Zimbabwe abandons price controls, promotes currency trading

by Brian Latham

Zimbabweans will be able to trade in any currency they choose and the government will abandon price controls with immediate effect, acting finance minister Patrick Chinamasa said today.

Chinamasa told parliament that price controls would be abandoned because they had “unintentionally’’ harmed businesses and added to Zimbabwe’s hyperinflation. Zimbabweans will also be allowed to use “multiple currencies’’ for all business, including trading shares on the Harare-based Zimbabwe Stock Exchange, he said, presenting Zimbabwe’s national budget.

The country is in its 11th year of economic recession and has the world’s highest inflation rate, last estimated at 231 million percent in July 2008. It faces almost total collapse of its health, education, power and water facilities as Mugabe’s Zanu-PF and the Morgan Tsvangirai-led Movement for Democratic Change spar over the formation of a power sharing government.
Chinamasa gave a bleak picture of the southern African nation’s economy, saying, “It requires a paradigm shift in terms of acknowledging that we cannot eat what we do not have.”

Most businesses have abandoned the Zimbabwe dollar, which is in short supply because the central bank can’t print money fast enough to meet demand. Government employees will be paid allowances in vouchers which can be converted into foreign currency “in line with the expected improvement in foreign currency inflows,” Chinamasa said on state radio and television. The Zimbabwe dollar will not be abandoned. Instead it will operate alongside foreign currencies like the U.S. dollar and the South African rand, he said.

A corn and wheat monopoly held by the state-owned Grain Marketing Board will also be terminated, he said. Farmers and millers will be permitted to trade without state interference, with immediate effect.

Separately, the United Nations’ World Food Program today said that 6.9 million Zimbabweans out of the population’s estimated 11 million people require emergency food rations.

Bloomberg

EAC trade barriers to be eliminated by 2010

Trade barriers within the East African Community are set to be eliminated by January next year once the East African Community Market protocol becomes operational.

The Minister for East Africa Community Jeffah Amason Kingi said that once the ongoing negotiations by high level task force from the five member states of the community resolve outstanding issues, there will be a complete trade tariff within the region.

Kingi expressed hope that once the barriers are removed there will be movement of labor, services and capital without any hindrance. "The Customs Union has already been put in place and by January 2010 we hope to have a common market that will lead to a monetary Union before a complete political federation is achieved" the Minister said.

Kingi said he was confident that outstanding issues expressed by some member states will be addressed during this round of negotiations and the two subsequent meetings to be held in Burundi and Kampala. He called on member states to relinquish some of their sovereignty to other organs in the EAC in order to achieve deeper integration. "We also need innovation to source for additional funds to support institutional reforms necessary for deeper integration" he added.

On persistent harassment by Ugandan security forces on Kenyan fishermen and the alleged seizure of some of Kenya's islands on Lake Victoria by Uganda, the Minister said soon the Prime Minister will convene an inter-ministerial meeting of relevant ministries to address the issue.
Kingi said soon after the common market protocol comes into force, trade within the region will be negotiated as a block.

Minister for Immigration and registration of persons Mr. Otieno Kajwang said his Ministry has relaxed regulations on free movement of people within the region to facilitate trade and movement of labour.

The Tanzanian head of delegation Musa Uledi allayed fears that Tanzania would pull out of the common market. He said his country was ready to relax some of its regulations, especially those regarding land ownership in order to ensure the success of the protocol.

KBC

China in Africa for the long haul

by Alistair Thomson

Chinese businesses are taking a long-term view and pursuing strategic expansion in Africa, even though China's multiplying investments on the continent have lost some luster in the global downturn.

Beijing and Chinese companies have pledged tens of billions of dollars to Africa in loans and investments, mostly to secure raw materials for China, the world's fastest-growing large economy. That long-term interest remains intact despite a worldwide economic slump that has hit China's exports to wealthy countries and a sharp decline in African mineral shipments to China.

China-Africa trade has surged by an average 30 percent a year this decade, soaring to nearly $107 billion in 2008.

"China is in Africa for the long term, and strategically," said David Shinn, a former U.S. ambassador to Ethiopia and Burkina Faso and adjunct professor at George Washington University. "They will not veer from this, in my view."

Far from retreating, many Chinese entrepreneurs are hunting for bargains. Chinese and Indian firms have expressed interest in taking over the top Zambian cobalt producer, Luanshya Copper Mines, since it halted operations in December, the Zambian state media reported.
In South Africa, Standard Bank, itself 20 percent owned by the Industrial and Commercial Bank of China, said last month that it was advising Chinese mining clients on buying opportunities in Africa and elsewhere.

"They are looking at 2009 and saying, 'This is a time we see as a very big buying opportunity. We've got the backing from government, we've got the financial means,"' said Thys Terblanche, the bank's head of mining and metals investment banking.

