World trade--a tiny step forward: the WTO's latest round of talks in Geneva has shifted the process a little further, but the reality remains that Africa continues to suffer from unfair terms of trade. What will it take to ensure a level playing field for all?

Author:Siddioi, Moin
Position:View from the City
 
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A major hurdle to Africa's growth in trade has been the protectionist agricultural policies in the 'quad' regions of the European Union, US, Canada and Japan. In 2002, these four power blocs accounted for 46.5% of the world's merchandise exports, led by the EU ($939.8bn), the US ($693.9bn), Japan ($416.7bn) and Canada ($252.4bn). By comparison, Africa has a 2.6% share of world trade.

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Agriculture remains at the heart of many African economies. According to the World Bank, the sector employs two-thirds of Africa's workforce, but farm exports earn just $12-15bn annually.

So what are the reasons behind such dismal earnings? The countries of the developing world have to battle against huge annual farm subsidies, currently running in excess of $300bn, enjoyed by farmers in the 29 Organisation for Economic Cooperation and Development (OECD) countries.

They also have to contend with non-trade measures, such as anti-dumping, technical barriers and excessive import duties on agro-processed and manufactured goods.

Western policies enable farmers to export their subsidised goods at knockdown prices, making it almost impossible for farmers in poorer countries to compete. Critics of this system justifiably claim that Africa's farmers are driven out of business, thus exacerbating poverty and famine on the continent.

SUBSIDIES HOLD BACK GROWTH

According to the International Food Policy Research Institute, protectionist measures cost the developing world some $40bn per annum in lost agricultural exports.

Anne Krueger, the IMF deputy-managing director, says that indefensible subsidies for agriculture and horticulture "could pay for each of the 56m cows in the OECD dairy herd to enjoy a first-class air ticket around the world". Omar Kabbaj, the African Development Bank president, was quoted in the UK Banker journal as saying: "It is now generally agreed that agricultural subsidies distort global trade--particularly in key commodities such as sugar, cotton and rice--and these hold back growth in the export revenues of developing countries. We call on industrial countries to liberalise their trade regimes further to improve access for Africa's exports."

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But global trade rules are simply structured to benefit industrialised countries, whilst developing nations are over-exposed to volatile commodity markets and have low manufacturing capabilities.

Oxfam, the British NGO, has noted: "They [the poorest people] are...

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