developments in international and intra-african trade mr. siope v. ‘ofa associate economic affairs...

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.


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



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.


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.



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.


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.


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.


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).


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.


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)


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.


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.


Source: UNECA, AU & AfDB (2012)

2022

2010 Baseline CFTA CFTA + TF

10.2% 10.6% 15.5% 21/9%

16

(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.


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);


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.


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


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.


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


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


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



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



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



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

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developments in international and intra-african trade mr. siope v. ‘ofa associate economic affairs...

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