Step by step, Africa inches toward ‘historic’ free trade zone

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Egyptian Foreign Minister Sameh Shoukry (C-L) delivers a speech at the opening of the 35th Ordinary Session of the Executive Committee of the Meeting of the African Union at the Palais des Congres in Niamey on July 4, 2019, ahead of the Heads of States of the African Union Summit in Niger. ( AFP / ISSOUF SANOGO)
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Egyptian Foreign Minister Sameh Shoukry delivers a speech at the opening of the 35th Ordinary Session of the Executive Committee of the Meeting of the African Union at the Palais des Congres in Niamey, on July 4, 2019, ahead of the Heads of States of the African Union Summit in Niger. (AFP / ISSOUF SANOGO)
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Chairperson of the African Union Commission Moussa Faki Mahamat (C) delivers a speech at the opening of the 35th Ordinary Session of the Executive Committee of the African Union (AU) at the Palais des Congres in Niamey, on July 4, 2019. (AFP / ISSOUF SANOGO)
Updated 05 July 2019
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Step by step, Africa inches toward ‘historic’ free trade zone

NAIROBI, Kenya: The African Union launches the “operational phase” this weekend of a long-awaited trade accord, but analysts say the continent faces an uphill task to transform the pact into reality.
The 55-nation AU, gathering for a summit in Niger, will give the formal push to a deal to phase out tariffs on trade from the Cape of Good Hope to Cairo.
By doing so, say supporters of the African Continental Free Trade Area (AfCTA), business between African nations will boom.
The economy of Africa, with a GDP of $2.5 trillion today, will reach takeoff just as its 1.2 billion population doubles over the next three decades, they predict.
“It’s a remarkable achievement, and one that can even be described as historic,” AU Commission chief Moussa Faki Mahamat said Thursday in the Niger capital Niamey.
Backers were given something to celebrate ahead of the summit: on Tuesday, Nigeria, the continent’s largest and most populous economy, said it would sign after long holding back.
Talks on free trade began back in 2002, culminating in a deal that in late May crossed the threshold of ratification by at least 22 countries.
That tally is now 25 out of 55 AU members. Benin and Eritrea are the last countries yet to sign.
‘Made in Africa’
The sunny mood may well sour when the AU is confronted with the realities of the task at hand, say observers.
“Negotiations on some very important points have not yet been completed,” said Trudi Hartzenberg, director at Tralac, a specialist trade law organization based in South Africa.
A timetable for lowering customs duties, rules for certifying “Made in Africa” products, and arbitration mechanisms to settle trade disputes are among the hurdles not even close to being resolved.
In its first phase, the zone will eliminate customs duties on 90 percent of goods.
Tariffs will be scrapped over a longer period on seven percent of “sensitive” goods — a potential means for a country to protect national sectors from foreign imports, say analysts. Tariffs on the remaining three percent of goods will remain in place.
At the Niamey meet the AU is expected to choose the location of a secretariat, with Ghana and eSwatini (formerly Swaziland) among the names doing the rounds.
Critics say many economies are hugely dependent on agriculture or on primary resources such as minerals and forestry, and lack the diversity necessary for vibrant two-way trade.
The share of trade done by African nations with each other is very low — just 16 percent, compared to 65 percent among European countries.
“Africa trades with the rest of the world, but it does not trade with itself,” said Jakkie Cilliers from the Institute for Security Studies, a South African-based think tank.
‘Not a magic bullet’
AfCFA fans claim this slender intra-African trade could be boosted by 60 percent within a few years.
But others caution that benefits on this scale will take far longer to achieve.
“The (free trade) agreement between Canada and the EU took seven years to negotiate and that was just between one country and a fairly economically integrated group of 28 states, not 55 countries, each at very different stages of economic development,” said Elissa Jobson at the International Crisis Group (ICG) think tank.
Cilliers said the AfCFA would take “about a decade to produce its positive effects.”
“This is not a magic bullet,” he said.
The average tariffs on intra-African trade, of 6.1 percent, are higher than on exports to non-African countries.
This discrepancy is cited as a reason why intra-African trade is so low.
But, say observers, import duties are not the only obstacles to freer business.
Corruption, decrepit infrastructure and lengthy waiting times at borders are also hefty barriers.
In a report published in April, the International Monetary Fund said “improving trade logistics, such as customs services, and addressing poor infrastructure could be up to four times more effective in boosting trade than tariff reductions.”


Funds managing $2 trillion urge cement makers to act on climate impact

A general view of Gulf Cement Company in Ghalilah, Ras al Khaimah, United Arab Emirates July 16, 2019. (REUTERS)
Updated 35 min 33 sec ago
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Funds managing $2 trillion urge cement makers to act on climate impact

  • The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China

LONDON: European funds managing $2 trillion in assets called on cement companies to slash their greenhouse gas emissions on Monday, warning that a failure to do so could put their business models at risk.
Some asset managers are ramping up engagement with heavy polluters to demand a faster transition to a cleaner economy.
“The cement sector needs to dramatically reduce the contribution it makes to climate change,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, which has more than 170 members, mainly European pension funds and asset managers. “This is ultimately a business-critical issue for the sector,” Pfeifer said in a statement.
The group said investors had written to cement or construction materials companies including Ireland’s CRH, Franco-Swiss group LafargeHolcim and France’s St. Gobain to demand they achieve net zero carbon emissions by 2050.
They also noted that Germany’s HeidelbergCement had already adopted the target. The funds urged all cement companies to align themselves with the 2015 Paris agreement to combat global warming, engage with policymakers to ensure an orderly transition to a low carbon economy, and increase their reporting of climate risk.
“Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios,” said Vincent Kaufmann, CEO of the Ethos Foundation.

FASTFACT

The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency.

Signatories collectively manage assets worth $2 trillion and include Aberdeen Standard Investments, BNP Paribas Asset Management, Sarasin & Partners and Hermes EOS.
Although funds are increasingly engaging with companies from airlines to carmakers on emissions, few are calling for the systemic transformation of the global economic system that scientists increasingly argue is needed to prevent runaway climate breakdown.
The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China.
With climate campaigners traditionally focused on fossil fuel companies, the European cement sector has received comparatively little scrutiny until recently.
On Tuesday, police arrested six climate activists from civil disobedience group Extinction Rebellion at a protest aimed at disrupting a site in east London belonging to London Concrete, a unit of LafargeHolcim.
In June last year, a report from think-tank Chatham House concluded that although there was no “silver bullet” to reduce emissions from cement, it should be possible to deploy a range of policies and technologies to achieve deep decarbonization.