1

www.comesa.int e

Issue #126 - Friday 19 October 2007 newsletterIssue #201 24th April 2009 newsletter

Ministers of Agriculture of the COMESA region are actively participating in the ongoing AU

Ministerial Conference taking place over the period 22-24 April, 2009 at the AU headquarters in Addis Ababa, Ethiopia. The host Minister, Honourable Tafera, Minister of Agriculture and Rural Development for the Federal Republic of Ethiopia opened the meeting calling on all cooperating partners to support Africa’s development efforts under the CAADP agenda.

Africa’s lead donors attending the meeting include JICA, The World Bank, EU, DfiD, FAO, WFP, IFAD and AGRA. Others present are AfDB, Global Donor Platform, the UN High Level Task Force on Food Security and UNECA.

Sierra Leone’s Minister of Agriculture, Honourable Sessay, gave a moving outline of Africa’s vast water and land resources and stressed that if the continent focused strongly on the disciplined planning process under CAADP, there is no doubt, the continent will overcome its developmental obstacles.

Libyan Minister of Agriculture is chairing the AU Ministerial Session on Agriculture which is on the theme “investing in agriculture for economic growth and food security” and tackling the key issues of climate change, livestock development, land policies, food security, agricultural finance and the overall status of CAADP implementation.

The decisions of the Ministers in Addis will form the main materials for the consideration of the AU Heads of State

COMESA Ministers Articulate Agricultural Issues at the AU Agriculture Conference

Summit in June/July, 2009. During the meeting, COMESA Senior Agricultural Advisor Dr Cris Muyunda held sessions with several COMESA Ministers among them Honourable Joseph Made Minister of Agriculture from Zimbabwe who reconfirmed that country’s readiness to host the COMESA Agriculture Meetings from May 11-15, 2009 in Harare.

Dr Muyunda also met Honourable Amin Abaza Minister of Agriculture from Egypt who reiterated his readiness to host the 2nd Joint COMESA Agricultural/Environment Ministers Meeting in Cairo

from 15-16 August, 2009. Meanwhile, the Head of Malawi Delegation Dr. Daudi Yamba has confirmed that the Malawi CAADP Compact has been approved by the Malawian Cabinet. This brings to two, after Rwanda the number of CAADP Compacts concluded in the COMESA bloc. COMESA is now way ahead of all Regional Economic Communities on the continent in concluding CAADP compacts.

All going according to plan, COMESA should have three compacts by the time of the COMESA Summit in June this year.

MODEL CONTRACTS HELP SMALL FIRMS CLINCH TRADE DEALS

Business lawyers from around the world and experts at the International Trade Centre (ITC)

met this week to finalize model contracts for trade deals that can be used free of charge by small firms in developing countries.

The ITC specialists and lawyers from 51 countries were joined at the session on 21-22 April by chambers of commerce and other trade support bodies from Africa, Asia, Europe and Latin America, who will make the contracts available to their member firms from June 2009.

“Small exporters can benefit from well-drafted model contracts, be they from developed or developing countries,” said

Catherine Ashton to page 3

2

www.comesa.inte

Capacity building and programme ownership are central to all programmes promoted by

the Common Market for Eastern and Southern Africa (COMESA).

Within the framework of continuing and deepening procurement reforms in COMESA and, as part of the implementation of the Enhancing Procurement Reforms and Capacity Project (EPRCP), COMESA launched the capacity building training of trainers in Addis Ababa, Ethiopia early this week.

The capacity building training which involves the training of a core group of procurement officers drawn from the nine regional governments in Ethiopia and two city administrations started on 20th April 2009 at the Ethiopian Civil Service Collage in Addis Ababa. It will run until 30th April 2009.

Capacity building is one of the key components of the Enhancing Procurement Reforms and Capacity Project (EPRCP) which is expected to support the reform programme by creating the necessary skills and competence required to manage the new and reformed procurement systems. The other components include national legislative and policy development and integrating ICT in procurement by developing a shared procurement web portal to facilitate increased opportunities for market access in public tenders by regional business communities.

The capacity building through training seeks to develop and upscale the professional competence and skills of current officers managing public procurement responsibilities in their respective jurisdictions and promote

Capacity Building Training in Procurement launched in Ethiopia

efficiency, fairness and prudent procurement. By extension, the trainees are expected to train others as one of the mechanisms being relied on by the Government to address capacity and specialist knowledge gaps within its procurement administration.

EPRCP Project Manager Mr Colas Ziki who spoke earlier during the opening session noted that improving the capacity in the administration of procurement will help to generate economic benefits by promoting efficiency, competition as well as expanding market opportunities in the region for the private sector.

