Trade agreements should offer all parties access to goods and services, access to markets and ease of doing business, and can cut trade costs by 15%. In sub-Saharan Africa, trade agreements have boosted intra-regional trade but it’s not all plain sailing.
As “Supply Chain Today” does its rounds at various conferences and seminars, we have put together some facts on intra-Africa and international trade.
Benefitting from signed agreements
According to Glyn Hughes, global head of cargo at IATA, the easiest part of a Trade Agreement is getting it signed – implementation is the hard part. Tleli Makhetha, general manager of SAA Cargo agrees, “Trade agreements don’t work if countries look at them in a selfish way and start tripping over each other. These agreements can only be successful through the desire and willingness of the member states to co-operate.”
Vladimir Zubkov, secretary general of TIACA (the International Air Cargo Association), points out that one of the lessons the aviation industry has learnt is that to benefit from trade agreements, you have to be in on the negotiations. His example – the transport industry.
“Dealing with issues like border control means the transport industry has to be involved at an early stage as they are the sector with a working knowledge of how moving goods across borders actually works.”
Politics, protectionism and trade
Global politics (Brexit, the election of Donald Trump as US President, increasing popularity of right wing political parties in Europe), seem to indicate a rise in protectionist policies, with the most well-known sentiment coming from the US – ‘America first’.
Will this impact global trade and trade agreements? No-one can answer this question with certainty.
“Bilateral agreements are very difficult to come up with and can be delicately balanced. A change of administration can really alter the goalposts,” Glyn explains.
But there are very few countries in the world that are self sufficient, and global trade looks likely to grow. “There is little evidence suggesting the end of globalisation,” according to the Boeing World Air Cargo Forecast 2016-2017 report.
“Advanced economies can still stave off the recent wave of protectionist sentiment and eventually conclude new large international free trade agreements. Additionally, many emerging markets continue to seek their economic fortunes by opening up to the world and growing their share of world trade.
“Global goods trade will likely grow around 4% per year in the absence of a major crisis.” In fact, global trade is now three times the level it was in the 1950’s.
Air cargo moves a third
How important is air cargo to global trade? The Boeing report found that air cargo accounts for under one percent of the volume of trade, but 35% in value.
The importance of civil aviation is not to be underestimated. When air traffic grows 1%, trade grows 6%. Says Glyn, “Those countries that support and understand the importance of air cargo give airlines and airports a chance to develop and support trade.”
Global growth in air cargo is just under 4%, Asia and North America are growing in excess of that number (6 and 5% respectively). But trade over our borders is still over-shadowed by that outside of the continent.
Europe is Africa’s main trading partner accounting for around 60% of all Africa’s trade, followed by Asia. Total intra-regional Africa trade accounts for 12%.
Importantly, the numbers are growing. According to the Boeing World Air Cargo Forecast 2016 – 2017, intra-regional Africa has rapidly expanded its share of African air trade in recent years.
Five cities dominate air cargo in Africa moving the bulk of the cargo: Lagos, Nairobi, Addis Ababa, Cairo, and Johannesburg.