Challenges strategies eac-victor_ogalo

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  • Suggestions for South-to-South Trade Capacity Building Economic growth: the gains from economic growth are much larger, whether as importer or exporter, and the gains as an exporter are dramatic. The changes of development strategy from import-substitution to export-orientation for developing countries are urgently needed. The importance of industry policy for LDCs…… Special treatment for LDCs is required. How to build LDC capacity for exports under the Doha Development Round? In contrary to Africa, Asia’s merchandise exports and imports expanded by 9.5 per cent and 7.5 per cent respectively. Asia’s trade developments and predominantly shaped by the performance of emerging economies: China …… From the standpoint of balance of payments concerns, for LDCs, economic growth will translate into more exports than imports—with a significant part of gains resulting from the increased exports to emerging markets such as China, India ……
  • Suggestions for South-to-South Trade Capacity Building Economic growth: the gains from economic growth are much larger, whether as importer or exporter, and the gains as an exporter are dramatic. The changes of development strategy from import-substitution to export-orientation for developing countries are urgently needed. The importance of industry policy for LDCs…… Special treatment for LDCs is required. How to build LDC capacity for exports under the Doha Development Round? In contrary to Africa, Asia’s merchandise exports and imports expanded by 9.5 per cent and 7.5 per cent respectively. Asia’s trade developments and predominantly shaped by the performance of emerging economies: China …… From the standpoint of balance of payments concerns, for LDCs, economic growth will translate into more exports than imports—with a significant part of gains resulting from the increased exports to emerging markets such as China, India ……
  • Main Internal NTBs: Cutting cost and time when trading across border has been difficult coz of: poor infrastructure (roads and power), double customs operations at border points, many government agencies involved in clearance of imports at border entry points (Customs, Police, Bureau of standards, Crop protection agencies, Pre-shipment inspection agencies) manual operation systems impede implementation of uniform standards and simplifying of custom procedures. In spite of the many government agencies at the borders, we still see serious loopholes in Customs Control (many cases of trade in counterfeits, contrabands/pirated and substandard goods) Main Internal NTBs: non-harmonized documentation: there are some border posts where certificates are required which others don’t a broad perception that available mechanism for monitoring removal of NTBs is not working: coz of lack of transparency, ownership of the mechanism and that the mechanism is not sensitised towards the business community some traders have in some cases given up reporting NTBs because of the long process; it is not uncommon that a dispute can take up to half a year, before it is settled instead of six days partner states are protecting their markets via NTBs and unwillingness from some partners is the reasons for the long time in settling disputes about NTBs
  • Slide 17 Example: Export-Led Poverty Reduction Progamme One example of a private sector initiative with a focus on poverty reduction is the International Trade Centre’s (ITC) Export-Led Poverty Reduction Programme (EPRP). Launched in 2002, the goal of this program is to integrate poor communities into international markets. It takes a similar approach in international trade as that employed by micro-credit in the field of finance. The EPRP approach rests on two main pillars: (i) the development of the entrepreneurial capacity of the poor with regard to exporting; and (ii) linking that capacity to proven export market opportunities. EPRP projects focus on five sectors based on analysis of demand in regional or international markets and the employment and income-generating potential of these sectors for poor communities. The sectors are: Agricultural products (fresh and processed) Textiles (fibres and clothing) Animal skins leather and leather goods Light manufacturing Community-based tourism The viability of proposed projects in the above sectors are assessed via feasibility studies by interested national governments, and together with the ITC, which analyses international market trends, a final project blueprint and action plan is put in place. The feasibility studies address a series of key considerations. These include: (i) identifying winning products and growth markets; (ii) product development, product adaptation, standards and quality; (iii) electing and organizing poor producers; (iv) selecting the right product market for the producer organization; (v) linking producers to buyers, financing and credit; and (vi) gender and environmental considerations. Notably, the EPRP ensures poor producers are organized in some type of network – in cooperatives and other modes – through which they can achieve a sufficient scale to produce, market and distribute their products. In this respect the ITC identifies, trains, and provides funding for local NGOs, whose role would be to build networks/structure the grouping of poor producers, or to ensure increased participation of producers in an existing grouping, in addition to facilitating their training in marketing, production and entrepreneurship. In many countries, groups of export producers have been formed, referred to as “Export Production Villages” (EPVs). Support services are provided by international development organizations, local NGOs, and the private sector. They are necessary to build the capacities of producers and exporters. A needs assessment is done at the outset of the project and adapted throughout the process. According to the ITC, ongoing EPRP projects in fifteen countries have benefited around 12,300 poor people by creating additional jobs and higher income. Salaries have gone up considerably, exceeding previous ones by 20 to up to 200 percent in some cases. Altogether, these projects generated estimated exports sales in excess of US$ 1.3 million for poor communities. Such results have stimulated growing interest among potential beneficiaries, as evidenced by fifteen recent requests for EPRP. The programme has also intensified its collaboration with the Integrated Framework (IF) and joint projects have been prepared for IF Window II funding in Burundi, Djibouti, Guinea, Rwanda and Senegal.
