After ten successful years, we have decided to stop producing Trade Negotiations Insights and Eclairage at the end of this year. This is the final issue.  We thank you for your interest in our coverage of (nearly!) everything related to trade and sustainable development, and hope that TNI / Eclairage were helpful for your work.

But there is reason to rejoice! From January 2012, The European Centre for Development Policy Management (ECDPM) and the International Centre for Trade and Sustainable Development (ICTSD) will provide TNI / Eclairage readers with new publications. We feel they will serve you better by more effectively addressing the regional and global trade and sustainable development reality as it has evolved over the past decade.

ICTSD will expand its coverage of the African, Caribbean and Pacific regions, responding to reader demands for more detailed and region-specific analysis. African issues will be covered in a new monthly periodical called BRIDGES Africa in English; and we will also continue production of our unique Francophone African publication Passerelles. As a complement to these analyses we will produce a continuous flow of insightful news related to African trade and development issues available online starting in January 2012. (http://ictsd.org/news/bridges-africa/)

ICTSD will also expand its coverage of the Asia Pacific region with BRIDGES Asia Pacific while coverage of the Caribbean region will continue through Bridges and Puentes. In addition a new thematic news stream BRIDGES Integration will cover regional and bilateral trade and integration agreements globally. Each of these publications will bring you original and top quality analysis from the regions with the cross cutting analysis and context that readers expect from the Bridges series.

ECDPM introduces GREAT Insights, a new monthly which will focus on Governance, Regional integration, Agriculture and Trade issues in Africa and other developing countries, hence broadening the scope of the current TNI. Naturally, trade and development issues will continue to feature prominently, and the regular EPA Update will remain. GREAT Insights will gather expert analysis and commentary from a wide variety of stakeholders with different perspectives. We will release the first issue in late January, and cover the African Union Summit on Intra-African trade (www.ecdpm.org/great)

As a TNI subscriber, you will continue receiving BRIDGES Africa and GREAT insights.  If you are not a current subscriber these publications, you can subscribe for BRIDGES Africa or for GREAT Insights. You can also register for ICTSD new resources here or ECDPM resources.

Nora Dihel from the World Bank analyses the characteristics of the professional service exporters in Kenya based on an in-depth study of 52 exporters, including their export strategies. The author identifies the key challenges faced by current and potential exporters of professional services and proposes policy recommendations.

Chris Noonan, Associate Professor at the University of Auckland and former Chief Trade Adviser at the Office of the Chief Trade Adviser for the Forum Island Countries, focuses on the PACER plus negotiations in which the Pacific Forum Island Countries are now engaged. The article takes a closer look at the lack of consensus, among the FICs themselves, on the approach needed to tackle the trade issue with Australia and New-Zealand, and insists on the idea that, without an agreed vision, PACER plus may tend to be out of touch and represent no gain for the FICs.

Manitra Rakotoarisoa from the FAO explains the rationale for deeper regional integration in the face of increased economic liberalisation and trade. Better integration would, the author argues, open up new opportunities to improve food security and enhance development capacity.

Pursuing on agricultural trade, Gbadebo Odularu and Emmanuel Tambi from the Forum for Agricultural Research in Africa’s offers strategic insights into workable policy options for strengthening Africa’s capacities to participate in the setting of standards and technical regulations for regional and international trade.

Bineswaree Aruna Bolaky from UNCTAD examines new strategies for industrial development in Africa, with particular reference to a recent Report published by UNCTAD and UNIO. The author puts a particularly strong emphasis on entrepreneurship and regional integration as well as the use of effective monitoring and performance criteria.

We hope you will enjoy reading this the last edition of TNI (see message on the front page). TNI editorial team would like to thank you for your interest through all these years and we wish you a happy end of the year! For any query please contact us at tni@ictsd.ch

The World Bank, in association with the Centre for Economic Policy Research in London, published in November a book in which the conclusions differ from the strained and frustrating 10-year-long Doha Round negotiations. Will Martin and Aaditya Mattoo, editors of the volume, insist on the substantial economic benefits and development improvements, which could emerge from a success in concluding the WTO Doha Round. The book highlights the gains of a much-needed liberalisation of world markets. By advocating for the setting of a more ambitious agenda, which would take in account the realities of the 21st century, such as climate change or food security issues, Unfinished Business ?, The WTO’s Doha Agenda offers what is severely lacking in the current process: solutions.

For more information, or to download the book, please visit the World  Bank Website.

New EU study shows significant economic benefits from a Doha deal

The European Union published on the 31st of October 2011 a new study showing that reaching a Doha deal would imply a significant increase of world exports. The conclusions provided by the study further strengthens the idea that failing in concluding the current DDA negotiations would represent a dramatic missed opportunity for the international trade community. According to the study, by reaching a deal on the liberalisation of industrial goods, agriculture and services, as well as on the trade facilitation, the gains for the countries would rise up to $359 billion annually, and could even reach $505 billion if an agreement on sectoral liberalisation of industrial goods was also implemented.

The study offers a strong analytical basis to policy makers, highlighting the importance of a successful DDA at different levels. Developing, emerging and developed countries would all profit from an ambitious agreement; It shows that such a success in negotiations would represent 0.2 percent of additional global economic growth, while barely affecting EU workers’ wages. In the meantime, contrary to a common perception, the realization of Doha would lead to increased tariff revenue for some regions, and especially Sub-Saharan Africa.

More key findings of the study on UE website

EU begins modernization review of Trade Defense Instruments

On the 28th October, the European Commission announced that a review of how it effectively supports and protects European companies facing unfair competition from across the globe would be launched soon. The objective is to improve the efficiency of the so-called Trade Defence Instruments, whose last revision dates from 1995. Protection provided by such a system is defined as “vital” by Karel De Gucht, EU trade commissioner, “in the face of challenges from an increasingly globalized economic environment”.

Through a wide consultation and open evaluation process, the European Commission should be able to deliver a reform proposal in autumn 2012, based on the input from all stakeholders involved in EU trade, including producers, importers and exporters, as well as business organizations, EU capitals or the EU parliament. These results, along with the ones provided by a Trade Defence Evaluation due to be completed by independent experts in January 2012, should bring clear directions to the reshaping of EU’s Trade Defence System, and ensure that the system is still efficient in tackling unfair trade threatening EU companies.

More information on this issue on UE website

Release of World Bank and IFC Doing Business  2012 report

Doing Business 2012 is the ninth in a series of annual reports benchmarking the regulations that enhance business activity and those that constrain it. 183 economies falls under the scope of the research, which is focusing on 11 crucial areas of the life of a business, such as dealing with construction permits, getting electricity, registering property, protecting investors or paying taxes. According to the report, Singapore, Honk-Kong, New-Zealand and the United States trust the first four places on the ease of Doing business in 2012. But in term of improvements made between 2010 and 2011, Morocco is leader this year, climbing 21 places to 94th. On the other hand, sub-Saharan Africa is the region where making business is the most difficult; economies in the region are the most likely to have both weaker legal institutions and more complex regulatory process. Although, sub-Saharan countries are working on improving their business environment; between 2005 and 2011, the rate of African countries having implemented at least one reform suggested by Doing Business has grown from 33 percent to 78 percent.

