Note: *671 Pig iron & spiege., sponge iron, iron/steel granules & powders. May 21, 1997. 4. International trade is characterised by the following special problems or difficulties. 2 And supply-side deficiencies, principally poor physical and financial infrastructure and low levels of human resource The continent also lacks clearly defined mandates, insufficient testing capacity, and catapulting in uncoordinated and overlapping technical regulations and other activities, which lead to confusion, delays, and duplicating costs. Trade costs as well as bureaucratic or procedural bottlenecks at home and the border, coupled with high transportation costs, appear among the factors that are constraining trade SSA countries. With greater integration could come greater country specialization – such as basic manufacturing in metal and plastic products that are expensive to import from the global market. Most West African countries share common trade-facilitationrelated challenges. It is worth mentioning that Nigeria, Angola, and Equatorial Guinea have recorded a positive trade balance mainly because fuels accounts for over 90% of the total exports. Publishing on IntechOpen allows authors to earn citations and find new collaborators, meaning more people see your work not only from your own field of study, but from other related fields too. Is the doctrine of mercantilism dead or still alive? The low level of industrialization in Africa may have partially constrained the scope for intra-industry trade in the continent. "The challenges that Africa faces in trade and regional integration are legion, and well documented. Source: Compiled from ITC market access map. Preface by the Cabinet Secretary. The IIT model stressed that international trade takes place as a result of economies of scale, product differentiation, and imperfect competition between and within industries and countries. However, their share of agricultural exports to developed countries has stagnated. Despite the fact that intra-African imports in total merchandise imports in Africa rose from 11.3% in 1995 to 13.6% in 2015, it was still low compared to 59% in developing economies and about 63% in Asia (Table 10). We then explore the ‘demand’ and ‘supply’ sides of Africa’s trade problems, noting where and how the European … Nontechnical measures: contingent trade-protective measures, nonautomatic licensing, quotas, prohibitions, and quantity-control measures other than for SPS or TBT reasons; price-control measures, including additional taxes and charges; finance measures; measures affecting competition; trade-related investment measures; distribution restrictions; restrictions on post-sale services; subsidies (excluding export subsidies under p7); government procurement restrictions; intellectual property; and rules of origin. Note: *71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin. Available from: Materials Science, Engineering and Technology, Product concentration and diversification, [057] Fruits and nuts (excluding oil nuts), [334] Petroleum oils, bituminous >70% oil, [343] Natural gas, whether or not liquefied, [522] Inorganic chemical element, oxides & hal. This progress in tariff reduction can be largely attributed to the WTO persistent efforts in reducing trade barriers for mutual benefits, growth, and development in the countries involved. African countries should as a matter of urgency provide transport and other critical infrastructure facilities to ease movement of inputs to the sites and output to the markets for global competitive supply chains to be ensured. Libya’s oil exports accounted 94.3% of total exports of the country, and the value of the goods shipped was decreased by −50% in 2015. Data from UNCTAD [18] and ITC [19] trade map show that mineral fuels, mineral oils, and products are by far the topmost export products in Africa, and the continent is the net exporter of fuels based on Standard International Trade Classification (SITC 3) as also revealed in Table 7. Developed countries’ relative importance as key suppliers in global markets has declined. Undoubtedly, this is a tedious task but a feasible one as has been successfully carried out by most advanced and newly industrialized countries. African countries have made several efforts to exploit its trade potentials for growth and development since gaining political independence in the 1950s and 1960s. The continent recorded negative trade balance not only in labor- and resource-intensive manufactured but also in low-skill and tech-intensive manufactured (Table 7). By Introductory Chapter: Economics, Natural Resources and Sustainable Development. Intranational trade costs are approximately four to five times higher in some SSA countries than in developed countries [30]. Trade similarity and complementary. Intra-industry trade in SADC increased from 15% in 1995 to 21% in 2015, while EAC rose from 17% in 1995 to 19% in 2015, albeit below the developing countries average. It evaluates eight markets on six core dimensions of trade (i.e., infrastructure quality, custom performance, logistics competence, tracking and tracing, and timeliness of shipments) on a scale from 1 (worst) to 5 (best). The South African Institute of International Affairs cordially invites you to a Speaker’s Meeting to be addressed by the Honourable Dr Rob Davies, Minister of Trade and Industry on ‘Major Trade Policy Challenges Facing South Africa’ The Honourable rob davies is Minister of Trade and Industry of the Republic of South Africa. Finally, African countries complain about market access in advanced and newly industrialized nations without fully opening their markets to trade within the region. The external constraints, such as the market access, volatility of commodity prices, domestic support and export subsidies, quality standards, and competitiveness, have been identified among