Africa's trade with India and China

"For the first time in Africa's modern economic history, a large portion of the continent has registered not only high, but also uninterrupted growth," according to a 2010 International Trade Forum magazine report, noting growth among African nations in GDP and resilience during the global economic crisis that started 2008-09.


The traditional African exports to India has been gems and jewelry. South Africa and Nigeria, however, have led the way among African nations exporting to India with Nigeria providing 10 percent of India's petroleum needs. India polishes almost all of South Africa's diamonds and is a major importer of the Sub-Saharan African nation's gold. India exports fabric, yarn, auto-parts and machinery, especially agriculture equipment, to South Africa.


According to a WTO report, in 2011 India surpassed China with an export growth rate of 16.1 percent, placing it at the top of the list of all major global trading countries. China has now replaced India's as the second-fastest exporting nation among major economies at 9.3 percent. In 2010, China exports growth was 28.4 and India saw a 22 percent growth.


India is interested in creating equitable partnerships with African nations, states Sheppa Tapanti, Deputy Director of the Confederation of Indian Industry. "Indian industry should not be looked up as colonizers, or someone who is moving in to take away. They would rather be looked upon as people who would contribute."


In April 2012, the African Union (AU) selected 14 nations to be represented at an Africa-India summit to discuss increasing trade. This was the first ever India-Africa forum and addressed relaxing duties and quotas India places on some products from African nations.


China is in competition with India for natural resources abroad to meet the needs of its industrial economy. In November 2006, Beijing hosted nearly 50 African leaders. One of the outcomes of these negotiations was China nearly doubling aid to Africa. Credit lines and commercial deals also increased in the billions.


African nations interested in growing exports to the India and China emerging economies will be in a better position because of the competition. India and China, however, will have the advantage of bargaining from a centralized power base. For the 50 African nations seeking to increase export trades, organizing efforts through trade and economic unions like the AU, the East African Community and the Economic Community of West African States will offer the soundest vehicles for harnessing collective bargaining power.


Additionally, increased exports from African nations to India and China may find assistance in predicted climate changes. For example, Tanzania may benefit from increased demands for its corn due to climate change, according to a study by researchers at Stanford University, the World Bank and Purdue University. It is also encouraging news that the AU's current focus is on boosting intra-African trade, which has the potential to increase trading synergies among African nations.

References: 

• World Trade Organization World Trade Report 2011

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WTO MC9 Set for Bali, Indonesia December 2013

The World Trade Organization (WTO) has announced that its 9th Ministerial Conference will be held the first week in December 2013 in the Indonesia island of Bali. The decision was made July 25-26 at the WTO General Council meeting in Geneva. WTO members have pledged to discuss the precise dates after the summer break, according to General Council Ambassador Elin Johansen of Norway.The Ministerial Conference is a WTO decision-making body that meets about every two years. It is among the highest decision-making body of the organization. 

Will the stalled WTO's Doha Round, which aims to clear obstacles to trade for the poorest nations, find a place in the 2013 global trade negotiations or will the woes of the wealthiest nations continue to dominate the organization's agenda? The Doha Round began in 2001 and were designed to address protectionist global trade issues like farm aid by the United States and the nations of the European Union, which locks out export opportunities to these markets among the poorest nations -- many of whom have agricultural products as staple exports. Industrial products tariffs and other restrictive measures to imports by emerging countries like China and India are also a major agenda of the Doha Round. 

While the WTO has lowered its bar to entry for poorer nations, the questions being raised by nations seeking fair global trade opportunities is whether the WTO as an institutional organization is capable of assisting them in combating artificial barriers to global trade. Do regional international trade blocs like ASEAN, CARICOM, Mercosur and EAC offer a more effective way to grow free trade opportunities for poorer nations and reduce the effects of powerful nations discriminating against their interests? These will be issues that the WTO must address if it wants to remain relevant to poorer nations.

DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.

Africa and International Trade: A Brief Round-up Review

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Africa's National Governments Discuss Continental Free Trade

Over 100 Members of Parliament (MPs) from 40 African countries agreed to step up efforts to improve the business environment. They agreed to review legislation linked to governance, trade barriers, and regional infrastructure in a bid to strengthen sustainale private sector development. they met during a conference on private sector development in Africa as a cornerstone for sustainable growth held in Kigali, Rwanda, from March 14-16, 2012.

African leaders have called for a continental free trade area by 2017 to boost trade within the continent. The African MPs discussed how they could boost macroeconomic stability by promoting legal and regulatory reforms to encourage productive and sustainable private investments, necessary to boost growth and create jobs in Africa.

Zambia's Electronic Power Transmission Project

Zambia will start building two 330 kV electric power transmission lines this year to provide power to the eastern and northern regions. The lines are expected to cost US$285 million and work would start by June 2012 and be finished by the end of next year with financing provided by the Industrial and Commercial Bank of China.

