Trade Policy Issues and challenges in SSA

1. Trade Policy Issues and challenges in SSA Session 4.1: Evolution of Trade Policies in SSA countries since the 1990’s in the context of bilateral, regional and multilateral negotiations and agreements Presented by Margaret K. Chemengich 16th June 2009, at Lamada Hotel

2. Format of Presentation • Evolution and overall direction of trade policies in SSA • Changes in trade policies and impact on Trading patterns and performances • Context of trade policies with trade negotiations and agreements

3. I- Evolution of trade policies in SSAWhy changes in trade policies? • Changes in international foreign policy architecture with end of cold war, leading to new opportunities to expand markets • Technology developments • Emerging economies • International economic and social shocks (Terrorism, financial crisis, energy crisis-bio-fuels, environmental impacts, etc) • Failure to conclude multilateral agreements-leading to increased regional trade • Better appreciation of linkage between trade and development • Wider involvement of the private sector and the civil society in policy making processes • Political democritisation and adoption of governance principles • Level of regional integration agenda • Transformation of RECs from original political/functional organisations to Economic entities

4. Trade Policy scenarios Level • National • Bilateral • Multilateral • Regional bilateral Period: • Early 90s • Late 90s • 2000 and beyond

5. Institutions shaping trade policies in SSA Liberalisation/Privatisation/commercialization (early 90s) • WB • IMF • Bilateral donors Globalisation (late 90s) • WTO and related multilateral agencies • Involvement of developed countries in particular international trade • Private sector and multinationals, and transnational agencies Regionalisation (2000 and beyond) • AU/ECA (Pan Africanism) • Bilateral regional trade support institutions • Regional Blocs • Partner States ministries/ institutions/ agencies responsible for trade and investment

6. Phases in the evolution of trade policies: • SAPs • Export Promotion and development • Globalisation (Multilateral/Regional Bilaterals and impact of emerging economies) • Regional Integration • Pan Africanism (RECs, NEPAD, AU, ECA,) • Technology led trade patterns

7. SAPs [late 80s into early 90s] • Came into effect in the 80s • Operational into the early 90s • National Trade policies/strategies in the early 90s • Finalise with liberalisation, privatisation, commercialisation (giving private sector wider say) • Macroeconomic structural reforms (tariffs, fiscal, debt management, financial sector reforms at national level but harmonised at regional level • Sign up on multilateral trade agreements at country level • Establishment of regulatory institutions • Initiate economic restructuring • Limited private sector and CSO participation in trade Impact of trade Policies • Wider stakeholder involvement (private sector) • Predictability of policy environment • Increased Local investment and FDI flows

8. SAPs [late 80s into early 90s] External trade Policies • Continued Preferential trade arrangements with EU • Cooperation arrangements within African based economic RECs • Continuation of bilateral trade agreements- differed from country to country • Signing up onto the WTO as individual countries. However, the developed world dictated the terms of the trade policies. SSA not party to the Green Rooms. • Multiplicity of trade instruments in country trade policies- cumbersome to implement • Lack of analytical context and preparations for trade negotiations Domestic trade policies:- partnerships with private sector (local/external) • Liberalisation • Commercialisation and restructuring of state owned enterprises. • Privatisation • Regional cooperation arrangements

9. Trade Policies in the late 90s • Predominance of the RECs overlaps and multiplicity • Development of the African continental markets through regional trading arrangements • Regional consultations and adoption of common positions for negotiation at global levels (starting with RECs, Africa, ACP, Least developed, global level) • Implementation of the Abuja Treaty provisions • Individual countries sign onto international generic agreements

10. Trade Policies 2000 and beyond • Deepening of the African RECs starting with FTA, CU and CM • Deepened analytical work to mark preparations • Development of negotiating capacities (eg resources dedicated at the WTO level, bilateral donors, …) • Failures of WTO talks because of demands/interests for the developing countries • SSA countries appreciating trade impact on development hence demands for own interests to be taken into account (eg VA, wider preferential market access, …….)

11. Trade Policies 2000 and beyond (cont.) • Non-reciprical preferntial trading arrangements (EU-EBA,GSP;, AGOA, • External relations predominantly Pan African in approach ( EU- Africa, AGOA, • Fragmented approach towards emerging economies • Prioritisation of the development, infrastructure and trade facilitation within trade negotiations. • Reciprical trade arrangements compliant with the WTO non LDCs and RECs • Liberalization of the transport sector. • Expiry of the MFA.

12. Negotiation Patterns and Trade Agreements in the SPA trade policy environment. • Limited preparations for negotiations • Agreements signed on determined by the developed world agenda. • Trade policies heavily influenced by the Bretton wood institutions • Proliferation of Preferential trade agreements through bilateral agreements • Bilateral agreements narrow in product coverage • Traded products were low in value added content • .

13. Negotiation Patterns and Trade Agreements in the SPA trade policy environment (cont) • Main export commodity products were raw materials natural mineral extract with low uncompetitive prices. • Introduction of Synthetics in the international markets displacing natural fibers from Africa and other developing countries. • National economies were weakened due to inappropriate domestic facilitation environment and the volatility of internationally traded products (cocoa, tea, coffee, copper etc.) • Price fluctuations in key input like oil made our economies unstable

14. Negotiation Patterns and Trade Agreements in the Export Promotion trade policy environment • Concentration of external markets (EU in particular) • New opportunities under AGOA Act by the US for textiles industries. • Exploration of regional markets ( though with fear of loss of markets by the private sector, ….) • National governments providing leadership in the expansion of markets inspite of private sector reluctance. • Strategies to expand regional markets (PTA, FTA, CU, CM, MU) • Trade facilitation as an integral component of trade policy • Development became a constituent part of trade policy-DDA

15. Negotiation Patterns and Trade Agreements in the Export Promotion trade policy environment (cont 1) Deepening of regional integration period • Signing up on FTAs • Entering CU in a number of RECs • AU providing serious leadership in Pan African trade policy making • Inter REC harmonisation mechanisms • Signing of trade agreements as CU • Promotion of regions as single investment and tourism areas • Diversification of markets and products taking into account emerging markets, technology developments, VA liberalisation • Development of common trade facilitation infrastructure development.

16. Negotiation Patterns and Trade Agreements in the Export Promotion trade policy environment (cont 2) Global linkages: • Lack of organisation for the emerging economies (eg India, China, …..) • Negative impacts of global market developments (financial crisis) • Lack of regional/Pan African approach to respond to global financial crisis

17. Trading Patterns • Increased Potential for Intra and inter regional trade within the continent • Higher value content products for trading (eg manufactures trade in regional markets, VA added products in preferential markets eg AGOA, • Exploration of new products (Oil, VA coffee, minerals to China, textiles to the US, handcrafts to the US) • Deeper preparation in identification of markets and products • Stronger linkages between investment promotion and export promotion • New generation NTBs in export markets

18. Overall direction of SSA Trade Policy • Liberalised and embracing technology change • Interconnection to the global economy • Pan Africanism towards AEC • Strong global influences • ICT Facilitated trading-ecommerce • Innovations in financial services sectors • There will be increased movement of persons to compliment trade in services • Foreign policies will be heavily influenced by trade policy.

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