Slide 1

Enhancing trade between Arab and African countries Troisime Runion des Chambres de Commerce et dIndustrie dAfrique et du Monde Arabe ,Rabat Maroc, 29-30 Novembre 2012Dr. Azza Morssy ,Chief of Middle East &Arab Programme , UNIDO (Vienna)

1UNIDO & Global TradeUNIDO is enhancing the capacity of developing countries and countries with economies in transition to participate in global trade and integrate them into global value chains through effective participation in the based- rules of global trading system

2

Why? Because of high trade barriers, effect on poor traders, poverty reduction.Potentially refer to South-South cooperation.2Aid for Trade and UNIDOThe UNIDO trade capacity approach and the Aid for Trade Initiative are complementary endeavors along the same holistic line of thought

Kandeh Yumkella, Director-General, UNIDO

3Source: UNIDO 2009Trade & Poverty reduction4Source: World Bank 2012Africa: Economic ProfileThe near-term outlook remains positive in the post-crisis period Africa will have the worlds largest workforce by 2040 (approximately 1.2 billion) and will need to create a sufficient number of jobs5Source: UNIDO 2009 Africas main exportsFossil fuels (petroleum, hard coal, and natural gas) are main exportsFossil fuels - total exports increased from 72% in 1980 to 75% in 2008, ( above the global average of 50%)In physical terms, all African countries account for about 10.5% of fossil fuels supply to the world market

6Source: UNCTAD 20121. Africas share of global international trade 2000-2010, (%)7

Source: UNECA 2012 Industrial Challenges for SSA and MENASeveral countries in SSA are affected by deindustrializationSeveral countries in the MENA are affected by the middle-income trap 8Look in index for explanation of middle-income trap.8Exports by Product (MENA)9

Source: WTO 2012Common Growth ProspectsBoth regions are expected to continue their economic recovery to pre-crisis levelsThe MENA region is expected to accelerate its economic growth to 5.1% in 2012 In Sub-Saharan Africa (SSA) growth is projected to grow at over 5% in 2012 as well

Source WTO201210The middle-income trapIt affects countries unable to compete with low-income, low-wage economies in manufactured exports and with advanced economies in high-skill innovations such countries cannot make a timely transition from resource-driven growth, with low cost labor and capital, to productivity-driven growth.11Source: ADB 2012Definition.11

Source: ILO 20101314No.14Global Trade ChallengesSUPPLY SIDE:LDCs have neither the surplus of capacity of exportable products nor the production capacity to take immediate advantage of new trade opportunitiesKofi Annan - UN SG, Financial Times, 5 Mar. 2001CONFORMITY:

Countries that can not meet standards and regulations in developed country markets are effectively barred from trading with those markets. International Development Research Centre (IDRC), CanadaTrade facilitation/infrastructure: For the majority of African countries, tariffs amounted to less than 2%, while transport cost often exceeded 10%.

World bank trade note 15; may 10, 2004

1415No.15Countries must have COMPETITIVITY of productive capacitiesProducts must conform to requirements of clients and markets CONFORMITY with standardsRules for trade must be equitable and customs procedures harmonized CONNECTIVITY to markets

PRODUCTIVITY (enterprise) COST OF EXPORTING (support services)

CompeteConformConnectChallenges for Trade : The 3 CsThe Arab World: Economic ProfileEconomic growth in the Arab world slowed significantly with the global financial crisisUrgent need to create 2.8 million jobs every year 16Source: Arab Competitiveness Report 2011-2012 Africa and world tradeAfrican countries are net suppliers of resources to the world In 2008, net exports of materials by the region were 409 million tons, compared to 284 million tons in 1980 Since 2000: significant increase in demand for Africas resources by developing countries such as Brazil, China and India

17Source: UNCTAD 2012Rapid GPD GrowthMENA countries as a whole grew by 5.2%from 2000 to 2008, whereas OECD economies grew by only 2.4%18Source: Arab Competitiveness Report 2011-2012 19Source: World Bank 2012EXPLANATION: Decrease in exports and slight increase in imports.19Industrial challengesAs Justin Lin (2012) suggests, income growth in developing countries depends on upgrading industrial structures Whereas Arab and African countries are major exporters of fuels and mining products, other Regions are major exporters of manufactured goods

20Mention UNIDOs role in promoting industrial development and strategic partnerships.20Exports by Product (Africa)21

