by Thabelo Muleya | Jun 29, 2023 | Blogs
Following a continent-wide recession and the shift of external partners towards focusing on their domestic needs after COVID-19, Africa’s policymakers need to look inward. The continent needs a recovery plan that is financed largely by Africans. Also, considering the heightened risks of climate change and extreme weather, as well as the need for post-pandemic economic recovery, development priorities have shifted towards sustainable development. This means that infrastructure development must be transformed to focus more on low-carbon and green infrastructure – consistent with the international climate protocols, such as the Paris Agreement and nationally determined contributions (NDCs). It should focus on rural development, regional connectivity, and risk mitigation for climate change.
Achieving the Sustainable Development Goals (SDGs) requires concerted efforts to develop economic and social infrastructure. Tutwa recently conducted a study focused on the economic (or physical) infrastructure sectors while acknowledging the heavy dependency of the social infrastructure sectors on improvements in the energy, transport, water, and digital sectors. The study presented Asset Recycling as an alternative to infrastructure financing mechanisms in African countries.
What is Asset Recycling?
Infrastructure asset recycling is the monetisation of existing public assets through sale or lease to the private sector, with all funds received being reinvested in new infrastructure projects. Asset recycling provides the opportunity to develop new infrastructure without adding to public debt, all while maintaining or potentially improving existing infrastructure service delivery.
Figure 1: Infrastructure asset recycling process
Asset recycling allows governments to bring private sector innovation, investment, and efficiency to an asset without handing over the ownership of the asset to the private sector. It is a partnership between the public and private sectors to manage, maintain and operate an asset for a specific period. The government retains control over the construction, design, and outputs while leveraging private sector methodologies and innovation to upgrade and operate those assets efficiently over a set time. Asset recycling allows governments to release the value of their existing assets by bringing forward future revenues. A virtuous circle is created when the proceeds are invested back into new, more efficient, and more sustainable infrastructure.
While asset recycling is a new concept in Africa, countries like Australia have used it to generate over AUD25 billion ($18 billion) in three years by recycling just 12 state-owned assets. African governments could emulate this approach to help close the infrastructure-financing gap, which the African Development Bank (AfDB) estimates at USD68-108 billion annually. Aside from the immediate benefits, asset recycling in Africa could attract a new class of infrastructure investors, as has been the case in Australia. Here, sovereign wealth, pension, and private investment funds have participated in asset recycling projects.
African governments can limit their dependence on donors and development finance institutions by working to attract these types of institutional investors. The continent has 30 sovereign wealth funds (SWFs) or sub-funds, mostly relatively small, with a combined wealth of around USD100 billion.[1] In December 2022, Africa50, the pan-African infrastructure investment platform, signed a Memorandum of Understanding with the government of Zimbabwe to establish a framework of cooperation to manage and operate three of the country’s international airports under the Africa50 Asset Recycling Programme.[2] This marks the beginning of innovation in infrastructure financing in the continent.
Private investors are often reluctant to take on project development risk for infrastructure in emerging markets and developing economies. However, they are interested in the returns the investments can provide once the projects are operational and demand is proven. Asset recycling is a potential mechanism to capitalise on this interest. Its strategies present a viable means for African governments to contribute significantly to self-financing the investments that their countries so urgently need.
[1] Global SWF, 2022. African SWFs: The Art of Patience, 23 August 2022. https://globalswf.com/news/african-swfs-the-art-of-patience.
[2] Africa 50, December 2022, https://www.africa50.com/news-insights/news/africa50-signs-mou-with-the-government-of-zimbabwe-for-the-management-and-operation-of-three-international-airports-under-the-africa50-asset-recycling-programme/.
by Thabelo Muleya | Mar 22, 2023 | Blogs
Rafia Akram and Thabelo Muleya
The Phase II Protocols have been assented to by the African Union (AU) Summit in Addis Ababa, Ethiopia, on 19-20 February 2023 and will now undergo a national ratification process. Unlike the Phase I Protocols, such as the ones on Goods and Services, the tangible benefits and opportunities may seem less evident.
The Phase II Protocols on Investment, Intellectual Property Rights, and Competition Policy move beyond the focus on tariffs on goods and services. These so-called ‘beyond the border’ measures require the creation of regulatory systems at both regional and national levels. Member States are called upon to put in place relevant processes and institutions to facilitate the objectives of the AfCFTA. The Protocols harmonise norms, and create rules and procedures to which Member States must comply based on various policy flexibilities that accommodate national development objectives. The relationships between the various RECs and the AfCFTA and instruments are also clarified to ensure that no duplication exists.