More key findings of the report here

The World development report 2012 focuses on gender equality and development

During the last two decades, women have benefited from significant gains in rights, education and health, as well as in access to jobs and livelihoods. During this period, more than 136 countries have shown the political will to tackle gender equality between men and women by guaranteeing it through their constitutions. Sub-Saharan region is one of the regions suffering the most from gender inequality. By addressing directly gender inequalities in its last publication, the World Bank is clearly setting the issue among the ones leading the global agenda. “Gender equality is not a developing country problem; it’s a global issue”, said Sudhir Shetty, co-director of the report. If growth doesn’t necessarily implies gender equality, the report clearly shows that gender equality leads to it; countries that have been able to set policies that tackle gender inequalities show significant competitive advantage compared to the others.

More information on the report here

To better understand the reasons for the current stalemate, it is useful to re-visit some of the debates that preceded the launch of the Doha Round.

• From the first WTO MC in Singapore in 1996 till the adoption of Doha Ministerial Declaration launching the Round in December 2001, many developing countries were against the launch of the Round. They argued that the so-called built-in agenda of the WTO (negotiations on agriculture and services from 2000 and several reviews of other agreements already mandated) were enough to keep all “busy” and to keep on the liberalisation agenda moving forward.  Furthermore, the WTO was a permanent institution with its clear mandate including on negotiations, unlike its predecessor the GATT which was a provisional arrangement and hence required a mandate of its Contracting Parties to launch any negotiations.  The main demandeurs were the agriculture-centric countries - on the one hand the EU, supported by some other European countries and Japan who wanted addition of other issues to sweeten the bitter pill of agriculture in the built-in agenda, and on the other the main agricultural exporters of the Cairns group who apprehended only marginal improvements in agricultural trade reform if other issues were not added to make it palatable to the EU, Japan, et al.

• The primary role and responsibility of the WTO, it was stated repeatedly, was to provide a stable, predictable and conducive environment for the conduct of international trade.  Hence the critical role of its regular Councils and Committee including the Trade Policy Review Body (TPRB), the Dispute Settlement Body (DSB), the General Council (GC), and the two-yearly Ministerial Conferences (MCs).  Negotiations for further liberalisation and updating the WTO rulebook were only meant to strengthen this primary function.

• There was also some disquiet regarding the concept of a single undertaking (SU), its practical implication being that all Members, big or small, were required to participate in all WTO discussions and negotiations, and undertake commitments.  While conceptually sound and a bulwark against free riding by some, it was difficult to imagine how such a principle could operate without either everyone agreeing to move at the pace of the slowest Member or messy and prolonged negotiations among all.

The above recap is intended to link the current debate with a longer and complex history.  However, it is also true that the decade-long Doha Round negotiations offer invaluable experience and lessons which should be weaved with history to chart a better way forward.  Moreover, this has not been a wasted effort.

It may not be common knowledge but there are areas in which the Doha Round has already yielded some concrete negotiated results though some of them may not have been fully implemented yet.  A non-exhaustive list of these positive outcomes includes:

• General Council Decision of 30 August 2003, and the subsequent amendment in the TRIPS Agreement under a December, 6, 2005 Decision related to flexibilities to deal with public health issues
• In principle agreement to establish a Monitoring Mechanism for special and differential (S&D) treatment provisions
• A Transparency Mechanism for regional trade agreements (RTAs) established through a General Council Decision of December 2006 and operationalised on a provisional basis
• Agreement at Hong Kong Ministerial Conference in 2005 to ensure the parallel elimination of all forms of agricultural export subsidies and disciplines on all agricultural export measures with equivalent effect by the end of 2013

There are several other less visible achievements.  One, the painstaking negotiations have dealt with a number of new concepts, built an impressive inventory of technical work, and have already led to many political compromises.  There are examples of such achievements in all areas of negotiations, Special Products (SPs) and Special Safeguard Mechanism (SSM) in agriculture, hybrid approach to identify environmental goods and services in trade and environment, mandatory technical and financial assistance in trade facilitation, measures to deal with preference erosion in agriculture and non-agricultural market access (NAMA), and special provisions for Small, Vulnerable Economies (SVEs) in agriculture and NAMA, to name some.  All these required a lot of substantive work as well as political compromises many of which were not even on the table when Doha Round was launched.

Two, while adhering to the principle of single undertaking, the diversity in the needs and capabilities of various Members has been taken into account through proposed differentiated treatment for various groups of countries (and even individual Members in some cases) in various draft modalities.  It can be regarded as a key departure from earlier practice and its importance for the future cannot be belittled.

Three, the Doha Round has contributed to the capacity of developing countries to deal with trade policy issues both at the national and multilateral levels, including negotiations.  These improvements in capacity have resulted from greater investment in trade-related capacity building by both the developing countries and their development partners, often in the context of Doha Round.

The above is not to claim that Doha Round has been a success.  Instead, it is an effort to point out the valuable substantive, political and capacity improvements that can be linked to Doha Round but also have relevance beyond the Round and should be capitalised to strengthen the multilateral trading system.

It is critical to recognise in this context that the multilateral trading system (MTS) and the Doha Round, though institutionally linked, are not one and the same.  In fact, at the time of the launch in 2001, the MTS as represented by the WTO was the main enterprise - with Doha Round being only one if its initiatives, though perhaps the most important one.  As briefly outlined earlier in this article, the WTO as an international organisation has several important functions, including providing a permanent forum for negotiations among its Members for mutually advantageous outcomes.  The WTO framework also provides sufficient flexibility and room to deal with new situations.  For example the Trade Policy Review Mechanism mandate relates to the periodic, peer review of WTO Members’ trade and related policies but it has been innovatively and effectively used to provide a means to monitor Members’ “protectionist” responses to the economic crisis since 2008.  Rounds of negotiations can support these functions but should not be allowed to supplant them.

In conclusion, when ministers meet at WTO MC8 in Geneva in December this year, they should neither focus exclusively on reviving the Doha Round nor pretend to ignore it (as was attempted at the last WTO MC in December 2009).  Instead, a balanced and calibrated approach is needed to strengthen the MTS.  Viewed from this perspective, the following issues should be on the agenda of the MC8:

• Regular WTO Work: Informed and structured discussion of the regular work of the WTO with a view to giving it more prominence and substance. As argued in the article, this work is valuable and must be put on the forefront.

• Doha Round: Identification of negotiated outcomes from the Doha Round, with a focus on development, that can be accepted by all for implementation (with particular emphasis on issues of interest to LDCs); and identification of issues where negotiated outcomes can be expected in the near future. This should be complemented with guidelines on a methodology that is derived from the experience of Doha Round.

• Systemic Strengthening of the MTS: Inventorisation of important outputs, outcomes and lessons - including both the technical substance and political compromises - from the Doha Round. This will preserve the achievements and allow for appropriate capitalization to strengthen the MTS at an appropriate time. This agenda item should also include identification of systemic issues of relevance to the MTS with a mechanism to debate these in the WTO

Author : Rashid S. Kaukab is Associate Director and Research Coordinator, CUTS Geneva Resource Centre.  This contribution is based on his personal experience of involvement with the WTO and Doha Round in the last 16 years and has been written in a personal capacity: it does not in any way reflect the views of CUTS.

