Rockwell: Political Will Needed to Enhance Intra-African Trade

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Keith Rockwell

The Director of Information at the World Trade Organisation, Mr. Keith Rockwell, in this interview calls for initiatives that will help increase intra-African trade which presently is about 18 per cent, in order to drive growth and stimulate economic activities in the continents. He also says there is need to eliminate bureaucratic bottlenecks hindering trade in the continent. Obinna Chima presents the excerpts:

What do think can be done to ensure that informal trade is formalised in a lot of economies in Africa?

Well, that is a very important question, particularly in Africa. I think the statistics is close to half of trade in Africa is informal trade. And I know that in the discussions about the formation of the continental Africa Free Trade (AfCFTA), this was a key factor and I know in fact that a lot of informal traders have actually being setting up post near the boarders so that they can express their view and be more out in the open. It is very difficult to capture and it makes it complicated in terms of government ability to access their trade policy.

If you don’t have accurate data, it becomes very difficult in terms of doing a full range of things including facilitating trade of these young entrepreneurs. And many of these informal traders are women. So it is very important that their interests are taking into account. Now this is something that I know that on continental basis it is being discussed. It is for the government to bring that issue here at the WTO. And I think because of the nature of informal trade, it is mostly done with neighbouring countries.

This can change because of trading by the internet. E-commerce maybe a way of changing this now. Capturing e-commerce trading activity is also complicated and a number of countries including South Africa have raised the issue of do you continue to have a moratorium on e-commerce transmission when you are not sure exactly what’s included in that transmission. Now, how exactly how this will be done is not easy to say because we don’t have rules on this.

More than 71 countries signed up to a declaration that would lead to a discussion that has been underway now for a year and could then turn into negotiations as many proponents would like. Others say it’s too complicated now because we don’t know exactly the extent of this trade. So, it is an open question and as usual here, you are seeing perspective that may vary but which are meritorious. It is very complicated and until we have a better grip on that, it is going to be difficult to get everybody on board. Right now, as I said, there is perhaps even more than 80 countries participating in the discussions on e-commerce, many others have some reservations. I haven’t answered your question precisely but I think the reason for that is that it is not something that has been brought into the global contest yet. And I think one thing that might change that is when you see informal traders beginning to engage in more transcontinental traffic and trading. The way that can be facilitated is by e-commerce.

But why the difficulty in agreeing on e-commerce?
Well, there is a digital divide and there are developing countries, many African countries, but Nigeria is different. Nigeria, Kenya, Ghana have a slightly different view on this. There are a lot of brilliant entrepreneurs in those countries who engage in e-commerce activity. When you talk to entrepreneurs in Nigerian or in Ghana, Kenya they press you and say why don’t we have rules on this? And if you look at the continental African Free Trade negotiations you will see that it is an issue people want to take up. But I think there is concern that the gaps between some developing countries and the advanced countries are such that they worry about being encumbered by rules that they would have difficulty themselves in influencing or shaping because they don’t have the capacity, the infrastructure, they may not have the technical abilities at this stage to participate in a very active fashion. And that does not apply to Nigeria which has got a tremendously active entrepreneurial sector. So the other issue has to do with this being taking up in a less than fully multilateral way. There were efforts to advance this in one channel, in a multilateral fashion but those who have advocated a more rapid approach have gone away from this and said it is taking too long, we were in this process since 1998, and we have not yet identified areas where ruling can take place. So, you can see again, there are merits on both sides even within individual African countries there are very different perspective on this.

For the AfCFTA, how do you think it will be beneficial to African countries?
It is incredibly important because the intra-African share of total African trade is really very small. It is between 15 and 18 per cent and that is better than it was five or six years ago, when it was only 12 per cent. But it still lags far behind Europe, Asia, and North America. In Eastern Africa, they are doing a good job and trade facilitation have been very helpful component. The WTO trade facilitation agreement has taken down a lot of the bureaucratic obstacles to moving goods. If you make it difficult for particularly smaller entrepreneurs to trade, they are not going to do it. If it is difficult and expensive they are going to find local outlets. But if you are talking about neighbouring countries very often what you are talking about are similar taste in terms of product, whether it is food or clothing, electronic or whatever the product maybe, you have got a chance to make your market bigger.

You got a chance to utilise economies of scale to greater extent that is now the case. And you widen the possibility of establishing global value chain in Africa. Now, Africa does not have the same concentration of global value chains as other parts of the world. And part of that is that global value chains tend to be local in nature. Africa as a continent is the same population as India which is roughly 1.3 billion, but it is 55 different markets. And that creates a lot of fragmentation that makes it difficult to do business. In Western Africa you got some language barriers to overcome. But there are lots of very smart energetic people who can get around this and find ways to overcome this. But first what you need is that you need the political commitment to go forward. If you can do that, you can generate a dynamic market that I think would be a way to help many of these entrepreneurs to increase the scope of possible markets to reach a wider number of people. And that can mean jobs, it means growth and development.