the major factors that are militating trade and development in Africa. Entering and succeeding in international trade is not without its challenges, but overcoming those challenges can lead to global entrepreneurial success. One of the biggest challenges faced by African traders is the gap in trade finance, especially in relation to the credit availability provided to traders in Africa. The ability of Africa to aggressively expand export is partially associated with its capacity to produce or manufacture and export. Given that agriculture is the primary export commodities in Africa, this chapter will also focus on the performance of agricultural trade in the continent. The last part of the brief contains an assessment of the role of regional integration and Economic Partnership Agreements in bringing about an improvement in Africa’s trade and broader economic performance. The overdependence of some oil-producing countries on oil exports in the region resulted in the decline of Nigeria’s share of the world merchandise exports from 0.9% in 2012 [17] to 0.31% in 2015. The continent has abundant factor endowments as postulated by the Heckscher-Ohlin model [3, 4] that need to be typed for industrial and commercial purposes. The WTO has to ensure that defensive trade remedies, such as SPS, should not be the next frontier of protectionism as these measure to some extent curtail trade from Africa and other LDCs. However, its global share of merchandise trade has reduced over the decades. Instead, African exports are commodity-dependent, which has until recently caused a long-term decline in Africa’s terms of trade. 2 However, the trade performance of sub-Sahara African countries … In this brief we attempt to summarise them against the backdrop of Africa’s broad development priorities. Source: Compiled from UNCTAD. This slowdown has been partly occasioned by an ample of other factors, including political turmoil in some countries in the continent. Last update: 7 July 2019. This trade diversifies the products and services that domestic customers can receive. The result, an Africa that exports refined petroleum instead of crude petroleum and high quality packaged medication instead of oily seeds and tea. While the World Trade Organization's Trade Facilitation Agreement can act as a powerful tool for progress, it cannot work in isolation. Ill Health. Arguably, African countries have been left in the cold as they struggle to compete with advanced economies. Even though global trade has fluctuated over the years, it has also rapidly increased. Africa is now feeling both the humanitarian and economic impact of the virus and plans to control and manage the challenges of COVID-19 are underway across the continent. Consequently, African processors and exporters are being marginalized and excluded from taking competitive advantage in the global markets, thus partly impeding production, trade, and development in the continent. Contact our London head office or media team here. Downloadable! AFRICA’S RelAtIve PoSItIon In globAl tRAde And FdI Today’s global economy is dynamic and increasingly interdependent. This is particularly the case for developing countries in Latin America, Africa and the Middle East. Unemployment in sub-Saharan Africa stands at around 6%, according to the International Labour Organization. They developed an index called the Grubel-Lloyd index (GL index) to measure the degree of the structure of trade overlap in countries. On the other hand, modern trade theories [5–10] stress that there are many factors beyond the relative costs of production or factor endowments. For instance, as shown in Table 11, global agricultural exports by region showed Europe (40.8%) with the highest share in the world, followed by Asia (22.4%) and North America (15.7%) and South and Central America (12%), while Africa, which has heavily depended on agriculture for food, economic growth, and development, merely accounted for 3.6% of total global food exports in 2014 [24]. The International Chamber of Commerce (ICC) has estimated the trade finance gap in Africa at US$110 billion to US$120 billion, which is approximately 25% of total … Ryan Musser is Program Assistant for Africa at CIPE. In other words, a high index might signify that two nations stand to benefit from increased mutual trade. Trends in merchandise trade. Globally, WTO seems to be at the crossroad at the moment in ensuring that all the agreements are implemented for mutual trade benefits. The result shows that apart from South Africa, African countries have been consistently scored below the global average in global overall in quality of trade and transport infrastructure. Because advanced and newly industrialized economies have better technology and know-how, manufacturing industries, access to finance, and market than Africa, they have a greater market proportion in the world trade. Regrettably, African countries have been complaining about market access in developed countries but have not significantly traded among themselves. African countries focus on global trade prospects, challenges. Trade similarity index, as developed by modern trade theories [6, 8, 20], is an indicator that helps to verify whether the structures of two economies or continents’ products traded are similar or dispersed. Also, the developing countries’ share in agricultural exports to other developing countries has also increased, albeit not as manufactured products. Also, studies by Grubel and Lloyd [8] confirm high ratios in the industrialized economies. When it comes to possible problems of exporting goods, … Merchandise trade specialization index in Africa, 1995–2012. Mercy Mpinganjira (August 22nd 2012). Buyers and sellers rarely meet one another and personal contact is rarely possible. With the increasing integration of markets as a result of globalization and