TRADE: Iraq War Deflects Attention from Africa

By IPS Correspondents Reprint | | Print |

Farah Khan

JOHANNESBURG, Apr 21 2003 (IPS) - Even before the United States sent troops to the Middle East, South Africa’s government has been warning that the war in Iraq will deflect attention from Africa, a region which had become a focus after the unveiling of the New Partnership for Africa’s Development (NEPAD) two years ago.

The latest warning, by Trade and Industry minister, Alec Erwin, came just before the South African parliament prorogued for the Easter break.

Erwin told parliament: "The attention of developed nations, and flows of development assistance and investment, may turn away from Africa and NEPAD".

Not only was the United States distracted, but so was the European Union, a key ally of NEPAD and of the African Union formed last year to soon replace the moribund Organisation of African Unity. "The actions of the United Kingdom will also have the effect of preoccupying the EU with its own policy coherence," said Erwin.

He added, "NEPAD is critical to the successful economic development of our continent and its successful implementation is based upon innovative partnerships between African nations and the rest of the world…(but) we must realise now more than ever that Africa’s future lies essentially in its own hands."

This was why the stuttering progress in negotiations at the World Trade Organisation (WTO) did not bode well for the continent. Negotiators missed deadlines vital for the economic growth of the continent last week. This places in jeopardy progress in Cancun, Mexico in September, the next big date for world trade talks.

Agriculture negotiations – the most important – stonewalled; efforts to secure cheap and legal generic drugs were thwarted by the United States, while the spectre of greater trade protectionism in the wines and spirits sector looms for South Africa.

Agriculture is the one sector in which Africa has a clear comparative advantage. But getting products into the wealthy group of Organisation of Economic Co-operation and Development (OECD) markets is difficult because their agricultural sectors receive an average 360 billion U.S. dollars a year in state subsidies.

"The annual cost in lost export revenues and related economic activities is estimated at about 100 billion U.S. dollars a year," says South Africa’s ambassador to the WTO Faizel Ismail.

Total world aid is only 50 billion U.S. dollars a year, and Africa gets about half this amount.

At the launch of the Doha round of trade negotiations in Qatar in November 2001, the promise to open markets and reduce subsidies was crucial in convincing the Africa Group of countries to give their thumbs-up to trade talks geared at kick-starting the failed Seattle meeting two years previously.

"We are very concerned that the agriculture negotiations at the WTO did not make the deadlines. We are hoping to resuscitate the talks as soon as possible," said Land and Agriculture minister Thoko Didiza.

The United States and the European Union pay the biggest subsidies to their domestic industries, though the Europeans face more difficulties in trying to cut them. While agriculture accounts for just four percent of EU gross domestic product, farmers are a powerful political lobby. By contrast, two thirds of the poor in Africa in rural areas work in agriculture.

The effect of the Brussels subsidies is felt directly in South Africa’s sugar industry, for example. Because European confectionary producers use sugar one-third cheaper than that available to local producers, they are able to land sweets in South Africa that is often cheaper than local products. The result: Beacon, for example, is struggling and laid-off 1,000 workers between 1997 and 2000.

Largely black small-scale sugar producers are being displaced from export markets because they cannot compete with subsidised European sugar. "South Africa loses about E100-mn in potential export earnings," says Ismail.

The biggest disappointment for the continent has been failure by the United States to agree to effectively amend the Trade Related Aspects of Intellectual Property (TRIPS) agreement to provide for developing countries to import patented drugs cheaply, as agreed in Doha.

The agreement was a triumph for developing countries because it elevated public health above patent protection and should allow poor countries – the majority of which are in Africa – to bring in drugs, at a fraction of the patented costs, to fight HIV/AIDS, malaria and other diseases.

Once TRIPS is implemented across the globe by 2016, "life-saving drugs will become almost totally inaccessible and unaffordable for the poorest and least able developing countries," says Ismail, explaining the need for the amendment.

But, lobbied by the pharmaceutical industry, the United States put the spoke in the wheel of the negotiations.

South Africa faces another problem with TRIPS – tightened protection of wine and spirit trade names. When Department of Trade and Industry negotiators concluded the Trade and Development Accord with the European Union in the late 1990, it floundered for months on product names like port and sherry which are held to be the intellectual property of producers in the areas where the products were started: port in Portugal; sherry in the Jerez valley of Spain.

The accord was only finalised when local producers agreed to phase out the use of these terms.

At the WTO, negotiators are now trying to tighten protection of such "geographic indicators" by establishing a register of terms. The debate over port and sherry could be the harbinger of a bigger fight, warn South Africa’s agricultural negotiators.