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Brexit Negotiators Reach Outline of Historic Trade Accord

Today, 23rd December U.K. and European Union negotiators have reached the outline of a post-Brexit trade agreement, and are now working to finalize the wording of the deal after almost ten months of often fraught deliberations.

The accord still needs to be approved by British Prime Minister Boris Johnson and the EU, according to officials with knowledge of the matter. That means the deal could still fall apart, and any announcement could be some hours away, they said.The pound soared, advancing by as much as 1.6% to $1.3571, for its biggest intraday gain in more than a week. The yield on 10-year U.K. government bonds was poised for the biggest gain since March.Johnson and European Commission President Ursula von der Leyen intervened personally in recent days, holding several phone conversations in a last-ditch bid to reach an agreement before the U.K. leaves the single market at the end of the month.

Negotiations resumed early on Wednesday in the commission’s Berlaymont headquarters in Brussels, with discussions focused on what access EU boats will have to British waters, and what rights the EU will have to impose retaliatory tariffs should the U.K. limit that access in the future.

Both sides have made an agreement on fishing a precondition for any wider deal over their future relationship, even if the 650 million euros ($790 million) of fish European boats catch in U.K. waters each year is a fraction of the 512 billion euros of goods traded annually between Britain and the EU.

Michel Barnier, the bloc’s chief negotiator, told a meeting of ambassadors from the 27 EU member states Tuesday that there had been progress in the talks, and a deal could be signed before Christmas — if the British are prepared to compromise further on fishing, according to diplomats briefed on the discussions. The talks could continue beyond Christmas, or fail completely, he told the private meeting.

Senior EU officials said the decision lies with Johnson, while people familiar with the British side said the onus was on the Europeans to move.

Diplomats in the EU’s working group have discussed how a potential agreement could be put into effect by Jan. 1 even though there isn’t enough time for formal ratification by the EU Parliament. While such procedural preparations aren’t in themselves proof a deal has been reached, they signal that the bloc is preparing for one.

If an agreement is struck, the commission will publish the draft unofficial text and send it to member states and the European Parliament, according to a diplomat briefed on the preparations. EU government envoys in Brussels will have two days to discuss and approve the draft, according to the plan. Then a written procedure for the signing of the free trade agreement will follow, so that it can be published in the official journal of the European Union by Dec. 31.





EU Commission publishes guidance on key provisions of EU Global Human Rights Sanctions Regime

On 18 December 2020, the European Commission has published guidance on the implementation of specific provisions of Council Regulation (EU) 2020/1998 concerning serious human rights violations and abuses.

The Guidance Note seeks to address the questions most likely to arise in the implementation of these new sanctions. It includes information about the scope of the financial restrictions therein and their application. It also explains in detail the responsibilities of those who must comply with the Regulation, covering notions such as ownership and control, and the functioning of derogations[1].

Josep Borrell, High Representative of the Union for Foreign Affairs and Security Policy/Vice-President for a Stronger Europe in the World, said: “The EU Global Human Rights Sanctions Regime sends a clear message to those responsible for serious human rights violations and abuses. It is a sign of our determination to take action and to hold those responsible for violations and abuses accountable. This Guidance Note seeks to ensure that we provide the necessary information to EU operators to facilitate/ensure their compliance.”

Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “The proper implementation of EU sanctions is a priority. For the first time, a new EU sanctions regime is accompanied by a Guidance Note, to ensure uniform implementation from the outset. The Commission remains open to the views of operators and national authorities, and will continue issuing guidance and opinions to ensure that EU sanctions are targeted and effective.”

For more information on the Guidance Note:

Commission guidance note on the implementation of certain provisions of council regulation (EU) 2020/1998 (europa.eu)

EU sanctions are a foreign policy tool, which, among others, helps to achieve key EU objectives such as preserving peace, strengthening international security, and consolidating and supporting democracy, international law and human rights. Sanctions are targeted at those whose actions endanger these values, and they seek to reduce as much as possible any adverse consequences on the civilian population. The EU has about 40 different sanctions regimes currently in place.

On 7 December 2020, the Council adopted a Decision and a Regulation establishing the EU Global Human Rights Sanctions Regime. The regime enables the EU to target individuals, entities and bodies – including state and non-state actors – responsible for, involved in or associated with serious human rights violations and abuses worldwide, no matter where they occurred. It applies to acts such as genocide, crimes against humanity and other serious human rights violations or abuses. Other human rights violations or abuses can also fall under the scope of this sanctions regime, if they are widespread, systematic or otherwise of serious concern as regards the objectives of the EU common foreign and security policy. The sanctions consist of travel bans applying to individuals, and freezing of funds applying to both individuals and entities. In addition, EU persons and entities will be prohibited from making funds available to those listed, either directly or indirectly.

