Transcript Mainstreaming Trade in National Policies

Mainstreaming Trade in National
Policies - An ECA View
Finance Ministers´Meeting,
Kampala, May 2004
Presented by Hakim Ben Hammouda,
Director, TRID
Table of Contents
I - Africa’s Marginalisation from global
economy
II – National Policies to Counteract these trends
III – International Negotiations and policy
space for Africa’s development
IV – Regional Integration in Africa
The Issues....
• Gradual marginalisation of Africa from
the global economy
• Insufficient external support
• Severity of Poverty
• Distance from MDGs
• Insufficient employment creation
Africa´s Marginalisation from
Global Economy
World Total (blns US$)
1980
1985
1990
1995
2000
2003
2034
1954
3449
5162
6446
7482
121.5
83.7
106.0
111.9
146.9
172.5
6.0
4.3
3.1
2.2
2.3
2.3
18.1
27.4
62.1
148.8
249.2
438.4
0.9
1.4
1.8
2.9
3.9
5.9
Africa
Total Exports (blns US$)
% of World trade
China
Total Exports (blns US$)
% of World trade
The pressing need to diversify
out of commodities..
• Current trends misleading - no hiding
secular decline in commodity prices
• Cumulative terms of trade losses 1970-97
estimated at -120 percent of GDP
• Nor have African oil producers fared
better...
Some diversification, but
insufficient.....
% of Manufactured Goods in Exports, 1980-2001
Cameroon
Egypt
Kenya
Mauritius
Morocco
Nigeria
Senegal
South Africa
Tunisia
Uganda
Zimbabwe
1980
3.8
10.9
12.1
27.4
23.5
0.3
15.1
18.2
35.7
0.7
35.8
1990
8.5
42.5
29.2
65.8
52.3
..
22.5
21.9
69.1
..
30.9
2001
4.7
32.7
20.8
74.2
64.1
0.2
28.8
59.4
77.0
6.9
28.1
And gradual loss of
competitiveness internationally
UNIDO´s Industrial Competitiveness Index
Country
South Africa
Zimbabwe
Mauritius
Kenya
Cameroon
Senegal
Zambia
Nigeria
Tanzania
Malawi
Madagascar
Central African Republic
Uganda
Ghana
1985
1998
32
38
47
64
72
59
68
75
70
78
73
77
80
76
39
51
56
62
75
76
77
78
80
81
82
83
84
86
Change in
Ranking
-7
-13
-9
2
-3
-17
-9
-3
-10
-3
-9
-6
-4
-10
Limited gains from preferential
schemes
Industrialised countries recognised problem of
insufficient market access, E.g. AGOA...
• Adds 1,835 products to regular GSP
products (approx. 4,650)
• Significant increase in exports to US from
South Africa, Nigeria, and Lesotho in 2002
• Some evidence of  in FDI
But are these measures sufficient?
• 15% fall of US imports from SSA in 2002
• AGOA excludes “sensitive” products
• Limited list of countries benefit from
special textile preferences
• Excessively strict rules of origin
• “Short leash” of agreement (until 2008)
How to Counteract these trends?
• Lack of coordinated policy to promote
structural diversification
• Pessimism regarding “picking winners¨
(although all Northern countries provide
support for their industries)
• Importance of Coherence and interministerial coordination  Mainstreaming
What Is the Correct Role for
Trade?
Consensus amongst economists on beneficial
characteristics of trade:
–
–
–
–
–
Source of foreign exchange
Increase in consumer choice
Scale economies (“learning by doing”)
Greater competition
Faster technological acquistion
Yet in Africa liberalisation has so far failed to generate
necessary synergies and effectively promote exports
and reduce poverty
Mainstreaming Trade...the key to
improving competitiveness?
(i) trade reform by developing countries under
a pro-poor agenda;
(ii) assessing market access impediments;
(iii) establishing the benefits of WTO and
global rule making to developing countries;
(iv) strengthening the capacity of developing
countries to trade.
Strengthening the Supply-Side
Main themes of ERA 2004
Proactive reform agenda in...
• Energy sector
• Transport Sector
• Trade Facilitation
• Fiscal Policy
Energy Sector Reforms
• High Correlation between Export Diversification
and energy consumption
• Africa has lowest rate of electrification in world
(23% of population)
• More investment in sector – receives only 6 % of
FDI between 1990-8
• Need for effective regulation of sector
Trade Facilitation & Transport Sector
• Transport costs 6 times more expensive in
Cameroon, Ivory Coast & Mali than Pakistan
• Many barriers to trade simply unnecessary e.g.
roadblocks
• Simplification of Cross-border formalities (e.g.
Tunisia Trade Net, ASYCUDA )
• Harmonization of customs procedures
Fiscal Implications of trade
liberalisation...
• Overall tax base excessively low and
excessive dependence on trade taxes.
• Fiscal deficits in 2002/3 around 7 percent
• Trade liberalisation poses key challenge to
Finance Ministries.
• EPAs make subject all the more urgent
Need for micro-reforms to build
long-term competitiveness
In addition, reforms and adequate financial
support required in the following areas:
• Education
• Health
• Technology Policy
• Agricultural reform
Negotiations on international
Level
• Agriculture is key to deeper integration
• High Stakes in the negotiations on cotton
• Reciprocal non-agricultural market access may
wipe out industrial sectors
• More progress needed on special and differential
treatment
• Will Singapore Issues be the Stumbling Block?
The Pending Goal of Regional
Integration (1)
• Lack of progress on multilateral front
means greater emphasis on RI?
• Intra-African trade only 10.5% of exports
(though fast growth and figures distorted by
primary resource exports)
• Best hope for Africa to build its
manufacturing sector?
The Pending Goal of Regional
Integration (2)
Objectives:
• Removing non-tariff barriers
• Establishing a common external tariff
Conclusions – towards a strategic
approach to trade policy? (1)
• Priorities? domestic saving and investment,
greater investment in human capital, and
structural diversification
• Need to mainstream trade policy at national
level
Conclusions – towards a strategic
approach to trade policy? (2)
• The need for policy space in international
negotiations
• Importance of achieving Doha development
agenda
• Importance of promoting regional
integration