VENDREDI 06 NOVEMBRE 2020 BIZWEEK ÉDITION 315 ACTA PUBLICA COMMERCE AND DEVELOPMENT OMC members talk about essential role of investment to increase commercial capacities of small economies On 2nd November, members of the World Trade Organization expressed their views, during a committee held on small economies, regarding difficulties faced by the latter to attract foreign investment – more particularly in context of COVID-19 pandemic. Three members of the WTO’s Small, Vulnerable Economies (SVE) Group – El Salvador, Guatemala and Saint Lucia – presented initiatives they have taken to increase foreign direct investment (FDI) in order to expand their trading capacity and support economic diversification Members of the World Trade Organization and part of its Small, Vulnerable Economies (SVE) Group, El Salvador, Guatemala and Saint Lucia, stressed the need to modernize their countries’trading and investment infrastructure, build resilience to external shocks and increase the predictability of investment opportunities. The three countries also expressed concern about rising protectionist measures and plummeting FDI as a result of the COV- ID-19 pandemic. They stressed the significance of the United Nations Sustainable Development Goals and the WTO negotiations for a multilateral agreement on investment facilitation for development, in which 105 WTO members are participating. A number of participants stressed the importance of implementing the WTO’s Trade Facilitation Agreement (TFA). The United States drew attention to the recent joint communication by Australia, Brazil, Colombia, Japan and the United States on accelerating implementation of the Agreement in light of the COVID-19 crisis to help economies gain access to essential products. Reference was also made to the significant role the WTO-led Aid for Trade initiative can play in mobilizing resources to improve FDI flows into developing countries and least-developed countries (LDCs). The WTO Secretariat noted the importance of FDI regulatory frameworks and investment facilitation policies. It was pointed out that enhanced cooperation at the cross-border and domestic level can help facilitate investment and generate more trading opportunities. Efficient authorization procedures are also very important, notably through the use of electronic processes. The International Trade Centre (ITC) explained how the organization is helping Mongolia, Mozambique, Zambia and other developing countries identify and implement investment facilitation measures and strategies. The ITC referred to the challenges faced by small businesses in terms of identifying and screening investment flows and their lack of access to finance. It also noted the significant revenue source that FDI represents for developing countries and LDCs. The United Nations Conference on Trade and Development said market indust ry opporrunmes fi Dry eveakness statistics week's identify market discover 4- inveSt°°— threalsaa threats idefeify Ca ruon.1.1,1, C £2 oppoeunities rI }r M investigation *0 information research Invest cp IA " c ; Lies +.0 5 V)rformedo At g > Cm. fi: - information cons consumer 76 analyssif ID c c opportune. pote ai finance 441 171 M'AIL that small economies have only a 1.3 per cent global share of FDI inflows. It added that investment flows into SVEs declined by 17 per cent during the first half of 2020, dropping from USD 9.8 billion to USD 8 billion. Among the challenges faced by small economies are connectivity issues due to geographical and infrastructure constraints, vulnerability to natural disasters and climate change, and Strategic choice of trading partners key to prosperity of nation «The prosperity of any nation no longer depends on a country’s productivity but on the strategic choice of trading partners, export products and policies that promote trade. Trade contributes towards industrialization and structural transformation. Kenya is one of the leading importers of raw materials and intermediate inputs for manufacturing within the COMESA region. This makes COMESA an important Free Trade Area (FTA) for Kenya.» These remarks were made by Ms. Phyllis Wakiaga, Chief Executive Officer, Kenya Association of Manufacturers (KAM), during a meeting held recently between COMESA Business Council (CBC) and the Kenya Association of Manufacturers, to discuss the status of trade at the port of entries in Kenya, following the country’s swift response to resolve a situation where non preferential customs duties were applied on COMESA origin goods by the Kenyan customs authorities. In 2019 Kenya’s total trade with COME- SA was worth US$ 2.8 billion. Exports to COMESA were worth US$1.6 billion, which constitutes 27% of Kenya’s total exports ; imports stood at US$1.2 billion and COMESA has a market share of 7%. In fact, Kenya is ranked the second exporter and third importer in terms of COMESA intra trade. Kenya’s key trading partners in COMESA are Uganda, Rwanda, Egypt, DRC, Kingdom of Eswatini, Mauritius and Zambia. On the 8th of September 2020, the COMESA business community awoke to a situation where non preferential customs duties were applied on COMESA origin goods by the Kenyan customs authorities. This affected the imports of goods, that were stuck at the various ports of entry in Kenya. Through various advocacy efforts, CBC engaged with Kenya Association of Manufacturers (KAM) on the matter. KAM is the National Focal Point and Vice Chair of Board of Directors. Following this, among other engagements between COMESA and Government of Kenya, the matter was swiftly resolved. By the 18th September 2020, Kenya government instructed all cargo release processes to effectively and expeditiously implement the EAC legal notice No. EAC/180/2020 the difficulty of attracting funding. UNCTAD also stressed the need to build partnerships with bigger economies and emphasized the important role played by investment promotion agencies. published on 15th September, to grant preferential treatment on goods meeting the criteria of the COMESA rules of Origin. The instructions further guided that all goods from COMESA member states shall continue enjoying preferential treatment as per pre-existing arrangements. The Government of Kenya remains committed as a member of COMESA. Ms. Phyllis Wakiaga explained how KAM effectively dealt with the above business challenge. «As I mentioned earlier, trade is a critical component, contributing towards industrialization. The application of the non-preferential custom duties on goods originating from COMESA by the Government of Kenya, following the lapse of the 31st December 2019 deadline, dealt a huge blow to local industries who depend on the FTA for industrial inputs. We laud the speedy intervention on the matter by the Government of Kenya and the Partner States, which resulted in the extension provided by the EAC Secretariat. Since the gazettement of the extension, local industries have managed to get back to business.» 3