In the context of this regime, for the first time, the Commission is publishing guidance on the implementation of a Council Regulation on sanctions immediately after its adoption. The present Guidance Note reflects the more common questions received by the Commission in the context of other sanctions regimes, chiefly from EU banks and SMEs, but also from private citizens and NGOs. Many of these questions refer in particular to the humanitarian derogation and other exceptions; to financial transactions with persons linked to those who are listed; and to specific concepts such as the anti-circumvention clause. In turn, the purpose of the Note is to help prevent the more common implementation issues that EU operators can face when applying EU sanctions. More detailed analysis, on a case-by-case basis, can be sought from National Competent Authorities (NCA) in the Member States. The Note may be updated at a later stage, in light of possible new questions received from EU operators and NCAs.

The Commission is also working closely with Member States to ensure that national procedures for authorisations are transparent, and that the Regulation is uniformly implemented throughout the EU.

EU Chronicle



EC Publishes Regulation (EU) 2020/2171 of the European Parliament and of the Council of 16 December 2020 amending Annex IIa to Council Regulation (EC) No 428/2009 as regards granting a Union General Export Authorisation for the export of certain dual-use items from the Union to the United Kingdom of Great Britain and Northern Ireland

Full text of the regulation :   EUR-Lex – 32020R2171 – EN – EUR-Lex (europa.eu)



Middle East

Iran launches ‘indirect talks’ with US President-elect Joe Biden

Iran has opened indirect dialogue channels regarding the nuclear deal with the administration of US President-elect Joe Biden, Israel’s Walla reported on 21st December.

Quoting Israeli security officials, the news website said that the US Chief of Staff,  Mark Milley, and his Israeli counterpart, Aviv Kochavi, had a “lengthy professional discussion on Iran’s deal, with participation of a number of Israeli military leaders.”

The report pointed out that Kochavi also discussed “security developments in the region, the Iranian presence in Syria, ballistic missile projects, and common security challenges that the Israeli and American militaries would face in 2021.”

In May 2018, US President Donald Trump unilaterally withdrew from the Iranian nuclear deal which was signed by world powers including Germany and the UK. He subsequently imposed “unprecedented” sanctions on the Islamic Republic. In response, Tehran was said to have breached many of the deal’s core restrictions on its nuclear activities, noting that its breaches could be reversed if Washington’s moves are undone.

Biden, who takes office on 20 January, said he will bring the United States back into the deal if Iran resumes full compliance with its nuclear restrictions.




Africa Readying for Free Trade, Come January 2021

Accra-based coffee and cocoa trader Meron Dagnew at the Secretariat of the African Continental Free Trade Area (AfCFTA). Credit: Africa Renewal

UNITED NATIONS, Dec 14 2020 (IPS) – One day in February 2020, Accra-based coffee and cocoa trader Meron Dagnew visited the Secretariat of the African Continental Free Trade Area (AfCFTA) to introduce herself, even before the Secretariat was fully operational.

“I couldn’t wait,” she told Africa Renewal in a recent interview “I need free trading in Africa to begin as quickly as possible; it will be so good for my business.”

The AfCFTA Secretariat officially opened in Accra on 17 August 2020, although, because of the COVID-19 pandemic, free trading will now begin on 1st January 2021 instead of the originally scheduled date of 1 July 2020.

Ms. Dagnew is eager to take advantage of reduced tariffs and a consolidated market — potential spinoffs from AfCFTA — to expand the operations of her company, BE Kollective that imports Ethiopian coffee to Ghana and exports Ghanaian cocoa to Ethiopia.

“I am hoping to not pay as much as 35 per cent tariffs on my goods; I am hoping that soon I can take my value-added cocoa and coffee to African countries without problems of rules of origin. I could then make more profit, expand my business and hire more people,” she says.

Ethiopia is one of the world’s largest coffee producers and Ghana is the world’s second-largest cocoa producer, after Côte d’Ivoire. Ms. Dagnew is particularly attracted to West Africa’s market of 380 million people.

High tariffs and non-tariff barriers such as customs delays and administrative bottlenecks at border posts underscore the challenges facing African traders and at the same time accentuate a strong desire by traders for a free trade zone.

The AfCFTA eliminates tariffs on 90 per cent of goods produced on the continent, tackles non-tariff barriers to trade and guarantees the free movement of persons.

Ms. Dagnew’s business slowed down in March 2020 just as the pandemic began to rage. As African economies start to slowly open while adjusting to the realities of the pandemic, Ms. Dagnew intends to restart trading soon.

Yet, she frets about other structural challenges to intra-African trade, such as the competition with big global brands that compete on an uneven playing field. For example, BE Kollective, according to Ms. Dagnew, competes with Nescafé, which is imported into Ghana by retailers.

