developments in international and intra-african trade mr. siope v. ‘ofa associate economic affairs...
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Developments in International and Intra-African Trade
Mr. Siope V. ‘OfaAssociate Economic Affairs Officer
Regional Integration, Infrastructure & Trade DivisionUnited Nations Economic Commission for Africa
8th Session of the Committee on Trade, Regional Cooperation and Integration6 - 8 February 2013Addis Ababa, Ethiopia
1. Africa’s Trade Performance (Goods and Services)
2. Intra-African Trade: towards a CFTA3. Status of other Trade Negotiations4. Aid for Trade in Africa5. Conclusions and Policy Recommendations
Outline:
2
(A). Trade in Goods• Africa’s trade performance rebounded strongly in 2011,
surpassing pre-economic crisis level of 2008.
(1). Africa’s Trade Performance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -
100,000,000.00
200,000,000.00
300,000,000.00
400,000,000.00
500,000,000.00
600,000,000.00
700,000,000.00
Imports
Source: UnctadStat, 2012. 3
(A). Trade in Goods• Africa’s strong trade performance
in 2010 & 2011 is attributed to;1. higher primary commodities
prices, 2. strong demand from China of
African exports and, 3. increased foreign aid inflows.
(1). Africa’s Trade Performance
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20110
50000000
100000000
150000000
200000000
250000000
300000000
China's Imports (000 USD) from Africa, 1995-2011
Source: UnctadStat, 2013.
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -
10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 60,000.00 70,000.00 80,000.00 90,000.00
100,000.00
Official Development Assistance to Africa (Gross Disbursements), Constant USD millions
Source: OECD Online Source, 2013.
Source: World Bank, Online Source, 2013.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
20406080
100120140160180200
Commodities Prices Index for Energy (includ. Crude Oil), 2000-2012
Com
. Pric
es In
dice
s
4
(1). Africa’s Trade Performance
Source: UnctadStat, 2012.
2001 2008 2011 2001 2008 2011Africa's Exports Africa's Imports
0%10%20%30%40%50%60%70%80%90%
100%
Distribution of Africa's exports/imports by main destinations for the years 2001, 2008 & 2011
European Union United States Africa China India Other economies
(A). Trade in Goods
5
(A). Trade in Goods• Primary Commodities dominate Africa’s total exports, particularly in
fuel.
(1). Africa’s Trade Performance
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
100000000
200000000
300000000
400000000
500000000
600000000 African Exports by Broad Category, 2000-2011
All Food Items Fuels Primary Commodities, less Fuels and Food
Manufactured Goods
Source: UnctadStat, 2013.6
(B). Trade in Services• The Travel sector remained Africa’s biggest service sector
export.
(1). Africa’s Trade Performance
Source: UnctadStat, 2013.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Africa's Services Exports, 2000-2011
Travel Other services TransportYear
Perc
enta
ge S
hare
of T
otal
Ser
vice
s Tra
de
7
(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.
(1). Africa’s Trade Performance
8
(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.
(1). Africa’s Trade Performance
9
(C). Intra-African and Intra-Regional Eco Communities (RECs) Trade• In 2010, intra-African trade in manufacture was more 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.
(1). Africa’s Trade Performance
Intra-African Exports
0%
10%
20%
30%
40%
50%
60%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Agriculture and food
Primary
Manufactured
Others
Source: UnctadStat, Online Source (2012)
10
(A). Boosting Intra-African Trade• Low share of intra-African trade as compared to other regions - %
(2). Intra-African Trade: towards a Continental Free Trade Agreement
Source: 2010 International Trade Statistics of the World Trade Organization
2009
Intra-European trade 72%
Intra-Asian trade 52%
Intra-North American trade 48%
Intra-South and Central American trade 26%
Intra-African trade 11%
11
(A). Boosting Intra-African Trade
• Factors contributing to low intra-African trade include;1. African production and export structures are geared towards
primary commodities, which demand is externally oriented. (about 88% of Africa’s trade).
(2). Intra-African Trade: towards a Continental Free Trade Agreement
All Food Items Fuels Primary Commodities, less Fuels and Food
Manufactured Goods 0
10
20
30
40
50
60
70% Share of Africa's Export by Major Product Categories, 2000 & 2011
2000 2011
% S
hare
Source: UNCTADStat, Online Source (2013)
12
(A). Boosting Intra-African Trade
2. 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.
(2). Intra-African Trade: towards a Continental Free Trade Agreement
2000
2010
-
100,000,000.00
200,000,000.00
300,000,000.00
Africa's Intermediate Goods imports from the World, 2000 & 2010
Imports
Source: COMTRADE, Online Source (2013)
Intermediate goods Sum 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.
13
(A). Boosting Intra-African Trade3. 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)
(2). Intra-African Trade: towards a Continental Free Trade Agreement
14
(A). Boosting Intra-African Trade• Measures undertaken to boosting Intra-African Trade;1. 18th AU Summit (January 2012) - African Heads of State and
Government endorsed the AU Action Plan on “Boosting Intra-African Trade (BIAT) and the Establishment of the Continental Free Trade Area (CFTA)”
2. In particular, to expand intra-African trade by eliminating tariffs and non-tariffs barriers.
3. Fast-tracking a CFTA is necessary but not a sufficient condition to address Africa’s weak internal trade performance.
4. Need to develop the productive capacity and industrial sophistication of African countries.
(2). Intra-African Trade: towards a Continental Free Trade Agreement
15
(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.