So, why do you think countries like Nigeria are not keen on signing the agreement?

Well, it is for every government to decide what they want to do. Nigeria is the largest economy in Africa, it is many ways at cutting edge in terms of technology, entrepreneurial activities and in terms of e-commerce, compared with a lot of other African countries. So what you have is a very large and very sophisticated market. What the Nigerian government decides to do is up to them. I think there 10 countries that have still not fully signed it yet and I think it is really for them to decide on their own. I do know that you have seen governments going forward with integration efforts. It has been a catalyst to increase trade and I know it well that there are so many different regional trade agreements in Africa right now that overlaps and intersects. There are entrepreneurs who become confused about rules of origin, about what really are the rules.

If you are to advise China and the United States in terms of the trade tension between both countries, what will you be telling them?

I think for an international civil servant to give advice to the two most powerful countries in the world would be a grave error. All I can say is that in our view, what we hope is that any mode whether it is bilateral or multilateral here in the WTO that can lead a reduction of tensions, that can lead to a resumption of trade flow, that is very positive. And anything that my boss, the Director General can do or we in the WTO can do to facilitate a calming of these tensions, we think that would be very, very helpful to the global economy.

What are the benefits of multilateral trade?
Multilateral trade is beneficial because it basically sets the paradigm for everything else. Go and look at the AfCFTA documentation, the agreed template for the negotiations, the starting point for all of these things is the WTO. When they talk about services using the GATS, the General Agreement on Trade and Services, as the basis for discussion on how to liberalise services beyond where they may be here, in terms of depth or in terms of breath. The same for goods, the same for person, intellectual property , the starting point is here. And we view discussions like this in a very positive way because what that means is that these governments can advance the ball here. In the course of these African negotiations there is going to be some new ideas, new approaches that are going to come bubbling to the surface. And these approaches can be brought to the WTO. What you do is you begin to get people into a certain mentality of opening markets and removing barriers. We are not just talking territories here, a lot of these barriers are bureaucratic entanglements, which trade facilitation as helped. And in Africa now, if you look at trade markets in East Africa, some of the groups over there are doing some great work in terms of advancing these trade facilitation process, reducing delays, etc, all of these things can be extremely helpful. And we think that we can provide tactical systems, we think that it is a partnership that is extremely important to the multilateral trading system.

Some have said the WTO as presently constituted is in a bad shape, do you agree with that?

The system is clearly under strain for a number of reasons and I think the fact that so many leaders today are calling for reforms, is a very positive thing. Because with a broad number of delegation saying we need to address these concerns. That is the only way you can bring about the process of strengthening the WTO and making it more affective in addressing the concerns of all of our members in today’s economy.

In your own opinion what type of reform would you want to see?
Well it is for the members to decide. What they have talked about are things dealing with transparency, dispute settlement, and things dealing with rule making. We are seeing a number of countries going forward as I mentioned earlier with joint initiative which are not fully multilateral. They are open to any country to join but for the moment the number of countries in there are about half of WTO members. And these are countries that share certain perspective. And counties that may not agree with this don’t have to go along, which is important. On the other hand, creating a set of circumstances where you prevent countries from taking up issues that are important to them, well that is a difficult thing too because then people will certainly g elsewhere. We have seen that happening before, people take issues to other organisations form negotiations outside of the WTO where you will have far less transparency and far less accountability to the wider membership.

Recently, we had complaints by a group in Nigeria saying the export of hibiscus flower was banned from the country to Mexico, how do you think some of these issues can be resolved?
What I can tell you is what the regular work of the WTO is all about. We have a committee and in that committee Nigeria can say to Mexico, we have concerns about this issue you raise. Although I don’t know the circumstance, I will give you an example where this has worked out well. In the European Union, they had a new regulation that talked about maximum allowable pesticide revenue. Because people purchase flowers there, there is a possibility that they could get sick from exposure to the pesticide. These new regulations came in and in Eastern Africa, Kenya and Tanzania export a lot of flowers to the EU. So what happened was this issue came up here, we discussed it. The concerns raised by the Tanzanians and Kenyans were that they didn’t have the capacity to be able to make changes to their production methods to take into account this new regulation.

They worked together with the Europeans and the Europeans provided technical assistance to help them to meet the standards. And the export resumed and increased and flourished quite a lot. So I can’t comment on this particular case you raised, but I can say that this is one of the things the WTO does and it doesn’t get a lot of attention. We have a committee for this. There is very often as a perfect legitimate reason for doing this, and if you are talking about the health and safety of your population there is nothing more important than that. So that will be a way this could be settled? I don’t know the specifics of this case like I said but that is a very good example of what the WTO can do.