Enhancing trade between Arab and African countries

1. Enhancing trade between Arab and African countries Troisième Réunion des Chambres de Commerce et d’Industrie d’Afrique et du Monde Arabe ,Rabat – Maroc, 29-30 Novembre 2012 Dr. Azza Morssy , Chief of Middle East &Arab Programme , UNIDO (Vienna)

2. UNIDO & Global Trade UNIDO is enhancing the capacity of developing countries and countries with economies in transition to participate in global trade and integrate them into global value chains through effective participation in the based- rules of global trading system

3. Aid for Trade and UNIDO “The UNIDO trade capacity approach and the Aid for Trade Initiative are complementary endeavors along the same holistic line of thought” Kandeh Yumkella, Director-General, UNIDO Source: UNIDO 2009

4. Trade & Poverty reduction Source: World Bank 2012

5. Africa: Economic Profile • The near-term outlook remains positive in the post-crisis period • Africa will have the world’s largest workforce by 2040 (approximately 1.2 billion) and will need to create a sufficient number of jobs Source: UNIDO 2009

6. Africa’s main exports • Fossil fuels (petroleum, hard coal, and natural gas) are main exports • Fossil fuels - total exports increased from 72% in 1980 to 75% in 2008, ( above the global average of 50%) • In physical terms, all African countries account for about 10.5% of fossil fuels supply to the world market Source: UNCTAD 2012

7. 1. Africa’s share of global international trade 2000-2010, (%) Source: UNECA 2012

8. Industrial Challenges for SSA and MENA • Several countries in SSA are affected by deindustrialization • Several countries in the MENA are affected by the middle-income trap

9. Exports by Product (MENA) Source: WTO 2012

10. Common Growth Prospects • Both regions are expected to continue their economic recovery to pre-crisis levels • The MENA region is expected to accelerate its economic growth to 5.1% in 2012 • In Sub-Saharan Africa (SSA) growth is projected to grow at over 5% in 2012 as well Source WTO2012

11. The middle-income trap It affects “countries unable to compete with low-income, low-wage economies in manufactured exports and with advanced economies in high-skill innovations … such countries cannot make a timely transition from resource-driven growth, with low cost labor and capital, to productivity-driven growth”. Source: ADB 2012

12. Source: ILO 2010

14. Global Trade Challenges SUPPLY SIDE: “LDCs have neither the surplus of capacity of exportable products nor the production capacity to take immediate advantage of new trade opportunities” Kofi Annan - UN SG, Financial Times, 5 Mar. 2001 CONFORMITY: Countries that can not meet standards and regulations in developed country markets are effectively barred from trading with those markets. International DevelopmentResearch Centre (IDRC), Canada Trade facilitation/infrastructure: For the majority of African countries, tariffs amounted to less than 2%, while transport cost often exceeded 10%. World bank trade note 15; may 10, 2004 No.14

15. Compete Conform Connect Challenges for Trade : The 3 Cs • “Countries must have  COMPETITIVITY of productive capacities • “Products must conform to requirements of clients and markets” CONFORMITY with standards • “Rules for trade must be equitable and customs procedures harmonized” CONNECTIVITYto markets PRODUCTIVITY (enterprise) COST OF EXPORTING (support services) No.15

16. The Arab World: Economic Profile • Economic growth in the Arab world slowed significantly with the global financial crisis • Urgent need to create 2.8 million jobsevery year Source: Arab Competitiveness Report 2011-2012

17. Africa and world trade • African countries are net suppliers of resources to the world • In 2008, net exports of materials by the region were 409 million tons, compared to 284 million tons in 1980 • Since 2000: significant increase in demand for Africa’s resources by developing countries such as Brazil, China and India Source: UNCTAD 2012

18. Rapid GPD Growth MENA countries as a whole grew by 5.2%from 2000 to 2008, whereas OECD economies grew by only 2.4% Source: Arab Competitiveness Report 2011-2012

19. Source: World Bank 2012

20. Industrial challenges • As Justin Lin (2012) suggests, income growth in developing countries depends on upgrading industrial structures • Whereas Arab and African countries are major exporters of fuels and mining products,other Regions are major exporters of manufactured goods

21. Exports by Product (Africa) Source: WTO 2012

22. The Triangle Trade Developed countries Raw materials capital aid profits WB Payement of débats and interests Multinational Africa Loans IMF 22

23. Strategic Partnerships for Trade Capacity-Building No.23

24. Regulatory Environment for Compliance WTO -TBT /SPS Agreements (Jan 1995) Potential in Agro-Food area Pre-conditions for Exports : • WTO- TBT & SPS agreements compliance • Products sourced from areas free of pests & diseases • Fruits/vegetables - minimum pesticide residue standard • Meats/fish meet minimum antibiotic residue requirement • Standards of hygiene applied in manufacturing HACCP/ISO 22000) /lack of implementation capacity the above issues by developing • countries No.24

25. “Fair Trade for All”: “lack the ability to meet quality Standards Requirements,”“UNIDO recommends the following priority areas for assistance : 1. A national/regional standards/standardization body 2. A national/regional metrology system 3. A certification/conformity assessment 4. An accreditation system” Source: J. Stiglitz & A. Charlton, Fair Trade for All – How Trade can promote Development, Oxford University Press, 2005 No.25

26. Africa Aid • Increased Aid to Africa • More funds for Investment and Trade and build capacity in several sectors that will boost • production, marketing of products and service • Proper transparency and accountability of the donor and recipient governments • Proper planning, monitoring and implementing projects that will result in a positive multiplier effect for general development

