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tralac Newsletter • Issue 16 • February 2020
Welcome to our first Newsletter for 2020
The new year has started with a bang. This first tralac Newsletter for 2020 reports on several recent events. The unfolding picture is once again a reminder that the world is one interdependent space. National borders do not protect nation states against the ravages of nature, and increasingly not from those caused by governments. Borders provide governments with jurisdictional demarcations and territorial powers but do not insulate and comprehensively protect the national domain.

The outbreak of the Wuhan Coronavirus has claimed 909 lives in China and one outside China (as at 10 February 2020), with the number of infections now over 40 000. Viruses are quick and prolific at adapting to new environments and infecting new hosts. They are able to jump the species divide from animals to humans and could spread before symptoms emerge. The World Health Organization has declared a global emergency, while the virus has spread to 25 countries. And the doctor who first tried to sound the alarm about the outbreak has died. He contracted the virus while working at Wuhan Central Hospital. But when he warned fellow medics on 30 December, police told him to stop “making false comments” and forced him to sign a statement admitting wrongdoing.

Australia experienced devastating bushfires this summer. The latest scientific reports indicate that 2019 has been the world’s hottest year on record. However, many governments still refuse to tackle (and sometimes to recognise) the dangers of climate change. 2020 may see a tipping point. Vital steps to curb carbon emissions are urgent.

There is political drama in some quarters. Donald Trump became the third President in the history of the United States to be impeached. A Republican Party majority in the Senate secured his acquittal; and his subsequent boasting. The proceedings show a divided nation and cast a shadow over the presidential elections to be held later this year. This event will be watched with keen interest; the election of the President of the biggest economy of the world will not go unnoticed in the capitals of the world.

In the case of President Trump there are additional concerns. His trade-related actions (hefty tariff increases on steel and aluminium imports and measures against China) have already impacted negatively on the global economy. China and the US are trying to contain the fallout and we report on the Phase I agreement which these two nations have concluded in mid-January. We note major systemic difficulties which will not be resolved through ad hoc bilateral deals.

For decades (since 1947), the national security exception has not been invoked in the multilateral trade context. Now it is at the centre of several trade disputes, posing a potential threat to the WTO’s very existence. WTO Members have traditionally refrained from bringing legal challenges against security-based measures and from invoking the national security exception as a defence. This is no longer the case. The United States, the United Arab Emirates (UAE) and Russia have invoked Article XXI in WTO disputes. The restraint of earlier times is being abandoned, raising questions about the extent to which the national security exception is “self-judging”.

On 31 January 2020, Brexit became a reality, when the Withdrawal Agreement entered into force. The United Kingdom will now leave the European Union. We report on this long-awaited moment and will remind our readers that the real challenge still lies ahead. The UK is adamant to conclude a comprehensive trade agreement with the EU before the end of this year. Many believe this will not be feasible. The UK must, in addition, re-invent national trade governance and subsequently conclude trade agreements with other trading partners. It will be a tough and time-consuming process. Comprehensive FTAs take years to finalize.

Whitehall faces other challenges too. It has to decide whether Huawei, a Chinese firm, will be contracted to install the UK’s 5G network. The American administration applied pressure on Britain not to do so, citing concerns about national security. The UK decided to let Huawei continue to be used in its 5G networks, but with restrictions. The US Secretary of State then flew to London, for “further talks”. This may be a timely reminder of the tough times ahead, when London negotiates comprehensive trade deals with both Washington and Beijing. It now faces difficult choices about future relationships with Western allies.

The Huawei deal is an example of how significant international trade in services is becoming. And it is another example of how national security is increasingly invoked to justify trade restrictions. This is an uncertain and sensitive area of multilateral trade law. Article XXI of the GATT 1994 states, inter alia: Nothing in this Agreement shall be construed... (b) to prevent any Member from taking any action which it considers necessary for the protection of its essential security interests... (iii) taken in time of war or other emergency in international relations....

The inability of the 164 WTO Members to reach consensus on urgent matters (e.g. multilateral rules on new disciplines for trade in services and E-Commerce) casts a shadow over the future of the WTO. So does the fact that the Appellate Body has now stopped functioning. It does not have the required number of Members anymore. We discuss the reasons behind this disturbing development and report on the ad hoc agreement just concluded among 17 WTO Member States to use international arbitration for the purpose of finalizing proceedings in trade disputes.

This Newsletter also reports on developments relevant to Africa. The Cotonou Agreement comes to an end this year. The EU wants to enter into a new inter-continental partnership with Africa and sees the AfCFTA as the counterpart for such an arrangement. We unpack the arguments and raise some questions, looking also at the recent visit by German Chancellor Angela Merkel to Southern Africa – including South Africa and Angola.

