African Trade and Integration in a Post-Brexit World Brendan - - PowerPoint PPT Presentation

African Trade and Integration in a Post-Brexit World

Brendan Vickers Trade Division

Presentation to the launch of the Centre for Trade and Regional Integration Pretoria, South Africa 30 March 2017

Why important?

• UK and EU27 are important trade partners (EU is Africa’s single #1 trading

partner)

• UK and EU are important investment partners
• UK and EU are key development cooperation partners, especially

supporting regional integration:

• UK meets 0.7% ODA target, largest G7 multilateral donor of AfT to

Africa, Regional Infrastructure Programme, bilateral programmes;

• UK DFID’s Economic Development Strategy (2017) prioritises trade

and seeks more coherent AfT;

• EU’s EDF, EU-Africa Infrastructure Trust Fund, EPA implementation

programmes, where applicable.

• But GBP depreciation (10-20% since June 2016 referendum) impacting on

exports/aid/remittances received from UK

UK-Africa trading relations at a crossroads…

• For more than 4 decades now UK-ACP trade has been governed through

EU policies, most recently: GSP , EBA for LDCs, post-Cotonou EPAs (e.g. CARIFORUM EPA)

• Brexit appears to unsettle a part of EPAs involving EU and SSA countries
• Five regional EPAs in SSA at different stages of finalisation or

implementation (e.g. SADC EPA implemented on 10 Oct 2016).

• Upon formal exit from the EU, all rights and obligations will cease to

apply and the UK will devise its own trade policy

• UK White Paper seeks new strategic partnership with EU, including

comprehensive FTA and new customs agreement with EU

• With Article 50 triggered, vital that UK reassures SSA and LDCs of same

favourable market access (i.e. EBA and EPAs) post Brexit.

• Reassurances of trade continuity are imperative for investment decisions

and future planning.

SSA’s Merchandise Exports to the EU (2000-15)

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 20 40 60 80 100 120 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$ billion

Exports to EU28 (US$ billion) - Left axis Share of UK in SSA Exports to the World (%) - Right axis Share of EU28 in SSA Exports to the World (%) - Right axis

Source: Calculations using data from UNCTADStat

SSA’s Total Trade with the UK (US$ billion), 2000-15

5 10 15 20 25 30 35 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$ billion

Source: Calculations using data from UNCTADStat

UK Share of SSA’s Goods Exports to World (%)

1.0% 1.1% 1.2% 1.3% 1.3% 1.5% 1.5% 1.6% 1.6% 2.1% 2.4% 2.5% 2.5% 3.1% 3.3% 3.9% 4.1% 4.3% 5.0% 6.7% 10.4% 13.4% 18.9% 54.4%

Gabon Zambia Angola Uganda Ethiopia Rwanda Senegal Congo Zimbabwe Côte d'Ivoire Gambia Madagascar Mozambique Cameroon Ghana South Africa Malawi Nigeria Namibia Kenya Equatorial Guinea Mauritius Seychelles Botswana

Source: Calculations using data from UNCTADStat Excludes countries with shares less than 1 per cent

UK Share of EU Imports from SSA (2013-2015 avg.)

UK % of EU imports SSA Country More than 40% Botswana, Seychelles Between 30% and 40% Equatorial Guinea, Gambia Between 20% and 30% Kenya, Mauritius, South Africa Between 10% and 20% Ghana, Malawi, Nigeria, Rwanda, South Sudan, Zambia Up to 10% Angola, Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Congo DR, Cote d'Ivoire, Djibouti, Eritrea, Ethiopia, Gabon, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Mali, Mauritania, Mozambique, Namibia, Niger, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Swaziland, Tanzania, Togo, Uganda, Zimbabwe

Note: Share of EU market may be influenced by exports of just a few high-value products over this period Source: Eurostat COMEXT

Product-specific significance of the UK market for SSA

• 2607 - no. of SSA products at CN-8 digit level exported
• nly to the UK in the EU
• US$192 million earned
• 167 SSA products, each generating export revenues of at

least US$100,000 exported to the UK market alone

• The UK is a niche market for specific products in certain

countries, e.g. fresh vegetables, beef, fish products, tea, coffee, citrus, floriculture, gold and precious metals, etc.

Source: Calculated using Eurostat COMEXT

Post-Brexit arrangements with the UK

• Most SSA exports to UK benefit from duty and quota-free access under the

EBA scheme for LDCs or EPAs, where signed (except SA in the EU-SADC EPA)

• If no equivalent treatment post-Brexit, products entering the UK market

would face higher MFN duties

• US$734 million – potential ‘calculable’ import duties that could be applied
• n ACP states
• Arguably ‘small’ overall effect, but significant and disproportionate

consequences for certain sectors are likely

• MFN playing field will impact on SSA’s export competitiveness

Worst Affected ACP Countries Affected by Potential MFN

Source: Calculated using Eurostat COMEXT

Post-Brexit options for UK-SSA trade

• For LDCs: the UK’s own GSP regime similar to EBAs
• But UK can make certain improvements – Rules of Origin
• Inclusion of preferences in services
• Can the UK install EPA-replicas for non-LDCs?
• EPAs have no provisions for accession by new European members
• Some – like SADC EPA – could provide ready template to ‘lock in’ market

access and negotiate remaining issues for goods trade (quotas, SPS, etc.)

• But is this desirable given EPA experience?
• Any lessons to learn from EPA processes?
• Question of reciprocal market access for LDCs – EAC EPA, etc.
• Compromised regional integration processes in SSA
• EPAs-minus-UK may upset balance of commitments
• Transitional arrangements?
• UK could offer unilateral preferences - WTO compatibility (e.g. AGOA)
• EPA signatories could temporarily extend status quo to UK post-Brexit
• Medium to long-term trade relationship

Top 10 Markets for SADC EPA Exports (US$), 2015

• 1,000,000.00

2,000,000.00 3,000,000.00 4,000,000.00 5,000,000.00 6,000,000.00 7,000,000.00 8,000,000.00

United Kingdom Germany Belgium Netherlands Spain Italy France Portugal Sweden Poland

Source: Calculations using data from UNCTADStat

SADC EPA Export Composition to UK and EU27 (2015)

• 2,000,000.00

4,000,000.00 6,000,000.00 8,000,000.00 10,000,000.00 12,000,000.00 United Kingdom EU27 (European Union 27)

Source: Calculations using data from UNCTADStat

Strengthening UK’s Development Role Post-Brexit

• DFID’s Economic Development Strategy – trade is core; need to

match up trade and development priorities

• The UK’s strong commitment to trade and development support

for ACP countries: provided 0.7% of GNI as ODA

• Strong advocate and leading donor of AfT > US$1 billion a year to

assist ACP countries

• But GBP depreciation…
• Highest level of multilateral AfT disbursement
• Bilateral AfT to Africa up to US$790 million (2014)
• Projects – TradeMark Southern/Eastern Africa, West Africa

Regional Integration Programme, Regional Infrastructure Programme for Africa, Trade Advocacy Fund,

• UK’s Africa Free Trade Initiative

UK Bilateral AfT: Top African Recipients (2011-14 avg.)

5 10 15 20 25 30 35 40 45 50

Algeria Liberia Rwanda Zimbabwe Somalia Mozambique DRC Uganda Cameroon Tanzania Kenya South Africa Nigeria

Top 3 = 45% UK’s exports to SSA

Source: APPG (2016) Inquiry into the UK’s Free Trade Initiative in Africa

Thank you

• Dr. Brendan Vickers

Economic Adviser, International Trade Policy Commonwealth Secretariat London b.vickers@commonwealth.int