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IEA – World Bank Conference on “New Thinking in Industrial Policy: Implications for Africa”
Johannesburg, South Africa 3-4 July 2012
Dominique Njinkeu
ContentI. African Trade in industrial Products
1. Pattern2. Salient features of the New Global Trade order
II. Securing markets for African products1. Regional integration2. Bilateral trade agreements: EU, US, emerging markets3. Multilateral trade rules
III. Complementary Actions1. Beyond tariff: Non-Tariff Measures agenda2. ICT-enabled services agenda3. Connect to Compete: trade facilitation agenda
IV Concluding remarks
IntroductionIndustrialization has been associated with trade
liberalization and some form of supportThe traditional sequence :agriculture to pre-
industrial stage, to industrial production and to mass consumption is no longer the rule
African trade policy increasingly at regional level
Agglomeration for Africa considered at the regional level
This has implications on how Reindustrialization in the new global order will be shaped in Africa
Characteristics of African trade
Intra vs trade with ROW (in Billion USD) and by share
Intra-African exports
African exports to RoW
Sectors 2000 2010
Sectors 2000 2010
Value * Share Value * Share
Value * Share Value * Share Agriculture and food 2.57 17.9% 9.98 17.0%
Agriculture and food 12.21 9.1% 33.01 7.6%
Primary 5.01 34.9% 21.15 36.0%
Primary 81.95 60.9% 295.08 68.0% Manufacture 6.58 45.8% 25.30 43.1%
Manufacture 37.16 27.6% 96.39 22.2%
Other 0.19 1.4% 2.33 4.0%
Other 3.19 2.4% 9.38 2.2% Total 14.35 100.0% 58.76 100.0%
Total 134.50 100.0% 433.87 100.0%
Intra-African Imports
African Imports from RoW
Sectors 2000 2010
Sectors 2000 2010
Value * Share Value * Share
Value * Share Value * Share Agriculture and food
3.07 17.8%
10.17 16.6%
Agriculture and food
14.41 9.9%
34.12 7.4%
Primary 5.82 33.7% 23.36 38.0%
Primary 87.42 59.9% 314.94 67.9% Manufacture 8.27 47.9% 27.60 44.9%
Manufacture 39.57 27.1% 98.10 21.1%
Other 0.12 0.7% 0.27 0.4%
Other. 4.48 3.1% 16.96 3.7% Total 17.28 100.0% 61.41 100.0%
Total 145.88 100.0% 464.12 100.0%
*= Values are presented in Billion USD Sources: compiled from UNCTAD, UNCTADstat
Figure 1: Intra-African export and import trends over the period 2000-2010
Sources: compiled from UNCTAD, UNCTADstat
Figure 2: Intra-African trade composition (exports and imports) by main sectors (2000-2010)
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
Comparison of the compositions of intra-African trade and Africa’s trade with the ROW in 2000 and 2010
Sources: compiled from UNCTAD, UNCTADstat
Variation of African import shares to Africa and to the ROW in 2000 and 2010
Sources: compiled from UNCTAD, UNCTADstat
Level of intra-regional trade
Regional intra-industry trade: Africa behind
I.1 Trend in African tradeIntra-African trade: 12 % total trade in
2010. Intra-African trade composition
More sophisticated manufactures trade: Intra-African exports in manufactures over 45%
Agriculture and food only 15% despite the huge potentials: exploit potential linkages between agriculture and industry, including in high value added trading activities.
I.1 Trend in African tradeTrade with ROW
Main trade category: manufactured goods (16.7%), machinery and transport equipment (11.6%), chemicals and related products (9.6%).
The primary commodities trade: crude materials except fuels (6 per cent) and mineral fuels, lubricants and related materials, which account for 30 per cent.
Growth linked to market access opportunities offered under initiatives such as AGOA and “Everything but Arms”.
I.2 Lessons from African growthGrowth experience: extremely varied and
episodic, particularly in large countries.Low productivity growth: Africa yields less than
half the return measured in growth terms compared to other developing regions: reducing transactions costs, supporting innovation; and improving skills and institutional capacity.
Poor and erratic policy and governance account for between one-quarter and one half of the difference in predicted growth between African and non-African developing countries.
I.2 Lessons from African growthGeographic isolation and fragmentation, and
insufficiently diversified production and trade: 1/3 growth gap with other developing countries.
International trade: reduced barriers to trade and strengthened capabilities for international.
Demographic transition : 2/3 observed difference: growth labor force and employability of youth.
Consequence: Improving the investment climate, more and better infrastructure ,innovation (ICT and skill formation), institutional capacity
I.2 Features of current Global OrderProduction broken down into tasks by plants
located in countries with relative prices of factors of production: distant sub-contracting arrangements with foreign firms becoming a norm
Ability to adopt and improve upon existing technologies : partnerships programs for training from cutting-edge high-tech institutions, incentives for experts to retire or migrate to set up globally competitive enterprises in Africa.
