Countries and India

Table 4.4 Overview of Trade Agreements between Sub-Saharan African Countries and India

Country or regional group Agreement

Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA)

Southern African Customs Union (SACU): Botswana, Eswatini, Lesotho, Namibia, and South Africa Comprehensive Free Trade Agreement (CFTA)

Selected Sub-Saharan African countries Global System of Trade Preferences (GSTP)

Common Market for Eastern and Southern Africa (COMESA) Free trade agreement

Current status

The chapter on Trade in Goods (PTA) has been finalized. It includes tariffs, text of PTA with rules of origin, operational certification procedures, and a trade defense measure. Negotiations were held on Trade in Services with the view of creating a liberal, facilitative, transparent, and competitive services regime. The Trade in Investments negotiations also took place to improve the legal frameworks in both countries, including the bilateral Double Taxation Avoidance Convention (DTAC) and Bilateral Investment Promotion and Protection Agreement (BIPA). There was delay in the finalization of the chapters of “Enterprise” and treatment of “Shell Companies.” This led to a standstill in the negotiations. India's proposal to modify DTAC was rejected by Mauritius, and this has put the CECPA negotiations on hold until the modifications are accepted by Mauritius. The last round was held in October 2010, in which SACU presented a revised text of the PTA as a working document. At the round, both sides agreed on the following: the text on “Dispute Settlement Procedure”; to use the text proposed by India on “Customs Cooperation and Trade Facilitation” and “Technical Barriers to Trade (TBT)” as the working text; and to use the text “Sanitary and PhytoSanitary (SPS)” proposed by SACU as the working text. However, the fear of revenue loss from the implementation of an FTA is a sensitive issue for South Africa, which probably explains the lethargy shown by SACU authorities. This CFTA is still under consultation and study, but the hope that this PTA would concluded by the end of 2013 was dashed. The market access modalities adopted by the ministers are based on the principle of an across-the-board, line-by-line, linear cut of at least 20 percent on dutiable tariff lines; product coverage to be at least 70 percent of dutiable tariff lines; product coverage shall be 60 percent for participants having more than 50 percent of their national tariff lines at zero duty level; tariff cuts shall be made on the MFN tariffs applicable on the date of importation or, alternatively, participants may choose to apply the cuts on the MFN tariffs applicable on the date of conclusion of the third round; and the negotiating committee shall also consider the proposal for the revision of the GSTP rules of origin. A joint study group has been set up to look into the possibility of a free trade pact.

Source: Compiled from various sources. Note: FTA = free trade agreement; MFN = most favored nation; PTA = preferential trade agreement.

ranging between 10 percent and 100 percent. The remaining 6 percent of tariff lines (326 products) was excluded from any tariff reduction, with LDCs enjoying MFN rates when exporting to India.

The expanded DFTP scheme offers a considerable improvement in market access for LDCs to the Asian economy. Yet, among the 97 products still on the exclusion list, some are particularly strategic for Africa, such as some fruits and vegetables, some dairy products, cashew nuts, coffee, tea, some spices, oil seeds, wheat flour, beer, wine and spirits, tobacco and cigarettes, and copper. A 100 percent DFTP would certainly provide greater opportunities to stimulate exports from Africa to India.

Only 26 of the 33 eligible African LDCs are participating in the scheme: Benin, Burkina Faso, Burundi, the Central African Republic, Chad, the Comoros, Eritrea, Ethiopia, The Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, Senegal, Somalia, Sudan, Uganda, Tanzania, Togo, and Zambia. In addition, India has signed 13 bilateral investment treaties with African countries, of which, to date, 8 have come into effect.

Agreements with China

China has been promoting the reinforcement of economic partnerships with Sub-Saharan African countries since 2000. It announced the start of negotiations with the Southern African Customs Union (June 2004), but no specific negotiations have yet been held.

The China-Mauritius FTA was China’s first FTA with an African country, which met comprehensive high standards and mutually beneficial objectives. The agreement covers trade in goods, trade in services, investment, and economic cooperation, among others. On trade in goods, the shares of tariff lines and trade value in duty-free trade exceed 90 percent; on trade in services, both sides have committed to open more than 100 sectors. The China-Mauritius FTA is the most liberalized FTA for Mauritius in terms of services. On the investment side, the agreement upgrades the 1996 China-Mauritius Bilateral Investment Treaty, representing the first upgrade among China’s bilateral investment treaties with African countries.

Since 2005, China has provided zero import tariffs and exemptions on more than 180 product lines from 28 of the African LDCs, commodities whose average MFN tariff rate in 2004 was 9.8 percent. However, tariff escalations and peaks persist on certain African exports, such as raw cotton, which had a tariff of 27 percent in 2005 (Zafar 2007).

Agreements with Indonesia

Indonesia’s promotion of bilateral trade with African countries is backed by increased official diplomatic presence on the continent. Currently, Indonesia has 11 embassies in Sub-Saharan Africa—in Ethiopia, Kenya, Madagascar, Mozambique, Namibia, Nigeria, Senegal, South Africa, Sudan, Tanzania, and Zimbabwe. It also operates a consulate-general in Cape Town, South