and policy documents.

Trade data analysis

tralac has prepared a series of trade and tariff profiles to provide an overview of the intra-African trading relationships of individual African countries as we move towards the AfCFTA. Other regional and bilateral trade data updates are also available.

Browse our growing collection of infographics and data visualisations.
AGOA trade to October 2018 show slight decline over comparable 2017 period
Combined exports from AGOA beneficiary countries to the US were up by 4.9% compared to the same period in 2017, from $19.98b to $20.96b. Trade under AGOA/GSP was marginally lower at $10.53b compared to $10.68b over the same comparative period. Among the leading exporters, South Africa, Nigeria and Angola recorded lower AGOA exports while those from most of the other AGOA exporters (such as Chad, Kenya, Ghana, Congo Republic, Lesotho, Cote d’Ivoire, Madagascar, Ethiopia and Cameroon) were all up year-on-year with Mauritius unchanged.
Key trade stats for AGOA beneficiaries to end October 2018

Aggregate exports to US: Year to Date to October 2018: $ 20.96 billion (up 4.9% yoy)

Share of AGOA exports: Year to Date to October 2018: $ 10.4 billion (down -1.5% yoy)

With respect to the apparel sector, exports claiming AGOA preferences increased by 17% year-on-year to October 2018, with Kenya the leading exporter ahead of Lesotho, and with more than double the AGOA exports in this sector of Mauritius and Madagascar combined.

Latest AGOA news updates

AGOA eligibility update: US President Trump recently announced that Mauritania will lose its AGOA beneficiary status in January 2019 as a result of its non-compliance with AGOA’s eligibility requirements, and specifically, it’s failure to make progress on human rights (slavery). “Despite intensive engagement with the United States, the Government of Mauritania has failed to meet critical required benchmarks to address these issues to date” – according to the Presidential Proclamation (see here). See the updated list of AGOA beneficiary countries at this link.

AGOA and related resources
Access a wide selection of web resources related to AGOA, including national chambers of commerce, export promotion agencies, development and finance agencies, regulatory authorities and trade resources. Click on the various section headings for specific web links.

Other resources include information on AGOA product eligibility, country eligibility status, rules of origin (general and for apparel).

An extensive range of AGOA FAQs can also be accessed on For example: what are the rules of origin requirements? What are the AGOA trade benefits? Where do I find the text of the legislation?
Coming soon: AGOA guides and info-graphics
tralac will shortly be publishing a collection of AGOA-related guides and info-graphics covering a range of AGOA beneficiary countries and trade topics. Keep an eye on
The AGOA Business Connector is a new online facility on rolling out shortly. Its objective is 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, across sub-Saharan African AGOA beneficiary countries and the United States.
Copyright © 2018 Trade Law Centre, All rights reserved.

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