1 See, e.g. Jean-Pierre Lehmann in the Financial Times of 24 August 2011.

2 For example, see a statement by Pradeep S. Mehta, Secretary General CUTS International  here.

3 See, for example, a recent Briefing Paper by CSEND entitled “Doha stalemate: Implications and ways forward” here , Bhagwati and Sutherland Report (2011), “The Doha Round: Setting a deadline, defining a final deal”, available here, Patrick Messerlin’s “Polly Wants a Doha deal” available here, and Ambassador Ujal Bjatia note available here.

Kenya is in a unique position to export such services throughout East Africa and to the rest of the world. Kenya’s recent “ICT revolution” epitomized by the success of Safaricom has expanded mobile phone and Internet access to millions of people, and Kenya’s ICT services firms such as KenCall have had substantial success in the domestic as well as the international market.  However, as described in the World Bank’s 2010 Kenya Economic Update, exports represent Kenya’s “weak engine”. Increasing exports of services, especially high value added business services, therefore represents an important opportunity to drive economic growth in Kenya.

Despite a moderate growth in Kenya’s services exports during the last decade and a stronger revealed comparative advantage in transport, travel and communication services, anecdotal and empirical evidence show that Kenya has an important potential in exporting business services. While most developing countries tend to export basic business services such as back office tasks or low value offshoring, Kenya has several world class firms that provide and export higher value offshoring services such as product development, R&D business ventures and transformational sourcing. Therefore, there are substantial gains for Kenya’s economy from expanding the number of exporting firms and the number of firms that progress to the higher value offshoring and partnership segments.

This article describes the characteristics of the professional service exporters in Kenya based on an in-depth study of 52 exporters, including their export strategies. Second, it identifies the key challenges faced by current and potential exporters of professional services. Third, it proposes policy recommendations to address those challenges that will help establish Kenya as a desirable offshoring destination for international clients.

Kenyan service sxporters’ characteristics

Kenyan service exporters come in all sizes, but the majority employs less than 100 workers.  The majority of the surveyed Kenyan services exporters have less than 10 years of exporting experience. The sub-sectors with greatest export turnover are insurance, accounting, non-banking financial and BPO services. 

Modes of delivery [1]

Almost all Kenyan service exporters deliver some of their exports through cross-border supply (mode 1 in GATS). Service exports delivered through the movement of natural persons (mode 4 in GATS) are also quite prevalent, occurring for 60 percent of the surveyed exporters in Kenya. Commercial presence (mode 3 in GATS) is used by 44 percent of the surveyed Kenyan services exporters to deliver their services abroad.  The least used mode of supply by Kenyan service exporters is consumption abroad (mode 2 in GATS).

The regional markets of the East African Community (EAC) tend to dominate the export flows of Kenyan professional service firms. Multinational and private corporations are the main clients for more than half of Kenyan exporters. In general, BPO, ICT, financial advisory, and logistics services are the services that are typically exported outside Africa.

Exported services: In accounting, Kenyan firms export accounting services, tax services, consulting services, and auditing services. In architecture, Kenyan firms provide architectural consulting services such as master planning, urban planning, land use planning, site planning, but also interior planning, and project management. In BPO, Kenyan firms export an array of services ranging from inbound/outbound customer voice, email, or SMS support, inbound and outbound sales via phones, customer satisfaction surveys, and back-office support, to database management such as updating changes to information portals or live updates of stock markets, safe data storage and back-up facilities, transcription from voice to text or video sub-titling, to entertainment or professional service chat support. In ICT/ITES, Kenyan firms export design services such as animations of web-advertising, user interface systems, icon and banner advertisements, but also high-end corporate and technology solutions such as hardware and disaster recovery.

Customization: The services exported by Kenyan firms are subject to some degree of customization relative to the services sold domestically in order to suit client demands. Box 1 provides examples of exported business services by Kenyan firms and the necessary modifications to the domestic services to make them exportable.

The factor that constrains most service providers from exporting is a widespread lack of knowledge about exporting opportunities, markets, and processes, and a lack of awareness as to how to acquire such knowledge. Very often Kenyan service providers - especially smaller ones - lack international networks and find it very difficult to obtain market intelligence on foreign market. Another important constraint identified by the surveyed firms is the difficulty in penetrating foreign markets. Kenya has low international brand equity as a business service provider. Skills mismatches and skills shortages pose a significant challenge to many Kenyan exporters.

Policy recommendations

The Government of Kenya can, through its trade supporting institutions and in collaboration with business and professional associations and the private sector, develop a Services Export Strategy and play an important role in helping reduce the barriers that Kenyan service firms face in their export development efforts. [2] Most Kenyan service exporters feel that direct incentives to exports, such as tax incentives for example are unnecessary. Rather, what they consider to be crucial is that the government facilitates the access to foreign markets.

Address lack of knowledge about export opportunities

The Export Promotion Council (EPC) could collect and disseminate to Kenyan service firms market research information (e.g., country profiles, sector rules and regulations, tax issues, and general working conditions in foreign markets) and highlight available opportunities for services exports.  The EPC can establish links with other international trade support institutions to create a greater pool of information on businesses opportunities available in other countries as well as profile companies that can deliver those services.

Business and professional associations should be more active in hosting international seminars to educate the industry and increase networking opportunities for local experts.  The EPC could assist financially Kenyan service firms - especially small firms - in their incursion in international markets for example through participation in international fairs and expositions (perhaps through a co-shared effort).  The EPC should also be able to assist individual Kenyan service exporters or potential exporters with marketing and branding efforts when participating in international expositions (e.g., ensure that Kenyan delegations have top of the line display stands).

Address regulatory and branding issues

The liberalization of advertizing in various professional services sectors would enable current and future exporters in Kenya to use an important channel for targeting foreign clients.  Given the likelihood of strong informational asymmetries, allowing advertizing that is relevant, truthful and not misleading - as is currently done in accounting in South Africa, Malawi, and Zambia - would be the best combination to protect domestic and foreign clients.

The opening up of regional boundaries to allow free movement of EAC nationals without work permit requirements would be of great help to increase business opportunities within the region and boost service exports.

The establishment of mutual recognition agreements (MRAs) of professional qualifications and  licensing requirements within the EAC in the areas of accounting, architecture, engineering, and legal services would likely benefit Kenyan service firms (as well as firms in neighboring countries) in their exports of services to the region. The creation of standards at the EAC level for the services delivered in the accounting, architecture, engineering, and even legal sectors could potentially benefit consumers in the EAC.

The Government of Kenya should lead the positioning and marketing of the country brand and key services globally showcasing professional services next to tourism, sports, horticulture, and other Kenyan products. Trade support institutions should conduct concerted marketing efforts with professional associations and government agencies such as the Kenya ICT board, the Kenya Tourism board, the Communication Commission of Kenya, to promote Kenyan services and build Kenya‘s reputation as an exporter of professional services.