The Protocol on Investment is relatively low impact, with several best endeavour cooperation clauses on issues like investment promotion and facilitation, and the introduction of the standard language to ensure foreign investors receive equal treatment to local investors. Most clauses include substantial limitations that allow states to avoid these restrictions in cases where it is important to national development or to help designated groups, among other conditions.[1] This places a duty on states to facilitate investment but to allow for the differentiated development levels and needs in African states.
The core substantive portions of the Protocol on Investment exist in four areas. First, expropriation[2] is allowed under terms considered in line with international standards. Second, the transfers of funds creates a more robust protection for investors. Third, the Protocol allows only for a State-to-State dispute settlement system,[4] which may impact the parity between African and non-African investors. This inequality is further compounded by the final important provision that sets out an automatic ending of current African bilateral investment treaties.[5]
In complete contrast to Investment, the Competition Protocol is extremely ambitious. The Protocol effectively establishes a continental Competition Authority, with similar powers to regional or domestic authority that adjudicates over mergers, combatting anti-competitive practices and setting out prohibited business practices.[6] This would be a substantially empowered institution, with the capacity to issue large fines and penalties as well as legally restrict mergers, even when the domestic authority approves them.[7]
The establishment of such an institution creates a dilemma, as Article 12 stipulates that state parties who do not have a competition law or enforcement shall enact the Protocol upon entry, and those state parties that do must endeavour to harmonise their laws to the Protocol.[8] In addition, Article 20 of the Protocol sets out that the competition authorities of RECs will maintain their jurisdictions as building blocks for an integrated competition regime.[9] This may be intended to create a transitional process, to ensure there is time to harmonise the competition laws and enforcement.
In fact, it will be interesting to see what regulations the Council of Ministers for the authority set out for this Protocol.[10] The negotiations for such regulation should focus on proposing not only a prescriptive but an integrative approach to rules and their interpretation, allowing for recognition of the legal developments in national and regional decision-making bodies.
To the best of available knowledge, the Intellectual Property Rights (IPR) Protocol appears to be relatively low ambition.[11] It reaffirms largely pre-existing commitments to safeguard patents, marks, copyrights, and other forms of Intellectual Property (IP); but offers few restrictions on the ways in which this is achieved.
The specifics of IPR implementation are largely left to national authorities, and while the agreement may offer another lever to pressure some states to enforce IPR, it seems likely that enforcement will remain as strong as national capabilities.[12]
The Protocol does, however, make provisions for geographic indicators, which may be important for some African export products. Traditional knowledge and Traditional Cultural Expression are accepted as IP. These are currently being proposed at the World Intellectual Property Organisation as IP that warrants protection by African states.[13]
The Protocol also makes provision for flexibility in patents for pharmaceutical patents that are in conflict with human well-being, such as empowering states to produce products under compulsory licenses via the WTO’s TRIPS agreement.[14] The provisions on pharmaceuticals seem entirely in line with global standards and norms and seem very reasonable given the significant healthcare needs of many countries on the continent.[15]
The IPR Protocol is less interventionist. In light of overlapping membership to the two continental organisations, the African Regional Intellectual Property Organization (ARIPO) and the Organisation Africaine de la Propriété Intellectuelle (OAPI), and the divergent approaches across various IPR regimes, member states are permitted to consider how best to achieve policy coherence within this context.[16] The process of developing the AfCFTA IPR Protocol can also be used to develop mechanisms to facilitate better coordination at multilateral negotiations for all.[17] There are also other institutions, such as the Pan-African Intellectual Property Office, as well as policies outlined in the COMESA IP policy framework and the East African Community’s Regional Intellectual Property Policy, which create a network of IPR rules and policies that must be compatible with the AfCFTA.
Throughout the three Protocols, exceptions are created for developmental needs. The IPR Protocol, for example, provides exceptions for purposes of education, including distance/online learning and for research and collaborations.[18] There is also a specific reference to the Marrakesh Treaty,[19] highlighting an understanding of the constraints faced by students and researchers across the continent.