Mr. Tsegaye Abebe Abera, Director General of Ethiopian Public Procurement Agency expressed gratitude to COMESA on behalf of the Government for the support it had provided in reforming that country’s procurement system. He underscored the importance of modernizing and strengthening procurement systems by linking procurement and good governance. He stated that good governance, which promotes accountability, transparency, rule of law and participation, is central to creating and sustaining an enabling environment for development. He noted further that poor governance can be particularly damaging to the effective economic and social development of any country by undermining critical programs for poverty alleviation in education and health, for example, as

a result of lack of public accountability and corruption. He observed that prudent procurement has potential to mitigate squandering of government revenues and promote investment flows and therefore promote economic growth.

And Dr. Hailemichael Aberra, the President of the Ethiopian Civil Service College informed the participants and guests that his college has made the necessary infrastructure and faculty arrangements to begin offering courses in procurement for the benefit of the regional governments and city administrations in Ethiopia in the near future. He congratulated COMESA for taking the lead in developing a comprehensive curriculum on procurement training which he noted will be relied on to offer procurement training on a sustainable basis.

The capacity building training course will be replicated in all the COMESA member States to help support and consolidate the reform gains by increasing the number of procurement professionals to help support effective delivery of government programmes. As a mechanism to ensure capacity building sustainability, it is planned that COMESA will engage with leading training institutions in the region to help

Delegates at the training

3

www.comesa.int e

ITC Executive Director Patricia Francis. “but most smaller firms do not have access to the legal advice they need at the best of times, and even less so amid pressures to cut costs in thecurrent international economic climate.”

To meet this challenge, the Geneva-based ITC set up a network in which leading law firms with trade expertise seconded top specialists at no charge to work together to create models that – with minimal modifications – can be used for contracts in any part of the globe. The law firms are also covering their own costs to attend the meeting.

ITC, a joint agency of the United Nations and the World Trade Organization (WTO), provides the service as a contribution to Aid for Trade efforts led by WTO, as well as the UN Millennium Development Goals that aim to help to reduce poverty through trade.

“Small firms, the backbone of many economies, are finding themselves strapped by the current economic crisis,” Ms Francis noted. “These contract models are a concrete, practical way to secure their trade deals in global markets. They take into account the increasing sophistication of international trade transactions, and incorporate internationally-recognized standards and best practices.”

ITC already has contracts in several languages online for perishable goods, publishing and joint ventures. At this week’s meeting, 10 more model contracts are being discussed and validated. These range from simple sale of goods through long-term supply and service and brokerage to establishment of joint ventures for many sectors.

“Equally important is making sure these contracts reach small businesses in poor countries who need them most,” Ms Francis added. “This is why we are working with our global network of trade support institutions, who can make the contracts free to businesses in several languages through their websites.” ITC will also provide training on their use under local ITC programmes.

INTERNATIONAL TRADE CENTREITC, which has 45 years of experience in assisting developing countries and transition economies to work their way out of poverty through trade, is using the initiative as a way to strengthen its network to support SMEs with contractual issues and share best practices in contract drafting, while working to increase the training capacity of national trade support institutions.

The new model contracts will be online this summer on ITC’s web site, as well as on the web sites of participating law firms and national trade support institutions in developing countries. The full process of elaborating them, and thus bridging the many legal and cultural traditions that are reflected global trade, has taken only one year.

ITC wishes to express its appreciation to the lawyers and law firms from the 51 countries who have willingly contributed their time and expertise in drafting these model contracts.

Opinion:

IntroductionThe economic downturn is affecting populations across the world. Economic output is set to fall in 2009, and although it may rise again in 2010, it is the most vulnerable that face the greatest threat. According to the World Bank, the economic crisis could push a further 90 million people in developing countries into poverty this year.

Developing countries are being hit by the downturn in trade and finance. Foreign direct investment is falling, as are trade volumes and prices for their commodities, leading to a slowing in growth. All this comes on top of fundamental problems these countries face – they are already being badly affected by food and water shortages, fuel shortages and the effects of climate change.

The immediate response has to be to continue to provide the necessary aid

to those hardest hit, and the European Commission earlier this month voiced the EU pledge to fulfill our aid promises. Indeed, we have committed to frontload and refocus existing aid commitments to reach those who need it as soon as possible.What we should also do is continue to better equip developing countries, notably those in Africa, to take full advantage of the economic recovery when it comes. That includes making sure that these countries can reap the benefits of trade. The G20 meeting in London recognised this, reaffirming the commitment to developing countries to reach the Millennium Development Goals, and pledging funds to help boost trade.

The gains from trade facilitationSimplified, transparent trade procedures are a key component of good trade policy and vital for economic growth. Cumbersome, outdated bureaucracies and infrastructure stifle trade and entrepreneurship, discourage investment and encourage corruption. Africa is a very good example to have chosen as the focus of this seminar because African companies face many of these problems, and are very often small and vulnerable. As such, they stand to benefit greatly from trade facilitation.