The availability of scholarships or partial funding for BPO agents to be able to access formal training in courses not readily available in Kenyan universities and colleges would improve the skills and thus the marketability of Kenya‘s BPO sector. The provision of rebates or the development of incentives for firms to conduct training - especially specialized training such as a certified fraud examiners course in the accounting sector - would help increase the quality and degree of specialization of the services offered by Kenyan firms.

Conclusion

The factor that constrains most Kenyan service providers from exporting is a widespread lack of knowledge about exporting opportunities, markets, and processes and a lack of awareness about how to acquire such knowledge. What Kenyan service providers consider to be crucial is for the government to facilitate access to foreign markets. Such facilitation would lead to an increase in employment, upgrades in the technology used, and improvements in the quality of services delivered to meet high international standards. Possible policy actions for the government of Kenya are summarized in table 1.

Author : Nora Dihel is Senior Trade Economist in the Africa Region of the World Bank. This article is based on a paper entitled ”Can Kenya Become a Global Exporter of Business Services” by Nora Dihel, Ana Margarida Fernandes, Richard Gicho, John Kashangaki and Nicholas Strychacz, Africa Trade Policy Note No 19, World Bank. The views expressed here reflect solely those of the author and not necessarily the views of the funders, the World Bank Group or its Executive Directors.

This work has been funded by the Multi-Donor Trust Fund for Trade and Development supported by the governments of Finland, Norway, Sweden and the United Kingdom.

References

EPC (Export Promotion Council) and World Bank. 2009. “Services Exports Study: Assessment of Kenya’s Export Potential and Supply Capacities in Selected Professional Service Sectors.” EPC, Nairobi.

Government of Kenya and EPC (Export Promotion Council). 2008. “Strategy for Export Promotion of Professional Services in Kenya.” EPC, Nairobi.

Nora Dihel, Ana Margarida Fernandes, Richard Gicho, John Kashangaki and Nicholas Strychacz, Africa Trade Policy Note No 19, Washington, DC: World Bank.

Sudan, Randeep, Seth Ayers, Philippe Dongier, Arturo Muente-Kunigami, and Christine Zhen-Wei Qiang. 2010. The Global Opportunity in IT-Based Services: Assessing and Enhancing Country Competitiveness. Washington, DC: World Bank.

Notes :

1 The four modes of supply of services in the GATS terminology are: Mode 1 - Cross-border Supply: services supplied from the territory of one country into the territory of another country; Mode 2 - Consumption Abroad: services supplied in the territory of one country to the consumers of another country; Mode 3 - Commercial Presence: services supplied through any type of business or professional establishment of one country in the territory of another (i.e., FDI); and Mode 4 - Temporary Presence of Natural Persons: services supplied by nationals of one country in the territory of another. Mode 4 includes both independent service suppliers, and employees of the services supplier of another country.

2 A complementary view on policy changes that can make Kenya a more attractive destination for offshore of IT and ITES sectors is provided by the examination of a location readiness index described in Sudan et al. (2010)

The negotiations were linked from the beginning. When the FICs sought to negotiate a regional trade agreement among themselves, in preparation for the EPA negotiations, Australia and New Zealand initially insisted on being parties. As a compromise, under the Pacific Agreement on Closer Economic Relations (PACER), the FICs undertook to negotiate a free trade agreement with Australia and New Zealand if the FICs entered negotiations for or concluded a trade agreement with a third party, such as the EU. The position of the FICs in the EPA negotiations has been shaped by the PACER.

The FICs were mostly reluctant to commence negotiations for a comprehensive free trade agreement. Australia and New Zealand sort to reassure the FICs that these negotiations, dubbed PACER Plus, would not be like traditional trade negotiations. The FICs, however, face a number of challenges in negotiating a trade and economic agreement that is truly an instrument for development.

PACER Plus Promise

At the Forum Trade Ministers’ Meeting in June 2009, Ministers recommended to Leaders that PACER Plus negotiations commence after the conclusion of the Pacific Islands Forum Leaders Meeting in August 2009. The Trade Ministers’ recommendation was however silent on the intended outcome and structure of the negotiations, perhaps reflecting the officials’ earlier failure to agree on a Joint Roadmap for PACER Plus.

In August 2009, the Forum Leaders agreed to commence PACER Plus negotiations forthwith. Leaders also directed that the Trade Ministers should, inter alia, discuss a framework for PACER Plus negotiations including timelines. The decision of Leaders otherwise left open the objective, structure and contents of PACER Plus. The subsequent meetings of the Ministers in October 2009 and April 2010 did not deal with these matters. To guide the negotiations the officials only have had a few general statements made by Forum Trade Ministers during their meetings in 2009 and 2010, in particular the Ministers:

• recognised the capacity constraints faced by FICs when undertaking negotiations, and the need for national consultations with all stakeholders;

• recognised the importance of deepening regional trade integration;

• affirmed that PACER Plus provides the Pacific region with a significant opportunity to develop a truly innovative trade and economic agreement that takes account of the different stages of development of each nation;

• reflected their intention to bolster the capacity of all FICs to take advantage of trade opportunities; and

• discussed the development of a framework that enabled those countries ready to move ahead with negotiations to progress, while allowing other countries more time to prepare.

Office of the Chief Trade Adviser for Forum Island Countries (OCTA)

The experience of the FIC trade officials in the EPA negotiations will be highly valuable for the PACER Plus negotiations. The experience together with the assistance provided by the EU through the Pacific Islands Forum Secretariat (PIFS) to assist the FICs participate effectively in the EPA Negotiations convinced the FICs that they need an expert advisory body to assist in the negotiations independent of their negotiating partners. The membership of the PIFS extends beyond the FICs to include Australia and New Zealand, which made it impossible for the PIFS to support the FICs in the PACER Plus negotiations. The establishment of the OCTA to advise the FICs, and the provision on funding by Australia and New Zealand, was a precondition for the FICs agreeing to the commencement of the PACER Plus negotiations. The OCTA started operation in March 2010 and is based in Port Vila, Vanuatu.

Exclusion of Fiji

Following the decision of Forum Leaders in early 2009 to exclude Fiji from participating in Forum meetings in response to the failure to hold elections after the 2006 military coup, Forum Leaders decided in August 2009 that Fiji would also not be able to participate in the PACER Plus negotiations. Fiji responded that its exclusion from the PACER Plus negotiations was a breach of the PACER. The Australian Trade Minister Simon Crean, however, responded that PACER Plus was completely separate to the PACER. The non-participation of Fiji has been criticised by business groups. Fiji is an economic and transport hub in the Eastern Pacific. Regional integration without Fiji makes little sense and PACER Plus without Fiji is likely to distort regional trade flows. In September 2011, Pacific Forum Leaders agreed to permit Fiji to participate in PACER Plus meetings at officials-level only, given Fiji’s important economic role and links to prospects for broader regional economic integration. Without full rights of participation, progress towards regional integration is likely to be modest.