The AfCFTA negotiations for Phase II Protocols have also been extended to include both Digital Trade as well as Women and Youth. Steady progress has been made on both fronts. The Digital Trade zero draft has been shared with states, and the Inaugural AfCFTA Women and Youth in Trade Conference took place in September 2022.[20]
The Protocol on Women and Youth is a particularly important step to ensuring that these demographics can effectively participate in the AfCFTA. In the SMME sector, women are the majority due to a patriarchal culture that restricts their access to financial resources, leading to greater gender inequality[21]. Similarly, young people, who constitute the majority of the population, face significant barriers to accessing formal employment opportunities, which compels them to pursue entrepreneurship in the SMME sector[22]. By addressing these issues, the Protocol seeks to empower women and youth to become active participants in the AfCFTA, thereby promoting economic growth and reducing inequality across the continent.
[1] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
[2] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
However, to be truly inclusive women and youth should be the target of protection of the rules still to be negotiated on the E-commerce Protocol in addition to the Protocol on Women and Youth. Further women and youth should be prioritised in the policies and the implementation processes of the Protocols already in place.[23]
[1] Article 6 read with 7 and 8 and chapter 4 which set out the sustainable development-related rules.
[2] Article 19.
[3] Article 22.
[4] Article 44.
[5] Article 49.
[6] Part II Anti-Competitive Business practices and conduct read with Part IV institutional arrangements.
[7] Article 17.
[8] Article 12(3) and Article 12(4), the proviso in Article 12(7) is that state particles must ensure the adherence to the principles of transparency, independence, and procedural fairness.
[9] Article 20(1).
[10] Article 13.
[11] Can African trade integration be a game changer? M E Pangestu Feb 02, 2023 (Available at https://blogs.worldbank.org/voices/can-african-trade-integration-be-game-changer accessed 10 March 2023)
[12] Article 26
[13]WO/GA/55/11 ORIGINAL: ENGLISH DATE: JULY 20, 2022 (accessed 10 March 2023 at https://www.wipo.int/edocs/mdocs/govbody/en/wo_ga_55/wo_ga_55_11.pdf)
[14] The TRIPS Waiver Compromise Draft: A promising or compromising text? Thabelo Muleya | Apr 1, 2022 (Available at: https://tutwaconsulting.com/the-trips-waiver-compromise-draft-a-promising-or-compromising-text/ accessed 10 March 2023).
[15] Article 21.
[16] Nkomo, M., Mthombeni, J., and Lehong, T. (2020). The African Continental Free Trade Area: a significant role for IP. World Intellectual Property Organization (WIPO) Magazine. December 2020. (Available at: https://www.wipo.int/wipo_magazine/en/2020/04/article_0005.html accessed 9 March 2023).
[17] Ibid.
[18] Article 8(3), ((3), 10(3), 11(3),11(4),11(5), 12(3), 13(3),14(3), 15(2) an d16(2).
[19] The Marrakesh VIP Treaty (formally the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired or Otherwise Print Disabled 27 June 2013.
[20] https://au-afcfta.org/2022/09/day-1-afcfta-conference-on-women-and-youth-in-trade/
[21] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
[22] https://www.un.org/africarenewal/magazine/february-2023/afcfta-reaping-benefits-world%E2%80%99s-most-youth-and-women-friendly-trade-agreement
[23] National Experts meet to discuss the AfCFTA Protocol on Women and Youth | Economic Community of West African States (ECOWAS) 02 March 2023 Abuja, Nigeria, 16 February 2023.
by Thabelo Muleya | Dec 13, 2022 | Blogs
On 17 October 2022, Tutwa Consulting Group launched the TradeNetwork with its inaugural webinar under the theme: “Current and Future Prospects of the AfCFTA”. Trade Network is an initiative by Tutwa Consulting Group whose starting point is to work in Sub-Saharan Africa, leaning into the network of academics, practitioners, and consultants across the fields of law, economics, and trade. The purpose of the initiative is to ensure cooperative research and advice in the complex area of international trade, investment, intellectual property, and dispute resolution for trade and investment matters.
