AID FOR TRADE AND THE ALMATY PROGRAMME OF ACTION Stephen N. Karingi Chief, Trade and International Negotiations Section, UNECA. Stephen N. Karingi Chief, Trade and International Negotiations Section, UNECA. 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

Outline of Presentation  Preface  Africa’s 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.  Preface  Africa’s 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.

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.  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.

Africa’s 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  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

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.  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.

33 out 49 LDCs are in Africa 1 Land-locked Developing Countries 2 Small Island Developing States 1 Land-locked Developing Countries 2 Small Island Developing States AngolaEthiopia 1 Niger 1 BeninGambiaRwanda 1 Burkina Faso 1 GuineaSao Tome & Principe 2 Burundi 1 Guinea-Bissau 2 Senegal Central African Republic 1 Lesotho 1 Sierra Leone Chad 1 LiberiaSomalia Comoros 2 MadagascarSudan Congo, Dem. Republic ofMalawi 1 Togo DjiboutiMali 1 Uganda 1 Equatorial GuineaMauritaniaTanzania EritreaMozambiqueZambia 1

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.  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.

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.  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.

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.  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.

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  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

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.  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.

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  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

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  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

APoA Recommendations to be Considered under AFT (con’t)  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  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

APoA Recommendations to be Considered under AFT (con’t)  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  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

 The Africa WG on AfT is part of the Action Plan that was agreed in May 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 AfT institutional framework that could keep spotlight on APoA

Work on AfT of significance to APoA 1.Together with the AfDB, the ECA is helping African RECs to refine their AfT strategies especially in identify bankable projects. 2.The ECA is also spearheading, together with the AfDB and the WTO organisation of sub- regional review meetings as part of helping monitor progress. 1.Together with the AfDB, the ECA is helping African RECs to refine their AfT strategies especially in identify bankable projects. 2.The ECA is also spearheading, together with the AfDB and the WTO organisation of sub- regional review meetings as part of helping monitor progress.

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.  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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