Common Priority Issues

Beyond general principles listed above, in the decision to launch negotiations in October 2009, Forum Trade Ministers instructed officials in the first 12 months to deepen understanding on common priority issues including, but not limited to: Rules of Origin; Regional Labour Mobility (beyond Mode 4); Development Assistance, focusing on physical infrastructure for trade, trade development and promotion; and Trade Facilitation, including Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Standards and Customs Procedures. These are key issues for the FICs and have become the focus of negotiations since the first meeting of officials in April 2010.

In April 2010, Forum Trade Ministers noted the fundamental importance of air and sea transport, telecommunications, and water supply infrastructure to increase trade in goods and services and agreed that these were also priority negotiating issues.

PACER Plus negotiations have involved the exchange of papers between Australia and the FICs. The legal texts prepared by the OCTA on behalf of the FICs (and welcomed by New Zealand) reflect an alternative approach to regional integration, which would not initially focus on the negotiation of a comprehensive agreement. The negotiations have produced a deepening of understanding on a number of issues, but so far no common negotiating texts.

Conclusions

So far PACER Plus lacks an agreed vision of the type of regional economic integration that should come out of, or at least be set in motion by, the negotiations, let alone the path that will be taken to that ultimate destination. The lack of direction risks prolonged negotiations and ultimately risks generating few benefits for the development of the FICs.

Developed countries have over-promised on the benefits likely to flow to ACP countries in the EPA and in the WTO’s Doha Round of negotiations. The Doha Round, after a decade, looks unpromising. The general pro-development promises, such as those agreed by Forum Trade Ministers in relation to PACER Plus, made before the commencement of the negotiations have been hard to turn into concrete legal provisions. Australia and New Zealand have said that PACER Plus is a not a traditional trade negotiations, but do not appear to have thought through the full implications for negotiation processes and outcomes. Substantive commitments on issues of importance to the FICs made early in the negotiations would help to build confidence in the process.

For many of the FICs the benefits from a traditional trade agreement would be relatively modest, especially if key issues such as labour mobility are not adequately addressed, whereas implementation and adjustment costs will likely be more immediate and significant. Insisting that developing states bend to fit the trade regime rather than bending the trade regime to assist developing states is not conducive to timely completion of negotiations.

The failure to account for differences between countries within a region in agreements with developed countries will also create intra-regional pressures. Insisting on a single undertaking can be an obstacle to regional integration.  The PACER Plus parties should be realistic about the difficulty to conclude and implement a comprehensive agreement. While some parties may wish to take risks and move swiftly, others will be more risk adverse. If a developing country region wishes to stick together, compromises will be necessary or more nuanced negotiating positions formulated. Negotiating partners can assist by looking at trade negotiations as about a relationship rather than a discrete event. A phased approach to economic integration, not insisting one-size fits all, and ensuring rules are matched with equally firm commitments to provide resources would assist.

Author: Dr Chris Noonan is Associate Professor of Commercial Law at the University of Auckland was the Chief Trade Adviser at the Office of the Chief Trade Adviser for the Forum Island Countries (OCTA) until September 2011.

Note:

1 All of the fourteen FICs, as Pacific ACP States, are party to the EPA negotiations, while all of the FICs except Fiji are parties to the PACER Plus negotiations.

Given that African economies depend largely on agriculture and that smallholder producers are the driving force behind agricultural production, there is an increasing recognition of the importance to address agricultural policy and trade-related constraints that prevent smallholder agricultural producers and traders from accessing high value regional and global markets.

In this regard, standards and technical regulations have attracted increasing attention in ongoing regional and global trade policy dialogue as tariff and quota issues seem to assume a declining dimension.[1] In other words, with the reduction in the applicability of tariff barriers, the adoption rate of standards as a trade restrictive strategy has increased significantly. This growing emphasis on non-tariff barriers, in the face of increased globalisation and rapid agricultural trade liberalisation, has attracted considerable public debate on the impact of standards on regional and international market access for agricultural commodities in Africa. In addition to hindering access to markets for agricultural commodities produced by smallholder farmers in Africa, standards also raise the cost of agricultural exports, thus, serving as disincentives to smallholder farmers.

Opportunities for greater compliance and harmonization

Agreements and dialogue on SPS measures and other related commercial regulations encourage African countries to participate in trade at all levels.[2] They provide an international framework for exchange among and between African countries and the rest of the world, irrespective of each country’s political agenda, economic strength or technological capacity. They also reduce uncertainty about the conditions for selling to a specific market, thus, providing a variety of market destination options. Without such agreements, African countries will be at a disadvantage when challenging trade protectionist policies.

In fact, SPS measures, which apply to domestically, sub-regionally, and regionally produced/traded agricultural products, take many forms, such as requiring products to come from a disease-free area, inspection of products, specific treatment or processing of products, or permitted use of only certain additives in food products. Ultimately, the measures help to ensure that agricultural commodities are safe for consumers, and prevent the spread of pest or diseases among animals and plants.

Further, as an increasing number of African countries strive to meet these technical regulations, opportunities exist along the ongoing harmonization of SPS measures within regional economic blocs in Africa. Some of the regional economic communities (RECs) which provide these opportunities include notably the Economic community of Central African States (ECCA), Union du Maghreb Arabe (UMA), the Intergovernmental Authority on Development (IGAD), the East African Community (EAC), the Community of Sahel-Saharan States (CENSAD), the Economic Community Of West African States (ECOWAS), the Common Market of Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC). These opportunities grow as more African countries and RECs effectively participate in international standard setting. Further, some of these RECs provide best practices that could be shared, up-scaled and out-scaled in Africa.

Identification of challenges

At the same time, being an increasingly strategic trade issue, mandatory standards and technical regulations have continued to attract considerable attention from African governments because they pose significant challenges to all smallholder farmers and agro-processors. In making frantic efforts to access regional and international markets for agricultural commodities, African smallholder farmers are confronted with the arduous hurdles arising from SPS and food-safety issues such as the setting of standards; the costs of technical compliance; the cost of verification; and transitional arrangements.

While recognizing that some progress has been recorded at national and regional levels, Africa’s participation in standards setting has remained limited for many reasons. First Africa does not have a certified and well established database for its effective participation in standards setting process. Secondly, most African countries are not well represented and they are inadequately prepared before participating in meetings on standards settings, all the more since there is no forum where African experts can meet to discuss before meetings. There is moreover a low awareness of standard setting process across all levels in Africa, leading to inadequate ownership and recognition of standards by relevant stakeholders such as farmers and private sector. Scientific data are furthermore often inadequate to support an effective participation in international standards setting process. Available regulatory agencies in charge of standards and quality are similarly not adequately linked and human resources and infrastructure are often lacking to carry out risk analysis of agreeing with certain SPS measures. Finally, there is clearly a shortage of funding to support preparatory meetings for drafting and reviewing standards and for expert participation in SPS standards setting dialogues.

Conclusions and policy recommendations

SPS measures are essential for promoting access to regional and international markets for agricultural commodities in Africa. Some of the benefits accruable to Africa if it adequately meets SPS measures include: Enhanced confidence among regional trading partners and consumers; enhanced access to regional and international markets for agricultural commodities; improved cooperation and integration among African countries and sub-regions; improved food and feed safety, and animal / plant health; and speedy achievement of the overall objective of 6% agricultural growth as enshrined in the CAADP framework.[3] Meeting SPS measures along agricultural value chain in Africa is at the heart of the second Pillar of CAADP which is referred to as ‘improving rural infrastructure and trade-related capacities for improved market access. [4] Strategic policy recommendations in order to enhance Africa’s participation in standards setting fora include:

1.      The establishment of online databases and mailing lists of SPS experts at national and regional levels to provide a pool of expert resources for standard-setting processes.