The webinar was the first in a series to discuss the practical and legal implications of the AfCFTA for intra-Africa trade. Some of Africa’s great policy thinkers, drawn from international organizations, think tanks, and academia, were invited to participate in the discussion. The speakers discussed the status of the AfCFTA, new generation issues that predominantly define Industry 4.0, such as Investment, Intellectual Property (IP), Competition, and E-commerce that make up protocols of Phase II of the AfCFTA. The webinar also dived into a deeper unpacking of the issues and challenges that face the AfCFTA negotiators as the preparations for the AfCFTA Phase II negotiations are underway. The dialogue was cross-disciplinary including lawyers and economists, practitioners, and academics.
This webinar presented an opportunity for participants to engage in a dialogue to understand the significance of AfCFTA Phase II associated regulations and policies that can enable the Member States to fully access and utilize their benefits to promote intra-African trade.
The webinar featured intellectual giants who delivered some remarkable presentations. These distinguished guests included Mr. Hamed El-Kady, Program Coordinator and Senior Investment Policy Officer, UNCTAD; Dr. Martin Cameron, Trade Advisory, North-West University; Professor Wilma Viviers, North-West University, and Professor Patricia Lenaghan, University of the Western Cape. Tutwa Consulting Group’s Senior Legal Associate, Rafia Akram, moderated the session and introduced the participants to the Trade Network. Tutwa’s Advisory Director, Mr. Ravi Pillay delivered here the opening and closing remarks. In his opening remarks, Mr. Pillay walked the participants through Tutwa’s shared objective of promoting trade and the role of Tutwa. I had the privilege to present the key takeaways from the presentations and the discussions.
The presentations for the day kicked off with a Keynote address by Mr. Hamed ElKady under the title “The reform of the international investment agreements regime and the African continent”. This presentation unpacked the challenges African countries are facing within the investment legal framework as the investment Protocol is anticipated. One of the key challenges in the African investment climate is that some of the investment agreements signed by and between African countries are old and the investment commitments in most cases are too complex for most African countries.
COVID-19 highlighted the friction between commitment obligations under investment treaties and health priorities. In addition to this, the Ukraine war is another example that the global crisis slows down the capacity to react, particularly within the current investment legal environment. The speaker, therefore, noted the need to balance the global investment regulation system and allow countries to balance commitments to investment agreements with reaction to the crisis. This is what one would also expect to be part of the conversations at an AfCFTA level as the Investment Protocol is anticipated.
Despite the above-highlighted challenges, this presentation ended with an outline of some of the opportunities from the Investment Protocol. The anticipated protocol is going to consolidate a vast network of investment treaties and replace bilateral investment treaties between African countries. Further, it is anticipated that the protocol will simplify and consolidate the investment framework in Africa for the benefit of both the public and private sectors. Overall, the protocol is anticipated to give legal clarity to the State and investors and create a modern framework stipulating both commitments from Member States and obligations by the investors.
On a rather more practical and technical note, the second presentation was delivered by Dr. Martin Cameron under the title “The AfCFTA – from words to action: real-world logistics matters”. While the AfCFTA is necessary, Dr. Cameron’s presentation showed that it was not a sufficient condition for economic growth in the region. The focus should include enabling infrastructure and considering private sector rights and interests. On its own, the AfCFTA will not provide any impetus to the private sector.
The presentation also showed that the success of the AfCFTA is dependent on Phase II. Overall, this will include the implementation of an effective dispute settlement mechanism. This is particularly important for the protocol on investment. Generally, international trade needs predictability and ease of access. To achieve this, the Protocols should be negotiated with a view to ensuring effective trade facilitation measures are also incorporated. The AfCFTA Agreement has already made provision for the establishment of an online Non-Tariff Barriers reporting mechanism founded on the SADC-EAC-COMESA tripartite mechanism.
The AfCFTA trade in goods will have a limited impact, especially within and between regional economic communities (RECs). The presenter argued that tariffs are not the major issue that hinders trade in Africa. Logistics and infrastructure have much impact as that tariffs, but the impact is hidden to an extent. Countries can achieve the biggest economic value by cutting drastically the time spent within the proximity of ports of entry and exit. In a nutshell, Dr. Cameron’s presentation brought out an argument that what is key to the success of the AfCFTA is to never let physical infrastructure and logistics be a bottleneck.
The last presentation was delivered by Professor Patricia Lenaghan under the title “The AfCFTA: Variable geometry and gradualism, as a suitable response to the challenges of integration?” Her presentation gave a general and more theoretical overview of the AfCFTA from a South African perspective. In understanding the AfCFTA, it is important to understand the exact nature of the agreement which according to this presentation is a member-driven agreement. One would also at this point ask what the legal status is and what the implications are for the agreement’s implementation.
