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) 120 40.0% 35.0% 100 30.0% 80 25.0% US$ billion 60 20.0% 15.0% 40 10.0% 20 5.0% 0 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 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 35 30 25 20 US$ billion 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Calculations using data from UNCTADStat

UK Share of SSA’s Goods Exports to World (%) Botswana 54.4% Seychelles 18.9% Mauritius 13.4% Equatorial Guinea 10.4% Kenya 6.7% Namibia 5.0% Nigeria 4.3% Malawi 4.1% South Africa 3.9% Ghana 3.3% Cameroon 3.1% Mozambique 2.5% Madagascar 2.5% Gambia 2.4% Côte d'Ivoire 2.1% Zimbabwe 1.6% Congo 1.6% Senegal 1.5% Rwanda 1.5% Ethiopia 1.3% Uganda 1.3% Angola 1.2% Source: Calculations using data from UNCTADStat Zambia 1.1% Excludes countries with shares less than 1 per cent Gabon 1.0%

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 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, Up to 10% 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 only 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 on 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 8,000,000.00 7,000,000.00 6,000,000.00 5,000,000.00 4,000,000.00 3,000,000.00 2,000,000.00 1,000,000.00 - 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) 12,000,000.00 10,000,000.00 8,000,000.00 6,000,000.00 4,000,000.00 2,000,000.00 - 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.) Nigeria Top 3 = 45% UK’s South Africa exports to SSA Kenya Tanzania Cameroon Uganda DRC Mozambique Somalia Zimbabwe Rwanda Liberia Algeria 0 5 10 15 20 25 30 35 40 45 50 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