Beyond mining, Chinese state companies are pushing ahead with strategic energy sector investments and infrastructure; private outfits are continuing to expand in technology areas.
"Some developed Western countries hit by the financial crisis are reducing their investment in Africa. Objectively, this is a powerful opportunity for Chinese businesses to expand their investment and market share in Africa," Cui Yongqian, a former Chinese ambassador to Congo and Central African Republic, told a China-Africa trade forum this month.

Trade with Angola, China's biggest source of African crude oil, reached $25.3 billion in 2007 and Beijing has offered Luanda $5 billion in oil-backed loans.

Huawei Technologies, based in Shenzhen and the biggest telecommunications equipment maker in China, is pushing south from its established stamping ground in North Africa.

"I see no reason why they would want to decrease their investments in the telecommunications sector, because that's profitable for them," said Shinn.

Even China's slower economic growth far outpaces that of other major economies. Beijing says it can achieve 8 percent growth in 2009. The IMF says it may cut its forecast to about 5 percent, from the 9 percent it predicted in October.

While competitors lay off workers and delay new projects, China Nonferrous Metals is opening a copper smelter this month in Chambishi town, which Zambia has transformed into a tax-free economic zone to attract Chinese investment.

President Rupiah Banda and the Chinese trade minister, Chen Deming, opened a second economic zone this month near the Zambian capital, Lusaka, where Chinese companies will assemble electrical goods like television sets and cellphones for export.

"Zambia is still an attractive investment destination" and this will give "confidence to existing firms operating here not to start scaling down their operations," Banda said.

Zambia's copper belt is witnessing a growth in Chinese deals. "In Zambia, mining investment is large-scale and long-term," said Xing Houyuan, director of multinational business at China's Academy of International Trade and Economic Cooperation.

"I don't see any likelihood of a pullback," Xing said. "Companies won't give up investment plans because of the short term. The biggest impact is likely to be on projects that are still in the planning stage, where the money had not really been committed yet."

In Liberia, China Union has just signed a $2.6 billion contract to develop the Bong iron ore deposit.
China also insists the slowdown will not dampen interest. "We will continue to have a vigorous aid program here, and Chinese companies will continue to invest as much as possible in Africa because it is a win-win solution," Foreign Minister Yang Jiechi of China said in South Africa in mid-January.
The global slowdown, however, has led some Chinese businesses to close operations in Africa and prompted a rethinking of some of the multibillion-dollar deals that blazed a trail across the continent.
Congo and Guinea are cases in point.
Congo rode the boom in commodities to attract a wave of foreign investment in its rich but long-neglected copper, cobalt, gold and other mineral resources after postwar elections in 2006. Now that dream is fading.
"We have one processing mill and several workshops in Congo. We have closed them. There are many Chinese-invested firms in Congo, and I understand most of them have shut down their operations," said a marketing director at a private company in China's eastern province of Zhejiang that supplies cobalt and nickel compounds for use in mobile phone batteries

"I don't think we will resume production in the factories in Congo any time soon. We expect the economic slowdown could worsen in this year and weigh on the prices further," he said, requesting anonymity because he was not authorized to speak to the media.
Africa's heavy dependence on resource exports means it feels any squeeze more painfully. Global trade fell an annualized 3.7 percent from September to November last year, its biggest drop since 2001. Congo's franc has fallen 20 percent against the dollar in less than four months and foreign reserves are at a five-year low. The government is seeking a $200 million bailout from the International Monetary Fund.

Guinea, the world's top exporter of bauxite, had hoped for its own multibillion-dollar deal with China to build hydroelectric dams, roads and bridges in return for mines. Talks have dragged as the economic climate has worsened, hampered by Guinea's instability and a coup last month.

IHT

China marches on in Africa despite downturn

by Alistair Thomson

Chinese businessmen are taking a long-term view and pursuing strategic expansion in Africa even though China's multiplying investments on the continent have lost some lustre in the global downturn.

Chinese companies have pledged tens of billions of dollars to Africa in loans and investments mostly to secure raw materials for the world's fastest-growing large economy. That long-term interest remains intact, despite a worldwide economic slump that has hit China's exports to the rich world and a sharp decline in Africa's mineral shipments to China.

China-Africa trade has surged by an average 30 percent a year this decade, soaring to nearly $107 billion in 2008.

'China is in Africa for the long term, and strategically,' said David Shinn, a former U.S. ambassador to Ethiopia and Burkina Faso who teaches at George Washington University's Elliott School of International Affairs. 'They will not veer from this, in my view,' he said.

Far from retreating, many Chinese businessmen are hunting for bargains. Chinese and Indian firms have expressed interest in taking over Zambia's top cobalt producer Luanshya Copper Mines since it halted operations in December, Zambian state media reported.

