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Enhancing trade between Arab and African countries

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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, 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 Why? Because of high trade barriers, effect on poor traders, poverty reduction. Potentially refer to South-South cooperation.

3 Kandeh Yumkella, Director-General, UNIDO
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
Reduction of trade costs Increases competitiveness of firms Improved export performance More trade creates jobs and income opportunities Economic growth 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 Look in index for explanation of 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”. Definition. Source: ADB 2012

12 Source: ILO 2010

13

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 Development Research 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 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”  CONNECTIVITY to markets  PRODUCTIVITY (enterprise)  COST OF EXPORTING (support services) Compete Conform Connect 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 jobs every year Source: Arab Competitiveness Report

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

19 EXPLANATION: Decrease in exports and slight increase in imports.
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 Mention UNIDO’s role in promoting industrial development and strategic partnerships.

21 Exports by Product (Africa)
Source: WTO 2012

22 Payement of débats and interests
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 Pre-conditions for Exports :
Potential in Agro-Food area Pre-conditions for Exports : Regulatory Environment for Compliance WTO -TBT /SPS Agreements (Jan 1995) 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 Development, Oxford University Press, 2005
“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/ Africa Support 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 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 Trade related technical assistance programme
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 UNIDO TCB - LDCs Coverage (36 countries)
On-going and planned Regional Programmes SAARC Afghanistan Bangladesh Cambodia Ethiopia Mozambique Nepal Senegal Tanzania UEMOA/ ECOWAS MEKONG Country Programmes EAC Madagascar Mauritania Source: OECD DAC List Uganda Burundi (2007) Rwanda (2007) Bhutan Maldives MEKONG Delta Countries Lao PDR CARICOM Haiti SADC UEMOA/ECOWAS Benin Burkina Faso Cape Verde Gambia Guinea Guinea Bissau Liberia Mali Niger Sierra Leone Togo Angola Congo Lesotho Malawi Zambia CEMAC Central African Rep. Chad Equatorial Guinea No.29

30 GDP Growth by Region (percent change, constant prices)
EXPLANATION: As demonstrated by the graph, recent financial crisis had a considerable impact on the GDP of OECD economies. Less so in the case of the Middle East and Africa. Source: Arab Competitiveness Report

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: Identifying sectors and products that have competitive potential and are suitable for local value addition Analyzing and assessing trends in industrial performance at national, regional and global level, and Formulating strategies and policies designed to improve industrial competitiveness and to overcome technical barriers to trade (TBT) and comply with sanitary and phyto-sanitary measures (SPS). Assisting in upgrading manufacturing processes in sectors with high-export potential to internationally acceptable levels.

32 UNIDO is continuing to offer the following activities :2/2
strengthen the capacity of countries, productive sectors and suppliers to produce goods that meet requirements set by foreign buyers and markets; build up the national and regional quality infrastructure needed to provide internationally recognized quality assurance services, standards, product testing facilities and calibration laboratories, Creation of quality management systems and product traceability management system certification, inspection and accreditation mechanisms

33 A New Vision for Trade Facilitation
Competitiveness Export Promotion Meeting int. standards Physical Infrastructures Roads, ports, etc. Telecommunications Logistics and Transport Services Promoting competition Customs-Border- Transit- Management Traditional focus of trade facilitation

34 The Aid for Trade Agenda
Trade policy and regulations Trade-related technical assistance and capacity building Trade-related infrastructure Building productive capacity Macroeconomic and microeconomic adjustment 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 Vienna, Austria Tel:  Fax:

39 Trade & Economic Growth
ANNEXES Trade & Economic Growth

40 Exports of all goods, non-petroleum and non-natural goods
Comparing the COMTRADE total exports with IMF total exports, we can see that the export numbers are lower for the former. Some countries, like Libya and Bahrain, exhibit stark differences. However, mirrored imports from COMTRADE yield similar numbers to the IMF statistics (in part because the IMF uses mirrored import data in some cases). This suggests systematic underreporting by exporters. Further, a comparison between the COMTRADE export and import data suggests the overall discrepancy for MENA is by and large eliminated after excluding petroleum. This implies that the underreporting is concentrated in oil. However, the discrepancy is not eliminated for Libya and Bahrain. Source: World Bank 2011

41 World Exports by Product
What is the contribution of both regions vis-à-vis the rest of the world , in terms of exports. Source: WTO 2012

42 Value Added in Selected Regions (2009)
The manufacturing sector is relatively well developed in some MENA countries. Source: OECD 2011

43 Value added in the MENA region (2009)
The manufacturing sector is relatively well developed in some MENA countries. 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% of the 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

51 Material extraction in Africa, by category, 2000-2008
Source: UNCTAD 2012

52 Material extraction in selected African countries, by material category, 2008 (millions of tons)
Source: UNCTAD 2012

53 Africa’s share of global production and reserves of selected minerals
Source: UNCTAD 2012

54 2. Industrial development and per capita resource use in Africa (2008)
Source: UNCTAD 2012

55 Population, output and carbon emissions, across regions, in 2009
Source: International Energy Agency 2011

56 GDP and GDP per capita growth (2009/2010)
Source: Arab Competitiveness Report

57 MENA Exports as a Share of GDP
Source: Arab Competitiveness Report

58 Goods exports destinations (individual countries)
Source: Arab Competitiveness Report

59 FDI Inflows in the MENA (as a percentage of the total)
Source: Arab Competitiveness Report

60 FDI Inflows as a Share of GDP
Source: Arab Competitiveness Report

61 FDI by Economic Sector (cumulative 2000-07)
Source: Arab Competitiveness Report

62 World Proven Oil Reserves by Region (2010)
Source: Arab Competitiveness Report

63 MENA proven crude oil reserves by country (2010)
Source: Arab Competitiveness Report


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