Fostering Trade Relations through Agreements

A notable pattern in global tourism growth is the relatively faster rate of growth of arrivals in emerging economies than in high-income economies. The UNWTO predicts that international arrivals in emerging economies will grow at twice the rate (4.4 percent per year) of arrivals in high-income economies (2.2 percent per year). In absolute terms, emerging economies will add an average of 30 million arrivals per year—more than double the average of 14 million new arrivals in high-income economies. Emerging economies will surpass 1 billion arrivals by 2030, with a 57 percent share of the global tourism market (UNWTO 2017).

Sub-Saharan African countries can tap into this opportunity, because Africa is becoming an increasingly attractive destination for Asian tourists, especially Chinese tourists. A recent survey by the global travel platform Travelzoo9 finds that the continent was the top destination of choice for Chinese tourists seeking more adventurous holidays in 2018, beating Japan and Australia. Visitors were especially drawn to (in this order) Morocco, Tunisia,10 South Africa, Namibia, Madagascar, and Tanzania. Part of the interest in these nations came following the introduction of relaxed visa rules for Chinese citizens. And, in 2019, Kenya launched a marketing campaign to target China, hoping to boost the more than 53,000 Chinese visitors who came to the country in 2018. Chinese nationals also make up the largest group of tourists to Ethiopia, which had 45,307 Chinese visitors in 2017, a steady increase from 41,659 in 2016. The country recorded $169.6 million in revenue from Chinese tourists in 2017.

Leisure travel tends to accelerate most sharply when per capita income rises, and the Asian middle class is among the world’s top tourist spenders. China consolidated its leadership as the biggest spender in travel abroad in 2017, with $258 billion in expenditure. Among the top 20 world spenders on outbound tourism (in this order), France, the United Kingdom, Australia, the Russian Federation, Spain, and India all posted double-digit growth in expenditure (UNWTO 2018). This is particularly important for SubSaharan African countries, because every $1 spent by visitors contributes an estimated $3.20 to the economy (Sears and Turner 2013). By tapping into this sector, Sub-Saharan African countries could expand and diversify their sources of revenues.

Fostering Trade Relations through Agreements

Interest in trading with Sub-Saharan Africa has been growing in recent years, and the region is considered a strategic trading partner for Asian countries, as numerous initiatives continue to demonstrate. Japan launched its Tokyo International Conference on African Development in 1993 to bring together African stakeholders and Japanese officials. In 2000, China renewed its engagement in Africa by establishing its Forum on China-Africa

Cooperation. Asian and African countries renewed their long-standing solidarity at the 2005 Asian-African Summit in Indonesia.

Between 2010 and 2014, 13 of the 25 fastest-growing export countries for Indonesia were in Sub-Saharan Africa: the Central African Republic,11 Somalia, Mauritania, Djibouti, Mozambique, Kenya, Burkina Faso, Senegal, Guinea, Sierra Leone, Nigeria, the Republic of Congo, and South Africa. This has triggered meetings between Indonesian leaders and African leaders and officials to discuss opportunities to deepen their economic cooperation. Indonesia started the Indonesia-Africa Forum in 2018.

As a venture to build a bridge between Asia and Africa, the New AsianAfrican Strategic Partnership focuses its cooperation on the three broad pillars of partnership: political solidarity, economic cooperation, and sociocultural bonds. And, since 2008, India has been organizing the India-Africa Forum Summit, with the objective of enhancing existing partnerships between both sides.

Since 1948, the number of regional trade agreements (RTAs) in the form of free trade agreements (FTAs), PTAs, and customs unions has been increasing rapidly around the globe. As of May 2018, the WTO had been notified of 459 RTAs, of which 287 were in force. This proliferation of trade agreements has been driven partly by the desire of many countries to gain access bilaterally or multilaterally to larger markets. RTAs among non-neighborhood countries and regions go beyond goods trade and market access, by involving aspects such as investment, competition, labor standards, and the environment.

In the case of Sub-Saharan African countries, most trade agreements with non-African countries have been with high-income countries, especially the EU and the US. Some of these agreements include the EU and US Generalized System of Preferences (GSP), the EU’s Everything but Arms (EBA) initiative, the EU-ACP nonreciprocal PTA under the EU’s Cotonou Agreement, and the US African Growth and Opportunity Act (AGOA). Recently, efforts have been made toward establishing regional trading blocs with Asia.

Agreements with India

Under the umbrella of the most favored nation (MFN) clause, trade between the LMICs of Sub-Saharan Africa and Asia clearly grew significantly. For instance, India has bilateral trade agreements with 19 Sub-Saharan African countries (table 4.4). India introduced the Duty-Free Tariff Preference (DFTP) scheme for least developed countries (LDCs) in 2008. The DFTP scheme progressively eliminated customs duties imposed by India on its imports from LDCs on 85 percent of the country’s total tariff lines (as defined at the Harmonized System 6-digit level) by 2012. An additional 9 percent of tariff lines (about 458 products) offered a margin of preference