Source: WTO 20122222The Triangle Tradecapitalprofits

aid Raw materialsLoans

MultinationalAfricaDeveloped countriesPayement of dbats and interests

WB IMF2223No.23Strategic Partnerships for Trade Capacity-Building

24No.24Potential in Agro-Food area

WTO- TBT & SPS agreements compliance Products sourced from areas free of pests & diseases Fruits/vegetables - minimum pesticide residue standard Meats/fish meet minimum antibiotic residue requirement Standards of hygiene applied in manufacturing HACCP/ISO 22000) /lack of implementation capacity the above issues by developing countries

Pre-conditions for Exports :

Regulatory Environment for Compliance WTO -TBT /SPS Agreements (Jan 1995)

25No.25Fair Trade for All:

lack the ability to meet quality Standards Requirements,UNIDO recommends the following priority areas for assistance :1. A national/regional standards/standardization body2. A national/regional metrology system3. A certification/conformity assessment 4. An accreditation systemSource: J. Stiglitz & A. Charlton, Fair Trade for All How Trade can promote Development, Oxford University Press, 2005

Africa Aid26 Increased Aid to Africa

More funds for Investment and Trade and build capacity in several sectors that will boost production, marketing of products and service

Proper transparency and accountability of the donor and recipient governments

Proper planning, monitoring and implementing projects that will result in a positive multiplier effect for general development

UNIDO inputs/ AfricaSupport to the National Prevention Programme of Ochratoxin in Coffee and Cocoa in Cte dIvoire

27No.27Objective: help the supply-chain actors to secure their incomes and exportationsOutputs: studies in coffee and cocoa supply-chains (determination of contamination levels, identification of critical contamination points, and determination of adequate sampling methods); national OTA analytical laboratory upgrading for ISO/IEC 17025 accreditation promotion of good practices during production and post-harvest stages Lobbying activities to draw the attention of the EC on adequate OTA maximum levels.* The OTA is a mycotoxin considered as a genotoxic human carcinogen and the European Commission (EC) is examining the opportunity to raise new maximum contamination levels for green and roasted coffee, cocoa and cocoa based products

28No.28Barrier to Trade Survey : Study on SPS Compliance for ExportsStandards (PSQCA)Standards development /Certification Body (Systems)Consumer affairs/ Product certificationMetrology (NPSL)Lab upgrading, international accreditationProduct Testing (MFD, PCSIR, etc): Fisheries, Food, Leather, TextileLab upgrading, PT participationInternational accreditationAccreditation (PNAC)Organizational strengthening, international recognitionNational accreditation scheme /Training of auditorsSetting-up of PT schemesQuality/Hygiene (Private sector, FPCCI, etc.) Fish/foodManagement systems/Good practices /Compliance with market requirements Pilot certifications HACCP, ISO 9001, 14001, SA 8000)Pilot traceability systemsBoat hygieneIcingLanding SitesInspectionAuction HallProcessorsTraceability

Trade related technical assistance programmeUNIDO Aid-for-Trade type Programmes (Supply-side & Conformity)29No.29UNIDO TCB - LDCs Coverage (36 countries)

Regional ProgrammesSAARCAfghanistanBangladeshCambodiaEthiopiaMozambiqueNepalSenegalTanzaniaUEMOA/ECOWASMEKONGCountry ProgrammesEACMadagascarMauritaniaSource: OECD DAC List EACUganda TanzaniaBurundi (2007)Rwanda (2007)SAARCBangladeshBhutanMaldives NepalMEKONG Delta CountriesCambodiaLao PDRCARICOMHaitiCARICOMHaitiSADCUEMOA/ECOWASBeninBurkina FasoCape VerdeGambiaGuineaGuinea BissauLiberia

MaliNigerSenegalSierra LeoneTogoSADCAngolaCongoLesothoMadagascar

MalawiMozambiqueTanzaniaZambiaCEMACCentral African Rep.ChadCongoEquatorial GuineaCEMACOn-going and plannedGDP Growth by Region (percent change, constant prices)30

Source: Arab Competitiveness Report 2011-2012 EXPLANATION: As demonstrated by the graph, recent financial crisis had a considerable impact on the GDP of OECD economies. Less so in the case of the Middle East and Africa.30UNIDO &Supply Side 1/231UNIDO will continue to support enterprises in their efforts to offer competitive, safe, reliable and cost-effective products in world markets, this requires:32UNIDO is continuing to offer the following activities :2/2Creation of quality management systems and product traceability management system certification, inspection and accreditation mechanismsA New Vision for Trade Facilitation33Traditional focus of trade facilitation The Aid for Trade Agenda34Source: OECD 201235Conclusions Developing Compliance Infrastructure is complex tailor programmes Regional cooperation programmes are needed for developing Regional Capacity building on complying with standardsCompliance Infrastructure3 pronged: Competitive supply Compliance services - Connectivity

