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tralac Newsletter • Issue 27 • January 2021
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Welcome to tralac’s first newsletter for 2021
In some ways beginning-of-the-year Newsletters are predictable. They convey good wishes, remind readers about unfinished business from the previous year, and mention priorities for the new year. They also serve a useful purpose, despite being unable (mostly) to foresee the unexpected. Covid-19 was not predicted in those first newsletters of 2020.
This first tralac Newsletter for 2021 briefly discusses matters that are now priorities on the African trade governance agenda. It starts with the negotiations to conclude Phase II of the AfCFTA; looks at the decisions adopted by the African Union (AU) Assembly on 5 December 2020 to commence trading under AfCFTA rules; speculates about the profile and responsibilities of the AfCFTA Secretariat and the role of the Regional Economic Communities (RECs) within the AfCFTA scheme of things; and looks at some external developments such as the policies that President Biden may adopt, how the United Kingdom is adjusting to a post Brexit world, and whether some African Governments might start negotiating trade deals with external parties. We also include a trade data update for South Africa – in which we review the country’s trade performance for 2020, showing the impact of the pandemic.
We also want to share a few ideas about tralac’s plans for the new year, in addition to wishing all our readers a safe and successful 2021. As a result of the pandemic, we continue to work as a digital organisation – offering our training and policy dialogue events online and in virtual classrooms and meeting spaces. We foresee that this will be our work modality at least for the first half of 2021. While digital training and dialogue programs do work, they are not perfect substitutes for in-person training and dialogue events. The informal learning among peer groups and the working groups that continue sometimes late into the night provide rich learning experiences that cannot be perfectly replicated in a digital environment. The learning, networking and engagement at in-person dialogue events such as the tralac Annual Conference, the Alumni Workshop or our dialogue events for development partners make valuable contributions to not only building individual capacity, but also strengthening organisations and networks across the continent. But we are also conscious of the carbon footprint that is generated. Post-Covid we will leverage our experience during the pandemic and adopting best practice from other organisations, we’ll use digital solutions to best advantage, blended with in-person meetings, training and dialogue. Our research is already done collaboratively by tralac staff, tralac Associates and increasingly alumni of tralac’s training programmes, as well as a growing network of experts across the continent. Taking lessons from the experience of the pandemic is essential for developing organisational resilience and adaptability. If you have any experiences to share, we’d be very pleased to hear from you.
This year looks to be a very interesting and important year for trade-related developments. At tralac we will continue to focus on Africa’s trade agenda. This includes multilateral trade governance matters, Africa’s trade relations with specific global partners, including the European Union, United Kingdom, United States, China and many more, and of course Africa’s own trade and integration agenda. Notably, a decision was made by the Heads of State and Government of the African Union (AU), at the 13th Extraordinary Session of the AU Assembly on 5 December 2020, for trade to begin under the African Continental Free Trade Agreement (AfCFTA) on 1 January 2021, while negotiations on tariff concessions, some rules of origin and specific commitments for the 5 priority services sectors continue. While the negotiations continue, implementation of the AfCFTA has now started in earnest. This is a critical phase for the AfCFTA. Much analysis, training and implementation support is required. Equally important is providing information to the private sector and other non-state actors – they are key to the success of the AfCFTA. tralac will continue with stakeholder engagement, analysis and training on these matters.
Covid-19 and its implications for Africa are not discussed in any detail here but cannot be ignored. We mention what, in our view, has become its gravest consequences, namely the economic and social devastation caused and the implications for the public health sector in Africa and for African Governments generally.
When the pandemic first struck, many thought Africa might be spared the worst, because so many Africans are young or work on the land. Yet, it now looks as if the virus will leave more lasting scars in Africa than elsewhere. As observed in international media reports, rich countries can hope for a rapid economic rebound as they vaccinate their people, but Africa is years away from doing so and ensuring herd immunity. African economies will also be burdened by more debt. Repeated waves of infection will disrupt the schooling of millions. The educational and demographic trends that were among Africa’s best reasons to be hopeful are under threat.*
And what is happening elsewhere is not reassuring either. The Corona virus is mutating fast and the efforts of the European Union to ensure that the populations of the member states are vaccinated have become embroiled in acrimony over commercial contracts with the producers of vaccines and squabbles about who should get the vaccines first.
