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tralac Newsletter • Issue 26 • December 2020
As the end of this year draws closer, we can all agree that COVID-19 has caused pervasive disruption, exacerbating existing inequalities and deficits, and brought new challenges. At tralac we have also learned important lessons, recalibrated our priorities and significantly adjusted how we work. Since 17 March, we have all be working from home. By mid-April our training and dialogue programmes were digitalised. Research continued, supported by many interactions on zoom and other platforms.

The demand for tralac’s training increased way beyond expectations. We offered both full e-learning courses (including a short course on Data Science for Trade Data and Policy Analysis, and the tralac Certificate Course – International Trade Law and Policy for Africa’s Development) as well as a short course on Reading and Interpreting International Trade Agreements: case study of the AfCFTA, using a virtual classroom modality. The demand for the latter was such that, with the support of our development partners to reallocate funding, we offered the course six times. Two of the courses were specifically tailored – one for the SADC Parliamentary Forum and another for the Judges of the COMESA Court of Justice and the Registrar’s Office. This training programme was of course well-timed, given the expected start of trade under the AfCFTA. There were still many applicants we could not accommodate, and we will be offering the course again in 2021.

Our 2020 Annual Conference, which took place in September, demonstrated the convening facility of digital events. Our presenters and participants came from across the continent and further afield – representing constituencies that we had not been able to reach before with in-person conferences. The same was true of our AfCFTA Stakeholder Workshops and other webinars.

The benefits of going digital have been very important for tralac. However, going digital is not a perfect substitute for in-person training and events. We missed the classroom interaction, the informal discussions and peer learning that has become a feature of our training courses, as groups of participants share experiences and insights. Oral exams at the end of our Certificate Course are always an important opportunity not only to assess participants’ learning, but also to get feedback that we can incorporate into new courses. For lawyers, first encounters with Excel spreadsheets and huge data sets do not always run smoothly –working in a group, sometimes late into the night, to master these skills with the support of fellow participants, is difficult to replicate on zoom!
 
tralac hopes to offer workshops and conferences in the new year (once vaccination programmes have been rolled out in Africa) where the benefits of in-person contact can again be harnessed. Our plans are, when it is safe to do so, to offer blended learning programmes – combining the benefits of digital learning modalities with in-person modules. Until such time, we have garnered sufficient experience with virtual courses to continue using this versatile modality.

This has been an important year for Africa. The negotiations for concluding the African Continental Free Trade Area (AfCFTA), although disrupted by the pandemic, have reached the final stage. The AfCFTA Agreement entered into force on 30 May 2019, but negotiations to finalise certain Phase I matters will continue till the end of June 2021. A decision to this effect was taken at the 13th Extraordinary Summit of the Assembly of the African Union (AU) Heads of State and Government, convened virtually on 5 and 6 December 2020. Outstanding Phase I matters (tariff schedules, rules of origin and specific commitments for priority services sectors) must be agreed before a regular AfCFTA regime will be in place. Phase II negotiations on Investment, Competition Policy, Intellectual Property Rights and E-Commerce must also be finalised.
 
The December 2020 Extraordinary African Union (AU) Assembly meeting decided that some trade in goods under the AfCFTA will begin on 1 January 2021; based on an interim arrangement. The latter comprises the unilateral tariff offers and rules of origin proposals submitted by Governments as part of the ongoing Phase I negotiations. This initial phase will be based on reciprocity. It means reciprocal concessions must be exchanged and be adopted to establish a legal foundation for interim trade in particular configurations of State Parties. Each will require its own binding and domesticated arrangements. Trade under AfCFTA rules is symbolically important, but this interim system (which will presumably last for six months only) will be complex and ad hoc.
 
The sooner the AfCFTA becomes a regular trade regime, the better. Better trade governance will be the critical factor. If customs and border administration, trade facilitation and the elimination of non-tariff barriers are not markedly improved, the lower tariffs that may be agreed will not guarantee the AfCFTA’s success. Intra-African trade needs a comprehensive governance upgrade. If this can happen, trade with continental as well as global partners stands to benefit. These non-tariff improvements lower trade transaction costs and can increase competitiveness of Africa’s trade not only on the continent, but globally too.
 
