Credit: Amantha Perera/IPS

By Martin Khor
PENANG, Dec 5 2016 (IPS)

What kind of trade policy will the United States have under President Donald Trump? This is a hot issue, as Trump has made unorthodox pronouncements on trade issues during and after the election campaign. If he acts on even some of the positions he took, it will create a sea change in trade policy in the US and possibly the world.

Trump has recently emphasised that he will take the US out of the Trans Pacific Partnership  Agreement (TPPA) on his first day of office, and renegotiate the North American Free Trade Agreement (NAFTA).

He called them a disaster for the US.   He was probably referring to the claim that many of manufacturing jobs lost in the US in recent years were due to free trade agreements (FTAs) and the overseas relocation of US companies.  He is also probably blaming trade agreements for the US’ huge trade deficits.

Most economists however have a different view.  They attribute US job losses mainly to technological change.

There are legitimate fears that Trump’s “Put America First” slogan, when applied to trade, will lead to an increase in trade protectionism.

Trump has threatened to raise tariffs on products from China and Mexico by as much as 45%.   Trump in his campaign accused China of being a “currency manipulator”.    If a country is so labelled by the Treasury Department it could be grounds under US law to slap extra tariffs on its products.

President Obama came under pressure from many Congress members and economists to do just that, but he smartly resisted as he realised it would trigger a very nasty trade war with China.

Martin Khor. Credit: Nic Paget-Clarke

It is possible Trump will also climb down from this populist stance once he is President.  For a start, China’s currency is not under-valued and currently its government is trying to prevent (not encourage) its currency from further sliding.

Secondly, taking trade action against China on currency grounds would be against the rules of WTO, and China should be able to successfully take a WTO case against the US for any such action.

Finally, China has warned it will retaliate if the US were to take protectionist actions.  An article in the Beijing-based Global Times spelled out how the  country would cancel its orders of Boeing aircraft, restrict US auto and I-phone sales in China and halt US soybean and maize imports, while a number of US industries would be impaired.

But if an across-the-board tariff hike is out of the question, the Trump administration is likely to consider taking more trade-remedy action on a range of products from China and other countries by claiming they are being dumped or unfairly subsidised.

There are loopholes in the WTO rules on trade remedies which have made these a favourite protectionist tool.  A country can slap on high tariffs against an imported good from another country by claiming its price is artificially low because it has been “dumped” (exported at a price lower than the domestic price) or unfairly subsidised by the state.

But if the exporting country complains and a WTO panel rules that the actions were wrongly taken, there is no penalty imposed against the offending country which is only asked to lift the tariff.  Meanwhile the aggrieved country has lost many years of export earnings.  Moreover, the same actions can again be taken against the same country, thus perpetuating the protection.

We may see a rise in such trade-remedy actions under President Trump, especially if he is counselled against taking the more blatant route of imposing an all-out tariff wall.

But we can also expect tit-for-tat counter-action of the same type by the affected countries, in a global spiral of protectionism.  That will be in nobody’s interest.

The new Trump presidency is also expected to usher in a major change in how the US (and eventually many other countries) will perceive free trade agreements.   Trump’s objection to the TTPA and NAFTA seems to be based on the issue of goods trade, that the template of these agreements seems to favour the exports of the partner countries at the expense of the US.

Trump said he would instead “negotiate fair bilateral deals that bring jobs and industry back.”  This appears to be neo-mercantilist and against the free-trade principle, but it is this kind of “America-first” populism that helped propel him to power.

If the new US policy moves in this direction, what is to prevent other countries from doing likewise?   “Free trade” or “fair trade” will be interpreted by each country in ways that favour it, and many of the present rules will have to be set aside.

However the FTAs are much more than trade, and they became unpopular with the public in the US and elsewhere not only because of the threat of cheap imports taking over the market of local producers, but also because of the non-trade issues that are embedded in most recent FTAs, including FTAs between developed countries, and those between developed and developing countries.

If the new US policy moves in this direction, what is to prevent other countries from doing likewise? “Free trade” or “fair trade” will be interpreted by each country in ways that favour it, and many of the present rules will have to be set aside.