South Africa's Standard Bank, itself 20 percent owned by the Industrial and Commercial Bank of China (ICBC), said last month it was advising Chinese mining clients on buying opportunities in Africa and elsewhere.
said
'They are looking at 2009 and saying 'This is a time we see as a very big buying opportunity. We've got the backing from government, we've got the financial means', said Thys Terblanche, the bank's head of mining and metals investment banking.

Beyond mining, Chinese state companies are pushing ahead with strategic energy sector investments and infrastructure; private outfits are continuing to expand in technology areas.
'Some developed Western countries hit by the financial crisis are reducing their investment in Africa. Objectively, this is a powerful opportunity for Chinese businesses to expand their investment and market share in Africa,' Cui Yongqian, a former Chinese ambassador to the Republic of Congo and Central African Republic, told a China-Africa trade forum this month.

Trade with Angola, China's biggest source of African crude oil, reached $25.3 billion in 2007 and Beijing has offered Luanda $5 billion in oil-backed loans.

Shenzhen-based Huawei Technologies, China's biggest telecoms equipment maker, is pushing south from its established stamping ground in North Africa.

'I see no reason why they would want to decrease their investments in the telecommunications sector, because that's profitable for them,' said George Washington University's Shinn.
'It will vary according to sector and country ... It's very dangerous to generalise about the China-Africa relationship,' he said. 'They will certainly make tactical retreats where the economy requires it.'

Even China's slower economic growth far outpaces that of other major economies. Beijing says it can achieve 8 percent growth in 2009. The IMF says it may cut its forecast to about 5 percent, from the 9 percent it predicted in October.

While competitors lay off workers and delay new projects, China Non-Ferrous Metals Corporation is opening a copper smelter this month in Chambishi town, which Zambia has transformed into a tax-free economic zone to attract Chinese investment.

Zambian President Rupiah Banda and China's Trade Minister Cheng Deming launched a second economic zone this month near the capital Lusaka, where Chinese firms will assemble electrical goods such as television sets and cellphones for export.

'Zambia is still an attractive investment destination (and this will give) confidence to existing firms operating here not to start scaling down their operations,' Banda said.

Zambia's Copper Belt is witnessing a growth in Chinese deals. 'In Zambia, mining investment is large-scale and long-term,' said Xing Houyuan, director of multinational business at China's Academy of International Trade and Economic Cooperation, which is affiliated to Beijing's Commerce Ministry.

'I don't see any likelihood of a pullback ... Companies won't give up investment plans because of the short term. The biggest impact is likely to be on projects that are still in the planning stage, where the money had not really been committed yet,' Xing said.

In Liberia, China Union has just signed a $2.6 billion contract to develop the Bong iron ore deposit.

China also insists the slowdown will not dampen interest. 'We will continue to have a vigorous aid programme here and Chinese companies will continue to invest as much as possible in Africa because it is a win-win solution,' Chinese Foreign Minister Yang Jiechi said in South Africa in mid-January.

However, the global slowdown has forced some Chinese businesses to close operations in Africa and prompted a re-think of some of the multi-billion-dollar mega-deals that blazed a trail across the world's poorest continent. Democratic Republic of Congo and Guinea are cases in point.

DR Congo rode the boom in commodities to attract a wave of foreign investment in its rich but long-neglected copper, cobalt, gold and other mineral resources after post-war elections in 2006. Now that dream is fading.

'We have one processing mill and several workshops in Congo. We have closed them. There are many Chinese-invested firms in Congo and I understand most of them have shut down their operations,' said a marketing director at a private firm in China's eastern province of Zhejiang, which supplies cobalt and nickel compounds for use in mobile phone batteries.
.
'I don't think we will resume production in the factories in Congo any time soon. We expect the economic slowdown could worsen in this year and weigh on the prices further,' he said.

Africa's heavy dependence on resource exports means it feels any squeeze more painfully. Global trade fell an annualised 3.7 percent between September 2008 and November last year, its biggest drop since 2001.

Congo's franc has fallen 20 percent against the dollar in less than four months and foreign reserves are at a five-year low. The government is seeking a $200 million bailout from the International Monetary Fund's Exogenous Shocks Facility.

A much-trumpeted $9 billion package of Chinese loans, investment and infrastructure projects in return for Congolese minerals contracts may be cut back to $6 billion, a diplomat in Kinshasa said, partly to appease the IMF which has expressed concern at Congo taking on such huge debts.

Guinea, the world's top exporter of bauxite aluminium ore, had hoped for its own multi-billion-dollar deal with China to build hydropower dams, roads and bridges in return for mines. Talks have dragged as the economic climate has worsened, hampered by Guinea's instability and a coup last month after the death of President Lansana Conte, said Ahmed Tidiane Diallo, director-general for mining projects at the Mines Ministry.

Gabon, similarly eager to cement a 1.6 trillion CFA franc ($3 billion) contract to develop the 360-million-tonne Belinga iron ore deposit, has accused its Chinese partners of dragging their feet amid the uncertain economic environment.