2.       Develop, support or strengthen regional policies that encourage linkages with national research institutions and universities. This should collaborate with National Agricultural Research Systems (NARS) in order to empower regulatory institutions to commission standards setting researches and projects.

3.      Establishment of SPS standards-setting committees in order to coordinate national and regional positions at international standards setting fora.

4.      Governments at all levels should allocate funds to the accreditation of SPS laboratories; create incentives for private sector participation in funding initiatives; promote public-private partnerships including global partnerships in strengthening the capacities of laboratories; strengthening existing laboratories and identify centres of excellence for supporting accreditation activities. National governments in collaboration with Forum for Agricultural Research in Africa (FARA) (see box 1)  should formalize funding for relevant SPS research for development along agricultural value chains in Africa.

5.      Strengthen capacities for risk analysis as a core component of the strategies for implementation of CAADP country and regional compacts implementation processes.

6.      There is a dire need for the establishment of a database of trade-related SPS expert among member countries. This will provide a pool of experts on standards setting or other related issues. Further, member countries need to enact or review existing SPS policies in order to align it with international agreements.

7.      Government should allocate resources to the provision of creating awareness tools among stakeholders. Such tools include policy briefs, media, radio, leaflets, posters, et cetera. Along this recommendation is the need for the establishment, operationalization and promotion of SPS enquiry points or nodes at community levels.
Authors: Dr. Gbadebo Odularu is FARA’s regional policies and markets analyst, FARA, Accra, Ghana. Dr. Emmanuel Tambi is the Director of Advocacy and Policy, FARA, Accra, Ghana.

Notes:

1 Standards and certification issues involve food safety standards, fair trade standards, organic standards, labour standards, and several kinds of environmental standards and labels.

2 SPS measures must be transparent, non-discriminatory, and scientifically justified by harmonizing sanitary or phytosanitary measures with internationally agreed standards, guidelines or recommendations from the Codex Alimentarius Commission (CODEX), the International Office of Epizootics (OIE), and the International Plant Protection Convention (IPPC), or a country may undertake an individual and independent risk assessment. An importing country cannot impose different requirements on imports than on domestically produced goods (national treatment), nor can it favour imports from certain countries (most favoured nation). Members must adopt other approaches that will ensure safety insofar as the exporting member objectively demonstrates that its measures achieve the importing member’s required level of sanitary or phytosanitary measures if they have a significant effect on trade. However, under SPS Agreement, DCs are obliged to provide technical assistance to Africa in order to help them comply with SPS measures.

3 Comprehensive Africa Agriculture Development Programme (CAADP) is a pan-African vehicle that translates the NEPAD Planning and Coordinating Agency (NPCA)’s vision into an operational framework to guide agriculture-led development. CAADP’s overall goal is to improve livelihoods, food security and environmental resilience in Africa’s largely agrarian economies.

4 Four priority areas of the Comprehensive Africa Agriculture Development Programme (CAADP) are known as Pillars: Extending the area under sustainable land management and reliable water control systems (Pillar I); Improving rural infrastructure and trade-related capacities for improved market access (Pillar II); Increasing food supply and reducing hunger (Pillar III); and Agricultural research, technology dissemination and adoption (Pillar IV).

While the report recognizes that there have been numerous attempts and initiatives in the past to propel industrialisation in Africa, it advocates for an industrial policy that will be based on a new approach. Such a new approach must be strategic in design and yet tailored to specific country’s circumstances. It must not repeat mistakes of the past. It must make support by the State to the industrial sector conditional on good performance. It must be based on effective state-business relations and must incorporate a monitoring and evaluation mechanism that identifies lessons learnt from current policy to feed into the next policy-making stage. This feedback loop from current policy to future policy has been a crucial missing link in past industrial policies in Africa.

Manufacturing development in Africa: facts and figures

Africa still accounts for a very low share of global manufacturing value-added (MVA) and global manufacturing exports (1.1 percent and 1.3 percent respectively in 2008). Even more worrying is that Africa’s share of global low-technology manufacturing exports, a sector where it should have immediate comparative advantages, fell from 1.5 percent in 2000 to 1.3 percent in 2008, as opposed to East Asia and the Pacific where it rose from 17 percent to 26 percent over the same period. Africa has made some progress in boosting medium and high technology manufacturing activities in recent years. The share of medium and high technology (MHT) activities in total MVA in the region increased from 25 percent in 2000 to 29 percent in 2008 and its share in total manufacturing exports rose from 23 percent in 2000 to 33 percent in 2008. However most of Africa’s MHT activities are heavily concentrated in the chemical industry.

Empirical analysis also reveals that African countries are very dependent on resource-based manufacturing. In 2009, resource-based (RB) manufacturing accounted for about 49 percent of both total MVA and manufacturing exports in the region.  Such dependence is problematic for the continent for several reasons. RB manufacturing involves relatively low value-addition, makes exporting countries highly vulnerable to external price shocks, exhibits lower productivity growth and have few linkages with the rest of the economy. In sum, resource-based manufactures show only very limited product differentiation and share the pitfalls that are characteristics of commodities on which many African countries depend. Manufacturing development should be viewed as an opportunity for Africa to lessen its dependence on commodities and engage in economic diversification as a way to reduce vulnerabilities to shocks. In this respect, there is thus a need to diversify away from RB manufacturing within the manufacturing sector in Africa.

Key policy recommendations

What is needed therefore is a new strategic approach to industrial policy-making. It could rest on six elements. It starts with an industrial diagnosis or thorough evaluation of the country’s present industrial base, followed by the design of an industrialization strategy, whereby governments have to decide, in coordination with the private sector, which existing manufacturing industries to strengthen (industrial deepening), which new industries to stimulate (industrial diversification) and in which industries they want to improve the internal integration of existing involvements (industrial upgrading). In designing such strategies, due consideration must be given to the challenges and opportunities posed by the new global environment such as new trade and investment rules, climate change, South-South cooperation and the potential of integrating into global value chains. It then moves to consider the industrial policies needed to implement the strategy. Such industrial policies have to be aligned with other policy areas that should complement the decisions taken, in particular macro-economic and financial policies. Another important feature of this strategic approach to industrial policymaking relates to the feedback loop from policymaking to the diagnosis stage. Essentially, it has to be ensured that a critical examination of prior policy decisions (i.e. an independent monitoring and evaluation process) identifies success stories and failures that can inform the next policymaking cycle. Through such monitoring and evaluation, a systematic process of policy learning can take place, enabling adaptation and better performance.

Key principles

This said and based on the consensus emerging from the current literature, one could identify key principles on which a successful industrial policy should rest on. These include:

(i) Supporting and challenging entrepreneurs. The idea here is that any support that businesses receive from the government should be made conditional on the achievement of certain overall policy goals, such as increased investment or exports.