(2). Intra-African Trade: towards a Continental Free Trade Agreement
Source: UNECA, AU & AfDB (2012)
2022
2010 Baseline CFTA CFTA + TF
10.2% 10.6% 15.5% 21/9%
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(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:
1. Recognized the need for Africa to be proactive in response to multilateral and bilateral issues to minimize negative impacts on the African region.
2. Despite its shortcomings, the Doha Development Agenda negotiations is anticipated to provide benefits for Africa and therefore the support it requires.
3. Recognized the importance of addressing supply-side constraints of Africa to build capacity and thereby increase exports.
(3). Status of other Trade Negotiations
17
(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.
(3). Status of other Trade Negotiations
18
EPA Negotiation Status for Africa (as of 26 September 2012)
Implementing EPAs (4) Signed EPAs but not Implemented Yet (6)
Initialled EPAs but not Signed Yet (7)
Madagascar Cote d’Ivoire Ghana
Mauritius Cameroon Burundi
Seychelles Botswana Kenya
Zimbabwe Lesotho Rwanda
Mozambique Uganda
Swaziland Tanzania
Namibia
(B). Economic Partnerships Agreement (EPAs) with European Union
At least three main outstanding issues deters African countries from officially engaging into or finalizing EPAs:
1) 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);
(3). Status of other Trade Negotiations
19
(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:1. Only half of the signatories to the AGOA have really benefitted
from AGOA preferences (hence, need to look at realistic options)2. Rules of origin and requirements on third-country sourcing of
yarn and textile inputs needs to be flexible. 3. Need more technical assistance and capacity building on SPS
testing and certification bodies.
(3). Status of other Trade Negotiations
20
(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
(3). Status of other Trade Negotiations
China India United States
Europe
2000 3% 3% 18% 46%
2010 13% 4% 18% 34%
Source: UNCTAD(2011)
China India United States
Europe
2000 3% 1% 37% 19%
2010 9% 2% 34% 13%
Source: UNCTAD(2011) 21
(4). Aid for Trade in Africa
22
• 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.
(4). Aid for Trade in Africa
Source: OECD, Online Source (2013)
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
AfT to Africa, 2002-2011
Commitments
Gross disbursements
Mil
lio
n U
SD
(co
nst
ant
2010
)
23
(4). Aid for Trade in Africa
Africa America Asia Europe Oceania 0
5 000
10 000
15 000
20 000
25 000
Aid for Trade by Region Commitments, USD millions (2010
constant)
2002-05 avg. 2006 2007 2008 2009 2010
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)
24
(4). Aid for Trade in Africa
Source: OECD, Online Source (2013)
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
2,000
4,000
6,000
8,000
10,000
12,000
14,000
AfT to Africa by category, gross disbursements
Trade policy and regulations Trade-related infrastructures Building productive capacitiesTrade-related adjustment
Mil
lio
n U
SD
(c
on
sta
nt
20
10
)
25
(4). Aid for Trade in Africa
Source: W. Hynes, OECD (2012)
Japan
United State
s
World
Bank
Germany
EU Insti
t.
France
Africa
n Dev. Bank
Asian Dev. B
ankSpain
Arab Fund0
2
4
6
8
10
12
Top 10 Donors in 2010Commitments, USD billion (2010 constant)
2002-05 avg. 2006-09 avg. 2010
26
(4). Aid for Trade in Africa
Source: W. Hynes, OECD (2012)
0 500 1 000 1 500 2 000 2 500 3 000 3 500
TunisiaChina
MozambiqueCongo, Dem. Rep.
UgandaIraq
SenegalIndonesia
GhanaEthiopia
TurkeyPakistan
BangladeshMoroccoTanzania
KenyaVietnam
EgyptAfghanistan
India
Top 20 recipients of Aid for TradeCommitments in volume 2010USD millions (2010 constant)
Top 20 recipients include;
• Africa (11)
• Asia (8)
• Europe (1)
27
(4). Aid for Trade in Africa
Source: W. Hynes, OECD (2012)
Egyp
tKenya
Tanzan
ia
Morocco
Ethiopia
Ghana
Senega
l
Uganda
Congo, D
em. Rep.
Mozambique
0
400
800
1200
1600
2000
Top 10 African countries in 2010Commitments, USD billion (2010 constant)
2009 2010
28
1. African countries trade in more sophisticated products among themselves, compared to the rest of the world.
2. 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.
3. Africa faces numerous supply-side constraints and needs to take expeditious actions in diversifying exports into higher value-added products.
(5). Conclusions and Policy Recommendations
29
Thank You!Trade & International Negotiations Section
Regional Integration, Infrastructure & Trade DivisionUnited Nations Economic Commission for Africa
30