RecommendationsImproving cross-border trade: border procedures, traders associations, flow of informationRemoving a range of non-tariff barriers to trade: import and export bans, costly licensing procedures, restrictive rules of origin Reforming regulations and immigration rules: limits to the potential for cross-border trade and investment in services

36Source: World Bank 2012Trade-related opportunities for Africa and the Middle EastRegional cooperation can contribute to closer integration beyond tradeMore open trade in food staples can reduce food insecurityAdditional trade can increase competitiveness in regional value chainsGrant access to the increasingly global value chain production Achieve common positions and represent these interests in the international arena

37Thank you for your esteemed attention!

Azza Morssy, PhD Chief, Middle East and Arab Programme Bureau for Regional Programmes Programme Development and Technical Cooperation Division United Nations Industrial Development Organization (UNIDO) Vienna International Centre P.O. Box 300 1400 Vienna, Austria Tel: +43-1-26026-3841 Fax: +43-1-26026-6848 E-mail : a.morssy@unido.org

38Trade & Economic GrowthANNEXES39Exports of all goods, non-petroleum and non-natural goods40Source: World Bank 2011

Comparing the COMTRADE total exports with IMF total exports, we can see that the export numbers are lower forthe former. Some countries, like Libya and Bahrain, exhibit stark differences. However, mirrored imports fromCOMTRADE yield similar numbers to the IMF statistics (in part because the IMF uses mirrored import data in somecases). This suggests systematic underreporting by exporters. Further, a comparison between the COMTRADEexport and import data suggests the overall discrepancy for MENA is by and large eliminated after excludingpetroleum. This implies that the underreporting is concentrated in oil. However, the discrepancy is not eliminated forLibya and Bahrain.40World Exports by Product41

Source: WTO 2012What is the contribution of both regions vis--vis the rest of the world , in terms of exports.41Value Added in Selected Regions (2009)42

Source: OECD 2011The manufacturing sector is relatively well developed in some MENA countries.

42

Value added in the MENA region (2009)

43

Source: OECD 2011The manufacturing sector is relatively well developed in some MENA countries.

43 Oil production and the MENAWorld crude oil production increased by 60% from 1971 to 2010

The MENA region holds about 65% of the worlds proven conventional oil reserves (at the end of 2010)

In 2010, the Middle East regions share of oil production was 30% of the world total

44Source: OECD 2011Production of Crude Oil by Region (million tonnes)45

Source: OECD 2011Oil revenues continue to mount through 2014 (billions US$)46

Source: World Bank 2012Oil exporters in the MENA (current account balances, billions of US$)47

Source: IMF 2012Oil importers in the MENA (current account balances, billions of US$)48

Source: IMF 2012Africas material importsFossil fuels are the dominant material imports, with a share between 33 and 37% of total imports

The world average share of 50 to 55% of fossil fuels in total imports

All African countries together import about 100 million tons of fossil fuels, (2% of global imports of fossil fuels

Africa is a net importer of renewable resources 49Source: UNCTAD 2012Physical trade volume in Africa and the world, 1980-200850

Source: UNCTAD 2012Material extraction in Africa, by category, 2000-200851

Source: UNCTAD 2012Material extraction in selected African countries, by material category, 2008 (millions of tons)52

Source: UNCTAD 2012Africas share of global production and reserves of selected minerals53

Source: UNCTAD 20122. Industrial development and per capita resource use in Africa (2008)54

Source: UNCTAD 2012Population, output and carbon emissions, across regions, in 200955

Source: International Energy Agency 2011GDP and GDP per capita growth (2009/2010)56

Source: Arab Competitiveness Report 2011-2012 MENA Exports as a Share of GDP57

Source: Arab Competitiveness Report 2011-2012 Goods exports destinations (individual countries)58

Source: Arab Competitiveness Report 2011-2012 FDI Inflows in the MENA (as a percentage of the total)59

Source: Arab Competitiveness Report 2011-2012 FDI Inflows as a Share of GDP60

Source: Arab Competitiveness Report 2011-2012 60FDI by Economic Sector (cumulative 2000-07)61

Source: Arab Competitiveness Report 2011-2012 World Proven Oil Reserves by Region (2010)62

Source: Arab Competitiveness Report 2011-2012 MENA proven crude oil reserves by country (2010)63

Source: Arab Competitiveness Report 2011-2012