Reuters

European Commission defends dairy export subsidies

by Darren Ennis

The European Commission said its decision to offer subsidies for dairy products leaving the European Union would be temporary and not affect world prices.

"This decision does not in any way affect our overall commitment to the elimination of export subsidies as part of Doha (trade talks)," the EU executive, which oversees trade for the 27-member bloc, said in a statement.

The Commission was responding to a call by trade ambassadors from the Cairns Group -- a coalition of 19 countries including Brazil, New Zealand, South Africa, Canada and Indonesia -- to reverse its decision.

"The reaction of our trading partners, in particular dairy exporters, highlights the value of the concessions we are ready to make as part of a global trade deal."

The Guardian

Iran to build trade center in Senegal

The governor general of Iran’s Fars Province, Mohammadreza Rezazadeh and Senegalese Commerce Minister Mamadou Diop have signed a memorandum of understanding in which Iran agreed to build a trade center in Dakar.

According to Mehr News Agency, Rezazadeh called Senegal an entrance gate to Africa’s markets. He added that during his last visit to Senegal, Shiraz’s private sector successfully formed a trade consortium in the African country that would help promote trade between Senegal and the Iranian province.

Diop welcomed the promotion of bilateral trade ties, saying that Senegal lacks modern industries and is in need of the latest technology.

Tehran Times

Angola becomes China's largest African trade partner

Angola has become China's largest trade partner in Africa,Chinese Minister of Commerce Chen Deming said during a meeting with Angolan Prime Minister Antonio Paulo Kassoma. China is willing to strengthen the cooperation between the two parties in fields including agriculture, infrastructure, public health and human resources, in joint efforts to cope with the challenges of the financial crisis, he added.

Chen said that bilateral trade volume between China and Angola reached 25.3 billion USD in 2008. China has earnestly implemented the eight-step package providing major assistance to Africa announced at the Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) held in November 2006, forgiven Angola’s matured debts equivalent to 67.38 million yuan and given Angola duty free favorable treatment on 466 categories of products.


China will make full use of the opportunities offered by mechanisms such as the FOCAC and the China-Portuguese Speaking Countries Economic and Trade Forum to continue developing China-Angola bilateral economic and trade relations, encourage reputable and capable Chinese enterprises to take part in Angola's national reconstruction programs, and make more investments in Angola.

Prime Minister Kassoma spoke highly of the current China-Angola relationship and hopes to broaden the scope of cooperation with China in areas such as agricultural development and expanding investment.

The Southern African

China may zero-tariff more African imports

China is considering including more African goods in a list of products excluded from import tariffs as a way of further boosting trade with the continent.

China already levies no import tariffs on more than 10 types of goods imported from 31 African countries, including textiles, machinery and farm products, the official Xinhua news agency said.

“On the basis of offering zero tariffs for goods from 31 least developed African countries, we will consider further expanding the beneficiary scope of African products, and encourage enterprises to favour African goods under the same conditions,” it quoted Commerce Minister Chen Deming as saying.

Daily Nation

India plans to triple trade with Africa

India expects to triple trade with Africa over the next five years to reach $100bn, officials said, as it tries to strengthen ties in a region where Asian rival China has made rapid inroads.

Despite an economic slowdown, India is planning a slew of projects in agriculture, small industry, mining, Information and Communication Technology (ICT), oil pipelines, chemical industry, power generation and transmission among others. The government also plans to double credit lines to $5.4bn over five years and provide $500m for projects from the “Aid to Africa” budget, Pranab Mukherjee, India’s External Affairs minister said during a India-Africa business summit in New Delhi.

Business leaders and politicians from at least 32 African countries and India vowed to improve bilateral trade and relations, which date back to the British colonial period when thousands of Indians were taken to Africa as indentured labourers. Many stayed on, and there are now close to 2 million people of Indian ethnic origin living in Africa.

“We share an excellent relationship with Africa. The economic slowdown will not affect trade and we will withstand the financial crisis,” Anand Sharma, India’s junior foreign minister, said on the sidelines of the India-Africa business summit.

India’s trade with Africa soared from $967m in 1991 to $35bn in 2008, but remains way behind China’s nearly $100bn. China trailed India in trade with Africa a decade ago, but its investments have since risen considerably on the back of major energy construction and mineral extraction projects.

India has held hundreds of meetings on the sidelines of this week’s summit which could result in hard deals, industry leaders said. India will also donate $1bn to connect 53 African countries through a satellite and fibre-optic network to promote “Virtual” medical and educational programmes.

Officials said Africa could benefit from India’s low cost business models. “India can bring in its low cost expertise in the manufacturing sector and in Information technology...there is so much India can offer to Africa,” Maurice Kagimu Kiwanuka, Uganda’s Minister of State for Economic Monitoring, said.