“The problem is that importers of Nescafé from countries in Europe or Asia pay much less tariff than I pay because those countries have favourable trade agreements with African countries,” she stresses. “Therefore, the odds are currently stacked against us intra-African traders.”

Ms. Dagnew is also concerned that countries’ customs services lack adequate information about the AfCFTA.

“Not long ago, I went to the customs service in Ghana and told them I wouldn’t need to pay tariffs at some point because of AfCFTA. They didn’t understand what I was talking about,” she recalls. “There are many traders who have no idea what AfCFTA is all about.”

She recommends a massive information campaign to raise awareness of AfCFTA among customs services, traders and other key actors in countries participating in the free trade area.

Lack of infrastructure

A lack of adequate modern transport infrastructure also impedes traders’ desire to reap the full benefits of free trade, studies show. With the right transport infrastructure and high integration, manufacturers of consumer goods could earn up to $326 billion per year, according to McKinsey & Company, a US-based management consulting firm.

And according to the World Bank, it takes about three and a half weeks for a container of car parts to be cleared by Congolese customs. While East African countries Tanzania and Uganda have established a one-stop border post to slash time for cargo movement between them, new delays in the form of divergent standards for goods have quickly emerged, underscoring the mutating nature of non-tariff barriers.

African countries could rake in $20 billion yearly by simply tackling non-tariff barriers that slow the movement of goods, according to the UN Conference on Trade and Development, the UN entity that deals with trade investment and development issues.

The African Union (AU)’s efforts at boosting infrastructure through its Programme for Infrastructure Development in Africa (PIDA) are expected to yield the Lagos-Abidjan transport corridor, the Zambia-Tanzania-Kenya power transmission line, the Lagos-Algiers highway and the Brazzaville-Kinshasa bridge, among others.

But experts encourage individual countries to invest in modern port, airport and rail line infrastructure.

Women traders

Widely spoken about in intra-African trade conversations are the challenges that women traders face.

Women constitute 70 per cent of Africa’s informal cross-border traders, and according to a 2019 study by UN Women titled Opportunities for Women Entrepreneurs in the Context of the AfCFTA, African women traders often confront corruption, insecurity and sexual harassment.

The AfCFTA agreement itself requires countries to protect the vulnerable, including women traders, and to address corruption.

African states with bilateral trade agreements with foreign countries or other regions such as the European Union will need to walk a tightrope in meeting prior commitments while implementing the AfCFTA.

In February 2020, for instance, East Africa’s economic giant Kenya began bilateral trade talks with the US, a move seemingly at odds with the country’s commitment to Africa’s free trade area.

Optimistic projections of the benefits of Africa’s free trade are, in theory, based on orthodox economic calculations — a linear demand and supply correlation that may not fully encompass externalities such as the availability of countries’ implementation capacity, requisite infrastructure, policy coherence and so on.

The World Economic Forum signals that AfCFTA’s full and effective implementation is what will lead to its transformative impacts, meaning that its touted benefits are by no means guaranteed.

The Secretary-General of AfCFTA, Wamkele Mene, acknowledges the enormous tasks ahead. “We have to roll up our sleeves and work,” he told Africa Renewal in an earlier interview.

Yet there is much to celebrate regarding the free trade agreement. The pact consolidates a market of 1.2 billion people and a combined GDP of $2.5 trillion. It would represent the world’s largest trading block by the number of participating countries if all AU member states were to ratify the agreement.

While some 30 countries have so far ratified the agreement, more countries are expected to join the bandwagon when free trading begins and its benefits become tangible.

Mr. Mene estimates that intra-African trade could increase from its current 18 per cent to 50 per cent by 2030.

It will boost earnings for traders, strengthen Africa’s competitiveness in the global marketplace, foster export diversification and enhance value addition to produce and transform natural resources.

Because of the AfCFTA, Africa’s manufacturing output is expected to double to $1 trillion, creating 14 million jobs by 2025, writes Landry Signé for Brookings Institution, a Washington, D.C.-based think tank.

An industrializing continent will catalyze the agricultural sector. In the coming years, Mr. Signé anticipates, manufacturing will complement “agricultural production and agro-processing plants, which provide the food and energy to meet growing African and global demand.”

He adds that African youth engaged in computer software and apps development will seize the opportunity to produce “leapfrog” technologies to meet increasing domestic demand. In other words, good paying jobs will be created for the continent’s bulging youth population.

“Across all subsectors and countries, Africa’s industrial revolution appears imminent,” Mr. Signé declares, optimistically.

Meanwhile, African traders envisage the end of the COVID-19 pandemic or at least its receding soon. They hope the teething problems that arise will be tackled and that AfCFTA will be a shot in the arm for Africa’s development.

“It will be a dream come true for traders like me,” enthuses Ms. Dagnew.


We wish you a Wonderful Holidays and Happy & Healthy New Year 2021