FRANCESCO RAMPAHead of Food Security Programme

GDPRD 20 May 2015, The Hague

From international trade to regional & south-south trade

• After 90’s, Regionalism as main trade policy [since DDA stuck]

• RTA easier (simpler; common aims/institutions, easier to harmonize behind-border measures, more time for adjustment, regional scale economies; easier to predict losers)

• African RECs, ASEAN, APEC, etc…TTIP…vs WTO..

…distortion/diversion in a globalised economy?

Evolving trade patterns…both commercial trends & policy/political direction

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-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Europe Asia NorthAmerica

Latin America Africa Middle East

Share of intra-regional trade Share of regional value added in intra-regional trade

Share of intra-regional trade & share of regional value added in the intra-regional trade

(by main region, 2011, %)

• Africa still a net importer of agric. products, while patterns of agric. export largely characterized by few traditional commodities

• To meet its basic food demand, Africa relies on imports from outside the continent (87% of imports from the RoW vs. 13% from Africa) (UNECA)

• Africa’s basic food products EXP also directed towards external partners despite its strong internal needs (78% of exports to the RoW vs. 22% to Africa)

Africa’s trade patterns

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..though improved intra-Afr agr trade from 90’s to 00’

Increased regional integration, especially when looking at the nutritional contents of ag.trade flows

African Imports Africa Asia Europe LAC NorthAmerica OceaniaDollars (value)1990-1995 6.77% 17.26% 37.90% 9.96% 24.79% 3.31%2002-2007 12.39% 19.81% 35.23% 15.97% 13.68% 2.93%

kCal1990-1995 3.09% 14.23% 23.81% 10.44% 44.81% 3.62%2002-2007 7.05% 20.38% 27.06% 19.45% 21.63% 4.43%

African Exports Africa Asia Europe LAC NorthAmerica OceaniaDollars (value)1990-1995 7.99% 16.79% 67.32% 0.61% 6.95% 0.34%2002-2007 15.15% 14.86% 62.51% 0.53% 6.10% 0.84%

kCal1990-1995 13.80% 26.20% 49.96% 2.99% 6.59% 0.46%2002-2007 31.41% 29.21% 34.03% 0.92% 4.19% 0.23%

1/3 of the calories exported by Africa, go to Africa

Role of African intra-trade over the previous decade has more than doubled.

Shift in external suppliers among Americas

Source: Bouet, Deason and Laborde (2014)

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• China…but also Braz, India, Gulf, Turkey…

• total trade China-Africa increased by 25% between 1995 and 2013.. Chinese imports from and exports to Africa increased by 29% and 22%, respectively

• …RSA 31% of total China-Africa trade in 2013…mineral products 58% of Chinese IMP, machinery 26% of Chinese EXP

SS trade on the rise

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…why regional trade is crucial…

• Challenge is to get food from rural areas to consumers in growing urban centers

• Nearest city is often across a border

• Provides incentive to invest in higher productivity

Source: Haggblade et al (2008).

• Integrated reg.markets enable food to move from surplus to deficit areas, increasing food availability, reducing price volatility, stimulating diversification

• more value created and remain in the region (employment too)(beyond cash crop EXP)

• RI as gradual integration of developing countries into global economy, transiting from low competitiveness commod.trade to reg markets to maturity in GVCs

• Africa: sufficient dissimilarity in current country production & trading patterns

• …FDI-led regionalism and corridors • …Political commitment, Malabo Declaration:

tripling…but…infrastr & Governance & Policy Bottlenecks

low supply response, no incentives to inv, export bans…

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(Agr.development?)Corridors

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Trade Policy Barriers for expanding trade in Africa

And huge potential for an ambitious trade facilitation agenda:

– Free Circulation of goods still not achieved within Custom Unions (intra-trade still affected by MFN tariffs, double taxation…)

– Numerous fees and bribes – Administrative burden– Inefficiency of checkpoints (delays)

ECOWAS CEMAC COMESA SACU0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%

Average Import Tariffs on Agri-food imports

Applied to non SSA countries Applied to SSA countries

• Despite RI [tariffs within RECs going down], intra-Africa trade still affected by significant tariffs [still significant between RECs], espec in Agric…need to address between blocks trade barriers

• External pressure to liberalize markets with third countries (EPA with the EU..)

• Still instability / uncertainty regarding some trade policies

Rice

Whe

at

Yam

s

Beef

(car

cass

)

Chicke

n (c

uts)

Milk

Pow

der

0%20%40%60%80%

100%

Tariffs Heterogenity on selected products among African Custom

Unions

CEMAC ECOWAS COMESA SACU

How could intra-Africa agric.trade perform?

Under a business as usual scenario? +122% on average

Which levers could we use to reach the CAADP target (+200% from 2014 to 2025, Malabo declaration)?– Addressing trade policy barriers– Improving infrastructure

Source: MIRAGRODEP model simulations, Bouet, Deason and Laborde (2014)

SACU ECOWAS COMESA CEMAC0%

50%100%150%200%

CEMAC

COMESA

ECOWAS

SACU

% increase in intra-SSA trade between 2013 and 2030

CEMAC COMESA ECOWAS SACU

CEMAC 67% 148% 80% 88%

COMESA 148% 146% 179% 116%

ECOWAS 80% 179% 136% 137%

SACU 88% 116% 137% 111%

Source: MIRAGRODEP model simulations, Bouet, Deason and Laborde (2014)

UNECA study: if ALL tariff barriers within Africa are removed through the CFTA, and African countries achieve a reduction of costs to trade across borders (i.e. more efficient customs procedures, faster inland

transport and port handling)

The share of intra-African trade in strictly agricultural products would increase by more than 57% over the next 10 years; passing from about 20% today to nearly 32%: With highest increases found in wheat, cereals, sugar cane and

sugar beet, milk and dairy, meat as well as processed food re-orientation of trade flows would reduce reliance on

ext.partners to satisfy Africa’s food needs, potentially contribute in reversing negative trade balances for food products.

Positive impacts on wages of agricultural workers would also be found…Yet, only if supply-side constraints are effectively addressed

• Role of informal trade in Africa: huge potential for increasing official level of integration (not included in existing measure)

• ownership and implementation of regional trade agenda at national level is not always ensured

• distribution of RI benefits? …hegemons…..regional champions can be rent-seekers

• SO: instead of CFTA and wholesale RFTAs, pragmatic (PPP) initiatives to remove trade barriers for a small set of priority food commodities, where real political commitment and commercial interests can effectively change policies and practices ?

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• Political economy analysis and trade policy issues that constrain open regional trade

• Challenges and opportunities : reg. corridor approaches & trade facilitation for PSD for food security

• a common vision on ? the role donors can play in promoting regional

trade opportunities for private sector/FDI involvement

in infrastructure development, logistics, agri-biz for regional trade

THIS GROUP:

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Thank you

fr@ecdpm.org

www.ecdpm.org/foodsecurity

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