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Volume 10
Issue 36
Wednesday, October 11 2006
This issue highlights:
TRADE DEALS BETWEEN EU AND ACP COUNTRIES IMMINENT
The European Union (EU) is negotiating with six regions of African, Caribbean and Pacific (ACP) countries to put trade deals or economic partnership agreements (EPAs) in place before January 1, 2008.
The 2008 deadline is aimed at a replacement deal guaranteeing preferential trade, Peter Thompson, European Commission director-general of trade, said.
The Post (Lusaka) reported on October 3, 2006 that the agreements are aimed at replacing the Cotonou Agreement, signed in Benin in 2000. The agreement grants ACP countries preferential trade access to the EU. The EPA's eventual goal is to lead to full trade liberalisation between the EU and its ACP partners.
Thompson was quoted as saying he was certain an agreement would come well before the deadline.
Negotiators in the EU and the Common Market of Eastern & Southern Africa (ESA) - of which South Africa is not a member - discussed the initial EPA draft late September in Mombassa.
The majority of the ESA countries have free access to the EU markets at present but this will come to an end on December 31, 2007. The EU has restricted access to the markets of its ESA partners. The Mombassa meeting, according to Thompson, started on a sour note. He said African delegates were holding firm to demands that development funding be a key element of the trade agreement while EU negotiators insisted that regional integration rather than donor aid was the road to development.
"We think that this partnership model, which will in and of itself render private investment more conducive, and in turn lead to economic growth that we need, that will dwarf anything to do with aid payments," Thompson said.
He added that between 2008 and 2013, the ESA region would receive 22, 6 billion euros from the European Development Fund (EDF) to finance infrastructure development projects such as building dams and roads.
REPUBLIC OF CONGO HYDRO-ELECTRIC PROJECT TO PROVIDE ADEQUATE POWER TO MANY AFRICAN COUNTRIES
The proposed Great Inga hydro-electric development in the Democratic Republic of Congo (DRC) will have a generation capacity of 39 000 megawatts. The project will offer the DRC the possibility of exporting electricity to the sub-region and North Africa.
The DRC currently obtains its electricity supply from the Inga 1 and 2 power stations built in 1972 and 1982, respectively. It currently has 1 775 megawatts of generating capacity.
The Inga 3 site -- if implemented -- could supply the whole sub-region, especially countries of the Southern African Development Community (SADC) with electricity.
An international round table seeking ways to make progress on the Inga project was hosted by the NEPAD Secretariat on October 5 and 6, according to the current issue of NEPAD Dialogue.
A total of 120 participants from African and regional institutions in the public and private sectors, electricity companies, non-governmental organisations, civil society and the news media attended.
TRADE PACT BETWEEN INDIA AND SACU SOON
Indian Prime Minister, Manmohan Singh, on October 2 visualised a Preferential Trade Agreement (PTA) between India and the Southern African Customs Union (SACU) 1 before long.
Asked about the prospects for such an agreement, Singh said his cabinet had already approved negotiations for such an agreement.
Tralac (published by the Trade Law Centre for Southern Africa) also reported Singh saying that South Africa and India had the potential to grow trade between the two countries more than fivefold to US$12 billion in the next four years.
Speaking at the business forum of chief business executives, which was launched by President Thabo Mbeki in 2002, Singh called on South African companies to take advantage of India's pool of skilled labour.
Patrice Motsepe, president of Business Unity SA, said the increase in trade between the countries was "almost solely attributable to India's imports of gold from South Africa."
South Africa's imports from India are mainly textiles and clothing, and leather and vegetable products, while Indian imports from South Africa include minerals, chemical base metals, textiles and pulp.
1 South Africa, Botswana, Namibia, Lesotho & Swaziland
PANELLISTS AGREE SITUATION IN SOMALIA PRECARIOUS
Panellists meeting in the American capital on October 4 agreed the situation in Somalia was precarious.
A panel of African experts met at the American Enterprise Institute to discuss how US security interests in the Horn of Africa region might be affected by Somalia's instability. They agreed that Somalia was slipping in and out of anarchy.
Warring clans vie for power while a conservative Islamic movement consolidates its hold over the capital, Mogadishu, and much of the rest of the country. A fractious secular government is trying to establish its autonomy. In addition, there are continuing threats from terrorist groups aligned with al-Qaida and from pirates operating off Somalia's coast.
Panel member David Shinn pointed out the volatility of the area, noting the decades-old animosity between Ethiopia and Somalia, and their common 1 600 kilometre border. Shinn is a former US ambassador to Burkina Faso and to Ethiopia and now a professor of political science at George Washington University in Washington, DC.
The two nations' disagreements, he said, are stoked in territorial claims, by both countries' support of secessionist movements and by disputes over natural resources.