One of these issues include investment rules aimed at liberalising foreign investment and financial flows, with an especially controversial section that gives rights to foreign investors to take cases and make claims against the host government in an international tribunal.

Another issue is the strengthening of intellectual property rules that favour multinational companies at the expense of local consumers.  A most unpopular effect is a tremendous rise in the cost of some patented medicines through the additional curbing of competition from cheaper generic drugs.

Other issues include the opening up government procurement to foreign firms on a national-treatment basis, thus reducing the share of local businesses in this huge sector;  the liberalisation of the services sectors, which for some countries may affect the cost of basic services that are normally performed by the public sector;  and, in the most recent FTAs, the establishment of new rules overseeing the policies and behaviour of state-owned enterprises.

The structure of this kind of North-South FTAs is mainly unfavourable to developing countries in general.  While a developing country can get some benefits on the trade component through better market access to the developed country, the non-trade issues are usually against their interests as the developed countries are far stronger and have the upper hand in the areas of investment, intellectual property, services and procurement.

However, civil society groups in the developed countries also find the non-trade issues against the public interest.  For example, the investor-state dispute system undermines the ability of these countries to set their own environmental or health policies, and the tighter intellectual property rules impede access to medicines and knowledge in these advanced countries as well.

Through the recent FTAs, sensitive areas and issues that were previously under the purview of the national government are now subjected to new and intrusive rules that cramp the space that countries (whether in the South or North) normally have to set their own policies.

Both the trade and non-trade issues have made the “trade agreements” highly controversial.  Civil society groups in developing countries have been expressing their concerns that the public interest and national sovereignty are being undermined.

At the same time, the public in developed countries, including in the US, Europe, Canada, Australia, New Zealand and Japan, have become disillusioned and even outraged by the effects of the FTAs their governments signed or proposed.

The anti-FTA movement became so strong in the US that it helped boost the unexpectedly good showing by Bernie Sanders in the Democratic primaries, pressurised Hillary Clinton to pledge her  opposition to the TPP, and enabled Trump to ride on and add to the “anti-trade” emotions in his  campaign.

The heightened focus on trade policy during and after the US elections is a good time to review what works and what does not work for the public interest in trade agreements.

It is becoming clear that trade agreements have become overloaded with many issues that do not  belong to an agreement originally designed for trade in goods.

For example, there is a history and logic to the “non-discrimination” and “national treatment” principles established for trade in goods among countries, and even then there is a debate on the conditions under which the  application of these principles bring about mutual benefits  in trade.

The same principles and template are often inappropriate when applied to non-trade issues for which they were not designed.  Creating rules based on these principles and including them in trade agreements can lead to imbalances and unequal outcomes among the partners, and even adverse consequences for all the partners.

However in recent years the scope of trade agreements has grown to include more and more issues, to which the original trade principles have been applied, leading to more and more contention and unpopularity.

The overloaded agenda in FTAs gives trade a bad name, with people being confused between trade, trade policy and trade agreements.  Many people who are disgruntled with trade agreements also become unhappy with trade per se, and the benefits that trade can bring get mixed up with and overwhelmed by the contentious non-trade issues, and trade ends up being condemned as well.

It is important, at this moment of an imminent Trump presidency, to clarify the difference between trade and trade agreements, and to review the whole issue of trade policy.

A good outcome would be to design new agreements that are mutually beneficial in the trade aspect to all partners, whilst removing the controversial non-trade issues from the agenda.   And this could be part of a broader pro-development trade agenda.

But this is not likely to be the new agreements being envisaged by the Trump team. The danger is that these may be even worse than the existing ones.

We risk entering a new era where the US, and maybe some other developed countries as well,  are tempted to promote extreme trade protectionism, whilst retaining or expanding the unpopular non-trade issues in the trade agenda because it is in the interest of their corporations.

We might end up with a new type of “America first” agreements, in which a Trump administration  ensures that the US can curb imports whilst championing its exports, thus reducing the trade benefits to its  partners;  while at  the same time strengthening the rules in non-trade issues like intellectual property and liberalising financial services that favour US corporations but are against the partners’ interests.

That would be the worst of both worlds, at least for developing countries.

It is thus crucial for policy makers and thinkers in developing countries  to rethink what kind of trade is good for their economies, what kind of trade policy would correspond to that positive trade performance, and what kind of trade agreements would be good to have and which types should be avoided.