Covid-19 has been catastrophic for Africa. Dealing with its consequences should be the urgent priority for years to come. Its effects cannot be tackled by way of individual efforts in different nations or by closing borders. It should become the urgent priority of those structures able of generating effective and urgent collective responses, including the African Union and of the RECs. This has not yet happened to the extent required.
We look forward to hearing from you and hope that this year will bring good health, hope and many opportunities for us to engage.
The tralac Team
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tralac Interns and Volunteers
We are very pleased to welcome a new group of volunteers and interns to tralac. They bring a diversity of expertise and experience on trade and related matters. They will join the tralac team to work on a range of important matters including trade and gender in Africa’s regional trade arrangements and the AfCFTA; customs and border management issues including implementation of the WTO Trade Facilitation Agreement and the AfCFTA Annex on Trade Facilitation and the related Annexes; and the role of road transport and related regulation in intra-Africa trade. In addition, the team will be monitoring the release of trade data by African countries, analysing intra-Africa trade, and trade with global partners, amongst other issues.
Please find brief profiles of our Volunteers and Interns here
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tralac Daily News
tralac curates a selection of the latest news and analysis relating to trade and integration in Africa and globally to enhance trade policy knowledge and information sharing. Sign up to receive important international, continental and national trade-related news and developments directly in your inbox.
CLICK HERE to subscribe
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Recent blogs
Will 2021 see African Governments negotiating with External Partners? The conclusion of trade agreements between African States and third parties is an important matter. Only 16% of the goods produced in Africa are sold in Africa. This indicates that more than 20% of Africa’s trade is with global trade partners. But this is also a controversial topic.
Trade under AfCFTA Rules started on 1 January 2021, but hard work lies ahead. At its 13th Extra Ordinary Session held virtually in Johannesburg on 5 December 2020, the Assembly of the African Union (AU) announced that trade in goods under the AfCFTA will start from from 1 January 2021. It is important that the legal basis for the interim AfCFTA trade regime that commenced on 1 January 2021 should be clear.
Speculating about Phase II of the AfCFTA Negotiations. The negotiations to adopt the AfCFTA’s Phase II Protocols are being launched and Phase III negotiations should be concluded by 31 December 2021. Phase II will cover investment, intellectual property rights and competition policy. What will the new Protocols provide for and how will they fit into the AfCFTA’s scheme of things?
The AfCFTA Secretariat: Is the Action now in Accra? The Assembly of the AU met virtually in Johannesburg on 5 December 2020 and adopted several important decisions about interim trade arrangements, the completion of the AfCFTA negotiations, as well as establishing AfCFTA structures and practices. One of these noted the outcomes of the 3rd Meeting of the Council of Ministers to transfer the coordination of the AfCFTA negotiations from the AU Commission to the AfCFTA Secretariat.
AfCFTA Phase II and III Negotiations – Update. The AfCFTA Negotiations are scheduled in phases. Phase I covers trade in goods and trade in services. Phase II covers IPRs, investment and competition policy. In February 2020, the AU Assembly of the Heads of State and Government adopted a decision to commence Phase III on E-Commerce, immediately after Phase II Negotiations.
AfCFTA Parallelism and the Acquis. According to the Governing Principles of the AfCFTA, the RECs’ Free Trade Areas (FTAs) are building blocks for the AfCFTA. The AfCFTA shall also be governed by the preservation of the acquis and best practices in the RECs, in the State Parties and International Conventions binding the African Union. What will these provisions mean in practice?
Who is doing what in the fintech space in Africa? Digital banking is driving Africa’s recovery. Africa’s biggest mobile telephony operators all have ambitions to transition from being Telcos (mobile telephony companies) to Techcos (technology companies). The emerging model, a global trend, is of companies which are ‘digital service providers’ and offer a range of businesses (finance, health, entertainment) on their platforms rather than only traditional mobile telephony.
Preferential trade with Mauritius: market access for the UK, China, and state parties of the AfCFTA. As of 1 January 2021, the Mauritian tariff book has three additional columns for preferential market access to the Mauritian market. These tariffs are for imports from the United Kingdom (UK), China and state parties of the AfCFTA. This blog reviews the preferential market access available under these agreements. Market access conditions of interest are highlighted.
