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Economy

Move and Counter-move

Osama Rizvi

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] T [/yt_dropcap] he world has always been an inquisitive olio of kaleidoscopic diplomacy. After the World War-1 we saw how nations toggled between alliances and camaraderie betwixt one another as globalization begun to spread its thousands of tentacles around the world. With the proliferation in technology, scarcity of resources and blurring of the boundaries the aforesaid trend has only gained more momentum and today we live in a world that is intricately connected.

A huge nexus. Tweak one string and the whole web vibrates. There were blood-wars in the past. Now there are trade-wars. The paradigm shift has caused many countries to cash in the benefits of trade blocs. Lo and Behold! Welcome to the era of Economic Integration. Here tariffs are the ammunitions and trade-areas bombs. Ladies and gentleman, welcome to the world of ‘soft-power’.

Today the largest trading nation with a GDP of more than $17 trillion USA stands as The Business Hub. China, yes, their oriental rivals. The recent rise in the populist narrative has raised some eye-brows across the world. USA was ringing with the “Make America Great Again” slogan and people were moved by the promise to “bring back our jobs”. So, we have the estate Mogul, Mr. Trump, as the president-elect who will assume office on 20th January, 2017. He has made few ambitious announcements and revealed some revolutionary plans. But it is often that what politicians use political sloganeering is in reality bitter paragraphs. His claims to repeal the Trans-Pacific Partnership (TPP hereinafter) has, inter-alia, send ripples across the seas reaching directly to their Far-Eastern and Pacific countries who are now confounded and incensed. Dislocating the President Obama’s “pivot to Asia” is not a small matter.

TPP is a trade deal that covers almost 40% of the world’s trade and includes 12 countries: Canada, Mexico, Brunei, Malaysia, Vietnam, Australia, New Zealand, Japan, Chile, Peru, Singapore and US. The trade deal has been finalized but this deal with 30 chapters running into 5000 pages needs to be ratified by at-least 6 member countries that constitutes 80% of the groups trade output. US alone constitutes 55-60% of it. Hence, its absence will certainly repudiate the deal. This has left many of the member countries pondering at the actual implementation of the deal.

Enters China, to the rescue of their neighbors and as well as other countries, holding a file titled: Regional Comprehensive Economic Partnership (RCEP). As I mentioned in the start, moves and counter moves. Chinese leadership is all ready to fill in the impending and expected void if created by president elect Mr. Trump. RCEP involves members of ASEAN plus India, Australia and New Zealand, South Korea, Japan and evidently, China. Seven of the countries superimpose each other in both the deals. However, there are few political and regional nuances that might come into effect as, and if, the deal progress. The first thing is the issue of South China Sea. Philippines, Malaysia and Vietnam all have laid claim on this significant trading route which hosts $5trillion of trade annually. The recent election of Mr. Dutetre in Philippines may help ameliorate the growing acrimony but the territorial infringement remains there. One thing China might be doing by peddling this RCEP is to solve this issue in its [RCEP] guise. As the economic bond with all the ASEAN countries which also includes the above three bolsters, the virtues of economic integration play their role. One of which is that the countries engaged in bi-lateral trade very rarely go to war or in conflicts with each other. Secondly, as the deal is “backed” by Beijing it might abet Chinese influence and legality in the trading bloc. Another intriguing partner is the Southeast Asian nation, India. India and China has engaged in word war from decades over the border claims. Also, both occupy the top slots for being the most populous countries in the world. Free movement of people can create a lot of issues. The domestic industries may also be effected. For the rest of the member countries all is hunky-dory. Both the trade deals have an equipoise importance.

TPP represents 13% of global trade and RCEP 12%. TPP countries are slow growing as compared to the RCEP ones. RCEP will cover almost half of the world’s population and TPP covers more than 800 million of people. But TPP tends to cater trade between richer countries than RCEP. The benefits yaw from one bloc to another. It is not about TPP or no TPP or RCEP. But it is certainly about the question: who writes the rules for the trade in Pacific. USA and China both are well acquainted of the significance of the region and hence, Mr. Trump’s revolting mindset is a cause of concern and surprise for many. He must know that if USA doesn’t than China is ready to ‘write down the rules’. The geopolitical, social and economic axis can shift and the gyrations may prove costly for the police man of the world. But we have to wait and see how much coherence the president-elect can instill in his pre-office and post-office life. This is a world today. Of trade clouts and economic weapons. I am not sure whether the US will continue to tread upon the precarious path adduced by Mr. Trump. But given his tilt for economic nationalism it is not hard to imagine that the biggest trade deal ever will see its demise very soon.