Uganda has a $100bn trade with India and Kiwanuka said that could double in less than five years as Indian companies invest in sectors such as food processing and textiles.

The Peninsula

Exporting inside Africa as expensive as exporting to Asia

by Moses Magadza

In August 2008, the Southern African Development Community (SADC) launched a free trade area (FTA). This means that goods entering any part of SADC from within the region will no longer attract import tax.

Despite the new free trade agreement linking southern African states, it still costs as much to move goods between African states as it costs to move goods from Asia to Africa, according to an economist. While the SADC FTA is an important milestone, economists point to various hurdles that still litter the road to regional integration and increased trade among SADC countries.

“It was a good start but reducing tariffs is just one aspect of regional integration,”said economist Klaus Schade, acting director at the think tank called the Namibian Economic Policy Research Unit (NEPRU).

He argued that for the SADC FTA to achieve its objectives, non-tariff barriers need to be removed. These include cumbersome customs procedures, lack of transport infrastructure and delays at border crossing points. “If these issues are not addressed we won’t see strong growth in intra-regional trade.”

Schade recalled an observation he made while on a recent trip to Tanzania: “The cost of moving a container from Tanzania to Uganda or Rwanda is the same as that of transporting a container from China to Tanzania because of the high transport costs.”

Working towards common customs documents and harmonising other systems may draw the region closer to its integration objectives.

Schade also pointed out that “SACU (Southern African Customs Union) had already removed tariffs for SADC imports about three years ago. Therefore, imports to Namibia from SADC countries are not going to become cheaper because SADC has launched a FTA.”

While admitting that the SADC FTA could increase access to the wider SADC market for SACU member states like Namibia, Schade said the relatively low purchasing power of SADC citizens leads to low demand for goods in the region. Save for South Africa, Botswana and Mauritius, the rest of the 15 SADC countries are classified as either poor or developing.

“We produce almost the same products and raw materials. There is no trade in manufacturing products, hence the scope for increased intra-regional trade currently is very limited,” he explained. He is optimistic that the launch of the SADC FTA would create awareness of the SADC market and its potential. But, while “that might provide momentum for addressing non-tariff barrier issues, the SADC FTA alone will not solve all our problems.”

These problems are not new. Towards the end of 2007 a meeting was held as part of efforts to develop the Walvis Bay-Ndola-Lubumbashi trade corridor to link Namibia, Zambia and the Democratic Republic of Congo (DRC). There businesspeople from DRC expressed concern over the lack of return trip loads, should they use the corridor. They said driving back empty trucks doubled their transport costs.

Another perennial concern has been SADC states’ multiple memberships to different trade blocs, according to University of Namibia economist Dr Joel Eita.

“Consider this: Zambia is a member of the Common Market for East and Southern Africa (COMESA) and also hosts the COMESA secretariat. At the same time it is a member of SADC.
“Now we have a SADC FTA. South Africa is a chairing member of SADC but is not a member of COMESA. By virtue of being a member of SADC, Zambia should not impose tariffs on goods entering it from South Africa. “Yet as a member of COMESA, Zambia must charge tariffs on goods coming from outside COMESA. How does Zambia deal with South Africa? This presents a policy headache,” Eita expounded.

Other trade blocs to which some SADC members are affiliated to include the East African Community and the Economic Community for West African States.

Turning to attempts by African states to launch an Africa-wide FTA early this year before the success or otherwise of the SADC FTA has been ascertained, Eita said such moves are “over-ambitious. My view is that we should start integrating regional trading blocs before we can hope to integrate the whole continent,” he argued.

Eita also said there was need for SADC economies to diversify, saying only South Africa was sufficiently diversified to benefit meaningfully from a SADC FTA. “Zimbabwe also has a very strong industrial base. It is actually a sleeping giant because of the things happening there. Other SADC countries must develop their manufacturing sectors and add value to their products. Botswana, for instance, cannot sell diamonds to Namibia or Angola,” he said.

He warned that unless SADC economies diversified, the direction of trade would remain as it was before the SADC FTA: from South Africa to smaller SADC economies while raw materials would continue to flow to the West and Asia.

Takawira Musavengana, a senior researcher with the Institute of Security Studies in Tshwane (Pretoria), South Africa, said peace and stability are important for trade to flourish. “Plural politics has come to southern Africa and I think in spite of some problems in parts of the region, southern Africa has been a model of peace and stability on the continent, certainly when you consider what is happening in West Africa; the horn of Africa and other hot spots, for example.
“That must not, however, make us complacent. There are pockets of instability that need attention: DRC, Angola, Zimbabwe and Lesotho. Trade can not grow in an environment that is pregnant with uncertainty,” Musavengana said.