It is also time to rethink the role of the World Trade Organisation and reaffirm the priority of developing a balanced and pro-development multilateral trading system.  If (and that is a big if) the WTO could evolve into such an ideal system, there would be no need or less need for bilateral trade agreements.

Excerpt:

Military checkpoint on the Atrato River. Credit: Jesús Abad Colorado/IPS

By Jim Lobe
WASHINGTON, Apr 9 2014 (IPS)

Three years after Colombia agreed to U.S. demands to better protect labour rights and activists, a “Labour Plan of Action” (LPA) drawn up by the two nations is showing mixed results at best, according to U.S. officials and union and rights activists from both countries.

Pointing to continuing assassinations of union organisers, among other abuses, U.S. lawmakers and union leaders here are calling on President Barack Obama and Colombian President Juan Manuel Santos to do much more to ensure that the LPA achieves its aims.“In spite of numerous new labour laws and decrees... companies still are violating worker rights in Colombia with impunity." -- Richard Trumka

“(V)iolence against trade unionists continues; in the three years since the Labour Action Plan was signed, 73 more trade unionists were murdered in Colombia. That alone is reason enough to say the Labour Action Plan has failed,” said Richard Trumka, the president of the biggest U.S. union confederation, the AFL-CIO, Monday in response to a new report by the Colombia’s National Labour School (ENS).

“In spite of numerous new labour laws and decrees, and hundreds of new labour inspectors not a single company fined by the Ministry of Labour for violating the law and workers’ rights has paid up, and companies still are violating worker rights in Colombia with impunity,” he added.

For years Colombia has been considered one of the most dangerous countries in the world for trade unionists, more than 3,000 of whom have been killed since the mid-1980s.

While Colombia has long been given preferential trade treatment by Washington as part of its broader “war against drugs” in the Andean region, the administration of President George W. Bush negotiated a free-trade agreement (FTA) with Colombian President Alvaro Uribe in 2006.

But the deal was strongly opposed by the AFL-CIO, labour and human rights-groups, and their allies in Congress who refused to ratify the FTA without provisions designed to substantially improve the country’s labour rights performance.

The pact was essentially put on ice until Obama and Santos signed what is formally known as the United States–Colombia Trade Promotion Agreement in April 2011 to which the Labor Action Plan (LAP) was attached.

The LAP — which, among other provisions, required the Colombian government to protect union leaders; enact legislation to ensure that workers could become direct employees instead of subcontractors; establish a new ministry of labour; and prosecute companies that prevent workers from organising — aimed to bring Colombia’s labour practices up to international standards.

While the original intention was to delay the FTA’s implementation until after the LAP’s conditions had been met, Congress approved the FTA in October 2011.

The activists insisted this week that the approval was premature in that it relieved the pressure on the Santos government to fully carry out the LAP.

“The approval of the FTA by the United States Congress, without verifying full compliance with the LAP, significantly reduced the political will behind the plan and contributed to decisively in turning the LAP into a new frustration for Colombian workers,” according to a joint statement issued Monday by Trumka and the leaders of two of Colombia’s trade union movements, the Confederation of Workers of Colombia (CTC) and the Union of Colombian Workers (CUT).

The statement, which also called for a “serious review” of the FTA’s impact on Colombia’s agricultural and industrial sectors and on its exports to the U.S., was also signed by more than a dozen other trade-union and human rights groups in the U.S. and Colombia.

For its part, the Office of the U.S. Trade Representative (USTR), which oversees the implementation of both the LAP and the FTA, gave the record of the past three years a more positive spin in its own report released Monday.

“Three years ago, the Colombian Labor Action Plan gave the United States and Colombia an important new framework, tools and processes to improve safety for union members and protections for labor rights. We have made meaningful progress to date, but this is a long-term effort and there is still work to be done,” USTR Michael Froman said.

The department’s report noted that 671 union members have been placed in a protection programme, which in 2013 had a nearly 200 million dollar budget; that more than 250 vehicles had been assigned assigned to union leaders and labour activists for full-time protection; and that the prosecutor general has assigned over 20 prosecutors to devote full-time to crimes against union members and activists, among other achievements.