Independent Economic Analyst, Writer and Editor. Contributes columns to different newspapers. He is a columnist for Oilprice.com, where he analyzes Crude Oil and markets. Also a sub-editor of an online business magazine and a Guest Editor in Modern Diplomacy. His interests range from Economic history to Classical literature.

Economy

Russians Need to Strategise Trade with Africa

Kester Kenn Klomegah

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Russian business lobbying groups, together with about 40 business and industry heads, have shown interest in exporting their products to markets in Africa but found it difficult to access facilitation procedures in some of the countries.

To understand some of the processes and procedures, Nonna Kagramanya, the Vice President of Delovaya Rossia (Business Russia), moderated a special seminar to constructively discuss emerging issues and possible solutions on various foreign economic tracks. Representatives of governments, development institutions, private businesses as well as Southern and Eastern African diplomats attended the event.

She said despite the relatively small trade turnover with African countries, Russian companies were very interested in establishing stable long-term contacts with African partners.

As a first step, Ms. Kagramanya proposed the creation of a permanent discussion-line for all interested participants of the seminar to discuss a set of priority problems and barriers when working with Africa.

Polina Slyusarchuk, Head of Intexpertise (St. Petersburg-based African focused Consultancy Group), questioned whether Russia has a broader Africa policy or long-term strategy in there.

“Today, Russia wants to deepen its understanding of the business climate and explore trade and partnership opportunities in Africa,” she underscored.

While meetings organised between Russia and Africa have to be used to discuss thoroughly how to trade, efforts should be made to remove or lessen some of the barriers for mutual benefits. Now Russia’s main goal is to decide what it can offer that foreign players haven’t yet been made available in the African market.

Contributing to the discussion, the General Director of Intelnexus, Anatoly Yakimenko, introduced the participants to the opportunities for the development of Russian-African business cooperation, noting the favourable and hindering factors in the African market.

He stressed the need for potential exporters of Russia to adopt high-tech production and solutions to expand initiatives for more effective positioning of high-tech companies in Africa.

The Deputy Director of the Department of Asia, Africa and Latin America of the Ministry of Economic Development of the Russian Federation, Alexander Dianov, spoke about the non-financial support measures for Russian companies operating within the department.

“Currently, there are 10 intergovernmental commissions between the Russian Federation and African countries,” he said.

At the same time, he said: “There are trade missions only in four African countries, and if you take sub-Saharan African countries, the trade mission operates effectively only in South Africa. It is obvious that there is something to work on in terms of developing the infrastructure to support Russian businesses. If there is a serious request from the business community, we are ready to expand the geography of our presence.”

A representative of the Russian Export Centre (REC) in Africa, Dmitry Suchkov, drew the attention of companies to the need for in-depth analysis of national programmes of economic and investment development of African countries.

He spoke about the initiatives of the Coordinating Committee for Economic Cooperation with Sub-Saharan Africa.

Natalia Zaiser, the Chairperson of the Board of the African Business Initiative, pointed to the problems of ensuring security and stable “rules of the game,” as well as the need to identify five priority areas of business cooperation on the medium and long term perspectives for individual countries.

Representatives of the embassies of Rwanda, Tanzania and South Africa spoke about the integration processes on the African Continent, the potential of regional markets and national development initiatives.

Members of diplomatic missions also noted the greatly unrealised potential of cooperation between Russia and African countries, and interest in attracting investments in infrastructure, education and many other sectors.

They called for a wider interaction between African business circles and Russian businesses.

During the discussion, the participants mentioned high import duties, complicated certification procedure, high cost of products, expensive logistics, security and guarantee issues, and information vacuum as some of the barriers to Russian-African trade and economic cooperation. However, the participants agreed on the need to develop a comprehensive strategy for Russia to work with Africa.

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Economy

Curating a Vision with Young African Entrepreneurs

Jenni Jostock

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How can young people be involved in creating a future of work that is decent, equitable and bright? This November I was fortunate enough to take part in an event with this mandate at its heart.

The Youth Entrepreneurship and Self-Employment Forum (YES Forum) in Dakar, Senegal was co-organised by the ILO and our partners in the Global Initiative on Decent Jobs for Youth. It was a collaborative effort supporting young entrepreneurs in the region, and it was a joy to see this vision becoming real during the two-day event – with young entrepreneurs shining at different stages of the YES Forum.

More than 30 young entrepreneurs took on active speaking roles across the discussion sessions, a “Dragon’s Den” style pitching competition, and the Marketplace. This Marketplace offered participants the opportunity to float in between booths and to have one-on-one interactions with the presenting entrepreneurs and organisations.