(ii) Encouraging experimentation, search and learning by both governments and the private sector. This means that industrial policy should be viewed as a social learning or search process in which the government interacts with the private sector to identify the key constraints facing domestic firms and how to overcome them.

(iii) Focusing on lifting binding constraints. This requires identifying the key binding constraints facing domestic firms as well as possible measures that could be put in place to lift or relax them.

(iv) The use of monitoring, evaluation and performance criteria to ensure that support is linked to performance, that errors are quickly identified  and that quick and appropriate action is taken to correct such errors.

(v) Recognizing country heterogeneity. This refers to an understanding that industrial policy should be tailored to the needs and challenges facing each country. A one-size-fits-all approach will be counterproductive and unlikely to achieve desirable outcomes.

Encouraging effective state-business relations

Under the old approach, industrial policy was often viewed as a list of policy instruments to be set and implemented by government in a top-down mode. Under the new approach, on the other hand, there is a recognition that the state and the private sector need to be engaged in an effective state-business relations in which the government consults with the private sector when identifying new sectors and new activities. It is not about the government telling the private sector what to do. Rather it is a question of government providing and seeking information from the private sector and dispensing incentives and resources such that the private sector, through the pursuit of profit, behaves in a way that contributes towards the achievement of the national industrial development objectives.

Complementary actions

The new approach to industrial policy also recognizes that industrial policy is implemented through coordinated action in a number of different policy areas. It stresses the need for industrial policy to lay emphasis on (a) the promotion of scientific and technological innovation; (b) the creation of linkages in the domestic economy; (c) the promotion of entrepreneurship; and (d) the improvement of government capabilities.

Without scientific and technological innovation, African countries will find it difficult to compete with global exports in an increasingly competitive global environment.  African countries therefore should provide more support for science and innovation by for example stimulating domestic production of technological knowledge through the provision of incentives to entrepreneurs, or facilitating access to existing technology through FDI, licensing and purchasing capital equipment. African countries should also invest in education and skill formation to ensure that firms have reliable access to the skilled labour required to produce the high-quality goods that can survive competition in global markets.

African countries should give priority to the creation or development of linkages in the domestic economy to ensure that the promotion of industrial development yields positive spill-over benefits in other sectors of the economy. There are various ways to create domestic linkages in an economy. For example the promotion of agro-industries is one way to develop domestic linkages between the industrial and agricultural sectors of an economy. Furthermore, linkages can be created between domestic and foreign firms by building domestic technological capabilities. The report stresses the importance of fostering industrial development in conjunction with the development of other sectors. Industrial development should not be done at the expense of other sectors such as agriculture or services as this will compromise on the goals of reducing vulnerabilities to external shocks, limit the building of inter-sectoral linkages and in so doing reduce the benefits from industrialisation itself.

African countries should step up efforts to promote entrepreneurship by creating an economic environment that favours both domestic and foreign investment. In particular, they should reduce policy uncertainty, strengthen infrastructure provision and improve access to finance for firms, particularly SMEs. In promoting industrial development, African countries should ensure that the scope and degree of intervention takes into account government capabilities. Weak state institutions make

it challenging for governments to successfully implement their industrial development programmes and policies. In this context, African governments should give priority to enhancing government capabilities to design, formulate and implement policies.

In addition, strengthening regional integration may be critical in fostering manufacturing development. The building of robust regional markets in Africa, through regional integration, could unlock the manufacturing potential of the continent. African countries can target their regional markets as buyers of their manufactured products. Such an approach will permit African firms to exploit economies of scale and garner the experience they need to successfully face global competition. In addition regional integration can also facilitate the development of the other markets that Africa needs in order to support its industrial development objectives such as financial markets, transport and infrastructure. Regional integration can also contribute to reducing the regulatory burden facing African firms by, for example, harmonizing policies and serving as an external agency of restraint on domestic policies. In this context, the adoption of the West African Common Industrial Policy by the Economic Community of West African States (ECOWAS) Council of Ministers is welcome.

Finally, complementary policies should also put in place to increase the likelihood of success of industrial polices. The adoption of appropriate exchange rate, monetary and fiscal policies, policies to enhance domestic resource mobilisation, policies to strengthen infrastructure development and the achievement of political stability are deemed critical to the success of industrialization in Africa.

Author: Bineswaree Bolaky, Division for Africa, Least Developed Countries and Special Programmes.  Bineswaree Bolaky is an Economic Affairs Officer in the Africa Section of the United Nations Conference on Trade and Development. Her specialization is in International Trade, Economic Development and Institutional Economics.

This article is based on UNCTAD/UNIDO Economic Development in Africa Report 2011: Fostering industrial development in Africa in the new global environment

Agriculture liberalisation and economic integration: te challenges
Many initiatives to enhance regional integration have been taken but not followed through.  In 2008 for instance, African regional groupings planned to move beyond regional borders to a full African economic integration by announcing the ‘Africa Free Trade Zone’.  Each year, regional groups such as the Southern Africa Development Community (SADC) and the Eastern African Community (EAC) announce more commitments towards deeper integration.  Likewise, the Comprehensive African Agriculture Development Program (CAADP) has set as one of its goals the promotion of the regional integration that makes agricultural sector more competitive.   This year, the EAC, SADC and Common Market for East and Southern Africa (COMESA) have confirmed the tripartite agreement for a greater economic cooperation and towards economic integration.  The question is why all these commitments and the many more before them have not been followed through at a faster pace?
The main stumbling block towards agriculture liberalisation and economic integration is the fear of losing both the revenues from the duties that are still imposed on certain products and the flexibility to use trade policy as a tool to address socio-economic or political challenges (e.g. protecting consumers against high food prices, protecting infant industry).  Governments want to protect some ‘sensitive’ products, ‘sensitive’ meaning products of high tariff revenue or of great socio-economic or political importance.  The protection is also targeted against highly subsidised exports from developed countries.
But while justifiably defending the sensitive product argument against subsidised foreign exports, African countries have unfairly extended the same argument against intra-regional suppliers. Not long ago, for some agricultural products, regional partners faced much higher applied tariffs than outside suppliers did.  More importantly, many studies reported the high levels of non-tariff barriers within regions in Africa and cite examples of  ‘border red tapes’ such as the lengthy periods to receive trade approvals, strict licensing requirements for importers or exporters, and a high number of unnecessary controls and road blocks.  The question to be asked is whether or not all these intra-regional trade barriers have made the domestic agricultural sectors more competitive and solved food insecurity. Many analysts now agree that these barriers address neither issue.
The case for economic integration and regional policy
Theoretically, the mere threat of a competition with suppliers outside the region and the elimination of intra-regional barriers will encourage intra-regional agricultural sector to focus on competitiveness and release resources away from inefficient sub-sectors.  A vigorous regional agricultural sector will raise and keep employment and value-added within the region and improve access to food.  Regional savings from the increased income and more efficient allocation of resources will lead to regional investments that will enlarge capacity in, say, infrastructure or research and extension and enhance competitiveness further.  But, to practically achieve all of that, current policy strategies need some reconsideration.
To start with, the trade-off between consumer and producer welfare or between national and regional interests has its own rationale, but over the years it has led to agricultural policies that are inconsistent and often erratic and which suppress thereby incentive of domestic and regional producers.  For instance it was not unusual that during the food crisis in 2008, many African governments have reneged on their commitment to free export by banning it.   A clear priority on stakeholders’ welfare has to be established and once adopted the accompanying policies must stay the course.
The inconsistencies between national and regional policies are what the likes of CAADP are aiming to reduce.  True, interests among countries may differ a great deal but working on basic common goals such as regional food security and regional capacity building is a way forward.  An example is the Economic Community of West African States/Agricultural Policy (ECOWAP) program based on identifying and matching national policies with regional policy to promote  regional food security and  agriculture markets.
Moreover, the growing unregistered cross-border trade in agricultural products between neighboring countries in Africa proves the impracticality of the official intra-regional barriers, and highlights the need for deeper regional integration and effective regional policy.   Despite the barriers, herds of livestock, bags of paddy rice and sacks of maize still manage to cross national borders unrecorded.  Such trade contributes to welfare and income increases for consumers, producers, and traders alike.  At minimum, some, say, strict quality or sanitary controls should have been put on this cross-border trade to reduce the risks of a spread of animal or plant diseases, but such controls are better handled and coordinated at regional, rather than national, level because of the immensity of the task.
Conclusion
There is a consensus that deeper regional integration helps mitigate the risk and magnify the benefits of trade agreements.  Admittedly, under multilateral trade negotiations there are valid arguments for African countries to maintain some minimal protections, especially when developed countries continue to support their producers and exporters.  Nevertheless, the urgent step to take is to remove intra-regional trade barriers and trade distortions such as subsidies in order to open opportunities at the regional level to improve food security and enhance development capacity.  Ultimately, the position that trade barriers can be lowered for distant suppliers and not for the next door neighbor is untenable.
Author : Manitra A. Rakotoarisoa is an Economist, Trade and Markets Division at the Food and Agriculture Organisation