  • Challenges strategies eac-victor_ogalo

    1. 1. CUTS/WTO Regional Outreach Conference AfT in DDA : Challenges and Strategies for EAC By Victor Ogalo Programme Officer CUTS Africa Resource Centre, Nairobi [email_address]
    2. 2. Mauritius Kenya Denmark Australia Singapore Uganda CAR B. Faso B. Faso
    3. 4. Key challenges and constraints for EAC Trade policies <ul><li>The development of EAC countries is severely affected by the following “ Trade Problematique ”:- </li></ul><ul><li>low level of industrialization, </li></ul><ul><li>inability to access advanced technologies, </li></ul><ul><li>lack of domestic savings to invest, </li></ul><ul><li>high dependence on primary exports, declining terms of trade and volatile export earnings, </li></ul><ul><li>vulnerable balance of payment (BOP) situations, requiring sufficient reserves, not only to cover current imports, but for long term stability, </li></ul><ul><li>high cost of capital, which is not taken into account for example in dumping cases against developing countries, nor in the rules on export subsidies, </li></ul><ul><li>inefficient infrastructures, </li></ul>
    4. 5. Key challenges and constraints for EAC Trade policies <ul><li>inefficient taxation systems in which it is difficult for the country to calculate the rebate of indirect taxes, thus penalizing exporters, </li></ul><ul><li>inability to meet standards of developed countries like EU and difficulties in preparing and enforcing the required technical regulations, </li></ul><ul><li>lack of access to distribution channels, </li></ul><ul><li>high percentage of population employed in the agricultural sector, mostly at subsistence levels, </li></ul><ul><li>food insecurity, especially for low income groups, </li></ul><ul><li>lack of resources for subsidization, </li></ul><ul><li>difficulties in protecting against theft of traditional and indigenous technologies. </li></ul>
    5. 6. Key challenges and constraints for EAC Trade policies <ul><li>Other Challenges are: </li></ul><ul><li>The external challenges: pressure from buyers; competitive capability in price and quality standards, mainly SPS and TBT; other NTBs </li></ul><ul><li>The internal constraints: NTBs; weak management and low competitiveness; low level of labor skills, unstable labor forces; </li></ul><ul><li>Political obstacle: limited democracy and voice for trade policy </li></ul><ul><li>Institutional weaknesses: gaps in undertaking trade policies and policy making; weak public admin and facilities for business environment </li></ul><ul><li>Weak CSOs: limited CSOs influence in trade-policy making and claiming the rights of consumers </li></ul>
    6. 7. LDCs and the DDA <ul><li>What Steps for the Doha Round? </li></ul><ul><ul><li>The DDA must deliver the following Development Prerequisites for LDC/EAC : </li></ul></ul><ul><li>Favourable Market Access Regimes (Doha, EPAs, regional, etc.) </li></ul><ul><li>Development assistance targeted to enhance growth and trade </li></ul><ul><ul><li>Improve competitiveness </li></ul></ul><ul><ul><li>Improve ability to meet standards </li></ul></ul><ul><ul><li>Improve institutional capacity to engage in trade negotiations and implement the outcomes </li></ul></ul><ul><ul><li>Address poverty reduction by ensuring that the needs of marginalized producers and groups within countries are taken into account and that impoverished and isolated segments of these economies benefit from expanded trade opportunities. </li></ul></ul>
    7. 8. AfT: Major Shortcomings to be Addressed <ul><li>Global Level : </li></ul><ul><li>Failure to rationalize and prioritize the kind of activities to be supported, and to mobilize the resources needed for them to be effectively executed. As a result, minimal resources have been spread wafer-thin over countless activities, most with an unverified connection to the ultimate objective. For example, the IF, over the last eight years, covering some 30 LDCs, was allocated only $30 million. </li></ul><ul><li>A near total lack of bona fide coordination among donors. Virtually every international organization and every OECD country has gotten into the act, apparently with little or no concern for coherence, consistency, efficient management, or cost and development effectiveness. Direct aid to the production and export processes is rarely found. </li></ul>