The vibrant tone was set at the very start, with all participants given hand-made, customised notebooks, the product of an all-female team led by entrepreneur Ndey Fatou Njie for her business TIGA Gambia. TIGA Gambia is now an all-around fashion and accessories retailer, but originally zoomed in on providing locally-inspired swimwear – a large market gap that Ndey spotted and filled!

Not only were the TIGA Gambia notebooks a showstopper, they were also a colourful and popular extension of the empowering message of the YES Forum.

The innovative and vibrant spirit of entrepreneurs in their element was palpable all through the Forum, but shone particularly during the networking lunch and the Marketplace. It was difficult to lure the participants back into the plenary after these events, because they were so busy talking, forging synergies and building contacts.

While the young entrepreneurs embraced their speaking opportunities to the fullest, they also created a wonderfully inclusive setting that allowed everyone’s successes to be seen and recognised. I was particularly touched when the pitching competition winner, Malick Diouf, CEO of LAfricaMobile, immediately called his three competitors onto the stage to congratulate them on their incredible work.

Malick was humble about his win but his company deserves a special shout-out. LAfricaMobile serves as a digital bridge between African media publishers and organizations wanting to disseminate their content to the African diaspora. As a comms aficionado I was particularly impressed by how effortless their SMS service is in helping the African diaspora connect to what is going on in their home countries.

All in all, the YES Forum left a lasting impression on me for two reasons: Firstly because of the level of mutual support and cooperation that the young entrepreneurs showed, and secondly because the Forum truly catered for these young entrepreneurs and allowed them to share their stories and to explore collaboration. I believe it will leave a lasting result – of stronger alliances and greater empowerment.

Mariama Johm, founder of Afri Taste, a Banjul health joint that combats fruit and vegetable waste, summed up the atmosphere in her remarks during the Young Global Entrepreneurs panel: “I am glad we have the youth actually speaking here. We, young entrepreneurs, want to speak and let policymakers hear from us – not only here, but we want to make governments take into consideration what we are saying and that they should not make decisions on our behalf.”

ILO

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Economy

Easing US-China trade tensions could save millions of jobs

MD Staff

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Millions of jobs in the Asia and Pacific region have been put at risk by conflicts over trade, despite a recent agreement not to escalate tit-for-tat tariffs by the United States and China, according to a new regional UN report.

The 2018 Asia-Pacific Trade and Investment Report, issued by the UN’s development arm in the region, ESCAP, suggests that an escalating “tariff war” and resulting drop in confidence next year, could cut nearly $400 billion from the global gross domestic product, drive regional GDP down by $117 billion.

“As production shifts take place and resources are reallocated across sectors and borders due to the trade conflicts, tens of millions of workers may see their jobs displaced and be forced to seek new employment,” said Mia Mikic, the head of Trade, Investment and Innovation Division at ESCAP.

That said, the report also noted trade tensions have already had had a major impact, resulting in disruptions to existing supply chains and dampening investment. Trade growth slowed after the first half of 2018, and foreign direct investment (FDI) flows to the region are also expected to continue on a downward trend next year, following a 4 per cent drop overall this year.

In such a scenario, regional investment will be key to creating new economic opportunities, says Ms. Mikic, adding that “complementary policies” such as labour, education and retraining, and social protection measures must be placed high on the policymaking agenda.

This is also critical for ensuring progress on implementing the Sustainable Development Goals (SDGs), she said.

ESCAP has also called on countries to take full advantage of all existing initiatives to strengthen regional cooperation, including a new UN treaty on digitalizing trade procedures and enabling cross-border paperless trade in the zone.

‘Trade war’ has no winners

The report has also underscored that neither China nor the US can win a “trade war”, explaining that “both will see significant economic losses from continuing conflict.”

It also finds that implementation of mega-regional trade agreements such as the Regional Comprehensive Economic Partnership, among the Association of South-East Asian Nations (ASEAN) and its six partners – Australia, China, India, Japan, New Zealand and the Republic of Korea – could offset much of the economic losses from trade tensions.

The 2018 report estimates that implementation of such agreements could boost exports by 1.3 to 2.9 per cent and add 3.5 to 12.5 million jobs in the Asia-Pacific.

ESCAP, or the Economic and Social Commission for Asia and the Pacific is largest among UN regional commissions. Its 53 member States and 9 associate members span a geographic area from the Pacific island of Tuvalu in the east to Turkey in the west, and Russia in the north to New Zealand in the south. The region is home to nearly two-thirds of the world’s population.

In addition to countries in the Asia-Pacific region, ESCAP’s membership also includes France, the Netherlands, the United Kingdom and the US.

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