Lastly, the relationship between RECs and the AfCFTA is also significant. An assessment of the RECs will show that they have been playing a significant role in integrating Africa. This is a good starting point for the AfCFTA as it seeks to integrate the region further economically. However, the same challenge of infrastructure deficiency remains a challenge even for the AfCFTA. There is, therefore, as was noted earlier on, a need to ensure that as the protocol on investment is concluded, it should also provide for investment in infrastructure as well.
Access the recording from the webinar here.
by Thabelo Muleya | Apr 1, 2022 | Blogs
After nearly 18 months of negotiations, there has finally been some progress with regard to the request to waive certain provisions of the TRIPS Agreement in response to the COVID-19 pandemic. It was in October 2020, during the meeting of the WTO’s TRIPS Council, that India and South Africa initially tabled this waiver request. A revised proposal was subsequently submitted in May 2021.
Following intensive quadrilateral negotiations between South Africa, India, the United States and the European Union on 15 March 2022, a compromise agreement was tentatively reached that will now be presented to other WTO members for their consideration and possible adoption.[1] It will be interesting to see what benefits this is going to reap, as some have argued that there is likely to be little practical impact from any waiver of IP rights.[2]
The compromise draft text has drawn criticism from both those who support and oppose the waiver request.[3] The proponents of the waiver request find the compromise draft text disappointing. They argue that it is a very limited and narrow agreement. It only covers vaccines, and it limits “eligible members” to developing countries.[4] On the other hand, opponents of the waiver maintain the view that the compromise draft is a solution in search of a problem.[5] However, it remains to be seen if this compromise draft text would constitute the basis of any final waiver that may be adopted by the TRIPS Council.
Essentially, the May 2021 revised proposal sought a waiver of TRIPS obligations relating to the application and enforcement of copyright, patent rights, industrial designs, and the protection of undisclosed information.[6] These obligations were to be waived ‘in relation to health products and technologies including diagnostics, therapeutics, vaccines, medical devices, personal protective equipment, their materials or components, and their methods and means of manufacture for the prevention, treatment or containment of COVID-19.’ According to the revised proposal, the waiver should be in place for at least 3 years.[7]
However, the provisions of the compromise draft text are far from the demands contained in the revised waiver proposal. According to Oke, one could convincingly argue that the text is probably closer to the positions of both the EU and the US in this regard.[8] The compromise text merely provides some concessions regarding the rules governing compulsory licensing contained in Article 31 of the TRIPS Agreement, and its scope is limited to the production and supply of COVID-19 vaccines for now at least. This is basically in line with the position of the EU and the US on the waiver request. Although initially opposed to the waiver request, the US eventually expressed its support for the waiver proposal in May 2021. This support was, however, strictly limited to the production of vaccines.[9] In June 2021, the EU subsequently tabled its own counterproposal at the TRIPS Council, which essentially revolved around clarifying the rules relating to compulsory licensing in Articles 31 and 31bis of the TRIPS Agreement.[10] Nevertheless, when compared with the permanent waiver codified in Article 31bis of the Agreement, one could say that the provisions of the compromise draft text are not as cumbersome and complex as the provisions contained in Article 31bis.[11]
The aspects of the draft text that may be considered as gains for proponents of the waiver request include paragraph 2 of the text which allows that :
“…an eligible Member may authorize the use of patented subject matter under Article 31 without the right holder’s consent through any instrument available in the law of the Member such as executive orders, emergency decrees, government use authorizations, and judicial or administrative orders, whether or not a Member has a compulsory license regime in place…”
According to the text, the ” law of a Member” referred to in Article 31 is not limited to legislative acts such as those laying down rules on compulsory licensing. It also includes other acts, such as executive orders, emergency decrees, and judicial or administrative orders.[12]
Although the scope of the compromise text is currently limited to the production of vaccines, Oke argues that paragraph 3(c) of the compromise text is an implied admission of the practical difficulties associated with the use of Article 31bis of the TRIPS Agreement. [13] Paragraph 3(c) is a crucial departure from the strictures codified in Article 31bis, which was, ironically, originally intended to address the problems associated with Article 31(f), especially for countries with no or insufficient domestic manufacturing capacity.[14] It permits an eligible member to ‘waive the requirement of Article 31(f) that authorised use under Article 31 be predominantly to supply its domestic market’. Paragraph 3(c) further provides that an eligible member ‘may allow any proportion of the authorised use to be exported to eligible Members and to supply international or regional joint initiatives that aim to ensure the equitable access of eligible Members to the COVID-19 vaccine covered by the authorisation.’[15]
