Africa needs to formulate her own trade strategy

A headline in the free newspapers of UK’s Metro grabbed my eyes today. It took up space at the bottom of a much bigger headline that was highlighting the plight of a daughter who had stolen an amount of cash from her dying mother and just further down to this story, a date in history marking the announcement of Prince Charles’ birth in November 1948. My initial interest on this page had actually been caught by a news article of a woman who was in a critical condition from a bull attack. Sadly the victim’s husband had died at the scene…I guess this bull attack brought back two childhood memories on one; where fetching water out of the school grounds entailed one passing through such gauntlets. The latter was of my school excursion to East Anglia in 1979 when I and a group of school friends decided to cut across the field to make up time forgetting to heed the advice of our teacher not to do such. I could never work out if this bull charged at me because of territorial issues or simply that it disliked town school kids such as us.

However, it was the headline at the very bottom of such events happenings that brought me back to an on-going reality of a different scale…African cotton traders ‘are locked in poverty’. The article claimed that cotton farmers in west Africa are being ‘locked into poverty’ as a result of actions by America and the European Union, according to fair-trade campaigners. “Frankly, we are starting to doubt whether rich countries really want to reduce poverty in developing countries,” notes a joint statement against agricultural subsidies by cotton producers’ federations in Benin, Burkina Faso and Mali. Despite declarations of intent to reduce poverty in poor countries, domestic policies in rich nations have often had the opposite effect.

“There is no point in giving with one hand and taking with the other,” UN Secretary-General Kofi Annan told the World Food Summit in June 2002, commenting on the impact of agricultural subsidies. “You put yourself in the shoes of a small developing country which cannot export its agriculture products because of restrictions and tariffs, a small developing country that cannot compete on the world market even if it could export, because the richer farmers in the richer countries are heavily subsidized.”

Now most that know me will agree and know an economist or commerce person, I am definitely not. The thing is though…since the early 1990’s, reports from Oxfam (as a teenager, I volunteered and worked for Oxfam outlets and often read their articles…) and other non-governmental organisation have been arguing that production and export subsidies in the US have devastated not only small communities in Africa, but entire regions. These communities rely upon this trade to keep children in school, or to buy food and pay for health. While the major factors behind the declining price are varied and complex, the most significant is the increase in government subsidies paid to cotton farmers in the US and now EU countries. If the price of trade is affected then the repercussions would be felt all the way across the board and make a mockery of the UN call for addressing global poverty.

“It is hypocritical to preach the advantages of free trade and free markets and then erect obstacles in precisely those markets in which developing countries have a comparative advantage.”– Nicholas Stern, chief economist, World Bank

Northern subsidies place poor African farmers at a big disadvantage, noted the Oxfam report: “By driving down prices for these farmers, US taxpayers — along with their European counterparts in other product groups — bear a direct responsibility for poverty in Africa.” It charges that US subsidies directly led to losses amounting to more than $300 mn in potential revenue in sub-Saharan Africa during the 2001/02 season. US subsidies have a major influence on the world market because a large proportion of US production — more than 50 per cent — is exported, making the country the largest exporter by a wide margin.

But the debate over agricultural subsidies is often clouded by legal language and technical jargon. US officials insist their country is in compliance because its subsidies (those that fall under WTO rules) do not distort international trade. US officials also accuse developing countries of lumping all US subsidies in a single basket, even though WTO rules lay out different schedules for different types of supports. But leaders and activists in developing countries insist the US is not playing fair.

“Several Central and West African nations are victims of injustice by the US and EU. These countries subsidize their agricultural producers, ignoring the rules of the WTO.” — President Blaise Compaoré, Burkina Faso

One of the main criticisms against agricultural subsidies is that they work directly against efforts by donor nations, including the US, to combat poverty in developing countries. An estimated 96 per cent of the world’s farmers live in developing countries, with some 2.5 billion people depending on agriculture for a livelihood. Many seek an opportunity to trade their way out of poverty through a fair trading system. But over the years, unfavourable trade terms have been a major factor in the erosion of the market share of poor nations. According to the WTO, the share of developing countries in world agricultural exports continues to reflect this drop.

However, there is still no common position on the African continent on how best to seek redress for the current crisis even with the African Union in place. A number of proposals are emerging. Farmers from Benin, Burkina Faso, Mali and Senegal recently called on their governments and on the West African Economic and Monetary Union to file “petitions” with the WTO in support of Brazil’s legal action against US subsidies. To date, no African nation has yet filed a legal suit against agricultural subsidies at the WTO. Many are cash-strapped, dependent on aid and debt relief from the very countries they would be challenging. Many are also wary of the potential for retaliatory action.

About these ads

2 comments on “Africa needs to formulate her own trade strategy

  1. A thought provoking post Grace. Another thing that is killing off the African textile industry is the second hand clothing market. I wrote about it on these the blogs below.

    http://www.birdsontheblog.co.uk/gifts-for-an-african-child-some-tough-choices/

    http://ethnicsupplies.org/ethics/this-is-a-problem-we-don%E2%80%99t-want-to-take-to-africa

    • Ida – the causative issue at the heart of the African continent lies with the mental aptitude of us Africans both in the diaspora and within the continent itself. For those on the African continent, where countries are grappling to undo a legacy dominated by trade with their former colonial rulers rather than with each other, the same play off is seen between leaders and the very persons they should be serving to develop nations.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s