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Wednesday, August 31, 2011

WTO Waiver is Needed for the Extension of AGOA Come 2015

The African Growth and Opportunity Act (AGOA) will expire in September 2015. AGOA extension requires another World Trade Organisation (WTO) waiver because it is inconsistent with the Most Favoured Nation obligation. Programs such as the Generalized System of Preferences (GSP), under which developed countries grant preferential tariff rates to developing country products, such as the African Growth and Opportunity Act (AGOA) require a waiver by the World Trade Organization (WTO) .Such programs are inconsistent with the Most Favoured National obligation because they accord some countries more favourable tariff treatment to selected countries than is accorded to other WTO Members.

Wednesday, August 17, 2011

Benefits of COMESA Customs Union to the region

The COMESA Customs Union was launched by the Heads of State and Government on 7 June 2009 in Victoria Falls, Zimbabwe. A transitional period of three years was provided for during which time the Member States would align their national tariffs with the COMESA CET. The Common external tariff of the COMESA Customs Union is based on categorisation of goods into raw materials, capital goods, intermediate goods and finished goods.
The Common External Tariff structure which is meant to promote value addition in the COMESA region and is such that the tariff rate for raw materials and capital goods is 0%; that of intermediate goods is 10%; and that of finished goods is 25%. The COMESA Council of Ministers adopted the structure of the CET in May 2007 and provided for flexibilities according to which Member States can designate some products to be sensitive. Sensitive products will be given differential treatment in terms of application of the CET.

The three-year transitional period which started from June 2009 when the Customs Union was launched, was granted to allow Member States to identify and submit their sensitive products and tariff alignment schedules. In addition, the transitional period was granted to allow for countries to align their national tariffs with the COMESA Common Tariff Nomenclature (CTN) and the COMESA CET.

The COMESA Customs Union builds on the Free Trade Area which COMESA successfully launched in 2000.
The benefits of COMESA Customs Union  to the region include the following:
a)                Producers will get a large and wider market and can thus produce more goods;
b)               A large single market will encourage mass production of goods and services thereby lowering the cost of production by taking advantage of economies of scale.
c)               The COMESA Customs Union, through the CET, offers equal protection to all manufacturers against third country imports and minimises the possibility of transhipment or trade deflection.
d)               Through the CET, COMESA Customs Union will level the economic environment and promotes fair competition by reducing disparities in production costs for manufacturers in the various countries with regard to taxes on imported raw materials and intermediate goods from third countries.
e)               By offering a large market with harmonised trade policy, COMESA Customs Union has the potential to attract foreign investment seeking to exploit a large market.
f)                Traders will get wider choice of goods from the countries in the COMESA Customs Union;
g)               Traders will experience lower transactions costs and fewer delays at the borders due to the harmonised customs and other procedures.
h)               The countries by joining forces and having harmonised trade policy with a COMESA Customs Union against third parties will have a stronger voice in international forums.

Monday, August 8, 2011

Asia Leading in New Preferential Trade Integration Agreements-WTO Report

According to the WTO report, Asia is leading in new preferenatial trade integration agreements. The World Trade Report 2011, which was presented to United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) members on 27 July 2011 in Bangkok, observes that Asia is leading in new trade integration agreements. Asian countries have become some of the most active in signing preferential trade agreements (PTAs). They have been party to almost half the preferential trade agreements concluded in the last 10 years. This has contributed to the increased concentration of trade within the region — second only to Europe in 2009.
Burgeoning bilateral and regional trade agreements meet the need to regulate global production and can benefit non-members, but the WTO’s multilateral system also has a role in reducing the resulting complexity, according to the latest edition of the organization’s flagship publication released on 20 July 2011 in Geneva.
Although Asia is leading in preferential trade integration agreements, it seems that most of the countries are also in pursuit of deeper integration by going beyond tariffs and other measures at national borders. Preferential trade integration agreements increasingly are including domestic policies such as regulations on services and investment, intellectual property protection and competition policy, which the report calls “deep PTAs”. “These trends raise vital questions about the focus and reach of the WTO, and the value assigned by governments to globally-based trade relations,” Director-General Pascal Lamy said.


Read more on why Asia is leading in new preferential trade integration agreements


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