Working Paper 109 - The First Africa Region Review for EAC/COMESA

The main objective of this paper is to present a mapping of trade-relatedbottlenecks in the EAC/COMESA region to eligible aid-for-trade (AFT)categories, and to articulate a strategy for mobilising significant amounts of aidfor trade. To do so, the paper reviews the constraints to trade in EAC/COMESA.It identifies existing AFT-related programmes and activities, and documents thestatus of their implementation, pointing out any gaps and the causes thereof.The paper is based on the premise that the EAC/COMESA region faces uniqueand severe constraints to trade related to the fact that many of the memberstates are land-locked. This, combined with poor infrastructure and services,cumbersome border procedures, inadequate mainstreaming of trade in nationaldevelopment strategies, and lack of progress in deepening economic integration,explains the region’s dismal trade performance, both intra-regionally andexternally. AEC/COMESA is aware of these constraints. The region haslaunched various initiatives to tackle them. The majority of these initiatives relateto trade facilitation measures.The North-South Corridor is one trade-related infrastructure project that hasattracted attention in the region, both by virtue of its scale and purported benefits.Even though the implementation of the project was slow initially, the politicalimpetus during the North-South Corridor High Level meeting in Lusaka, Zambiain April 2009 attracted financing in the region of US$1.2 billion. As the first pilot inEast Africa, the North-South Corridor clearly shows that Aid for trade can play akey role in sustaining ongoing efforts to overcome bottlenecks to trade.The key message is that an effective AFT strategy should focus primarily ontrade facilitation, with some emphasis on trade-related infrastructure. Sincesubstantial aid has traditionally been directed to technical assistance andcapacity building, and the trend is likely to continue, there is no need to build thiselement into the strategy per se. Such a strategy must: (a) Emphasise thecontribution of trade facilitation measures in reducing trade costs and enhancingexport competitiveness; (b) demonstrate the added benefits of modern traderelatedinfrastructure; (c) demonstrate the political will by the EAC/COMESAmember states to address the region’s constraints in the spirit of cooperation andsolidarity to landlocked neighbours; and (d) impress on the donor community theneed for greater AFT resources to help the region participate fully in global tradeand attain the MDGs.The Aid for Trade agenda should also highlight the importance of monitoring toshow its impact on trade and development. In this case, the EAC/COMESAregion should maintain a database of Aid for Trade for monitoring and evaluationpurposes.

David v. Goliath : Mauritius facing up to China; a draft scoping study

The table of contents for this item can be shared with the requester. The requester may then choose one chapter, up to 10% of the item, as per the Fair Dealing provision of the Canadian Copyright ActMauritius is an outlier among Sub-Saharan Africa. As a small island economy, with no natural resources, Mauritius economic survival rests crucially on an openness strategy pushed to its limits. This study focuses on trade, Foreign Direct Investment (FDI) and aid. Since Mauritius can no longer rely on preferential market access to sell its products, especially textiles, local firms need to be more competitive to survive and in this spirit, the government abolished the differential incentive scheme for non-EPZ firms by abrogating the Industrial Expansion Act. These measures enabled the clothing industry to restructure to meet the challenges posed by globalization generally, and by China, in particular

From unilateral preferences to Reciprocity: Impact of the ACP – EU EPA on ESA countries

This paper attempts to analyze the welfare impact of the creation of the EU-ESA Economic Partnership Agreement, on ESA members against a benchmarked scenario which is the multilateral liberalization scenario. Ten regions by ten sectors aggregation of the GTAP model is used. The sector aggregation takes care of sensitive products which ESA countries decided not to liberalise for obvious reasons. While the EPAs is implemented as from 2008 and all the data, including the protection data, in the GTAP database version 6.1 has the common reference year of 2001, the dataset is updated to reflect (i) the EU enlargement and (ii) the phase out of the Multi Fibre Agreement. Four different experiments are simulated. Results show that (i) although under all scenarios welfare effect increase, Uganda and Madagascar tend to benefit the least and (ii) for some countries, such as Madagascar, Malawi and Zimbabwe, the required overall structural adjustment is low

