After Doha: How to Make Trade Work for Africa?

07.27.06

World Trade Organization (WTO) negotiations as part of the Doha Development Agenda collapsed Monday (July 24), just one week after G8 leaders in St. Petersburg directed trade ministers to meet in Geneva to try to break the deadlock on the agriculture portion of the talks. The so-called “group of 6” countries (U.S., EU, Japan, Australia, Brazil, and India) who have been trying to reach agreement on the extent to which farm subsidies and tariffs will be cut met to try to reach agreement on these crucial elements, but discussions broke down early Monday morning and meetings for later in July were cancelled. WTO Director-General Pascal Lamy officially suspended all ongoing Doha round discussions indefinitely. He declared that the gaps between negotiating positions remained too wide and that WTO Members now needed to determine whether there was any appetite to reconvene full negotiations in the future. The source of the continuing deadlock and ultimate breakdown was the extent to which countries would be willing to cut farm subsidy programs and tariffs on agricultural goods. This is an area of political sensitivity for the U.S., the EU, and Japan and of crucial importance for developing countries, where farmers make up a significant portion of the labor force.

What’s Next for Africa? The collapse of the Doha negotiations means that trade-distorting farm subsidies and high tariffs that impact African countries will be much more difficult to remove. Moving forward, large WTO economies such as the EU, U.S., and Japan are likely to focus more on bilateral and regional free trade agreements, which risk leaving Africa further behind. Africa needs greater opportunities in the global market for its products in order to be able to use trade to lift itself out of poverty. Accessing these opportunities will require renewed political commitments from WTO Members, particularly G8 and EU leaders.

As political leaders and trade ministers determine the future for Doha negotiations, the unique trade and economic challenges Africa faces have not changed. Africa’s share of global trade has diminished over time. In 1970 Africa accounted for approximately 4% of global trade. In 2005, that number dropped to 1.5%. In recent decades, as global trading and investment relationships have broadened and deepened, Africa has found it difficult to move beyond selling primary commodities such as gold, diamonds, oil, and cotton. In addition, Africa faces the additional challenges of disease, poor infrastructure, and limited access to education that make economic growth even more difficult. What Africa needs now is the opportunity to broaden the number of products it can sell to the world.

Through Doha negotiations or through individual country commitments, Africa needs all of the things below to use trade to fight poverty:

• Elimination of unfair farm payment programs in developed countries that distort prices and enable rich countries to sell their products at artificially low prices in poor countries. If disciplines on these programs cannot be agreed through Doha negotiations, countries can limit and eliminate the programs that impact poor countries the most – in areas like cotton, corn, fruits and vegetables, wheat, and rice through the U.S. Farm Bill and the European Common Agricultural Policy.
• Lower tariffs and fewer barriers for products that Africa has the capacity to produce, like textiles and apparel, sugar, processed cocoa, and cotton. Without an opportunity to eliminate these barriers through the Doha round, greater access is possible through existing tariff preference programs such as Europe’s Everything But Arms (EBA) program and the U.S. African Growth and Opportunity Act (AGOA).
• Development assistance that helps Africa to overcome challenges such as a lack of roads, ports, telecommunications networks, and strengthen government institutions involved in trade. Since the suspension of Doha negotiation, the U.S. and the EU have indicated that their commitments of funding of more than $2 billion each for this type of assistance will continue despite breakdown in discussions. But this money must be new and not tied to other donor requirements.
• Policy space that provides access to mechanisms that ensure that as African countries integrate into the multilateral trading system they are not compromising their national economic development priorities.

The recently-issued “DATA REPORT” at www.thedatareport.org outlines in greater detail what is needed to fulfill the G8 promise to “make trade work for Africa”.