Ivory Coast's Expected GDP Growth in 2012

The International Monetary Fund (IMF) expects the Ivory Coast's GDP to grow by some 8% in 2012 after a 4.7% contraction in 2011. Last year the Ivory Coast only received R600m (US$78.1m) worth of South African exports in contrast to Ivory Coast's neighbor Ghana, which received R3.1bn (US$403.6m). The largest destination for South African exports in West Africa is Nigeria at R5.8bn (US$755.1m) Zimbabwe is South Africa's largest African export desstination at R17.8bn (US$2.317bn), narrowly ahead of Mozambique at R17.7bn (US$2.304bn) and Zambia at R17.3bn (US$2.252bn).

The IMF said economic performance in 2011 was better than expected. After contracting sharply during the post-election crisis, the economy rebounded faster than expected, and finished the year 4.7% lower than in 2010. Twelve-month inflation, which peaked during the crisis at 9.1%, finished the year at 1.9%.

Budget execution was also better than expected. There have been some delays in implementing other planned reforms. Further progress is needed in resolving problems at some state-owned enterprises, including publicly owned commercial banks, and ensuring that the electricity sector becomes financially viable in the medium term, improves maintenance and expands capacity, as well as making the new National Debt Management Committee operational.

South Africa's Iranian Crude Imports

South Africa hopes to have a plan by the end of May for replacing Iranian crude that currently makes up a quarter of its crude imports. The US has pressured many of Iran's biggest oil buyers in Asia to reduce their purchases in a Western pubsh to starve Tehran of funds for its disputed nuclear program. Iran is South Africa's leading crude supplier and makes up about 29% of imports by Africa's biggest economy, according to the US Energy Information Administration.


Inflation in Ethiopia

Consumer inflation in Ethiopia rose to 36.3% year-to-year in February from 32% year-to-year in January, 35.9% year-to-year in December, 39.2% year-to-year in November and 39.8% year-to-year in October. Food inflation rose to 47.4% year-to-year in February from 41.4% year-to-year in January, 46.7% year-to-year in December, 50.3% year-to-year in November and 51.7% year-to-year in October, while non-food inflation rose to 21.4% year-to-year in February from 19.2% year-to-year in January, 21.8% year-to-year in December, 24% year-to-year in November and 23.4% year-to-year in October. The annual average consumer inflation rate was 33% in 2011 from 8.1% in 2010.

Malawi's New 1,000 Kwacha Note

Malawi will introduce a new 1,000 kwacha note in July. Reserve Bank of Malawi Governor Perks Ligoya said the old K20, K50, K100, K200 and K500 notes will be phased out.

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China Denounces EU Airline Carbon Emissions Fines, Leading Global Dissent

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The European Union's fines on airline carbon emissions are being opposed by China. A day after China's largest airline carriers refused to pay costs for non-compliance with the region's standard, Brussels warns that fines associated with non-compliance will cost even more. For observers, it appears that a global trade impasse between two major global trading powers has come to a head.


Starting Jan. 1, 2012 airlines using any of the airports within the EU will be subject to its Emissions Trading Scheme (ETS) law. The EU passed the airline carbon emissions law to charge foreign airlines for carbon dioxide emissions beyond the regional standard. Those not in compliance with the EU standard are fined $128 (100 euro) for each tonne of carbon emitted above the allowance. Serial offenders face a ban from providing airline services within the EU member states.


"China opposes the European Union's unilateral legislation," said Chinese foreign ministry spokesman Hong Lei. "China has expressed to the EU our deep concern and opposition many times on a bilateral level."


"We hope that Europe can take a cautious and realistic attitude and act carefully and properly consult related parties including China to resolve this issue," said Lei, noting that his nation was not the only one opposing the new law.


India has also joined the dissenting nations. India may advise airlines to withhold emissions data, said a civil aviation ministry official reporting to Business Week. 


In November 2011, a declaration was adopted by the United Nations' International Civil Aviation Organization (ICAO) seeking exemptions for international aircraft operators from the EU carbon emission regulations. The ICAO's non-binding statement was supported by 26 countries, including the US, Japan and Russia, who assert that the EU regulation does not comply with international law.


In December 2011, the US argued before the European Court of Justice that the EU fines violated aviation and climate change pacts. The EU insists that these are necessary efforts to support its initiative to lead the fight against climate change.


U.S. consumers will begin to feel the pinch. Continental, Delta, United and US Airways have already added surcharges to one-way tickets to EU destinations to pay for carbon emissions.


DISCLAIMER: Because of the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. This profile may constitute attorney advertising. Prior results do not guarantee a similar outcome. Any correspondence with this blog does not constitute a client/attorney relationship. Neither the content on this blog nor transmissions between you and the blogger through this blog are intended to provide legal or other advice or to create an attorney-client relationship.