in

   MarginUp Web Services

          The platform that enables you to take advantage of global supply chain

This Blog

Syndication

Global Trade

January 2012 - Posts

  • CISFTA – Free Trade Within the Russian Union

    The early 1990s saw drastic changes in global politics, trade, and geography in Europe and parts of Asia. With the dissolution of the Soviet Union, numerous independent states became recognized, and many would form an association of sorts to promote trade and financial support with each other and outside nations. The Commonwealth of Independent States, formed for the purpose of maintaining friendly relations among former Soviet territories, sought to create free trade boundaries with member nations, though this agreement was never officially ratified. Only recently have CIS nations consented to a formal trade agreement which will impact all members involved, in particular the Ukraine, which also seeks a relationship with the European Union.

    CISFTA

    CISFTA Member Nations

    Officially, only eight nations within the Commonwealth of Independent States are involved in the current free trade agreement:

    • Russia - Within the CIS, the Ukraine and Belarus are Russia's major trade partners. Known for its mining and agricultural industries, Russia exports iron ore and precious metals, as well as various machinery.

    • Ukraine - Ukraine is a major producer of coke and coal, and exports a good percentage of their petroleum and chemical output to Russia, the United States, and Germany.

    • Belarus - Largely industrial, Belarus relies on trade relations with Russia and the Netherlands as they export vehicles and machinery.

    • Kazakhstan - A smaller economy within the CIS, Kazakhstan produces on average 65-70 million tons of oil and gas condensate annually.

    • Kyrgyzstan - Kyrgyzstan encountered difficulties economically following the dissolution of the Soviet Union, but continue to grow slowly. Main exports include precious metals and hydropower.

    • Tajikistan - Turkey and Russia are major exports partners and benefit from Tajikstan's production of aluminum and cotton, among other agricultural crops.

    • Moldova - Moldova has struggled post-dissolution to establish a foothold in global trade beyond Russian borders, but has managed to export food and textiles to Turkey, Romania, and Germany.

    • Armenia - Metals and mineral mining are prime industries in Armenia. Russia, Bulgaria, and Germany are among their top trading partners.

    Current Issues Within CISFTA

    Foremost in the media regarding the CISFTA agreement is Ukraine's role and the effect, if any, it will have on relations with the European Union. While Ukraine's involvement in CISFTA should not negatively impact the deep and comprehensive free trade agreement with the EU, it should be noted that both treaties are important to the country. According to OdessaTalk, the bulk of Ukraine's trade, little over forty percent, is concentrated within the CIS borders. Trade with European Union members holds just under thirty percent, but could have the potential to grow. Should this potential be realized, one may find other member nations of CISFTA taking advantage of such a relationship.

    Compatibility of CIS nations with the procedures of non-member nations is key in forging successful trade relationships beyond the old Soviet borders. It is worth watching Ukraine closely to see if others in CISFTA follow suit.

  • CEMAC - Promoting the Resources of Central Africa

    The continent of Africa is perhaps the most diverse landscape on the planet in terms of natural resources and inhabitants. The Western perspective of Africa is likely so colored by media reports of internal unrest, drought, and poverty that one might be surprised to learn that some countries import and export billions of dollars' worth of goods annually. Indeed, among the nations that comprise the Economic and Monetary Community of Central Africa, there thrive a number of economies working together toward common goals to improve the region.

    CEMAC

    CEMAC has its roots in the Brazzaville Treaty ratified in 1966, which established the free trade area and eventually formed a common currency, the Central African Franc (French is one of the primary languages in the region). A little over a decade ago, the tenets of the CEMAC agreements took over the original treaty.

    The six member nations of the CEMAC trade agreement include:

    • Cameroon - Since gaining independence over fifty years ago, Cameroon has seen a steady increase in its GDP. While fishing is a large industry, the nation's exports are mainly comprised of petroleum and lumber and select crops.

    • Central African Republic - This landlocked nation relies primarily on agricultural industries to maintain its GDP. Main export crops include tobacco, coffee, and cotton, with nearly half of the goods traded to Japan.

    • Congo - The Republic of the Congo is comprised mainly of rain forests that support their timber industry, though petroleum exports play a sizable role in their export output.

    • Gabon - Rich in oil fields, Gabon exports several billion dollars' worth of petroleum product to main trade partners Russia, the United States, and China annually.

    • Equatorial Guinea - This nation is somewhat new to oil mining, with reserves discovered in the last fifteen years. Oil production has helped raise Equatorial Guinea's profile and GDP, though forestry and agricultural industries are also important to the economy.

    • Chad - Another oil-rich nation, the bulk of Chad's exports are traded to the United States, which has a large presence in the Republic via Exxon Mobil.

