SUCCESSFUL DOHA CONCLUSION WOULD BE BOON FOR AFRICA

By - - and Pascal Lamy Reprint | | Print |

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GENEVA, Jun 13 2007 (IPS) - Failure to successfully conclude the Doha development round would hurt the multilateral trading system but it would more devastating to developing countries, including those in Africa, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). Though agriculture is an important part of the agenda, this Round covers other issues with significant potential gains for Africa. For instance, in industrial products, such as textiles and footwear, improved market access in developed countries would benefit African exports of manufactured goods. The same is true for services, the most dynamic sector in many African countries. Developing the necessary infrastructure and human skills are two of the most important challenges Africa faces in terms of modernising trade. Progress in these two areas is fundamental to building African countries\’ capacity to effectively participate in regional and global trade.

In seeking to narrow divergences, I have been actively consulting with all stakeholders, and the unanimous view is that a failure to successfully conclude the Round would not only be detrimental to the multilateral trading system; it would be more devastating to developing countries, including those in Africa.

Failure to reduce developed countries’ trade-distorting domestic subsidies would mean a missed opportunity to boost the expansion of agricultural production in Africa, particularly for cotton exporters, whose production has dropped significantly over the past years as a result of distortions in the cotton export market.

Lowering agricultural tariffs whether in developed countries or emerging countries will also benefit African exports, particularly in those sectors where they have comparative advantage, including cereals, vegetables, and horticulture. Negotiations will also address the important issue of tariff escalation, which affects African exports of processed agricultural products and undermines efforts to diversify agriculture exports. For example, African exports of cocoa to Japan enter duty free, but exports of cocoa paste face tariff rates of up to 25 percent.

It is important to note that although agriculture is an important part of the agenda, this Round covers other issues with significant potential gains for Africa.

For instance, in the area of industrial products, such as textiles and footwear, improved market access in developed countries would benefit African exports of manufactured goods.

The same is true for services, the most dynamic sector in many African countries. Developing countries have reserved the right to designate the service sectors that they wish to liberalise. In South Africa services now account for approximately 65 percent of GDP and around 70 percent of formal employment. Africa stands to gain further by maintaining an offensive position in this sector. This would not only send positive signals to investors but also provide the predictability and transparency that is required to facilitate investment decisions.

There cannot be a discussion on intra-African trade without addressing the services sector. Take the transport sector: according to UNCTAD, transport costs in Africa constitute over 15 percent of the total cost of any product, compared with 8 percent for other developing countries and 5 percent for developed countries. This high cost of transportation has a negative impact on trade volumes.

Another key area of the Round is trade facilitation, cutting red tape at the border. Trade facilitation is at the heart of efforts to increase intra-African trade and to integrate the continent into the global economy.

Effective participation in global trade requires that all actors, be they governments, corporations, or individual firms, operate at the cutting edge of technology not only in production processes but also in chain management. Globalisation and further trade opening will place demands on firms, small and large, to adjust to the new trading environment. Reducing transaction costs is one important step towards remaining competitive in international and regional markets.

Developing the necessary infrastructure and human skills are two of the most important challenges Africa faces in terms of modernising trade. Progress in these two areas is fundamental to building African countries’ capacity to effectively participate in regional and global trade.

In terms of overall density of infrastructure, Africa still lags significantly behind the rest of the world, but there are signs that this is improving. The quantity of surfaced roads in Africa grew by 128 percent between 1991 and 2000, reflecting increased investment in road networks, but more remains to be done.

The experience of many land-locked African countries shows that significant savings can be made by improving in transport networks. However, doing so involves more than the traditional notion of “trade facilitation”; in African countries it is a fundamental problem of “development”.

This is why parallel to the Round, we are putting together a comprehensive package of aid for trade to help developing countries, and African countries in particular, address some of their supply side constraints, including poor transport and general trade infrastructure networks. This will help enhance their ability to benefit from trade opening.

A successful conclusion of the Round will benefit developing countries and Africa in particular. (END/COPYRIGHT IPS)