Paragraph 6 addresses the question regarding the duration of the compromise waiver. However, as can be read from the text, there is no consensus in this regard. The text refers to both 3 and 5 years. “An eligible Member may apply the provisions of this Decision until [3][5] years from the date of this Decision…”. Could this be a suggestion that the waiver could be in force for at least 3 years? It is certainly effective to clarify this in the text of the compromise waiver. Paragraph 6 goes on to state that ‘the General Council may extend such a period taking into consideration the exceptional circumstances of the COVID-19 pandemic. The General Council also has authority to review annually the operation of this Decision’.[16]
Before outlining some of the gains from the outcome of the quadrilateral negotiations, I highlighted some of the reasons why the proponents of the waiver are disappointed with the draft compromise text. First of all, the compromise text only covers the compulsory licensing of patents. This is not satisfactory as the waiver proposal requests for the waiver of obligations relating to copyright, patents, industrial designs, and the protection of undisclosed information. The scope of the compromise text is also limited to the production and supply of COVID-19 vaccines.
As indicated above, the definition of an ‘eligible Member’ in the compromise waiver text is another area of concern. The compromise waiver text defines, in a footnote, an ‘eligible Member’ as ‘any developing country Member that exported less than 10 % of world exports of COVID-19 vaccine doses in 2021.’[17] As noted by Oke, “this automatically excludes developed countries from the scope of the compromise waiver. It further narrows down the number of developing countries that can effectively use the waiver to export vaccines to other developing countries”.[18] This limited scope is likely to face more challenges as the compromise agreement is presented to other WTO members.
Having said the above, one may question the use of negotiations that are open to only four WTO members to deal with an issue that is affecting the entire international community? I guess the answer will lie in the reaction of the other WTO members to the compromise waiver text as it is presented. At this point, whether or not the compromise waiver text would also constitute the basis of any final waiver decision is still subject to debate. As has been said elsewhere, it will be up to the remaining WTO members to decide whether this is a promising or a compromising text.
[1] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022] Available online at: https://www.afronomicslaw.org/category/analysis/trips-waiver-compromise-draft-text-preliminary-assessment.
[2] G. Quinn, “COVID IP Waiver Attempts are Becoming Harder to Justify” [accessed 30 March 2022] Available online at https://www.ipwatchdog.com/2021/10/20/covid-ip-waiver-attempts-becoming-harder-justify/id=138993/.
[3] E. MacDermott, “Latest WTO Waiver Compromise Text Targets COVID Vaccine Patents, Draws Criticism from Both Sides” [Accessed 30 March 2022] Available online at https://www.ipwatchdog.com/2022/03/16/latest-wto-waiver-compromise-text-targets-covid-vaccine-patents-draws-criticism-sides/id=147576/.
[4] J. Love, “QUAD’s tentative agreement on TRIPS and COVID 19” [Accessed 30 March 2022] Available online at https://www.keionline.org/37544.
[5] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022].
[6] Ibid.
[7] Ibid.
[8] Ibid.
[9]Statement from Ambassador Katherine Tai on the Covid-19 Trips Waiver: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/may/statement-ambassador-katherine-tai-covid-19-trips-waiver.
[10] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022].
[11] Ibid.
[12] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members).
[13] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022].
[14] Ibid. See also TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members).
[15] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members). para 3(c).
[16] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members). para 6.
[17] TRIPS COVID-19 solution (the outcome of the quadrilateral discussions at the end of last week, to be presented to WTO Members). Footnote 1.
[18] E.K Oke, “The TRIPS Waiver Compromise Draft Text: A Preliminary Assessment” 18 March 2022 [Accessed 30 March 2022].
by Thabelo Muleya | Mar 29, 2021 | Blog
Thabelo Muleya
The Covid-19 pandemic has been the most fundamental disruption to economic activity in a century, introducing huge challenges for the South African economy, regional value chains, and global trade. How is this affecting regional integration? To understand this, we first need to analyse the different types of trade and economic policy responses to Covid-19 and how they relate to regional integration. A good starting point is the 2021 State of the Nation Address (SONA) by President Ramaphosa, followed by the Budget speech delivered by Minister of Finance, Tito Mboweni.