From unilateral preferences to Reciprocity: Impact of the ACP – EU EPA on ESA countries

This paper attempts to analyze the welfare impact of the creation of the EU-ESA Economic Partnership Agreement, on ESA members against a benchmarked scenario which is the multilateral liberalization scenario. Ten regions by ten sectors aggregation of the GTAP model is used. The sector aggregation takes care of sensitive products which ESA countries decided not to liberalise for obvious reasons. While the EPAs is implemented as from 2008 and all the data, including the protection data, in the GTAP database version 6.1 has the common reference year of 2001, the dataset is updated to reflect (i) the EU enlargement and (ii) the phase out of the Multi Fibre Agreement. Four different experiments are simulated. Results show that (i) although under all scenarios welfare effect increase, Uganda and Madagascar tend to benefit the least and (ii) for some countries, such as Madagascar, Malawi and Zimbabwe, the required overall structural adjustment is low

How does China matter for growth of clothing and footwear production in Africa?

This two-page report outlines the aim and results of a workshop project funding: providing financial support to the Institute for Development Studies (IDS), University of Nairobi, in order to convene a workshop to develop a full research proposal. The workshop provided an opportunity for the research team to come together to discuss the proposed research and prepare for working together on the project. This was especially useful for the new members of the African Clothing and Footwear Network (ACFRN)

David V. Goliath: Mauritius Facing Up to China

Recent studies of the impact of China's rise on the economies of sub-Saharan Africa generally find that the resource-rich countries of the sub-continent will gain while those that compete with China in export markets will invariably lose. Mauritius, with no exploitable natural resources, and facing acute Chinese competition in its traditional markets, is a most likely candidate to suffer China's onslaught. This paper argues that China's economic rise can benefit Mauritius. Analyzing the impact of China through the channels of trade, aid and investment, we show that preference erosion, not China's emergence, is to blame for the drastic loss of jobs in the clothing industry. This industry, however, has proved resilient since exports are back on a rising trend. On the other hand, Chinese aid to finance construction and infrastructure projects has been a welcome relief, even when it has been tied to the use of Chinese labour and inputs. The most significant benefits of China's engagement are likely to occur in the area of investment as China strategically uses Mauritius as a platform to penetrate the African market.Les études récentes sur l’impact de la croissance de la Chine sur les économies de l’Afrique subsaharienne concluent généralement que les pays riches en ressources naturelles en seront les principaux bénéficiaires, tandis que ceux dont les marchés d’exportation concurrencent la Chine seront inévitablement désavantagés. L’Île Maurice, sans ressources naturelles exploitables, et faisant face à une concurrence chinoise aiguë sur ses marchés traditionnels, fournit un bon exemple d’un pays particulièrement susceptible d’être défavorisé. Cet article suggère que l’importance croissante de la Chine en Afrique peut être bénéfique à l’Île Maurice. En analysant l’impact de la Chine sur le commerce, l’investissement, et l’aide au développement, il est démontré que les licenciements dans l’industrie de la confection à l’Île Maurice sont dus à une érosion des préférences et non pas à l’émergence de la Chine. Néanmoins, cette industrie manifeste une certaine ténacité puisque les exportations sont en hausse. Par ailleurs, l’aide au développement chinoise dirigée vers des projets de construction et d’infrastructure est bien reçue, même lorsqu’elle est liée à l’utilisation de travailleurs et de matériaux Chinois. Mais les avantages les plus significatifs d’un engagement de plus en plus important avec la Chine sont susceptibles de se produire dans le domaine de l’investissement car l’Île Maurice est une plate-forme stratégique chinoise facilitant la pénétration du marché africain.European Journal of Development Research (2009) 21, 622–643. doi:10.1057/ejdr.2009.26