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tralac Newsletter • Issue 19 • May 2020
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Welcome to the tralac Newsletter for May 2020.
The COVID-19 pandemic has precipitated an unprecedented global health and economic crisis. Although it is way too early for a full assessment, it is clear that COVID-19 has brought severe hardship, especially to developing and least developed countries, and to poor and vulnerable communities in developed countries too. Vulnerable sectors (e.g. tourism, oil industry, sea, air and road transport, freight forwarding, logistics and courier enterprises, wholesale and retail) have already been hard hit. The pandemic has resulted in massive job and income losses in both developed and developing countries. Food insecurity is rising, exacerbated by trade restrictions being imposed by many countries. The demand for, and price of many commodities has declined sharply, increasing the vulnerability of many commodity-dependent African countries. International production networks and supply chains have been disrupted by travel and trade restrictions. The pandemic further aggravates inequalities of all types, including gender-based inequalities. See a Blog by Bineswaree Aruna Bolaky and Darsheenee Ramnauth on Covid-19 and its implications for women.
Africa is still in the early stages of COVID-19 and yet to feel its full impact. See a Blog by Trudi Hartzenberg on Some Reflections on Africa Day 2020, COVID-19 and the AfCFTA. The United Nations (UN) has stressed the impact of the pandemic on health, economic growth, peace, security, human rights and humanitarian assistance in Africa. The pandemic has derailed the continent’s workplan for completing the AfCFTA negotiations by 1st July 2020. See a Blog by Trudi Hartzenberg and Gerhard Erasmus on Why it may be better not to rush the implementation of the AfCFTA now.
African governments have responded both individually, and also collectively at the continental and regional levels. National responses to the pandemic are legitimate, but we are realising how inter-connected our regions are. A border closure by one member state of necessity impacts neighbouring countries. The impact of national measures is particularly severe when they are imposed by regional hegemons, some of which are important conduits for essential goods to land-locked countries from global trade partners.
The African Union, regional organisations, private sector or civil society organisations (e.g. in SADC, EAC, ECOWAS, COMESA) have adopted guidelines, recommendations or cooperation and coordination mechanisms to limit the transmission of COVID-19. It is important to recognise that guidelines and recommendations cannot be enforced. This makes intra-regional trade even more difficult and costly; truck drivers could be stuck at border posts for days waiting for the processing of paperwork or COVID-19 test results. In many cases there are very limited, if any, ablution facilities, or access to water or food. At some border posts, truck drivers are appealing to regional bodies to assist – unfortunately, they may not find the rules-based solutions they are desperately seeking there. See a Trade Brief by Rwatida Marufutu and Talkmore Chidede on COVID-19 trade and related measures responses in Africa, and a Blog by Geoffrey Osoro on EAC Regional to the COVID-19 pandemic.
International organisations (e.g. the World Health Organisation, the International Monetary Fund (IMF), the World Bank) are providing emergency relief or support to African governments to tackle this deepening health and/or economic crisis. The list of countries seeking support is still growing. See a Trade Brief by Gavin van der Nest on IMF Emergency Funding in the face of the COVID-19 pandemic.
The UN is emphasising the importance of attempts to protect hard-earned gains, in terms of growth, for example, of some African countries, and to maximise opportunities in post-COVID-19 recovery for a more inclusive and sustainable future. It underscores the importance of prioritising the continent’s interests in areas such as access to finance and pharmaceutical products, including a vaccine, and in strengthening healthcare and food systems. It also reminds us that gender equality, leveraging the youthful population, improving governance and digital transformation (e.g. internet access, e-government, e-learning, e-justice, e-trade, and e-health) have to feature prominently in the post-COVID reconstruction and development agenda.
We are reminded at this time of the importance of trade. We cannot prosper in isolation – this has become very clear during the pandemic. See a Blog by Gerhard Erasmus on the Implications of COVID-19 for regional trade. We have witnessed the implementation of many restrictive trade measures across the continent, including export restrictions/prohibitions of essential medical or food supplies. Such export restrictions have negative effects – they decrease supply, raise prices in importing countries, and disrupt supply chains. See a Blog by Willemien Viljoen on South Africa’s trade for March 2020 – significant trade surplus shows the initial impact of COVID-19 on imports. South African businesses, across a broad range of sectors, are well-represented in neighbouring countries, especially in southern Africa. Any restrictions imposed by South Africa will impact regional value chains, which bring many essential products to consumers and to healthcare and other essential services providers.
COVID-19 has tested the viability of industries and trade linkages across the continent. It has exposed fragile productive sectors and shown how important well-functioning trade infrastructure and corridors are to ensure access to medical supplies, food, and inputs into production processes. This prompts us to rethink our industrial and trade policies going forward – what will make our economies and societies more resilient in the face not only of pandemics, but climate and other disasters that will come our way.
