Nigeria, Others Advised To Unlock $1.34trn Revenue Via Policies Implementation
The African Development Bank Group(AfDB) has urged Nigeria and other African countries to implement the World Trade Organisation (WTO) Trade Facilitation Agreement and four other trade policies.
The multilateral agency stressed that doing so could bring Africa’s total gains to 4.5 per cent of its gross domestic products (GDP), or $134 billion a year and $1.34 trillion in 10 years.
In a report on African economic outlook, AfDB noted that the first expected outcome of an effective preferential trade agreement is an increase in trade among members through three channels.
Nigeria had in January this year in Davos, Switzerland, ratified the Trade Facilitation Agreement (TFA) of the World Trade Organisation (WTO), making it the 107th WTO member to do so.
Only three more ratifications from member countries are needed to achieve the two-third threshold required to bring the treaty into force.
Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit.
The agreement sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
It also contains provisions for technical assistance and capacity building in this area, and has the potential to increase global merchandise exports.
According to the AFDB, “First is eliminating all of today’s applied bilateral tariffs in Africa. Second is keeping rules of origin simple, flexible, and transparent. Third is removing all nontariff barriers on goods and services trade on a most-favoured-nation basis.
“Fourth is implementing the WTO’s TFA to reduce the time it takes to cross borders and the transaction costs tied to nontariff measures. Fifth is negotiating with other developing countries to reduce by half their tariffs and nontariff barriers on a most-favoured-nation basis.”
The first two, it explained, are the outcomes of measures taken under shallow integration, and the third is associated with deep integration.
It added: “As an extension of regional integration, monetary unions in Africa are seen as a way to achieve prosperity and better governance, sparked to some extent by the example of European monetary integration. But African monetary unions have underperformed, failing to bring about economic prosperity and poverty reduction.
“In many cases, even the weaker requirements of free trade areas and customs unions have not been met. Yet African political leaders have consistently chosen to forge ahead without first taking the bold institutional and economic coordination measures that would enable monetary unions to strengthen integration in Africa.
“In the absence of true fiscal and economic coordination, the opportunity cost of maintaining a single currency can be high. While the treaty creating the African Union envisions a single currency for Africa, and many Regional Economic Communities (RECs) have plans to create regional currencies, these plans are in most cases more aspirational than concrete guides to national policy.
“Countries need to implement the institutional building needed to make a monetary union successful, such as close coordination of banking supervision, a willingness to come to the assistance of countries in economic crisis, and political federation to coordinate fiscal policies and control deficits.”
Regional integration, the AFDB stated, has always been about more than market access adding that regional cooperation has always been important, “if only because of the need for rail, roads, and other means of communication, and it is now attracting more attention on several fronts.
“Beyond the eight RECs and seven other regional organisations aiming at deepening intra-regional trade, the majority of regional organisations deal with regional public goods: deal with; energy, the management of rivers and lakes, peace and security, the environment. Collective action by governments in the region should create positive spill overs across the region that are greater than the spill overs that individual governments acting alone could generate.
“This requires regional governance by a regional body with real authority over member states to deliver regional public goods. States must be willing to cede a significant amount of authority to the body, something that has so far occurred only in the European Union.
That is why most regional cooperation is intergovernmental. Each state retains veto power, and the regional organisation is a secretariat to coordinate and harmonise policies, set standards, and provide services but with no authority.”