News on the AfCFTA is that Wamkele Mene, former Chief Director at South Africa’s Department of Trade and Industry, and the country’s AfCFTA chief negotiator, has just been appointed Secretary General of the AfCFTA Secretariat. His appointment follows intense competition between Nigeria and South Africa for this top position in the institutional architecture of the AfCFTA. President Ramaphosa also took chairmanship of the African Union during the African Union Summit at which he emphasized the importance of finalizing the phase 1 negotiations (on tariff concessions, rules of origin and sector commitments for the 5 priority services sectors), and the implementation of the agreement, so that trade could begin on 1 July this year. President Ramaphosa said that his aim is to work towards finalizing these negotiations before an extraordinary summit to be held in May, in South Africa.

We look forward to engaging with you this year on what looks set to be a very interesting and challenging trade agenda for Africa and the global economy.
 
The tralac team
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Trade Governance Developments – What Can Business Expect In 2020?
20 February, Cape Town

For enquiries, contact info@tralac.org.

tralac Annual Conference, 2-3 April

tralac’s 2020 Annual Conference will take place in Accra, Ghana – the city that is hosting the Secretariat of the African Continental Free Trade Area.

For further details, please contact us on info@tralac.org.

tralac Certificate Course: International Trade Law and Policy for Africa’s Development

This blended learning course includes three week-long residential modules. These will take place in Cape Town.

Module 1: starting 20 April
Module 2: starting 11 May
Module 3: starting 6 July

See the tralac website for further details.

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. View the latest blog posts here.
 
Mining Indaba 2020: Vague Promises leave South Africa’s Mining Industry Insecure
by David Christianson
Angela Merkel’s state visit to South Africa: its significance amid the current Germany-South Africa trade relationship
by Eckart Naumann
Brexit: The Milestone of 31 January 2020 and the Challenges ahead
by Gerhard Erasmus
New Border Management for South Africa amidst unresolved systemic Issues
by Gerhard Erasmus
China and the United States conclude their first ad hoc Trade Deal
by Gerhard Erasmus
An interim Dispute Settlement Arrangement for some WTO Members
by Gerhard Erasmus
Workshop Report

Thinking afresh about Industrialisation and Industrial Policy for Africa

tralac hosted a Workshop on 20 and 21 January 2020 to stimulate a fresh debate (and ask relevant and urgent questions) about industrial development and policy. The Workshop brought together representatives from the African Union Commission (AUC), regional and national governments and business organisations and the private sector to share their narratives on industrialisation and industrial policy. The Workshop was organised in focused sessions. Download the workshop report.

Recent 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.

Trends in South Africa’s Tariff and Trade Remedy Investigations
 Taku Fundira - 03 Feb 2020 
An update on the African Continental Free Trade Area and Southern African Development Community Protocols on Trade in Services
Viola Sawere - 15 Jan 2020
Domestic Courts and Customs Governance: Time for urgent Reform?
Gerhard Erasmus - 19 Jan 2020 
The Automotive Components Trade in Africa: Its Place and Potential
John Stuart - 27 Jan 2020
 
South Africa under GSP country review: what implications for preferential exports to the United States?
On 25 March 2019, the United States Office of the United States Trade Representative (USTR) issued a notice through the Federal Register on its annual Generalized System of Preferences (GSP) product and country review. This is a relatively routine review process relating to the country’s non-reciprocal trade preference scheme(s).

Exactly seven months later, on 25 October 2019, the USTR announced GSP “enforcement action” relating to seven countries, including South Africa, having accepted a petition by the International Intellectual Property Alliance (IIPA) regarding South Africa’s ongoing compliance with the GSP eligibility criteria. A subsequent Federal Register notice on 19 November sets out some of the more detailed timelines around this process as it pertains to South Africa’s case. The GSP Subcommittee of the Trade Policy Staff Committee (TPSC) convened a hearing on the GSP country practice reviews on January 30, 2020. Download the related documents and submissions here.

What is at stake for South Africa’s trade under GSP and AGOA? Developments in South Africa (and any action taken by the IIPA or the US) might impact, influence, or indeed form some kind of persuasive precedent for what might or might not follow in other African markets later. Download a Trade Brief by Eckart Naumann discussing these issues.

Some related trade data

Key AGOA stats to end-November 2019
Aggregate exports to US: 2019 YTD to November: $19.15 billion (-16.5% yoy)

(Share) of AGOA exports: 2019 YTD to November: $7.98 billion (43% of total exports)

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