liberalization, Africa faces a more fiercely competitive external trading environment. High level of chemicals, insufficient information on nutritional content, inadequate labeling, and high levels of pesticide are the main reasons; some African products are frequently banned in the global markets. World merchandise exports (US$ billions, current and share), 1948–2015. In 2014, about €58 billion or 40% of the EU’s total budget were for CAPs. Logistics performance index (LPI): quality of trade and transport infrastructure (1 = low to 5 = high), 2007–2016. The positive values signify that Africa has been a net exporter of these products. Angola’s oil export accounted 97% of total exports of the country, while pearls, precious stones, metals, and coins (code 71) accounted for 2% of the total exports in 2015. However, just as in export, the continent remains a marginal player in the world imports, declined 8.1% in 1948 to 3.3% of the global share in 2015 (Table 4). International Trade Promotion in Southern Africa: Challenges and Lessons, International Trade from Economic and Policy Perspective, Vito Bobek, IntechOpen, DOI: 10.5772/50096. This type of trade restriction in developed economies in processed or manufactured products from Africa other LDCs is incredibly outrageous, making it almost impossible for exporters to develop and benefit substantially from trade. A value closer to 1 indicates lower diversification and vice versa. Sadly, the intra-African trade has also substantially faced with market access issues including tariffs. Accounting for about 40% decline in the region’s exports, in the oil-exporting countries, such as Nigeria (−45%), Angola (−44%), and Algeria (−40%), in 2015. International Trade: The Position of Africa in Global Merchandise Trade. Despite this development, challenges remain prevalent in logistics infrastructure. Even though Africa has performed above Oceanic, as its index improved from 0.41 in 1995 to 0.47 in 2013, it was still below developing countries, South America and South Asia’s averages. We share our knowledge and peer-reveiwed research papers with libraries, scientific and engineering societies, and also work with corporate R&D departments and government entities. World trade will continue to bear the scars of the tit-for-tat trade war, and the effects of subsidies introduced during the pandemic risk dampening the recovery. This transition in world history poses a potent challenge to the mainstream IR theory, as the concept of an all sovereign state becomes untenable in Africa and elsewhere in the Global South. Banks intermediate almost a third of trade activities across There is no doubt opening up Africa to global trade integration will present domestic challenges in the form of fiscal pressures and short term adjustment costs [194]. Trade complementarity index (TCI) is an overlap index, which provides significant information on intra-regional trade [21, 22]. Source: Compiled from UNCTAD. On individual country levels, Table 2 indicates that South Africa, Nigeria, Algeria, Angola, and Morocco were the leading merchandise exporters in Africa in 2015. Recognizing sources of potential difficulties and planning to meet and overcome them is the key to … Sadly, even though agriculture is the mainstay of Africa’s economy, the continent has performed badly in the world markets. Help us write another book on this subject and reach those readers. Africa’s challenges. Historically, between seventeenth and early twentieth centuries, the share of agricultural trade as a percentage of total global trade was above 50%. The Africa Renewal information programme provides up-to-date information and analysis of the major economic and development challenges facing Africa today. By making research easy to access, and puts the academic needs of the researchers before the business interests of publishers. Against this background, this chapter aimed at assessing the performance and challenges of trade in Africa in the present era of trade liberalization. The challenges to reversing the decline of the apparel sector in South Africa International Conference on Manufacturing-Led Growth for Employment and Equality in South Africa Johannesburg, South Africa 20 - 21 May 2014 Mike Morris PRISM, School of Economics University of Cape Town Mike.morris@uct.ac.za and Justin Barnes We are a community of more than 103,000 authors and editors from 3,291 institutions spanning 160 countries, including Nobel Prize winners and some of the world’s most-cited researchers. Even though countries’ taxes have been cut, especially since the beginning of the current Doha Round in November 2001, it persists in many commodity chains, especially in processed products. Open Access is an initiative that aims to make scientific research freely available to all. The global oil crunch and other raw products are a wake-up call for a rapid industrialization and diversification for a sustainable export competitiveness, and export-led growth hypothesis to be achieved in Africa. Africa’s current economic growth rate is far too low. Different legal norms. Gkoutzinis, Apostolos, ‘International Trade in Banking Services and the Role of the WTO: Discussing the Legal Framework and Policy Objectives of the General Agreement on Trade in Services and the Current State of Play in the Doha Round of Trade Negotiations’, 39(4) International Lawyer 877 (2005), at 887. A value closer to 1 indicates the higher similarity or identical products trade structure between economies or continents, also known as overlap of trade. ", Copyright © 2017 The current share of Africa in global trade is only around 3 per cent compared to 10 per cent in 1950. These developments have intensified international competitive pressures on U.S. firms and arguably have reduced the economic … Welcome to Africa International Trade and Commerce Research — The