I.3 Features of current Global OrderExcellence in international service trade:
network of think tanks and R&D institutions to generate cutting edge knowledge and nurture a new culture and work ethic of innovation, high-quality decision making, and product excellence.
Nurture a vibrant domestic export industry through policies promoting high-tech and high domestic value-added industries.
I.3 Features of current Global OrderProduction of sophisticated goods generate
positive externalities via learning-by-doing especially coupled with government assistance consistent with country’s comparative advantage
To reap economies of scale, manufacturing needs to be concentrated and a particular location requires a minimum level of industrial agglomerations
Trade in tasks are highly transport-intensive hence needed attention to efficient trade facilitation and modern telecommunications.
I.3 Lessons as Ingredients for African industrializationProduction of sophisticated goods generate
positive externalities via learning-by-doingSome export goods have higher spillover effects
than othersComparative advantage: avoid “comparative
advantage defying strategies”. Increasing trade of intermediate goods and
services produced in plants located in several countries and often belonging to the same firm
Agglomerations to reduce costs and be competitive
• 1. Regional integration• 2. Bilateral trade agreements: EU, US, emerging markets• 3. Multilateral trade rules
II. 1Regional integration agendaTowards a Continental FTA: timeline
1. Tripartite: 20172. West Africa: vision 20203. Central Africa: CEMAC 2025
Bilateral trade agreements: Align timeline to above
1.USA: AGOA: third country fabric (2012), AGOA expiry (2015)
2.EU: December 2013 (Interim EPA)3.WTO: EBA
II.2 Proposals for AGOAThird country multi-fiber provision beyond the
new sunset period determined for AGOA itself.Stability and predictability e.g. 10 years, together
with the establishment of benchmarks.Broaden coverage: tobacco (Malawi), peanuts
(Gambia), groundnuts (Zambia), dairy products (Kenya) and meat products (Botswana).
Incentive package to spur U.S. FDI particularly for non-energy and non-extractive raw materials
System of sanctioning errant countries without hurting other economies to which they are tied
II. 3 Consolidated trade regime to concentrate on CFTACoordination of ongoing discussion at AGOA,
EPA, WTO with an extension of current trade regime for a fixed period aligned with REC and CFTA liberalization timelines ( 2025?)
Extent the above to emerging countriesAt WTO aligned all countries in African RECs
to the LDC trade regimeFocus on a CFTA rules of origin regime that
would enable trade with developed and emerging countries: AGOA RoO could serve as a model
Complement trade rules with actions to enhance competitiveness
III.1 Connect to compete: trade facilitationAlong corridors Think and Act
holistically• The Transport corridors link a
gateway to an inland terminal:– Physical infrastructure (ports,
roads, railways, dry ports)– Logistics services– Procedures (notably transit)
• Institutional environment:– Articulation of regional, corridor
and national levels– stakeholders engagement– policies
• Monitor and improve– corridor performances– identification of non tariff
barriers to address through policies / operational measures
III.1 Connect to compete : GatewaysDouala for Cameroon, Chad and CAR; Congo
Brazzaville, Equatorial Guinea and GabonTEMA for Ghana and Burkina Faso, Mali, NigerDakar - BamakoDurban and North-South CorridorRole of African Alliance for Electronic
Commerce comprising most SW in Africa: Morocco, Tunisia, Senegal, Cote d’Ivoire, Ghana, Cameroon, Gabon, Madagascar, Mauritius, ….
27
Missions
Reduce cost and delays in clearance
External Trade Transaction
Objectives
III.2 Connect to compete : corridors to Inter-connect landlocked to sea
Mombasa :Kenya, Uganda, Rwanda, Burundi and DRCDar-es-Salaam :
(1)Tanzania, Rwanda, Burundi, Uganda and DRC (2), Tanzania, Zambia, DRC, Malawi
Walvis Bay: (1) Namibia, Botswana and South Africa; (2) Namibia, Zambia and DRC , (3) Namibia and Angola
Douala : Cameroon ,CAR and ChadDakar : Senegal, Mali, Burkina Faso and Niger, Cotonou : Benin, Burkina Faso, Niger, and MaliWA cost: Cote d’Ivoire, Togo, Ghana, Benin and
Nigeria
….ET DU PROGRAMME DE POOL ÉNERGÉTIQUE DE L’AFRIQUE CENTRALE (PEAC) QUI SONT COHÉRENTS AVEC LES PROJETS D’INFRASTRUCTURES DU NEPAD.
