AID FOR TRADE AND THE ALMATY PROGRAMME OF ACTION

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AID FOR TRADE AND THE ALMATY PROGRAMME OF ACTION
E c o n o m i c C o m m i s s i o n f o r A f
r i c a

• Stephen N. Karingi
• Chief, Trade and International Negotiations
  Section, UNECA.

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Outline of Presentation

• Preface
• Africas trade challenges.
• What Africa could do to respond to the
  challenges.
  
• How AFT responds to the challenges and its
  priorities in Africa.
  
• Coherence between AFT and APoA.
• APoA recommendations that could be considered
  under AFT.
  
• Current institutional framework on AFT that could
  spotlight on APoA.
  
• Conclusion.

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Preface African consensus

• Integration to global economy a central objective
  for Africa. Why
  
• Will generate necessary resources for social
  priorities.
  
• Small size of national and even sub-regional
  markets make international trade indispensable.
  
• While indispensable, openness not sufficient.
  There is need for
  
• Stronger supply-side capacities lower trade
  costs and improved connectivity to markets.
  
• Internal barriers such as poor infrastructure,
  inefficient customs, unreliable supply chains
  high energy costs that impede competitiveness
  also need to be removed.

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Africas internal challenges in international
trade?

• Internal trade challenges, which include
• Weak supply capacities
• Weak ports and transportation infrastructure
• Trade facilitation
• Trade finance
• Limited research and development resources
• Institutional constraints
• Lack of skills towards better quality products

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Why Africa has not been able to fully harness
trade potential

• It has the highest trade costs which prevent full
  realisation of gains from trade reforms.
  
• High ratios of trade costs to production costs
  make African producers less competitive.
  
• Significant components of the high trade costs
  include poor infrastructure and weak institutions
  which heighten inefficiencies in trade
  facilitation.
• Africa is also home to 15 landlocked countries
  compounding the trade costs.

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33 out 49 LDCs are in Africa

• 1 Land-locked Developing Countries
• 2 Small Island Developing States

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What African countries need to do to address
trade challenges

• African countries can only deal with the high
  trade costs if
  
• They upgrade infrastructure networks, modernize
  inefficient ports and customs facilities, and
  strengthen institutions
  
• Without dealing with the high trade costs, they
  will gain little from any improved market access
  from Doha Round.
  
• And as a result, trade as an engine of growth
  would remain a mirage.
  

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What African countries need to do to address
trade challenges

• Better infrastructure can reduce transport costs.
  By some estimates
  
• For coastal countries by at least 40 and for
  landlocked ones by 60.
  
• This raises competitiveness. It has been shown
  that a 10 rise in transport costs reduces trade
  volumes by up to 20.
  
• Improving trade facilitation by reducing time
  delays by 1 day can lead to at least 1 increase
  in trade.

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African external challenges in international
trade?

• These relate mainly to global trade environment
  and include market access and distortions in
  international prices
  
• Market access tariff peaks tariff escalation
  and non-tariff trade barriers.
  
• Price distortions as a result of export
  subsidies and domestic support policies.

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How does AFT respond to Africa trade challenges?

• Its mandate goes beyond traditional trade
  technical assistance.
  
• Its scope include
• Dealing with constraints related to trade policy
  and regulations.
  
• Trade development e.g. business services finance
  and investment.
  
• Trade related infrastructure development e.g.
  roads
  
• Support for building productive capacity towards
  diversification.
  
• Meeting adjustment costs to trade reforms

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The AFT priorities for Africa

• Access to modern infrastructure for transport
  
  
• Trade facilitation issues
• Studies suggest African exports could increase by
  as much as 17 from a 10 improvement in customs
  procedures.
  
• Standards testing laboratories.

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Coherence Between AFT and APoA

• African AFT Review meeting identified
  infrastructure constraints and Trade Facilitation
  as priority areas.
  
• African countries and RECs called upon to prepare
  AFT action plans.
  
• APoA could be an important starting point in
  preparing AFT action plans.
  
• APoA has already identified specific actions for
  key transit transport and infrastructure issues

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APoA Recommendations to be Considered under AFT

• Fundamental Transit Policy Issues
• Modernize existing facilities eliminate
  non-physical barriers to transport.
  
• Establish regional transport corridors and adopt
  common rules and standards.
  
• Strengthen institutional mechanisms to monitor
  and promote implementation of trade and transport
  facilitation agreements

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APoA Recommendations to be Considered under AFT
(cont)

• Infrastructure Development Maintainance
• Construct missing links in regional and
  sub-regional transport networks.
  
• Modernize existing port terminals establish new
  ones and simplify procedures.
  
• Establish dry ports in landlocked and transit
  countries.
  
• Expand training programmes for port workers to
  adapt to new technologies and procedure

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APoA Recommendations to be Considered under AFT
(cont)

• International Trade and Trade Facilitation
• Expand use of ICT implement efficient customs
  control systems simple documents and
  procedures.
  
• Become party to and effectively implement
  international conventions and transport
  instruments.
  
• Establish/strengthen national trade and transport
  boards or committees involving all stakeholders

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AfT institutional framework that could keep
spotlight on APoA

• The Africa WG on AfT is part of the Action Plan
  that was agreed in May 2008. The Composition of
  the WG AfDB, UNECA and WTO.
  
• Immediate tasks are
• Identify bankable regional and national projects
  in priority areas.
  
• Coordinate with RECs and individual countries to
  agree which among the identified bankable
  projects are ready for support.
  
• Establish an African AfT Network.
• Contribute to the review of and development of
  monitoring and evaluation of indicators for
  implementation and effectiveness of AfT.
  
• WG had its second meeting in January 2009 to plan
  for the April 6-7 meeting in Lusaka and other
  activities for 2009.

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Work on AfT of significance to APoA

• Together with the AfDB, the ECA is helping
  African RECs to refine their AfT strategies
  especially in identify bankable projects.
  
• The ECA is also spearheading, together with the
  AfDB and the WTO organisation of sub-regional
  review meetings as part of helping monitor
  progress.

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Conclusion

• AFT and APoA have broadly similar objectives in
  terms of improving trade infrastructure.
  
• APoA important in operationalising AFT because it
  has identified specific actions that could be
  part of AFT action plans.

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THANK YOU!
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