We need industrial policies capable of addressing the realities of a 21st century economy and public policy objectives (e.g. safety, health and essential needs) – industrial policies that focus on productive capacity development, value added products, and servicification of production (e.g. in agriculture and industry). Traditional industrial policies, focusing only on the development of core manufacturing, are woefully outdated and will not produce desired outcomes for a modern economy.
We also need trade policies that support sustainable long-term solutions and shared benefits of international trade transactions. See a Blog by Patrick Low on The role of trade policy during the COVID-19 pandemic and its aftermath.
Trade facilitation measures are also important to expedite the clearance and transit of goods and services. Governments need to remove non-tariff barriers to facilitate trade; digital trade solutions (e.g. electronic documents and payments) are essential to ease congestion at border posts.
It has become crystal clear that a country cannot be self-reliant in stemming the pandemic. Collective commitment and concerted efforts across governments, private sector and civil society organisations are necessary to effectively mitigate the impacts and spearhead recovery, post-COVID-19. Cooperative and coordinated actions are important and necessary, but they are not enough. Pragmatic solutions and effective legally binding rules at national and international levels are required. See a Working Paper by Trudi Hartzenberg and Gerhard Erasmus on Governance in abnormal times – dealing with COVID-19: A regional perspective from South Africa.
We are pleased to bring you this collection of blogs and publications on COVID-19 and its impact in this newsletter.
We look forward to your feedback; and wish you all the best.
The tralac team
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We will all remember Africa Day 2020 (25 May). While government measures and responses to the COVID-19 pandemic make the usual Africa Day celebrations impossible, we hear that many are embracing digital platforms to listen to broadcasts by Presidents, participate in continental workshops and music concerts. We now know it is possible to have policy discourses among stakeholders, to make and implement policy and regulations, and to trade with the support of digital solutions.
In some quarters, it is lamented that the African Continental Free Trade Area (AfCFTA) negotiations have all but stopped, and that trade under the AfCFTA regime will not begin on 1 July 2020. Careful scrutiny of the negotiations process reveals that the initial impressive momentum of negotiations had already slowed down well before the pandemic struck.
Africa deserves a continent-wide free trade agreement that addresses the real challenges that the continent is facing, not only now, during the pandemic, but more generally in a digital 21st century. We know that non-tariff barriers are far more pernicious impediments to intra-Africa trade than tariffs. COVID-19 is serving to bring into very sharp relief this reality, and many other lessons about trade and integration on the continent and in the global economy. And ironically, the pandemic is providing an important opportunity to reflect and appraise where we stand in the AfCFTA negotiations, and to recalibrate where necessary. Let’s not miss this opportunity.
Read this blog on the tralac website.
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Gerhard Erasmus and Trudi Hartzenberg
In this Working Paper we take a look at the emergency measures announced and implemented by the South African Government, their local and regional implications, and what awaits policy makers when they have to pick up the pieces again.
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Rwatida Marufutu and Talkmore Chidede
Most, if not all, African governments have implemented several trade-related responses and measures during the coronavirus pandemic. This Trade Brief provides an overview of the COVID-19 trade related measures adopted by member states and the responses at continental and regional levels.
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IMF Emergency Funding in the face of the COVID-19 pandemic
Gavin van der Nest
The severity and duration of the negative consequences of COVID-19 will depend on several factors, including the level of economic and developmental assistance and global partnerships. This Trade Brief focuses on funding in times of crisis available from the IMF.
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Trade-related policy responses to COVID-19
tralac is closely monitoring trade related policy measures and responses to the COVID-19 pandemic adopted and implemented by African countries and beyond. Take a look at our resources pages:
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tralacBlog is a forum to share and engage with the views of tralac researchers and Associates, as well as guest contributors, on pressing regional integration and trade policy issues affecting African countries in order to encourage relevant, topic-related discussion and debate. View more here.
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The Pandemic and its Aftermath: The Role of Trade Policy
by Patrick Low
On the policy side, some take the position that countries must become more self-reliant and less dependent on foreign promise in order to manage a crisis like COVID-19. Others argue that openness to trade is an essential centrepiece of effective crisis management and the protection of health in a COVID-19 world.
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Why it may be better not to rush the Implementation of the AfCFTA now
by Trudi Hartzenberg and Gerhard Erasmus
Under present conditions, it may not be wise to set new deadlines for when trade under AfCFTA rules will commence. The reasons are twofold: Individual Governments face more urgent challenges in light of COVID-19, and the outstanding negotiations are about complex matters.
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COVID-19 and its implications for women
by Bineswaree Aruna Bolaky and Darsheenee Ramnauth
Crises exacerbate inequalities of all types, including gender-based inequalities. Crises also expose the vulnerabilities inherent in male-dominant societies. Policies for the promotion of gender equality should consider the asymmetric impact of economic shocks on women and men.