    Within this Central African community, goals include the establishment and growth of a common market to benefit member nations, continued stability of the CFA Franc, and harmonic political and social relations. Other goals set at the establishment of CEMAC, such as the elimination of tariffs within member nations' borders, however, have yet to be realized. Possible reasons for the delay may include unstable political conditions or external issues that downplay the CEMAC nations' merits and promotional endeavors. It is possible with the establishment of ECCAS (the Economic Community of Central African States), which will succeed the CEMAC treaty, these countries will see long-term goals come to fruition.

    At present, the region's overall GDP experiences a growth rate around four percent that may increase as demands on prized resources increases. Growth projection for 2012 sets the region at six percent, dismissing rumors of a devalued currency. One can hope this fortune is felt beyond this region's borders.

  • The SPARTECA Trade Agreement – Unrestricted Trade Access to the Pacific Islands

    People in the Western Hemisphere may consider Australia and New Zealand more as tourist destinations than viable, exporting trade partners. While it's true Australia alone enjoyed an increase in foreign visitors in the last year, one cannot rule out their contribution to the global economy. This isolated country/continent is ranked among the top twenty national economies and has entered numerous free trade agreements with countries close to home and on the other side of the world. Australia's involvement in the South Pacific Regional Trade and Economic Co-Operation Agreement, or SPARTECA, serves to bring Australian influence to lesser island nations in the Southern Hemisphere and improve trade relations among members.

    SPARTECA

    SPARTECA has its roots in a treaty signed in July, of 1980 at a meeting of a group known as the Forum Island Countries, or FIC. The purpose of the treaty initially was to encourage trade among the smaller, lesser developed island nations of South Pacific with New Zealand and Australia. SPARTECA nations may trade amongst themselves without duty taxes and other restrictions.

    Current members of SPARTECA include:

    • Australia - Australia holds the largest economy among the current SPARTECA roster. The Australian dollar is standard among several other island nation members, who trade with Australia for goods like beef, grains, and coal.

    • Cook Islands - This chain of small islands is technically part of New Zealand, and relies heavily upon tourism for their economy. Their geographical location allows for limited trade opportunities, though fruits and fish are exported regularly to Australia and Japan.

    • Fiji - While a popular tourist destination in the Pacific, Fiji has not existed without political controversy. A military coup in the late 2000s resulted in a governmental flux, and citizens continue to await the opportunity for fair elections. Prime exports of Fiji include timber, seafood, and various precious metals.

    • Kiribati - Once known as the Gilbert Islands, Kiribati is a former British colony with one of the lowest GDPs on record. Fish is a prime export, though Kiribati relies upon aid often from more developed neighbors like Australia and Japan.

    • Marshall Islands - A pivotal area during World War II with regards to nuclear testing, these Micronesian islands rely more upon imported goods from the United States, Japan, and Australia than they are able to export. Like other member nations in SPARTECA, seafood is a major industry.

    • Nauru - Nauru has the distinction of being one of the least populated independent nations in the world, and having a rather large unemployment rate. Strip mining is the major industry on the island.

    • New Zealand - New Zealand remains a constitutional monarchy under Queen Elizabeth II and is a highly developed island nation within SPARTECA, though trade is crucial to their economic status. Wool is perhaps their best known export, along with dairy and livestock to major partners Australia and China.

    • Niue - New Zealand is this island's largest benefactor, and the New Zealand "Kiwi" dollar is their standard currency. Nearly everything exported from here - honey, coconuts, and passion fruit - is distributed among SPARTECA nations.

    • Papua New Guinea - This British commonwealth nation is one of the least developed and explored in the world, yet is rich in natural resources like palm oil and precious metals which are traded to Australia.

    • Samoa - Samoa represents one of the larger islands in Polynesia, and like other SPARTECA nations relies upon crops of coconuts and indigenous fruits for their exports.

    • Solomon Islands - This Melanesian nation subsists on fishing industries and exports nearly half of their goods - coconut products, cocoa, and other crops - to Japan.

    • Tonga - Tonga presently seeks to grow as a tourism destination in the South Pacific, but for now they rely on cash crops such as root vegetables, coconuts, and bananas to trade.

    • Tuvalu - As one of the smallest nations in the world, Tuvalu has experienced little to no economic growth in recent years. Interestingly enough, the nation derives some income through sales of their desirable national Internet domain suffix (.tv).

    • Vanuatu - Vanuatu is dependent on their agriculture and tourism to maintain their economy. Television viewers may be familiar with the island nation through reality shows as Survivor , which has filmed on location.

    One of the major challenges to SPARTECA is the obvious underdevelopment of the lesser member nations and their dependence on the larger economies of Australia and New Zealand for aid. The islands of Polynesia and Micronesia may see branching out trade to Europe and the Americas as a challenge if there are not enough goods to produce to meet a demand. To this end, a focus on tourism may help boost these minor economies, though their isolation in terms of geography presents issues for travelers outside of Australia and New Zealand.