III.2 Connect to compete : corridors to
Inter-connect landlocked to sea
Ligne Afrique de l’Ouest Ligne Afrique australe Ouest Ligne Afrique australe Est Ligne Afrique centrale Ligne Afrique centrale – Afrique du Nord
INTERCONNEXIONS ENERGIQUES EN AFRIQUE
III.2 Connect to compete: corridor priorities and actions?Despite widely held view hard infrastructure cost
represents a small part of total logistics costsMost gains in trade likely from investment in soft
rather than hard part:road quality has more impact on delays or
predictability of trade flows than on cost of transportation through maintenance and fuel consumption;
infrastructure sustainability given low trafficLow reliability of the transit supply chain more
worrisome than average transit time
III.2 Connect to compete: Inter-REC connectivity
Ligne Afrique de l’Ouest Ligne Afrique australe Ouest Ligne Afrique australe Est Ligne Afrique centrale Ligne Afrique centrale – Afrique du Nord
CORRIDORS ROUTIERS EN AFRIQUE
III.3. Trade in services (Factor mobility)Removal of restrictions on free movement of labor:
exchange of information on regulatory regimes, streamlining immigration processes for business travelers and workers and temporary residence of business people
Experience of regional groupings such as EU or APEC Business Mobility Group provide practical guidance
SADC univisa scheme, other RECs should do the same
III.3. Trade in services: Mutual recognition Agreements(MRA)Promote Academic and professional qualifications:
Accreditation of schools or academic programsRegional qualification and licensingRegional conduct and ethics: standards of
professional conduct and nature of disciplinary action for non-conformity with those standards
Professional development and re-certification: continuing education and ongoing requirements to maintain professional certification
III. 4 Non-Tariff MeasuresApplicable to imported and domestically-
produced goodsNot always bad e.g. regulations to protect local
and global public goods desirable Legitimate NTMs imposed in response to market
failure otherwise not allowed by WTOMost NTB: customs valuation, TBT, SPS, rules on
import-licensing proceduresNTB major concern in a small country b/o can be
captured by special interests as they lack transparency and are complex.
III. 4 Non-Tariff MeasuresMost prevailing NTM in Africa
Cumbersome customs and administrative documentation procedures;
Immigration procedures;Cumbersome inspection requirements;Varying trade regulations within same RECsVarying, cumbersome and costly procedures
for transit and verification of imports and export cargo;
Business registration and licensing.
Major bottlenecks include:Veterinary certificates : Required from
exporting and importing countries and issued separately for every individual shipment
Quality analysis: National quality seals are meant to be sufficient proof of compliance with standards but every EAC country requires further testing by own lab or other body
Ineffectiveness of the National Monitoring Committees
Limited dialogue/exchange of information; regulatory assessments and audits
36
III.4 NTM in dairy trade in EAC
Figure 1: Coverage and frequency ratios
Burundi
Ouganda
Kenya
Namibie
Maurice
Afrique du Sud
Madagascar
Sénégal
Amérique Latine
Af. Nord & MO
Asie
UE
100 80 60 40 20 0 20 40 60 80 100
Taux de fréquence Taux de couverture
Source : Cadot
Figure 1: Incidence of NTM, # of measures
0.0
20.0
40.0
60.0
80.0
100.0
120.0
Cinq et plus
Quatre types
Trois types
Deux types
Un type
Source des données : World Bank and UNCTAD
III.3 NTMIn sum
African countries heavy userNote sure what heavy regulatory apparatus addresses; not consumer concerns as in developed countries
Mostly regulatory overkill: streamline
Conclusion: NSE and African Re-industrialization in New Global OrderStep 1 : Documented African success storiesStep 2: constraints to alleviate: coherent/
sustainable policy, skill and technology, NTB, trade facilitation
Step 3: firm incubation: build capacity of private sector in international trade
Step 4: careful about governance; regional approach adds to complexity
Step 5: Mixed performance of Africa SEZ; Support other regional public goods
Step 6: compensating pioneer firms : complicated
Conclusion: NSE and African Re-industrialization in New Global OrderBroaden the market space to foster greater
opportunities for scale production, competition, investment, and trade
Eliminate existing tariff and non-tariff barriers, bost trade facilitation reform
Take into account human and institutional capability and include a component on stakeholders empowerment
Conclusion: Summary of main messages
1.Trade regimes African countries are subjected to need to be consolidated and secured to enable focus on Continental FTA agenda
2.For this consolidation rule of origin under EBA, EPA, AGOA should be harmonized and aligned to CFTA; emerging countries should be fully involved… an agreement in the G20 framework preferable
Conclusion: Summary of main messages3. NSE should be considered in the framework
of RECs and the CFTA
4. Support should draw relevant lessons from the past and the complication associated with using a regional approach: preference to measures that enhance competitiveness (trade facilitation, NTM, ICT-enabled services) and skills that can be transferred to other sectors