Regional Trade Patterns – West and Central Africa
Purpose
The purpose of the research work is to:
· Provide an overview of regional trade patterns and trade flows in West and Central Africa, focusing on Ghana, Cameroon and Gabon; and
· Analyse the potential impact of EU FLEGT and VPA on the trade flows, including the impact on trade with China.
The aim of the study is to identify any potential trade distortions that might arise as a result of the Voluntary Partnership Agreements (VPAs) between the West and Central African countries (primarily Ghana, Cameroon and Gabon) and EU. Through the implementation of the VPAs there may be an adverse incentive for producers to supply to neighbouring markets or alternative less stringent markets such as China and the USA. Such potential distortions would undermine the objectives of implementing the VPA.
The assessment of regional trade flows and patterns will provide an understanding of the mechanics of how the trade works and thus ensure that the framework of the VPA for each country (Ghana, Cameroon and Gabon) is developed to minimise the negative potential impacts and enhance the positives.
The study will examine the relationship of trade flows between neighbouring countries. For example, there is a need to understand how the trade in Cameroon works, in particular the volume and mechanics of the trade that is in transit in Cameroon, coming into Cameroon’s trade flow from other countries. Reportedly some timber is transhipped (and recorded as an export from CAR even though it goes through Douala port) while other material originates from CAR but is exported (and sometimes processed) from Cameroon. Regional trade flows will also assess the relative importance of for example trade between Ghana and Nigeria, Senegal and others. Data permitting, trade flows through Dar EsSalaam and Mombasa will also be assessed, as there is reportedly a considerable volume from Eastern Congo Basin that goes east.
Approach
The study will follow a two-phase approach.
1. Review of trade flows and patterns across the region of West and Central Africa, focusing on proposed VPA countries Ghana, Cameroon and Gabon.
2. Terms of reference for further assessments of trade trends, potential distortion and consequences that goes beyond the overview assessment, for each of the VPA countries will be developed by mid-December by the individual VPA countries.
The approach and methodology outlined here refers to the first phase – the regional trade assessment.
The study will be undertaken as desk-based research with local support provided where necessary, to assist with data gathering including some interviews and data interpretation.
Task 1: Literature Review
To understand the rationale, the trends and mechanisms behind the existing regional trade flow and to support the trade data gathered in Task 2, a literature review of existing trade information will be undertaken. This will include a review of existing information on issues such as:
· current tariff structure/regime for log imports to the EU and other regional markets (at the point of import) and at the point of export (for each producer country);
· existing information on issues such as industry cost structures (for example from FAO cost assessments) and
· tax and price setting (through World Bank forest sector reviews, for example) will be reviewed.
The purpose of this broader literature review will be to firstly, provide supporting rationale behind the current trade patterns and secondly, to identify where further research may be required on price, tax and tariff regimes. This latter area of work will not be further developed during this study.
Task 2: Trade data analysis
An initial assessment of existing statistics will be undertaken to assess regional trade patterns and trends. This will provide an overview of current trade patterns. A number of scenarios will then be developed to map the potential impact of the VPA on these trade patterns. This will include the potential impact on the relative importance of domestic markets compared with international or regional exports. Where possible price information on key species will be gathered across the region, and will be used to identify disparities in price of products for export, domestic and inter-regional trade. Prices may be reflective of different tax structures, but an assessment of this kind is beyond the scope of this study.
To support internationally available data, other data on production, consumption and exports will be collected, where available, from relevant institutions in each producing country: forestry departments, export agencies, producers themselves etc. The local consultants will assist with this data collection exercise.
Task 3: Questionnaire & Interviews
In addition to the statistical analysis, and to further determine the potential impact of the VPA, a questionnaire and/or a series of interviews will be developed and undertaken, to a sample of exporters and traders across the region.
A semi-structured questionnaire will be developed and emailed out to a sample of companies: traders, exporters etc. Follow-up phone calls will be made to collect the information and other supporting evidence.
Supporting data collection and interviews with traders may also be required in the main neighbouring countries, for example, in Senegal which currently trades with Ghana, and the trade relationships between Cameroon and Congo Brazzaville and DRC.
Task 4: EU traders perceptions
The questionnaires will also be used to provide an assessment of the perceptions and perspectives of EU companies in producer countries about overall trade patterns. The aim would be to get a view of varying perceptions of Euro-traders of trade/forestry in different producer countries of the region.
To support the questionnaire the consultant shall liaise and work closely with the UK TTF and Rupert Oliver.
Output
The output of the study will be a report, highlighting potential positive and negative impacts on the current trade patterns, of the VPA. Recommendations on ways to mitigate potential negative impacts will also be highlighted, as will potential areas for further research.
Timing
It is expected that the study be undertaken from January to March 2006.
Funding
This work is funded by DFID. For details contact Julia Falconer
Contact person
Emily Frip is leafing this study:
3