Whereas commitments towards regional and continental trade can be found in the SONA, the general sentiment is that South Africa, just like most other economies affected by the pandemic, is looking to grow local production and encourage the localising of value chains. South Africa is not alone. In a growing protectionist climate, most SADC Member States appear to be acting in a manner that prioritises national interests over regional cooperation. This has culminated in the debate about whether national economic policies should focus on creating local productive capacity or facilitate the building of regional value chains that remain linked to global trade. According to a study by the OECD, localising value chains in the post-Covid-19 world would add to the economic losses and make domestic economies more vulnerable.[1] This is not stopping countries from resorting to higher levels of protectionism and the emergence of economic nationalism.
President Ramaphosa reiterated that the African Continental Free Trade African (AfCFTA) provides a platform for the South African businesses to expand into markets across the continent, and for South Africa to position itself as a gateway to the continent. On the same note, Minister Mboweni, emphasised the government’s plans to improve access to African markets. This shall be done by upgrading and expanding South Africa’s six busiest border posts; starting with Beitbridge, which was last upgraded in 1995. Ideally, these One-Stop-Border-Posts will harmonise the crossing of borders by people and goods, eliminating the dreadful scenes witnessed during the pandemic. There will be significant infrastructure interventions using a public-private partnership (PPP) model.
On the other hand, while acknowledging the opportunities for regional trade and growing regional value chains as presented by the AfCFTA, the SONA stressed the priority of localisation policies, as embodied in industry masterplans. The pandemic has left policymakers wondering whether more localised production of key goods would provide greater security against disruptions that can lead to shortages in supply and uncertainty for consumers and businesses[2]. However, even with the support and protection offered to domestic producers under a localised regime, not all stages of production can be undertaken in one country, and trade in intermediate inputs and raw materials continues to play an important role in domestic production. In this context, less international diversification of sourcing and sales means that domestic markets are required to shoulder more of the adjustments and to absorb shocks.
One of the priority intervention proposals of the Post Covid-19 Economic Reconstruction and Recovery Plan is to support a massive increase in local production and to make South African exports globally competitive. Key to this plan is a renewed commitment from the government, business, and organised labour to buy local. Increased local production will hopefully lead to the revival of the manufacturing industry and encourage greater investment by the private sector in productive activity. All social partners who participated in the development of the Recovery Plan as part of a social compact have agreed to work together to reduce the country’s reliance on imports by 20{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} over the next five years.
The above is a clear indication of the hard policy choices caused by the pandemic, which can be read from the SONA and the budget speech. While local value chains could look like the answer, the OECD study suggests that increased localisation could do more harm than good and that the international network of interconnected supply chains remains key to producing essential goods and services. Global and regional value chains organise the cross-border design, production, and distribution processes, creating much of what we purchase and consume every day.
What does that mean for SACU[3], SADC, and the continent? In his recent presentation to the Portfolio Committee on Trade and Industry, Minister Patel reported that over three-quarters of intra-African trade takes place within regional trading blocs. In 2019, around 26{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} of South Africa’s global exports were destined for the rest of Africa, with 80{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} of those exports going to SADC countries. The country should therefore use the opportunities created by the AfCFTA to expand trade beyond SADC to East, Central, West, and North Africa.[4] Strategically incorporated into national trade policies, the AfCFTA can unlock the region, grow regional value chains needed for resilient economies.
[1] https://voxeu.org/article/localising-value-chains-after-covid-would-add-economic-losses-and-make-domestic-economies-more-vulnerable
[2] Javorcik, B (2020), “Global supply chains will not be the same in the post-COVID-19 world”, in Balwin, R and S Evenett (eds) COVID-19 and Trade Policy: Why Turning Inward Won’t Work, VoxEU.org eBook, CEPR.
[3] Payments to SACU have been revised upwards by R1.9 billion in 2022/23 and R15.5 billion in 2023/24 to R137.3 billion over the medium term.
[4] DTIC, “Update on African Integration and the AfCFTA: Minister’s Presentation to the Portfolio Committee on Trade and Industry”, 16 March 2021.