We want to mention Brexit too. On 1 January 2021, new rules will apply to trade between the United Kingdom and the European Union. Several deadlines for concluding a preferential deal have already passed. In the absence of a bilateral agreement, World Trade Organisation (WTO) rules with higher tariffs will apply to the trade between them. That will be costly (the EU is Britain’s biggest trading partner) and the impact will be felt beyond the directly affected parties. Both the EU and the United Kingdom are important African trading partners. The UK has concluded new partnership agreements with several African States under which duty-free quota-free access for goods from Africa will continue (South Africa is an exception – as part of the SACUM-UK Economic Partnership Agreement, it does not have duty-free quota-free access to the UK). However, a no-deal Brexit will cause other forms of disruption (for example, for logistical services) and may mean higher costs for us too.
 
At the time of writing, a “final” deadline has been agreed for Brexit negotiations to continue. This extension raises hopes that the two sides may be shifting from their entrenched positions and find agreement regarding a “level playing field” and fishing rights. Earlier serious problems about the Irish border have been resolved. The world will be a far less disrupted and politically uncertain place with a bilateral deal in place.
 
We would like to thank you for your support and collaboration during this extraordinary year. We wish you all a safe festive season, and look forward to working with you in 2021.

Please note: tralac’s offices will be closed from Wednesday, 23 December 2020 and will reopen on Wednesday, 6 January 2021.

What to look out for in early 2021

 
  • 22 January: AfCFTA Update: Stakeholder Webinar

  • 26 January: SheGovernsTrade Webinar: Preparing for the AfCFTA’s phase 2 negotiations

  • 9 February: Brexit: What will change after January 2021? (Cape Chamber of Commerce)

  • 10 February: Regional Trade Roundtable: Trade developments in 2021 - what can we expect?

tralac Daily News

 
The final edition of tralac’s Daily News newsletter will be sent out on Monday, 21 December 2020. The service will resume on Monday, 18 January 2021.
 

Latest AGOA news

Key trade stats for AGOA beneficiaries to end September 2020

 
Aggregate exports to US: 2020 YTD to end September:
 
  $ 13.7 billion
 
(Share) of AGOA exports: 2020 YTD to end September:
 
  $ 2.86 billion (represents 21% of total exports)
 
Total US import duties on aggregate imports from AGOA beneficiaries: 2020 YTD to end September   $ 33.7 million (0.25% of value of total US imports from AGOA beneficiaries)

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 meetingsecond 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. More recently, the Kenya private sector consortium also submitted its inputs. The negotiations began on 7 July 2020.
 


 

Some background

 
No Sub-Saharan African country currently has an FTA with the United States. Morocco is the only country on the African continent that has an FTA with the U.S. (since 2006) – under the FTA bilateral trade between the countries grew considerably with the U.S. enjoying a substantial trade in goods surplus.
 
An FTA between Kenya and the U.S. would be remarkable in many ways.
 
At this stage, and for the past two decades, the U.S. African Growth and Opportunity Act (AGOA) has meant that no more than 3% of total tariff lines were potentially subject to import duty in the U.S. when produced in and exported by an African eligible beneficiary country, with 60% of goods receiving duty-free status under AGOA (including around 1,500 tariff lines normally available only to poorer countries with LDC status). This favourable, unilateral and non-reciprocal outcome has meant that of the $667m in goods that Kenya’s producers exported to the U.S. in 2019, $518m entered the U.S. duty-free under AGOA (or GSP). Of the remaining $149m, U.S. importers only had to pay $0.5m in import duties. But the AGOA regime is set to expire late in 2025 and there are no guarantees that GSP preferences continue uninterrupted (GSP is subject to periodic Congressional renewal legislation, which in recent times often happened long after the programme has expired, leaving traders vulnerable and uncertain).
 
This brochure provides a broad overview – and a number of details – of the current market access arrangements that Kenya enjoys under AGOA, and relevant information and context around the planned transition (negotiations) towards a bilateral FTA, including timelines and early milestones to date, the thematic coverage and objectives of the negotiations (as published by the parties), as well as a closer view of the countries’ trade with each other.

> Read more here.

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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