Zambian Watchdog

An African perspective on EPA negotiations: they 'fall short of expectations'

by Elisabeth Tankeu

With the Caribbean having signed an Economic Partnership Agreement (EPA) with the European Union in mid-October, all eyes are now fixed on swiftly concluding the EPA negotiations between the EU and the Pacific and African regions, respectively. As a major trading partner, Africa has a significant amount to gain from the outcome of the EPAs not only in terms of basic trade relations, but also as a vehicle to drive efforts to meet development challenges.

With all that is at stake, what is Africa’s perspective on how the negotiation process has been unfolding on the continent thus far? What are the outcomes and gains that African negotiators are expecting? And, what do they want to see evolve in future talks? To find out, Trade Negotiations Insights spoke with Elisabeth Tankeu, Commissioner for Trade and Industry at the African Union. As Mrs. Tankeu states in the interview, from the African perspective, the outcome of the EPA negotiations so far, “falls short of expectations.”

TNI: How would you qualify the process leading to the initialing of several interim Agreements in the context of the EPA negotiations in Africa?

Tankeu: Europe is Africa’s major traditional trading partner. Hence, within the continent, much hope and value was placed on the EPA negotiations to lead to the attainment of a new trade regime driven not just by the requirement of WTO compatibility, but also by lessons drawn from the experience ...under the Lome Conventions. African countries have invested their limited human and financial resources heavily in the EPA negotiations to achieve this goal.

The initialing of interim EPAs (IEPAs) appears, on the surface, to be the outcome of several years of intensive negotiations between equal partners. In reality, they are the products of a process of unequal bargaining, in which the stronger party was able to effectively use its superior bargaining power and the “carrot and the stick” method to secure Interim Agreements in line with its negotiating objectives.

The request by the African Union (AU) policy organs for the extension of the Cotonou waiver beyond the deadline of 31 December 2007 was rejected by the European Commission, thus putting many African countries under pressure to rush and initial IEPAs or risk losing access to the EU market for their exports. It needs to be stated that the deadline was set with the expectation that the WTO Doha Round negotiations would be concluded and would have produced development-friendly rules compatible with development friendly EPAs.

The process leading to the initialling of Interim Agreements was unsatisfactory. This is evident from the fact that a) some African negotiating groups and countries (e.g. the ESA group) were confronted, shortly before the deadline, with texts that were different from those already negotiated and; b) that most of the African countries that have initialed interim EPAs had done so outside of the regional groupings within which they negotiated with the European Commission; The large number of contentious issues that have been identified in interim EPAs by the Joint Conference of AU Ministers of Trade and Finance is also a reflection of the imperfection of the process that led to the initialing of the IEPAs.

TNI: What is your assessment of the outcome of this process?

Tankeu: The outcome, so far, of the process falls short of expectation. The interim EPAs can be assessed against the objectives set for this new trade regime in the Cotonou Partnership Agreement (CPA). The ACP and EU countries had agreed that EPAs would serve primarily as instruments for the promotion of sustainable development, the eradication of poverty, the reinforcement of regional integration initiatives, and the gradual integration of ACP countries into the global economy. The interim EPAs currently on the table cannot achieve these objectives.

The emphasis in the interim EPAs has been on policy reforms, opening markets, and granting reciprocal preferences. While these may be necessary, they are not sufficient for EPAs to serve as effective instruments for the promotion of sustainable development and the eradication of poverty.

For EPAs to achieve these important objectives, the issues of adjustment costs of reforms and liberalisation, building infrastructure, productive and trade capacities, and the provision of additional resources above the European Development Fund (EDF) have to be addressed. Unfortunately, these critical issues are yet to be seriously dealt with in the EPA negotiations. The request of African countries that the development dimension of EPAs be adequately considered through the inclusion of binding commitments on additional resources has been largely ignored.

A major concern with the current interim EPAs is the possible adverse implications for Africa’s regional integration efforts. Instead of serving as instruments for the strengthening of existing integration initiatives as envisaged in the CPA, they are capable of undermining these initiatives. The analysis of the eighteen interim EPAs initialled by African countries indicates that they are all different and only in one region (the East African Community) does more than one country have the same trade liberalization commitments. The differences among African countries, which belong to the same Regional Economic Communities (RECs), in time schedules and baskets of products for liberalization in the Interim EPAs, are bound to complicate Africa’s regional integration process. Of great concern also is the inclusion of contentious provisions in the interim EPAs that could limit development policy space for African countries and which tend to impose obligations that are higher than those required by WTO trading rules.

TNI: How do you see the EPA debate evolving in the future and what, in your view, would be best way forward for those involved?