    8. 9. AfT: Major Shortcomings to be Addressed <ul><li>Global Level : </li></ul><ul><li>A lack of concern for measurable results. </li></ul><ul><li>Recent events point to progress in this area: </li></ul><ul><li>Enhanced IF </li></ul><ul><li>Paris Declaration principles </li></ul><ul><li>OECD 2006 methodology for conducting ex-ante poverty impact assessment to maximize the poverty reducing impacts of development interventions </li></ul>
    9. 10. AfT: Major Shortcomings to be Addressed <ul><li>Domestic Level </li></ul><ul><li>Aid for Trade has concentrated on ‘getting the plumbing right’ on the premise that benefits trickle-down: </li></ul><ul><ul><li>that those employed in small-scale agriculture, in rural areas, and/or in the informal sector will at some point be in a position to take advantage of any trade benefits that do open up. </li></ul></ul><ul><li>Challenge with this approach is that, </li></ul><ul><ul><li>the linkages between export-oriented activities and the rest of the economy are not automatic. </li></ul></ul><ul><ul><li>Most jobs and livelihoods in these countries are not export-oriented. The danger is that export expansion will not be broad-based, leading to enclave growths. </li></ul></ul>
    10. 11. Prioritisation of AfT <ul><li>In EAC, there are two major types of enterprises: </li></ul><ul><ul><li>a few large-scale enterprises, either domestically or foreign-owned, which have commercially viable assets, which provide regular full-time jobs for skilled labour, and which are linked with global markets. </li></ul></ul><ul><ul><li>a mass of micro and small enterprises in which the majority of the unskilled labour is employed in informal ways, including casual wage labour. These enterprises are generally oriented to the domestic market, providing services or producing goods which are affordable for the poor. </li></ul></ul>
    11. 12. Prioritisation of AfT <ul><li>If producers in the second enterprise are to take part in more formalized economic activities, they require targeted and sustained support to help households ‘make the switch’ </li></ul><ul><ul><li>Extension services, access to credit, and investments in infrastructure (especially roads and water). </li></ul></ul><ul><li>These must be supplemented by wider Aid for Trade </li></ul><ul><ul><li>For improvements in ports, customs, regulatory capacity, access to finance, telecoms and power and business services </li></ul></ul><ul><ul><li>Building capacity of this group to articulate and prioritize their own concerns into immediate and longer-term needs clearly to governments and donor groups. </li></ul></ul><ul><ul><li>Producer groups and organizations representing the interests of the rural poor and the informal economy must be included in consultations, with a view to bringing them in more fully to the market economy. </li></ul></ul>
    12. 13. <ul><li>Need for Export-Led Poverty Reduction Progamme: </li></ul><ul><li>With 2 main pillars: </li></ul><ul><ul><li>development of the entrepreneurial capacity of the poor with regard to exporting; and </li></ul></ul><ul><ul><li>linking that capacity to proven export market opportunities. </li></ul></ul><ul><li>To focus mainly on 5 sectors: </li></ul><ul><ul><li>Agricultural products (fresh and processed) </li></ul></ul><ul><ul><li>Textiles (fibres and clothing) </li></ul></ul><ul><ul><li>Animal skins leather and leather goods </li></ul></ul><ul><ul><li>Light manufacturing </li></ul></ul><ul><ul><li>Community-based tourism </li></ul></ul>Prioritisation of AfT
    13. 14. THANK YOU !

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