Transcript Africa`s trade relations in the context of India`s DFTP scheme

Africa’s trade relations in the context of
India’s DFTP scheme: Evidence from
Ethiopia, Tanzania and Uganda
Vinaye Ancharaz
A presentation at the 10th CII-Exim Bank
Conclave on India-Africa Project
Partnership, 9-11 March, 2014, Taj
Palace Hotel, Delhi
The International Centre
for Trade and Sustainable
Development
The International Centre for Trade and Sustainable Development
Outline
• Background (Ethiopia, Uganda, and
Tanzania)
• Trade with India
• Gauging the impact of the DFTP scheme
• Factors affecting the impact of the DFTP
scheme
• Conclusion and policy implications
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Economic Background
Ethiopia
Uganda
Tanzania
GDP (USD, 2012, billions)
41.6
19.8
28.2
Real GDP per capita (USD, 2012)
454
547
609
Real GDP growth rate (average for
2010-2012)
5.8%
5.3%
6.8%
Share of agriculture (% of GDP)
49%
23%
27.7% (2011)
Share of manufacturing (% of GDP) 4%
8%
10.2% (2011)
Share of services (% of GDP)
41%
51%
47.2% (2011)
Exports of goods (USD, billions,
2012, and share of GDP)
5.99
(6.9%)
4.73
(11.3%)
5.54
(19.6%)
24% (2012)
31% (2011)
Exports of goods and services (% of 14% (2012)
GDP)
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Top 10 Global Exports
(Share of Exports)
Ethiopia
Product
Uganda
Share of
Product
total exports
Coffee
Sesame Seeds
Sweet Corn
29.1% Coffee
14.7% Portland
cement
9.3% Fish fillets
Tanzania
Share of total Product
exports
20.0% Gold
5.2% Precious metal
ores
4.4% Manganese ores
Share of total
exports
30.1%
10.8%
6.9%
Fresh cut flowers
6.3% TV receivers
4.0% Coffee
3.0%
Gold
6.0% Light oils and
preparations
3.6% Tobacco
3.5% Tobacco
2.7%
3.2% Cashews,
coconuts, etc.
2.8% Cotton
2.4% Copper Ores
2.3%
2.1% Sesasum Seeds
1.5%
2.0% Furnishing articles
1.4%
Bovine animals,
live
Kidney beans
Meat of goats
Other mammals
2.6% Cotton
1.7% Vegetable fats
and oils
1.6% Cocoa beans
Chickpeas
1.4% Other black tea
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1.9%
1.8%
Top 5 Export Destinations
Ethiopia
Top 5 Export
destinations
(share of total
exports, 2012)
Uganda
Tanzania
Destination
Share of
Exports
Destination
Share of
Exports
Destination
Share of
Exports
EU27
28.5%
SSA (exc.
EAC)
30.4%
South Africa
17.7%
China
11.1%
EAC
24.6%
Switzerland
14.4%
Somalia
9.0%
EU27
17.5%
EU27
13.8%
Saudi Arabia
6.7%
UAE
7.5%
EAC
11.1%
Switzerland
6.1%
Switzerland
5.2%
SSA (exc.
EAC, South
Africa)
9.9%
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Top 5 Import Sources
Ethiopia
Top 5 import
markets
(share of total
imports,
2012)
Market
Uganda
Share of
imports
Market
Tanzania
Share of
imports
Market
Share of
imports
China
16.1% EU27
20.3% Switzerland
13.5%
EU27
15.8% China
15.5% China
9.9%
United
States
13.4% India
14.1% UAE
8.8%
India
6.8% South Africa
5.3% South Africa
8.0%
Turkey
4.1% Japan
4.9% Bahrain
7.8%
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Trade with India
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Ethiopia
• Ethiopia’s exports to India have increased steadily (from USD 8
million in 2000 to USD 35.1 million in 2012)
• India is the 4th most important source of imports for Ethiopia,
mainly manufactured goods
• India is the second largest investor in Ethiopia, with approved
investments of USD 4.79 billion (40% of which in commercial
agriculture)
• India has provided Ethiopia with technical assistance:
• Central Leather Research Institute (CLRI)
• Footwear design and development
• Assistance to the Ethiopian Revenue and Customs Authority
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Uganda
• Although Uganda’s trade with India increased over
the last decade, by 2012, Uganda’s trade with India
was minimal (1% of Uganda’s total exports)
• Recent data suggests that India is one of the biggest
investors in Uganda
• Development assistance provided by India to Uganda
in recent years includes:
 The establishment of a tele-medical centre in Mulago
Hospital
 The creation of India-Africa Institute of Foreign Trade and
the Food Processing Business Incubation Centre
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Tanzania
• India’s importance as an export destination has
grown significantly (9% of Tanzania’s total exports in
2012)
• India’s FDI stocks in Tanzania increased from USD
49.2 million in 2009 to USD 63.3 million in 2010
• USD 497 million has been invested by Indian firms in
various Export Processing Zones in Tanzania
• Indian firms have been active in banking, agriculture,
and telecommunications, minerals, natural gas,
health, and infrastructure
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The DFTP Scheme
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Brief Description of the DFTP
• India’s DFTP scheme, open to all LDCs, was launched in August
2008
• The DFTP scheme unilaterally grants tariff preferences on LDC
exports
• Currently, 29 LDCs benefit from this scheme (22 in Africa, 7 in
the Asia-Pacific region)
• Coverage:
 Excluded: many fruits and vegetables, coffee, cereal, spices, tea,
tobacco, and other metals
 Included: cotton, cocoa, aluminum and copper ores, garments and fish
fillets,
The International Centre for Trade and Sustainable Development
Ethiopia’s Exports to India
2001 - 2012
50
45