Tankeu: Those involved in the process must show greater commitment to the development of full and comprehensive EPAs that can meet the objectives set in the CPA. Given the issue of the disruption of trade with the EU, there is a need to avoid setting another artificial deadline for the conclusion of full EPAs. What is needed are EPAs that can meet the test of time and serve as useful frameworks for the promotion of mutually beneficial trade between Africa and Europe in a dynamic and rapidly changing global economy. The negotiations of these trading arrangements must therefore not be rushed but given adequate time for their successful conclusion. The initialled interim EPAs can serve as a basis for the negotiations of full and comprehensive EPAs. However, it must be realized that the interim EPAs were rushed to beat the December 31 2007 deadline and many of them are characterized by defects that need remediation.

There is a need to broaden the scope of participation in the negotiations of full and comprehensive EPAs, involving other major stakeholders, especially in the private sector, whose role will be critical in the implementation of EPAs.

TNI: What is needed for the successful completion of EPAs?

Tankeu: Some flexibility in the negotiating position of the European Commission is necessary for the successful completion of the EPAs. The divergence of positions between European Commission and African countries on the development dimension of EPAs, for instance, will need to be adequately addressed. Also, the contentious issues that have been identified in the interim EPAs must be satisfactorily dealt with within the context of the negotiations for full EPAs. From the African Union Commission (AUC) perspective, one of the yardsticks with which to judge the successful completion of EPAs will be the coherence of the negotiation outcomes with the African agenda for unity and solidarity, the promotion of regional integration and the establishment of the African common market. This requires that full and comprehensive EPAs are not concluded by African countries individually, as was the case with the interim EPAs, but on a regional basis that will strengthen Africa’s regional integration initiatives. African countries that have concluded individual interim EPAs should continue with the negotiations and finalize comprehensive EPAs within the framework of their respective RECs and groupings.

TNI: What is the role of the African Union Commission in the context of the regional EPA negotiations?

Tankeu: A major objective set for the African Union in Article 3 of its Constitutive Act is to establish the necessary conditions that will enable Africa to play its rightful role in the global economy and international negotiations. The AUC is not a direct party in the current EPA negotiations although, in the long run, the ideal framework for the development of trade and economic cooperation between Africa and Europe should be an AU-EU EPA, in which the AUC would play a role similar to that of the European Commission. However, at the AU Maputo Summit of 2003, the AUC was mandated to coordinate and harmonize the efforts of African countries in the EPA negotiations. The AUC has been using this mandate to organize spaces for the African countries/RECs to exchange experiences, develop African common positions, and speak with one voice in the negotiations. The common positions are contained in the various decisions and declarations adopted by the African Union policy organs. The AUC has also been playing an advocacy role in supporting the interests and concerns of African countries in the trade negotiations.

TNI: What are the prospects for collaboration between Africa and the other ACP regions?

Tankeu: The prospects for collaboration between Africa and other ACP regions are good. These countries all share common interests and concerns not only in the EPA negotiations but also in the WTO Doha Round negotiations. Collaboration between the regions in both negotiations is critical to achieving development-friendly outcomes. Moreover, South-South cooperation has been accorded high priority in Africa’s strategy for meeting development challenges of the 21st century which reinforces the need for greater collaboration between Africa and the other regions of the South.

TNI: What are the linkages between Aid for Trade and EPAs?

Tankeu: As agreed during the 6th WTO Ministerial Conference, Aid for Trade should not be a substitute for market access benefits. There should therefore not be any linkages between Aid for Trade and EPAs. The Aid for Trade initiative, which constitutes one of the most important development-related outcomes of the Doha Round to date, is meant to support developing countries in the building of trade-related infrastructure, institutional, human, production and supply capacities, and in meeting the costs of implementation and adjustment to WTO Agreements. The pledge by the EU (and its Member States) to provide 2 billion Euros annually for Aid for Trade by 2010 is highly commendable and welcome. However, the disbursement of the EU A4T resources should not be linked to the conclusion or signing of EPAs. Some other major donors, such as Japan and USA, have made A4T commitments for building trade-related capacity in African countries without concluding EPA-type agreements.

ICTSD

Indian medicinal exports to Kenya threatened over counterfeiting claims

by Joe Mathew

Even as India is working hard to allay the doubts of African countries on the quality and safety of medicines supplied by its domestic companies, Kenya, the third-biggest African market for Indian medicines, is planning a new legislation against “counterfeiting” that could seriously jeopardise India’s medicine exports to that country.


Indian industry fears that other African nations may follow suit. The Anti-Counterfeit Bill, 2008, placed before the Kenyan parliament recently, indicates that copies or generic versions of all products having patent protection in Kenya or elsewhere can be considered “counterfeit” in case of an intellectual property dispute. Since a majority of medicines manufactured by Indian companies are under patent protection in some country or the other (though they do not enjoy patent protection in India or Kenya), the definition, in its current form, can be misused to delay or prevent supply of low-cost generic medicines to Kenya, industry experts fear.