Africa Trade Link! Also, Africa continues to export a broad range of primary products that are highly vulnerable to shocks in demand in the global commodity markets, which lead to disincentives to production and trade when the prices sharply shrink. The high rate of unemployment and the slow progress of economic growth in most North African countries have spotlighted the importance of inter-regional trade among them as an alternative solution to achieve inclusive growth in the long run. We then explore the ‘demand’ and ‘supply’ sides of Africa’s trade problems, noting where and how the European Union may improve its efforts to assist. Top five African merchandise importers ($ billions, current, and share) in 2015. The consistent price fluctuations of primary products in the global markets might have had adverse effects on export and earnings in Africa. It is worth reiterating that Africa needs to increase production and the level of industrialization to process or manufacture most of the products it consumes. Reversing these policies would be an act of bad faith and would take away the little confidence domestic and international private firms have in the policy environment. Finally, recommendations for necessary measures to stimulate production and trade in Africa in the present era of free trade and negotiations at the WTO and other regional bodies are summarized here as follows: African countries should create a friendly environment and provide/guarantee affordable/soft loans to producers and traders to support their services and productive initiatives. Also, the markets are chosen based on the most applicable export and import markets of the respondent’s nation. The share of these five countries in the continent rose to 47% in 1948 to 57% in 2015. Nahanga Verter (September 13th 2017). Côte d'Ivoire’s cocoa accounted for 43% and oil 17% of total exports in 2015. The situation is even worrisome in some leading exporting countries in the continent. International Trade Promotion in Southern Africa: Challenges and Lessons, International Trade from Economic and Policy Perspective, Vito Bobek, IntechOpen, DOI: 10.5772/50096. Since those countries’ output and exports surpass African countries (see Tables 1 and 11), the large-scale import suggests having hampered domestic producers and exporters in the continent as they cannot favorably compete with external competitors regarding price, quality, and quantity. Arguably, the doctrine of encouraging local production for exports and discouraging imports as postulated by mercantilism is still alive in agriculture [16] and other commodities that African countries have an advantage for exports, albeit in different forms. The current share of Africa in global trade is only around 3 per cent compared to 10 per cent in 1950. Arguably, the extreme world price volatility leads to insecurity for all the exporters involved. Available from: International trade allows countries, states, brands, and businesses to buy and sell in foreign markets. The values range from 0 to 1. The merchandise trade specialization index (TSI) according to specific products in Africa (Table 7) shows the sluggish performance of the continent and country in the global market. The ability of African countries to integrate efficiently into the world market to a great extent depends on the quality of both hard and soft infrastructure, ranging from transportation, customs practices and procedures, and financial services to border processes and regulatory environments [27]. Cost is a concern, but the time required to compile documents and gain approval is the most taxing aspect of international commerce. Implying that trade between developing countries has been intensified with identical products. Africa trade: top seven product groups (at two-digit level) in 2015. To boost intra-regional trade, African regional bodies such as the ECOWAS, EAC, and SADC have launched Customs Unions to abolish duties and taxes of equivalent effect and remove nontariff measures that constraint trade within the continent. African merchandise trade has risen faster than those of the developed and developing economies. Both EPDI and EPCI show that Africa has concentrated only in few product groups for exports. The constraints to trade in Africa are multidimensional, both internal and external dimensions. Thus, they have some arguments for cross border trade: trade brings a wide variety of goods and services that spur choices of consumers in the countries involved. South Africa is a notoriously tricky place to conduct overseas trade, although big strides have been made in rectifying difficulties experienced when trading across borders. The continent has committed to intra-regional free trade, nevertheless there have been a widespread smuggling of products between countries. On the other hand, producers and traders in many African countries find it difficult to have access to finance for production and exports as governments and the financial institutions’ provision of affordable loans and support has remained a major challenge on the continent. This implies that the continent’s export structure has not proportionally matched with that of its imports from its partners as proposed by intra-industry or Linder’s similarity [6] trade theories. You need to be informed when it comes to the local norms in your country and the norms in the country you aim to export to. In this brief we attempt to summarise them against the backdrop of Africa’s broad development priorities. This shows that the continent is vulnerable to the global shocks of these few export products. In particular, the analysis describes the state of domestic trade policy, examines regional integration efforts, and identifies priorities for the attention of policy makers and international donors. 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