South Africa’s implementation of the African Continental Free Trade Agreement: customs arrangements and technicalities. Trading under the AfCFTA was set to begin on 1 January 2021. South Africa with the rest of the Southern African Customs Union (SACU – Botswana, Eswatini, Lesotho, and Namibia) submitted its tariff offer. The administrative procedures to receive imports under the AfCFTA into the South African market are in place. But there are delays in South Africa implementing the AfCFTA which are halting the implementation of the AfCFTA for all SACU countries.
VIEW ALL BLOGS
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South Africa: 2020 trade update
2020 saw strict restrictive measures implemented by SA to curb the spread of COVID-19. Through 2020, the monthly trade data showed the impact of these measures. On 29 January 2021, the South African Revenue Services (SARS) released South Africa's official trade data for December 2020. This enables an analysis of South Africa's trade performance during the first year of the Covid-19 pandemic. Also, the 2020 trade performance can be compared with 2019 to assess the impact of Covid-19 and related mitigation measures in 2020.
This report analyses the impact of Covid-19 and restrictive measures on South Africa's 2020 trade performance and trends. To achieve this South Africa's 2020 total trade, trade surplus, exports, and imports with different individual trade partners and regional groupings are evaluated.This is also compared with 2019 trade data. View the report here.
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African Continental Free Trade Area (AfCFTA)
The AfCFTA is flagship project of the African Union’s Agenda 2063, a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years. The Agreement entered into force on 30 May, 2019 for the 24 countries that had deposited their instruments of ratification with the African Union Commission (AUC) Chairperson. Subsequently, the operational phase of the AfCFTA was in Niamey, Niger on 7 July, 2019.
An Extraordinary Summit of the AU Assembly on the AfCFTA took place virtually on 5 December 2020. The Assembly approved the start of trading under the AfCFTA Agreement as 1 January 2021. As at 5 February, 36 countries have both signed and deposited their instruments of AfCFTA ratification with the AUC Chairperson. Of the 55 AU member states, only Eritrea has yet to join.
For more background info on the AfCFTA, including its origins and negotiations process, adopted legal texts and policy instruments, and research and analysis from tralac, visit our dedicated AfCFTA Resources page.
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The AfCFTA presently finds itself being poised between an incomplete founding agreement and a decision by the AU Assembly to “start trading under the African Continental Free Trade Area”. This decision was adopted on 5 December 2020 and provides that trade under the AfCFTA Agreement should begin on 1 January 2021. However, the AfCFTA cannot yet be implemented as designed and a unique legal dispensation has therefore been launched to make this possible.
This paper discusses this interim arrangement for AfCFTA trade and its implications, the ad hoc legal instruments on which it will be based, and mentions the challenges expected to confront the private sector when firms will utilize this unique implementation process.
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La Zone de Libre-Echange Continentale Africaine: Un guide du tralac
tralac’s guide to the AfCFTA Agreement booklet – how it fits within Africa’s broader development agenda, architecture of the Agreement, what the Agreement covers and institutional arrangements, as well as an overview of intra-African and intra-REC trade – is now available in French.
DOWNLOAD IN FRENCH
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trade-related policy responses to COVID-19
tralac is 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 to find out more:
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Key trade stats for AGOA beneficiaries
Aggregate exports to US: 2020 YTD to end November
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$ 16.7 billion
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(Share) of AGOA exports: 2020 YTD to end November
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$ 3.72 billion (22 % of total exports)
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| Total US import duties on aggregate imports from AGOA beneficiaries: 2020 YTD to end September |
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$ 33.7 million (0.25% of value of total US imports from AGOA beneficiaries) |
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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…”. In May and June respectively, the United States and Kenya published their negotiating principles. More recently, the Kenya private sector consortium also submitted its inputs. The negotiations began on 7 July 2020.
This brochure provides a broad overview – and a number of details – of the current market access arrangements that Kenya enjoys under AGOA, and relevant information and context around the planned transition (negotiations) towards a bilateral FTA, including timelines and early milestones to date, the thematic coverage and objectives of the negotiations (as published by the parties), as well as a closer view of the countries’ trade with each other.
> Read more here.
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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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Download: AGOA guides and info-graphics
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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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