References

Morissey , Milner , Zgovu  (2010).  Designing Economic Partnership Agreements to Promote Intra-regional Trade in ACP countries.
Koroma  Mosoti , Mutai , Coulibaly , Iafrate  (2009). Towards an African Common Market for Agricultural Products.  . Lapodini (2009). Etude des Barrières Tarifaires à l’Echelle Regionale et l’Impact des Barrières Non Tarifaires sur le Commerce Intra et Extra Communautaire en Afrique de l’Ouest.
Ubwani Z  (2011).  East African Community’s Non-Tariff Barriers Faulted.

Leaders from the Group of 20 major economies met in Cannes, France, on 3-4 November and reaffirmed their commitment to resolving the impasse in the WTO’s Doha negotiations. They have instructed their trade ministers to redouble one’s efforts by pursuing “fresh, credible” approaches in order to overcome current talks’ struggles. “It is clear that we will not complete the [Doha Development Agenda] if we continue to conduct negotiations as we have in the past”, leaders noted. In particular, they asked that such approaches should be geared toward issues relevant to least developed countries (LDCs) and, “where they can bear fruit, the remaining elements of the [Doha] mandate”.

Meanwhile, with the past several months seeing tensions ramp up over China’s currency valuation, many were watching to see how China would respond to criticism of the yuan at the summit. Prior to the G-20 meeting, China’s yuan valuation has been the subject of intense debates in the US, leading to the US Senate’s vote in favor of a bill targeting countries practicing currency undervaluation, which could possibly provoke a trade war between China and the US, should the bill eventually become law. Nonetheless, G-20 leaders praised China’s recent decision “to increase exchange rate flexibility consistent with underlying market fundamentals”. “This is something we’ve been calling for some time, and it will be a critical step in boosting growth”, US President Barack Obama added after the summit.

The G-20 also promised to mobilise additional funds for the IMF, in order to ensure that the institution would “have resources to play its systemic role”. Leaders agreed that the IMF and the European Financial Stability Fund (EFSF), more commonly referred to as the euro zone bail-out fund, could work in concert.

Concerning the widening use of protectionist measures and export restrictions in G-20 countries, as pointed out by a WTO report released in late October, leaders at the Cannes Summit committed to refrain from raising or imposing new barriers to trade and investment in goods and services. They also endorsed a decision taken by G-20 agriculture ministers in June 2011, agreeing to remove export restrictions on food destined for humanitarian purposes via the UN World Food Programme.

Russia quickly closes in on WTO Entry

After an 18-year process, Russia now appears set to join the WTO; negotiations led to the definition of an accord on which trade ministers will vote during the upcoming December ministerial conference. WTO Director-General Pascal Lamy praised the completion of negotiations, declaring: “In acceding to the WTO, Russia embraces a series of rules and commitments that are the foundation of an open, transparent, and non-discriminatory global trading system”.

After years of stop-and-go negotiations, WTO members and Russia finally agreed on “an unprecedentedly detailed” accession package, according to one Geneva-based trade expert. Russia has committed to fully apply all WTO provisions, and will be provided with a few transitional periods in some areas. The accession package includes 30 bilateral agreements on market access for services and 57 on market access for goods. Export duties have been bound for over 700 tariff lines. Regarding agriculture, the accord states that all agricultural export subsidies will be reduced to zero. And with regards to the WTO Agreement on Trade-Related Investment Measures (TRIMS), the accession accord states that all WTO-inconsistent measures, including preferential tariffs or tariff exemptions, will be eliminated by 1 July 2018.

Russia’s accession has gained strong backing from the US and the EU these past few months. Barack Obama’s administration has been supporting the accession bid as part of a larger effort to “reset” its relations with Russia. Karel de Gucht, European commissioner for Trade, reminded that the EU played a “crucial role” towards achieving this goal, which is seen as “important step for Russia’s economic development and for the multilateral trading system”.

Now that Russia and already-WTO-member Georgia have reached a compromise resolving their differences over trade-monitoring in the disputed regions of Abkhazia and South Ossetia on 2 November, nothing stands in the way of Russia’s accession bid, which will be voted on at the upcoming WTO Ministerial Conference, along whit Vanuatu’s, Samoa’s and Montenegro’s.

Cotton: African exporters seek subsidy freeze

In a recent WTO proposal, West African exporting countries have advocated for the freeze of trade-distorting support applied by the US and EU on cotton. The C-4 group, representing Benin, Burkina Faso, Chad and Mali, argued that a “standstill principle” should be applied on support payments while a final negotiated solution is being reached on the cotton issue. The joint proposal has been sent to trade ministers, in order to ensure that the issue is tackled at the WTO’s eighth ministerial conference. The text calls for members to finally implement agreements on cotton that were reached six years ago in Hong Kong, at the global trade body’s fifth ministerial conference. However, the US has demonstrated no will in reducing subsidies in the last few years. At a June meeting of the Trade Negotiations Committee, The US government insisted that all of the major developing country cotton subsidisers, such as Brazil and China, should also commit to reducing their distortions in order to join a consensus on the cotton issue.

This information has been summarized from Bridges Weekly