Trade and Development Report on Africa and Environment

The UN Trade and Development Report 2009 was released. A few snippets highlights the worsening state of Africa and possible growth and development opportunities in addressing environmental concerns:

On Africa:

Falling GDP...

In Africa output growth is expected to slow down sharply in 2009, particularly in sub-Saharan Africa, where per capita GDP will actually fall.

Increasing food insecurity...

In 2009, food emergencies persist in 31 countries, and it is estimated that between 109 million and 126 million people, most of them in sub-Saharan Africa and South Asia, may have fallen below the poverty line since 2006 due to higher food prices

On the natural environment:

Climate change and development...

Increased efforts aimed at climate change mitigation can be combined with forward-looking development strategies and rapid growth in developing countries.

Market for ’environmental goods’...

At present, the global market for what is sometimes called “environmental goods” is clearly dominated by developed countries, but several developing economies already account for an increasing share of this market. For some countries, climate change mitigation offers new possibilities to exploit natural comparative advantages, particularly in the production of low-carbon energy, which so far have been of minor economic importance; for others it may offer opportunities to build new dynamic comparative advantages.

A proactive industrial policy with a special focus on using existing comparative advantages and creating new ones in the production of environmental goods is of particular relevance in the context of forward-looking development strategies, because the policy space for support measures in this area is less narrowly circumscribed by multilateral agreements than in other areas.

Climate policy and international trade

Policy instruments that are currently evaluated for a future climate policy regime include restrictions on international trade.  Some developed nations with stricter greenhouse gas reduction targets and policies argue that disincentives such as border measures for carbon-intensive production in other nations are needed. China, for instance, proposed that carbon should be disincentivised not at production, but when consumed. 

The international trade regime, however, is also an important consideration in this debate. A new paper Climate Policy Options and the World Trade Organisation foresees conflicts with WTO rules:

This paper examines whether the climate policy options policymakers are contemplating are compatible with core principles of the world trading system set forth in the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO), and Appellate Body decisions. The authors argue that border measures—both import restrictive measures and export subsidies—contemplated in US climate bills and the climate policies of other countries stand a fair chance of being challenged in the WTO. Given the prospect of foreseeable conflicts with WTO rules, the authors suggest that key WTO members should attempt to negotiate a new code that delineates a large “green space” for measures that are designed to limit GHG emissions both within the member country and globally. By “green space,” the authors mean policy space for climate measures that are imposed in a manner broadly consistent with core WTO principles even if a technical violation of WTO law could occur. To encourage WTO negotiating efforts along these lines, the authors recommend a time-limited “peace clause” to be adopted into climate legislation of major emitting countries. The peace clause would suspend the application of border measures or other extraterritorial controls for a defined period while WTO negotiations are under way. 

Roaring China-Africa trade in 2008

China-Africa trade increased by 45% from 2007 to 2008 - reaching a record $107bn in 2008. The biggest trading partners are Angola and South Africa. This places even more emphasis on the question whether these deals are sustainable (see earlier post: China: Doing Deals that last?)

From ChinaView:

BEIJING, Feb. 11 (Xinhua) -- Trade between China and Africa reached a record 106.84 billion U.S. dollars in 2008, up 45.1 percent from a year earlier, customs figures showed Wednesday.

    Exports to Africa reached 50.84 billion U.S. dollars, up 36.3 percent. Imports from Africa hit 56 billion U.S. dollars, up 54 percent.

    China had a trade deficit of 5.16 billion U.S. dollars with Africa in 2008, compared with a surplus of 940 million U.S. dollars in 2007.

    The number of African countries with which China had more than 1 billion U.S. dollars in trade increased to 20 in 2008 from 14 in2007.

    Angola remained China's largest trading partner in Africa and South Africa came the second.

H/T: Centre for Chinese Studies