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EAC Regional response to the COVID-19 Pandemic
by Geoffrey Osoro
The EAC Secretariat is developing a comprehensive COVID-19 Recovery Plan to direct efforts towards medium-term interventions (2-3 years) aimed at mitigating the fundamental impacts of the pandemic on vital economic and social sectors of the region on a continuous and progressive manner.
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The Implications of COVID-19 for regional trade
by Gerhard Erasmus
While regional integration makes perfectly good sense on a continent with many small national economies and land-locked states, the member states of Regional Economic Communities (RECs) have not succeeded in establishing the institutions and inter-state arrangements necessary for effective cross-border governance. The COVID-19 pandemic has revealed this governance deficit in a dramatic fashion.
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South Africa’s trade for March 2020 – significant trade surplus shows the initial impact of COVID-19 on imports
by Willemien Viljoen
On 30 April, the South African Revenue Services (SARS) released South Africa’s official trade data for March 2020. The data shows some of the initial impact of Covid-19, mainly driven by shutdowns in some of South Africa’s main trading partners which led to a decline in imports and a consequent trade surplus three times the trade surplus for March 2019.
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Recent Publications
tralac promotes active debate on trade law and policy issues in Africa and engages in applied trade law and policy analysis with the aim of addressing the most pressing trade matters for countries in the region. Our research is presented in trade briefs, working papers and books, among others. View more here.
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This book covers various topics related to agriculture and food security challenges in Africa. If there is one thing the current Covid-19 pandemic has done, it is to highlight the interdependence of food (in)security on food production systems and access to food (trade, tariff and non-tariff barriers, prices and market conditions).
Given the current state of the food production system, how will it be possible to improve physical and economic access to sufficient food, while also ensuring the sustainability of Africa’s food and agricultural systems?
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Key trade stats for AGOA beneficiaries to end March 2020
Aggregate exports to US: 2020 YTD to March:
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$ 4.54 billion (+1.35% year on year)
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(Share) of AGOA exports: 2020 YTD to March:
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$ 1.04 billion (23% of total exports)
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Overall exports from AGOA beneficiaries to the United States have increased slightly compared to the same period in 2019, despite Nigeria in particular recording a significant export decline to the US. This has also translated into significantly lower overall AGOA exports (mainly due to the impact of oil – being an AGOA-eligible product). A number of exporters have however seen a year-on-year increase in exports under AGOA, including Kenya (currently the third-largest beneficiary), Lesotho, Ethiopia, Madagascar, Côte d’Ivoire, and Tanzania. Namibia has also entered the list of top-15 AGOA exporters, with trade under AGOA increasing threefold from $0.66m to $2m in the first quarter of 2020 (versus 2019).
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Kenya – US Free Trade Agreement
On 6 February 2020, US President Trump announced that the United States intends to initiate trade agreement negotiations with the Republic of Kenya following a meeting at the White House with Kenyan President Uhuru Kenyatta. The announcement came while the US-Kenya Trade and Investment Working Group held its third meeting in Washington (see inaugural meeting, second meeting) - having been established earlier by President Trump and President Kenyatta in 2018 in order to lay the groundwork for a stronger bilateral trade relationship. On 18 March 2020, the Trump Administration, through the USTR, formally notified the US Congress in line with the Bipartisan Congressional Trade Priorities and Accountability Act (Trade Promotion Authority) which, inter alia, subjects “trade agreements to congressional oversight and approval, consultations…”
Follow developments on AGOA.info at this link.
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AGOA Business Connector
The AGOA Business Connector is an online facility on AGOA.info to help enable trade and business connections between producers, exporters, importers, sourcing agents, trade-related service suppliers including trade finance, logistics and related services, support organisations (such as business chambers and exporter associations and others), both from within sub-Saharan African AGOA beneficiary countries and the United States. Registered users are also able to list their businesses or professional trade-related service on the platform, and to communicate with other listings through a messaging facility.
> Download the AGOA Business Connector Brochure at this link
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Popular on AGOA.info: Searchable United States tariff database | AGOA products list
The AGOA products database on AGOA.info has been enhanced through the inclusion of a simplified (yet full) US tariff database, providing six relevant searchable fields: tariff code (HTS), product description, AGOA status (eligibility), GSP status, standard tariff (MFN basis) as well as the non-MFN tariff (when goods enter the US from a non-WTO Member State without claim of any special preferences). Follow the link here:
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Download: AGOA guides and info-graphics
tralac has produced a number of info-graphic type brochures (see section on AGOA.info / Exporter Toolkit) covering a range of AGOA-related topics, including on AGOA’s legal provisions with regard to eligibility and annual/out of cycle reviews, rules of origin, AGOA FAQs, sector-focused brochures (textiles and clothing, agriculture), as well as national AGOA brochures relating to Botswana, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Mauritius, Namibia, Nigeria, South Africa and Tanzania.
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