Additionally, the area remains a powder keg because of illicit arms shipments, with Ethiopians accusing Somalia of aiding Eritrea, another of its adversaries. Meanwhile, the Islamic Courts Union faction in Somalia is charging Ethiopia with arming the Transitional Federal Government (TFG), the secular entity once centred in Baidoa, striving to gain control of the entire country.
Other countries in the region are pursuing their own strategic interests, Shinn said.
WORKSHOP TO PROMOTE PROCESSED FOOD EXPORTS TO THE US
A Southern African AGOA workshop, aimed at the expansion of processed food exports to the United States under the African Growth and Opportunity Act (AGOA), will begin today in Cape Town, South Africa.
The workshop will focus on AGOA export opportunities in the processed and speciality food and ingredient sectors. A delegation including American food distributors, brokers, and marketing experts, will share expertise with participants from southern African countries.
The workshop will include sessions on retailing, distribution, marketing, financing, and important trends in the US food market for African processed food products, including speciality food and ingredients. Key officials of the USAID Trade Hub in Gaborone, Botswana, will be in attendance.
BOTSWANA AND US SIGN DEBT-FOR-NATURE AGREEMENT
The United States and Botswana signed a series of debt reduction agreements on October 5 that will generate funds to help conserve and restore Botswana's tropical forests. The ecologically fragile Okavango Delta and Chobe National Park regions are included.
The agreements - comprising the first US "debt-for-nature" pact to be concluded by an African country - were made possible through a contribution of nearly $7 million from the US government. It will reduce Botswana's debt by more than $8, 3 million.
The forests included in the Botswana agreements include closed-canopy tree cover, riverside forests and dry acacia forests. They are home to the fishing owl, leopard, elephant, hippopotamus and many other wildlife species. Populations living in and around these forests depend upon them for their livelihood and survival, and these agreements will help ensure the sustainability of the forests for future generations.
Under the US tropical Forest Conservation Act, eligible developing countries have the opportunity to reduce concessional debt owed to the United States while generating funds to conserve domestic forests.
OVERVIEW OF PROPOSED CHANGES TO AGOA
A number of bills have been introduced in the United States Congress that could result in key amendments to the African Growth and Opportunity Act (AGOA) legislation.
The Africa Investment Act of 2006, introduced by Representative Bill Thomas, chairman of the House Ways and Means Committee, appears to be the most important at present.
Some of the key changes envisaged in the Thompson bill include an extension of AGOA's apparel provisions, which not only offer duty-free access to originating garments until 2015, but also contain flexible origin rules for lesser developed countries which are permitted to source fabrics from outside the AGOA region. These rules have had the single most important impact on the struggling garment sector in many African countries, which has been largely uncompetitive when faced with the prospects of having to use locally made fabrics and yarns.
The third-country fabric provisions are set to expire at the end of September 2007, after which garment exports must be manufactured from local fabric. In the October 2006-2007 period, the quota associated with these rules has been halved, meaning that the restrictions may kick in earlier.
Under the proposed changes, the quota for the 2006-2007 period would be increased sufficiently so as not to hinder garment exports from eligible countries in sub-Sahara Africa. Likewise, the Thompson bill proposes extending these apparel provisions by a further year to 2007, likewise under an enlarged quota of 3, 5% of total US garment imports.
The bill also proposes to introduce a value-added rule of origin for apparel exports from eligible AGOA-countries that currently benefit from the flexible rules of origin. This entails a local 50% value-added requirement in the first three years after September 2007, rising to 55% in year four and 60% in years five, six and seven (the last being 2015). Local value-added is based on the local cost of direct processing as well as direct materials used in the manufacture of qualifying garments.
A further proposal relates to accumulation of origin, a concept that expands the number of countries whose processing (value-adding) may be taken together with any local value-added to make up the required minimum threshold. This proposal in effect means that AGOA countries would not be limited to sourcing from other AGOA countries, but from a range of other countries.
Furthermore, the bill proposes an extension for the US Generalized System of Preferences by a further two years to the end of 2008 and also changes to the Competitive Needs Limitations (CNL). These would remove GSP benefits of a product (from a particular beneficiary country) where aggregate exports (from that beneficiary country) of such a product exceed US $1, 5 billion worth of exports to the US in the preceding year. These provisions would begin at the start of 2007. (Source: AGOA. Info)
EXCLUSIVE POINTERS
The 2006 Washington-based Heritage Foundation-Wall Street Journal Index of Economic Freedom Report will be launched in Johannesburg, South Africa later today. The Chambers of Commerce and Industry in South Africa (CHAMSA) will partner the event. This year's 12th consecutive release of the Index marks a landmark development for South Africa, which now becomes the first and only country in Africa to join these host locations of choice. The Index, published annually and covering more than 120 countries, including South Africa, is considered as a flagship source of practical policy guidance on economic freedom and a country's entrepreneurial environment, institutional and policy climate, and disposition of Government control.
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