A report by the World Trade Organization (WTO) examines how African countries can leverage the multilateral trading system (MTS) to promote economic transformation and drive a robust recovery from the COVID-19-induced downturn.
Launched on 23 March 2021 at the virtual Aid for Trade Stocking Event, the publication titled, ‘Strengthening Africa’s Capacity to Trade,’ highlights the WTO’s involvement in Sub-Saharan Africa, which has been especially hard-hit by reductions in trade and economic activity as a result of the COVID-19 pandemic. Noting that open global trade has had positive effects for African industrialization and development, the report reviews WTO support for trade facilitation initiatives, the Aid for Trade initiative, the Trade Development Facility, and other policy mechanisms that enable increased trade capacity on the continent.
The report summarizes global trade impacts caused by COVID-19, outlining specific impacts on and challenges for African countries, which, the report notes, have a higher prevalence of informal employment and reliance on services such as tourism and travel. Citing research from the World Bank, the authors note that COVID-19 may drive up to 40 million people into extreme poverty across the continent, and that at least five years of development gains may have been erased. While African trade in goods and services has gradually risen from 2005 to 2019, its global share has remained consistent at just 3% of global imports and exports.
In the African region, the Trade Facilitation Agreement could reduce trade costs by an average of 16.5%.
Acknowledging intra-continental differences, the report flags that Africa’s exports are dominated by the northern region, which—despite steady increases in exports from Sub-Saharan countries—accounts for a third of all African goods and services trade even though North Africa only comprises five of the continent’s 55 countries. However, the WTO’s efforts have supported trade development on the continent through a broad range of agreements and programmes, including the Aid for Trade initiative.
The report highlights that since Aid for Trade’s launch in 2006, donors have disbursed USD 451 billion in official development assistance (ODA) to build developing countries’ trade capacity and infrastructure. Of the total amount, more than USD 163 billion went to African countries. Within Aid for Trade, the report cites the Enhanced Integrated Framework (EIF) as a facility that is “purely dedicated to supporting trade development” in least developed countries (LDCs). Citing country examples from Burkina Faso and Benin, the report describes projects enabled by the EIF as representing the successful combination of development aid and technical expertise at the service of LDCs.
Outlining additional support for LDCs, the report describes the WTO’s Standards and Trade Development Facility (STDF), which helps imports and exports meet sanitary requirements. Additional LDC support includes implementation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The report emphasizes that the TRIPS Agreement has facilitated technology transfer to LDCs. On intellectual property policymaking, the African Group at the WTO has taken an active role in discussions, including on topics relating to, inter alia, public health, innovation, and proposed amendments.
Other programmes highlighted within the report include the Trade Facilitation Agreement (TFA), which entered into force in 2017 following WTO members’ domestic ratification processes. The TFA aims to expedite the movement, release, and clearance of goods, and establishes measures for effective cooperation between countries to establish customs compliance. The report flags that for the African region, the TFA could reduce trade costs by an average of 16.5%.
The WTO Secretariat also works with regional bodies such as the Economic Community of West African States (ECOWAS), having organized virtual training activities on trade in services, trade facilitation, and market access in English and in French. Forty-four out of the 55 member states of the African Union (AU) are members of the WTO. [Publication: Strengthening Africa’s Capacity to Trade] [WTO News Release]