1. The South African Institute of International Affairs “South Africa’s window on the world” Trade and Market Access Can China and Africa cooperate? Preparing for the Forum on China-Africa Cooperation Muldersdrift, Johannesburg, October 16-17

2. The South African Institute of International Affairs “South Africa’s window on the world” Overview  Context  China-Africa trade  Market access considerations  It isn’t all about goods?

3. The South African Institute of International Affairs “South Africa’s window on the world” Contrasting fortunes  China  Rapidly rising, modernising global power  Spectacular growth and poverty reduction  Expanding global footprint  Africa  Marginalized from global economy  Mired in poverty and chronic socio- political problems

4. The South African Institute of International Affairs “South Africa’s window on the world” China trades a lot… Source: TIPS, WTO

5. The South African Institute of International Affairs “South Africa’s window on the world” …much more than Africa Source: WTO

6. The South African Institute of International Affairs “South Africa’s window on the world” But China-Africa trade is booming Source: Sandrey (tralac)

7. The South African Institute of International Affairs “South Africa’s window on the world” And Africa is becoming more important to China Source: Sandrey (tralac)

8. The South African Institute of International Affairs “South Africa’s window on the world” Why? Source: Sandrey (tralac)

9. The South African Institute of International Affairs “South Africa’s window on the world” What about China’s (rising) importance to Africa?  Africa’s exports to China in 2004 = 6% of total African exports - this is more than triple the 2001 figure  Total trade with China (imports + exports) surged past expectations to reach about US$38bn by 2005 year  IMF predicts US$100bn by 2010  Generally good macro impacts  China has made concessions (duty free access on some African LDC exports)  China has cancelled debt (US$ 1.27bn to 31 African countries)  Official aid; lines of credit (Angola)

10. The South African Institute of International Affairs “South Africa’s window on the world” Market access considerations

11. The South African Institute of International Affairs “South Africa’s window on the world” Four broad areas  China’s impacts  3 rd country and domestic market impacts  Accessing the Chinese market  Trade policy  Business realities  The grey areas in-between  Accessing African markets  Other issues (e.g. multilateral cooperation)

12. The South African Institute of International Affairs “South Africa’s window on the world” ‘C’ is for ‘Competitor’  Or is it? Third country impacts are mixed  African and Chinese export profiles very different – thus little competition in 3rd markets  But most of the manufactures that African countries do export are exported by China too – especially labour-rich products, and especially where preferences have eroded Products and countries: leather (Nigeria, Ethiopia, Mali, Kenya); textiles (Zambia, Tanzania); clothing (Lesotho, Madagascar, Malawi, Mauritius, SA); aluminium (Cameroon, Ghana, Mozambique, SA)

13. The South African Institute of International Affairs “South Africa’s window on the world” Domestic markets?  Have to balance consumer gains (purchasing power) and producer gains (cheaper inputs) with producer losses (and associated employment, welfare effects)  Literature very thin  Given Africa’s chronic lack of production manufacturing capacity it seems the net effects have been mainly positive so far, especially in the so-called ‘white’ and ‘brown’ goods sectors  Makes some sense, since China’s export profile matches most African countries’ import profiles very well. That is, Africa (households and producers) was already importing these goods in large amounts, and is now doing so from China more cheaply  However, cannot ignore that China (and India) are integrating over 2 billion people into the global labour pool – this is and will continue to be a key driver of change worldwide

14. The South African Institute of International Affairs “South Africa’s window on the world” Is Africa winning or losing?  Kennan and Stevens (2005)  Identified Africa’s “winners” and “losers”  Net effects based on trade gains vs. losses  Gains: import large amounts of things that China exports and/or export things China imports in large amounts  Losses: Third and domestic market share loss and/or importing things China imports a lot of  “Winners” = those countries with more sectors recording gains than losses

15. The South African Institute of International Affairs “South Africa’s window on the world” ??? Surprisingly positive outcome Suspicious? No actual quantitative assessment – just counting sectors

16. The South African Institute of International Affairs “South Africa’s window on the world” Accessing the Chinese market  China joined the WTO in 2001  Terms of accession were harsh  China’s at-the-border protection is very low now, or will be soon  China’s tariff profile already very favourable to Africa’s exports  So what are we going to talk about?  Tariffs, tariff escalation, NTBs  Agriculture  Multilateral cooperation?

17. The South African Institute of International Affairs “South Africa’s window on the world” China’s tariff distribution

18. The South African Institute of International Affairs “South Africa’s window on the world” China’s bound tariff rates

19. The South African Institute of International Affairs “South Africa’s window on the world” China’s tariff escalation

20. The South African Institute of International Affairs “South Africa’s window on the world” Behind the border concerns  Significant gains to made from increased cooperation on (‘soft’) non-tariff barriers (NTBs)  Trade facilitation  Business practices  Business-government relations  Clearly a government-to-government process, but business must provide input  Australian model is commendable

21. The South African Institute of International Affairs “South Africa’s window on the world” Agriculture  Africa’s mid-term future?  This is a key area of relatively unexploited comparative advantage in Africa  The sector’s development is constrained by OECD subsidies and domestic supply-side issues  But China is a net food importer and this is likely to continue  China is most protective in these sectors  Still applies tariff rate quotas to wheat, corn, rice, edible veg. oils, sugar, wool, wool tops, and cotton  On sugar, the in-quota rate is 15%, while the out- of-quota rate is 50%

22. The South African Institute of International Affairs “South Africa’s window on the world” Other considerations  Exchange rate  Doha Round  G20  Africa’s ‘real’ interests?  China’s role thus far  China’s preference schemes  AGOA

23. The South African Institute of International Affairs “South Africa’s window on the world” Conclusions: more than goods?  Goods trade and market access is important  But, agriculture and minerals aside, goods trade out of Africa is not going to boom anytime soon  Many services are desperately needed for Africa’s short– and long-term development  So don’t forget them, especially the often much trickier market access issues associated with trade in them  Where can China and Africa cooperate in this field?  Education  Health  Hard infrastructure

24. The South African Institute of International Affairs “South Africa’s window on the world” Phil Alves alvesp@saiia.wits.ac.za