USD (millions, current)
40
35
30
25
20
15
10
5
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Year
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2011
2012
Uganda’s Exports to India 2000 - 2012
25
USD (millions, current)
20
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Year
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2010
2011
2012
Tanzania’s Exports to India 2000 - 2012
600
USD (millions, current)
500
400
300
200
100
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Year
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2010
2011
2012
Ethiopia’s Top 10 Exports to India
Product Name
DFTP Status
Post-DFTP Average Exports
to India (Million USD)
Post-DFTP Average as a
Share of Total Exports
Tanned crust skins
Duty-Free
9.03
21.5%
Kidney beans
MOP at 10%
5.49
13.1%
Precious stones
Duty-Free
3.52
8.4%
Sesame seeds
Exclusion
2.93
7.0%
Chickpeas
Dried legumes
MOP at 10%
MOP at 10%
1.99
1.64
4.7%
3.9%
Oil seeds and
oleaginous fruits
Exclusion
1.32
3.1%
Leather
Duty-Free
1.17
2.8%
Cotton
MOP at 50%
1.13
2.7%
Beans dried, shelled MOP at 10%
1.08
2.6%
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Uganda’s Top 10 Exports to India
Product Name
DFTP Status
Post-DFTP Average Export
to India (Million USD)
Post-DFTP Average as a
Share of Total Exports
Coffee
Exclusion
9.95
54.8%
Other Coffee
Coffee, decaffeinated
Exclusion
Exclusion
1.20
1.07
6.6%
5.9%
Cocoa beans
Full grains, unsplit
Tanned or crust hides
and skins
Cane Sugar
Prepared or preserved
sardines
Television receivers
MOP at 29%
DF
DF
1.07
0.77
0.45
5.9%
4.2%
2.5%
MOP at 50%
DF
0.37
0.30
2.0%
1.7%
DF
0.23
1.2%
Tropical wood
DF
0.22
1.2%
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Tanzania’s Top 10 Exports to India
Post-DFTP Average
(USD millions)
Share of total average
exports (post-DFTP)
Product Name
DFTP Status
Gold (unwrought)
Preference
141.9
35.8%
Cashews (in shell)
Preference
98.6
24.9%
Peas (Pisum Sativum)
MOP 10%
40.7
10.3%
Cotton
Precious stones (other
than diamonds)
Cloves
MOP 50%
13.5
3.4%
Preference
11.4
2.9%
MOP 90%
6.1
1.5%
Cashew (shelled)
Exclusion
1.6
0.4%
Sesasum Seeds
Exclusion
0.8
0.2%
Copper waste
Exclusion
1.0
0.2%
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Assessing the impact of the DFTP
scheme
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Exports Pre- and Post-DFTP in Total and by Category to
India
Ethiopia
Uganda
Product
Pre-DFTP PostClassification Exports DFTP
Exports
Growth
Rate
PreDFTP
Exports
Tanzania
PostGrowth
DFTP
Rate
Exports
PreDFTP
Exports
Post- Growth
DFTP Rate
Export
Exclusion
1.3
5.7
343%
2.00
2.95
47.6%
4.4
15.6
257%
MOP
7.1
13.4
89%
0.12
2.50 1896.2%
31.5
92.7
194%
Duty Free
7.2
18.6
158%
1.25
36.8
270.1
635%
12.73
917.6%
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Change in India’s share of exports to the world pre- and
post-DFTP
Pre/Post DFTP Difference
Country
Exclusion
Products
MOP Products
Duty-Free
Products
Total
Ethiopia
-0.1%
-1.5%
3.3%
0.4%
Uganda
5.0%
0.4%
-0.04%
1.02%
Tanzania
1.6%
16. 6%
6.7%
6.3%
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Limitations of the Scheme
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Ethiopia
• Coffee represents 28% of Ethiopia’s world exports.
Yet coffee is excluded in the DFTP scheme, and no
coffee is exported to India.
• 66% of Ethiopia’s global exports are on India’s
exclusion list
• Despite Ethiopia’s total exports being larger than
Tanzania’s, Ethiopia exports to India amount to onetenth of Tanzania’s exports.
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Uganda
• Coffee is Uganda’s top export to India and the world,
but it is on the Exclusion list
• Many of Uganda’s global competitive exports are also
on the Exclusion list
• Tobacco, black tea, flat-rolled iron or steel, maize seeds,
sesame seeds
• There is limited complementarity between Uganda’s
top global exports and India’s global import demand
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Tanzania
• No certificate of origin has ever been issued for
exports to India under the DFTP scheme
• While Tanzania’s exports have diversified, it is still
dependent on a few products
• Products like tea, cashews (processed), sesasum seeds,
copper waste and scrap are on the Exclusion list
• India’s demand for Tanzanian exports is limited to
gold, natural gas, and copper ores
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Factors affecting the impact of the
scheme
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On the Receiving Country’s Side
• Lack of awareness and promotion of the scheme
• Limited production capacity
• Role of India’s investment, technology transfer, and
technical assistance
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On India’s Side
• Design and coverage of scheme
 Critical exclusions
 85% of exports are at preferential rates. But this figure is
artificially inflated by oil, natural gas and minerals.
• Implementation issues
– Processing delays
– Need for GoI to better promote the scheme
• NTMs
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Thank you for your kind attention!
Vinaye Dey Ancharaz
Senior Development Economist
[email protected]
ICTSD 7-9 Chemin de Balexert
1219 Geneva, Switzerland,
www.ictsd.org
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