    Nonetheless, while SPARTECA plays a small role in trade on the global scale, one may become aware of the contributions these island nations make to the world economy through their involvement with Australia.

     

  • The ECOWAS Trade Agreement – Promoting Economic Health in West Africa

    ECOWAS

     

    The Western mindset of Africa is likely filled with visions of poverty, primitive resources, and political unrest. Indeed, much of what we see in the news on Africa tends to perpetuate these general opinions, though it is unfair to place all African countries in the same category. While not the wealthiest region in the world in terms of GDP and trade, certain blocs of Africa have worked to improve trade relations with their neighbors and promote growing industries in energy, telecommunications, and commerce. The countries of West Africa, through nearly forty years of alliance, are such an example of progress within the continent.

    The Economic Community of West African States, or ECOWAS, has beginnings in the Treaty of Lagos, ratified in 1975 for the purpose of promoting economic development in West Africa. In addition to maintaining strong trade relations between member nations, ECOWAS assists in matters involving civil peacekeeping. Policies are put forth by the ECOWAS Secretariat and the ECOWAS Bank for Investment and Development, or EBID, which recently appointed Bashir M. Ifo their newest president. Over the last decade, EBID has entered into loan agreements with various companies and international banks in order to improve industry in West Africa. A significant agreement finalized in 2010, for one, has allowed for the financing of a pharmaceutical factory in the region and consequent production and research of resources designed to improve health conditions in the area.

     

    ECOWAS MEMBER NATIONS

     

    The lineup has changed little over the last thirty-seven years. Of the fifteen nations currently in ECOWAS, the members include:

    • Benin - A largely agricultural country, Benin produces one major crop (cotton) that accounts for the majority of their export trade. Primary trade partners include China, India, and Niger.

    • Burkina Faso - This nation represents one of the lowest gross domestic product percentages in Africa, if not the world. Like other countries in the region, Burkina Faso is agricultural - growing corn and sorghum among other crops - but also employs natives for copper and iron mining.

    • Cape Verde - The only islandic member nation of ECOWAS imports nearly all of its food, except for seafood. Once a colony of Portugal, Cape Verde maintains strong trade ties to the country as well as Spain.

    • Ivory Coast - As one of the top exporting African nations, Côte d'Ivoire is a top exporter of cocoa and coffee, bananas and pineapples, and other agricultural goods.

    • Gambia - Gambia is known for their peanut production and fishing industries, and is also one of the more popular tourist destinations in West Africa.

    • Ghana - Ghana is one of the continents more developed nations, with a healthy GDP that keeps the country economically above water. Gold and cocoa are among two of their more popular exports, traded to the Netherlands, the United States, and the Ukraine.

    • Guinea - Guinea maintains active mining and agricultural industries, with major exports like gold and minerals, and coffee traded to South Korea, Russia, and Spain.

    • Guinea-Bissau - One of the least developed nations in Africa, Guinea-Bissau averages around $50 million in export goods. They are known for ground nut crops and export more than half of their goods to India.

    • Liberia - Historically known as a nation founded by freed slaves, Liberia boasts a timber industry that partly contributes to their annual average export totals of $2 billion.

    • Mali - One of Africa's underdeveloped nations, Mali relies heavily on foreign aid but does manage to export cotton and gold to their main trade partners in Asia.

    • Niger - Niger is known for export of raw minerals - in particular uranium - to foreign markets. Japan receives the majority of their output.

    • Nigeria - One of the Next Eleven economies, Nigeria's growth is evident in rising exports to the United States and Europe - petroleum, cocoa and rubber among other products.

    • Senegal - Like many neighboring countries in ECOWAS, Senegal maintains agricultural and seafood industries that produce ground nuts and fish to trade partners.

    • Sierra Leone - Mining is one of the more profitable industries in this underdeveloped nation.

    • Togo - Togo is unique within ECOWAS in that it serves as a commerce hub for neighboring nations. Goods that come into Togo are often re-exported throughout West Africa, though the country also produces coffee and cocoa to trade.


    Of the above, Guinea, Guinea-Bissau, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo are founding members of UEMOA (West African Economic and Monetary Union), a pro-trade agreement signed to complement ECOWAS.  

    Future projects for ECOWAS include a better streamlined method for trade relations within the borders of member nations - improved transport by rail and a common currency dubbed Eco are among the proposals the ECOWAS nations hope to see in the next decade. With recent loan agreements in place through relations with India and companies like DO PHARMA, one can see the potential in raising the overall GDP for the region once such improvements are in place.

     

    Posted Jan 05 2012, 06:29 PM by admin with 1 comment(s)
    Filed under: , ,