I was in Lusaka, Zambia earlier this month, for a pledging conference to support the North-South Corridor infrastructure project. The most important message I got from African leaders was the urgent need for simpler customs rules and easier transit for goods. Africa’s trade potential is being stifled by inefficiencies and red tape. One example from the Eastern and Southern African region was that it costs more to move goods from Uganda to the coast than to then ship it on from there to Europe or the USA.

Small and medium-sized enterprises are particularly vulnerable to these difficulties, because for them such costs are a bigger proportion of turnover than for larger firms. A lack of transparency in rules and procedures is often enough to dissuade from exporting altogether. This is not

from page 1

to page 4

4

www.comesa.inte

Count down to COMESA Customs Union

We are only 44 days to the Launch of the COMESA Customs Union

exclusively a problem for the developing world. I know this is something that also affects European companies, including those in Italy, as I heard myself when I was in Milan last month. It is still the case that only 3% of EU SMEs export outside of the EU. The benefits from streamlining are significant. Studies show that globally, the costs of trade procedures may range from 2% to 15% of the value of traded goods. If we could halve these costs, we could achieve savings in the hundreds of billions of euros every year. Regarding delays of shipments at border crossings, the precise cost to business is unquantifiable, but clearly this is a barrier to trade. Countries that have introduced trade facilitation measures have reduced border crossing times massively. The Philippines has reduced times from up to 8 days down to 4 hours; Bangladesh from up to 3 days to 3 hours; Costa Rica from up to 6 days to as little as 12 minutes. This is often the difference between doing business and not doing business. For governments, simplified customs procedures also save money while improving levels of control. Chile spent US$5 million on automation of customs, but recouped the investment in just over a year.

Time for actionBusiness is telling us that trade facilitation needs to be put squarely on the political top table. There is a need for simpler trade procedures so as to reduce delays, cut costs, improve the services offered to consumers, and even get into overseas markets in the first place. The European Commission is working

to address this need through multilateral, regional and bilateral initiatives. The WTO has a natural role in setting rules on trade facilitation. The EC supports the development of a more binding rules-based approach, and trade facilitation is a prominent element in the Doha Round of world trade talks. It is therefore hardly a surprise that African countries have called for strong new rules on trade facilitation in the WTO, because they see the benefits to their continent. It explains why African business has joined European business in calling for an ambitious Doha agreement.Our own estimate is that the trade facilitation agreement in WTO will bring trade gains equal to those of industrial tariff cuts and services combined.

In parallel to the WTO work, the EC is also pursuing trade facilitation in regional and bilateral initiatives, including with the USA, South Africa, China, Asean, Mercosur and ACP countries. Where appropriate, these initiatives incorporate technical assistance initiatives.

Trade facilitation in AfricaIn Africa multiple and overlapping regional economic initiatives and groupings have led to a multiplication of rules and the creation of major obstacles to intra-regional trade as well as international trade. African countries are taking steps to deal with this. We hope to contribute to improving the situation through the Economic Partnership Agreements (EPAs) that we are working on with African partners, as well as with the Caribbean and Pacific. With EPAs, the EU aims amongst other things to reinforce cooperation in the area of customs and trade facilitation. Our aim is to promote harmonisation

of customs legislation and procedures to improve trade between the EU and Africa, but most importantly to facilitate regional trade and transit movements within and between communities in Africa.

We also provide help to African companies to understand our European import procedures, rules and standards through our Export Helpdesk. Anchored by a useful and popular website, this gives information on preferential import tariffs, customs documents, rules of origin and trade statistics.

All of this must be backed up with a serious financial commitment, and the EU is by far the largest contributor to Aid for Trade initiatives, with commitments of more than EUR 7 billion per year. The largest share of that – EUR 2.7 billion - goes to Africa. Under the 10th European Development Fund (EDF), the European Commission has almost doubled the financial commitment for regional integration of ACP countries (compared to the previous period of 2000-2007).

Some examples in Africa – we have allocated EUR 645 million to support the regional integration of the Eastern and Southern Africa and Indian Ocean region, and EUR 116 million for the Southern Africa Development Community (SADC). I mentioned the North-South Corridor – here the Commission has pledged EUR 115 million to improve trade linkages in the Southern and Eastern African region.

ConclusionTrade facilitation, like trade finance, is vital if our global trading system is to work. We preach the benefits of free and fair trade for development and growth, but how can developing countries prosper if trade often falls at the first hurdle? Spending on major infrastructure projects in Africa is vital, but it must go hand in hand with reform of administration and regulation. For example, improving port administration can have same effect as building a whole new port, at a fraction of the cost and in much less time. This realisation is the real key to unlocking

from page 3

MODEL CONTRACTS HELP SMALL FIRMS CLINCH TRADE DEALS