27. UNIDO inputs/ AfricaSupport to the National Prevention Programme of Ochratoxin in Coffee and Cocoa in Côte d’Ivoire • Objective: help the supply-chain actors to secure their incomes and exportations • Outputs: • studies in coffee and cocoa supply-chains (determination of contamination levels, • identification of critical contamination points, and determination of adequate sampling • methods); • national OTA analytical laboratory upgrading for ISO/IEC 17025 accreditation • promotion of good practices during production and post-harvest stages • Lobbying activities to draw the attention of the EC on adequate OTA maximum levels. • * The OTA is a mycotoxin considered as a genotoxic human carcinogen and the European Commission (EC) is examining the opportunity to raise new maximum contamination levels for green and roasted coffee, cocoa and cocoa based products No.27

28. UNIDO Aid-for-Trade type Programmes (Supply-side & Conformity) Trade related technical assistance programme • Barrier to Trade Survey : Study on SPS Compliance for Exports • Standards (PSQCA) • Standards development /Certification Body (Systems) • Consumer affairs/ Product certification • Metrology (NPSL) • Lab upgrading, international accreditation • Product Testing (MFD, PCSIR, etc):Fisheries, Food, Leather, Textile • Lab upgrading, PT participation • International accreditation • Accreditation (PNAC) • Organizational strengthening, international recognition • National accreditation scheme /Training of auditors • Setting-up of PT schemes • Quality/Hygiene (Private sector, FPCCI, etc.) Fish/food • Management systems/Good practices /Compliance with market requirements Pilot certifications HACCP, ISO 9001, 14001, SA 8000) • Pilot traceability systems Boat hygiene Icing Landing Sites Inspection Auction Hall Processors Traceability No.28

29. UEMOA/ECOWAS Benin Burkina Faso Cape Verde Gambia Guinea Guinea Bissau Liberia Mali Niger Senegal Sierra Leone Togo SAARC Bangladesh Bhutan Maldives Nepal Afghanistan SAARC MEKONG Nepal Bangladesh MEKONG Delta Countries Cambodia Lao PDR Mauritania Haiti UEMOA/ ECOWAS Cambodia CARICOM Senegal Ethiopia CEMAC EAC CARICOM Haiti SADC EAC Uganda Tanzania Burundi (2007) Rwanda (2007) CEMAC Central African Rep. Chad Congo Equatorial Guinea Tanzania Mozambique Madagascar SADC Angola Congo Lesotho Madagascar Malawi Mozambique Tanzania Zambia Regional Programmes Country Programmes Source: OECD DAC List UNIDO TCB - LDCs Coverage (36 countries) On-going and planned No.29

30. GDP Growth by Region (percent change, constant prices) Source: Arab Competitiveness Report 2011-2012

31. UNIDO &Supply Side 1/2 UNIDO will continue to support enterprises in their efforts to offer competitive, safe, reliable and cost-effective products in world markets, this requires:

32. UNIDO is continuing to offer the following activities :2/2 Creation of quality management systems and product traceability management system certification, inspection and accreditation mechanisms

33. A New Vision for Trade Facilitation Traditional focus of trade facilitation

34. The Aid for Trade Agenda Source: OECD 2012

35. Conclusions • Developing Compliance Infrastructure is complex – tailor programmes • Regional cooperation programmes are needed for developing Regional Capacity building on complying with standards • Compliance Infrastructure • 3 pronged: Competitive supply – Compliance services - Connectivity

36. Recommendations • Improving cross-border trade: border procedures, traders’ associations, flow of information • Removing a range of non-tariff barriers to trade: import and export bans, costly licensing procedures, restrictive rules of origin • Reforming regulations and immigration rules: limits to the potential for cross-border trade and investment in services Source: World Bank 2012

37. Trade-related opportunities for Africa and the Middle East • Regional cooperation can contribute to closer integration beyond trade • More open trade in food staples can reduce food insecurity • Additional trade can increase competitiveness in regional value chains • Grant access to the increasingly global value chain production • Achieve common positions and represent these interests in the international arena

38. Thank you for your esteemed attention! Azza Morssy, PhD Chief, Middle East and Arab Programme Bureau for Regional Programmes Programme Development and Technical Cooperation Division United Nations Industrial Development Organization (UNIDO) Vienna International Centre P.O. Box 300 1400 Vienna, Austria Tel:  +43-1-26026-3841 Fax: +43-1-26026-6848 E-mail : a.morssy@unido.org

39. ANNEXES Trade & Economic Growth

40. Exports of all goods, non-petroleum and non-natural goods Source: World Bank 2011

41. World Exports by Product Source: WTO 2012

42. Value Added in Selected Regions (2009) Source: OECD 2011

43. Value added in the MENA region (2009) Source: OECD 2011

44. Oil production and the MENA • World crude oil production increased by 60% from 1971 to 2010 • The MENA region holds about 65% ofthe world’s proven conventional oil reserves (at the end of 2010) • In 2010, the Middle East region’s share of oil production was 30% of the world total Source: OECD 2011

45. Production of Crude Oil by Region (million tonnes) Source: OECD 2011

46. Oil revenues continue to mount through 2014 (billions US$) Source: World Bank 2012

47. Oil exporters in the MENA (current account balances, billions of US$) Source: IMF 2012

48. Oil importers in the MENA (current account balances, billions of US$) Source: IMF 2012

49. Africa’s material imports • Fossil fuels are the dominant material imports, with a share between 33 and 37% of total imports • The world average share of 50 to 55% of fossil fuels in total imports • All African countries together import about 100 million tons of fossil fuels, (2% of global imports of fossil fuels • Africa is a net importer of renewable resources Source: UNCTAD 2012

50. Physical trade volume in Africa and the world, 1980-2008 Source: UNCTAD 2012