Kenya imported Rs 342.4 crore worth of medicines in 2007-08. Africa accounts for 14 per cent of India’s $8-billion medicine exports. “African countries have been the most vocal critics of Indian pharmaceutical industry for export of sub-standard and counterfeit products for the last several years. We have expressed our concern about such exports time and again and even suggested measures to address the concerns. Kenya’s Anti-Counterfeit Bill, if enacted, will ring the death knell of India’s pharmaceutical exports to African countries as others may follow suit,” says DG Shah, secretary general, Indian Pharmaceutical Alliance (IPA). The IPA, with its 15 member companies, accounts for over 50 per cent of India’s medicine exports.

Incidentally, a majority of the African nations and India are on two sides of the table in the ongoing talks to review the World Health Organisation’s definition of “counterfeiting.” While India opposes all attempts to link intellectual property issues with “counterfeiting,” African nations have a different view.
“The Kenyan definition is contrary to the IP Act, 2001, and doesn’t distinguish between different categories of goods (e.g. counterfeit trademark goods, pirated copyright products) as is done in Trips (Trade-Related Aspects of Intellectual Property Rights of World Trade Organisation). The definition is ‘Trips-plus’ as it includes non-obligatory issues for inclusion under Trips”, Shah complains.

Pharmaceutical Export Promotion Council officials said they would look into the matter.

In a letter to the department of pharmaceuticals, Shah has sought the help of the Ministry of Commerce, the Ministry of External Affairs and Indian missions in Geneva and Kenya to convince the government of Kenya to prevent it from taking more international obligations than required under the WTO’s Trips Agreement and WHO’s “Draft Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property”.
The letter alleges that “the African lobby did not support India on the Scope and Definition of Counterfeit Medicines at the World Health Assembly meeting in May 2008 in Geneva”. It also says that some of the African members had accused India of opposing the (WHA) resolution to protect its export of sub-standard medicines”.

Business Standard

Sub-Saharan Africa's economy grew by 5.4% in 2008

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Sub-Saharan Africa's economy expanded 5.4 percent in 2008, the first time in more than 45 years that growth exceeded 5 percent for five years in succession, and despite substantial deterioration in the external environment during the year.

According to the World Bank's Global Economic Prospects for 2009, GDP gains in the subcontinent have been broad-based and less volatile, even in oil-importing economies, as strong commodity export revenues and capital inflows underpinned domestic demand.

"Another notable and encouraging feature of the recent growth spurt is the sustained contribution of fixed investment to growth, which carries positive implications for long-term potential growth.

"Strong external demand, high commodity prices, and relatively robust private capital inflows invigorated growth across a large spectrum of economies, whether resource rich or resource poor," said the report.

Oil-importing economies, outside of South Africa, grew 5.2 percent in 2008, down from 5.8 percent in 2007, while oil-exporting countries grew by more than 7.5 percent for a second consecutive year.

However, the World Bank said that several years of above-trend economic expansion have pushed a larger number of African economies up against capacity constraints stemming from inadequate investment in energy, roads, railways, and ports over the past decades.

This constraint along with high food and fuel prices has contributed to the upturn in inflation witnessed across the subcontinent during the year.
The World Bank expects growth in subcontinent to slow to 4.6 percent in 2009, as a result of the global financial and economic crisis. The effects of the crisis are likely to be much more limited in Sub-Saharan Africa than in other regions, because African economies are less integrated into the international financial system and rely relatively less on international capital and bond markets to finance investment.
World Bank



Sub-Saharan Africa's economy expanded 5.4 percent in 2008, the first time in more than 45 years that growth exceeded 5 percent for five years in succession, and despite substantial deterioration in the external environment during the year.

According to the World Bank's Global Economic Prospects for 2009, GDP gains in the subcontinent have been broad-based and less volatile, even in oil-importing economies, as strong commodity export revenues and capital inflows underpinned domestic demand.

"Another notable and encouraging feature of the recent growth spurt is the sustained contribution of fixed investment to growth, which carries positive implications for long-term potential growth.

"Strong external demand, high commodity prices, and relatively robust private capital inflows invigorated growth across a large spectrum of economies, whether resource rich or resource poor," said the report.

Oil-importing economies, outside of South Africa, grew 5.2 percent in 2008, down from 5.8 percent in 2007, while oil-exporting countries grew by more than 7.5 percent for a second consecutive year.

However, the World Bank said that several years of above-trend economic expansion have pushed a larger number of African economies up against capacity constraints stemming from inadequate investment in energy, roads, railways, and ports over the past decades.

This constraint along with high food and fuel prices has contributed to the upturn in inflation witnessed across the subcontinent during the year.

The World Bank expects growth in subcontinent to slow to 4.6 percent in 2009, as a result of the global financial and economic crisis. The effects of the crisis are likely to be much more limited in Sub-Saharan Africa than in other regions, because African economies are less integrated into the international financial system and rely relatively less on international capital and bond markets to finance investment.

World Bank