It also noted that the number of union members who have been murdered for their organising activities has been reduced to an average of 26 per year since the LAP took effect from an annual average of nearly 100 in the decade before it.

“The action plan has been a good effort, and I know the government [in Bogota] has been taking it seriously,” said Michael Shifter, president of the Inter-American Dialogue (IAD), a hemispheric think tank.

“Of course, the activist groups are right to press harder for compliance and to hold both the U.S. and the Colombian governments to account on this, but the fact is that there has been progress and there should be more,” Shifter, a specialist on the Andean countries, told IPS.

In its report, the ENS concluded that the LAP had overall failed to produce meaningful results in protecting worker rights, including the right to be free from threats and violence or in prosecuting recent and past murders of trade union leaders.

“We would like to emphasize that thousands of workers and their trade union organizations have tried to make use of the new legal provisions that protect them against labor abuses, but mmost have found themselves more vulnerable since judges, prosecutors, and labor inspectors almost always refuse to provide the protection available under the new legal framework,” the ENS report concluded.

In many cases, it said, efforts to gain protection had “only backfired on workers,” particularly those working in ports and palm plantations.

ENS’s conclusions echoed those of a report released last October by U.S. Reps. George Miller and James McGovern, both of whom serve on the Congressional Monitoring Group on Labor Rights in Colombia.

“The ENS report reminds us that we have a very long way to go in successfully implementing the LAP and ensuring that workers can safely and freely exercise their fundamental rights,” the Group said, adding that the new U.S. ambassador to Colombia, Kevin Whitaker, make LAP’s implementation a priority and highlight illegal forms of hiring, the use of collective pacts by companies to thwart union organising, and the problem of impunity for anti-union activity.

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com.

The home of a poor farming family in the mountains of Cajamarca, in the central Colombian department of Tolima. Credit: Helda Martínez/IPS

By Helda Martínez
IBAGUÉ, Colombia , Apr 8 2014 (IPS)

“Things are getting worse and worse,” Enrique Muñoz, a 67-year-old farmer from the municipality of Cajamarca in the central Colombian department of Tolima, once known as the country’s breadbasket, said sadly.

“Over the past five decades, the situation took a radical turn for the worse,” activist Miguel Gordillo commented to IPS, referring to what is happening in Tolima, whose capital is Ibagué, 195 km southwest of Bogotá.

“Fifty years ago, Ibagué was a small city surrounded by crops – vast fields of cotton that looked from far away like a big white sheet,” said Gordillo, head of the non-governmental Asociación Nacional por la Salvación Agropecuaria (National Association to Save Agriculture).

“In Tolima we planted maize, tobacco, soy, sorghum and fruit trees, and the mountains that surrounded Cajamarca were covered with green coffee bushes protected by orange trees, maize and plantain, and surrounded by celery,” Muñoz said.

His voice lost in the past, he said the farms in the area also had “piggies, chickens, mules, cows; everything was so different.”

Gordillo said, “In the north of the department we had fruit trees of all kinds, and the rivers were chock full of fish. There’s still rice, some maize, coffee…but even the fish have disappeared.

“In short, in five decades the look of this agricultural region has changed, and today it’s all freeways, residential complexes, gas stations, and here and there the odd field with crops,” he complained.

As a result, everything changed for Muñoz. “My wife and I are now supported by our kids who work, one in Ibagué and two in Bogotá. On the farm we have a cow, whose milk we use to make cheese that we sell, and we plant food for our own consumption.”

Muñoz plans to take part in the second national farmers’ strike, on Apr. 27, which the government is trying to head off.

The first, which lasted from Aug. 19 to Sep. 9, 2013, was held by coffee, rice, cotton, sugar cane, potato and cacao farmers, who demanded that the government of Juan Manuel Santos revise the chapters on agriculture in the free trade agreements (FTAs) signed by Colombia, especially the accord reached with the United States.

The national protest was joined by artisanal miners, transport and health workers, teachers and students, and included massive demonstrations in Bogotá and 30 other cities.

Clashes with the security forces left 12 dead, nearly 500 injured and four missing.

Colombia has signed over 50 FTAs, according to the ministry for economic development.

The highest profile are the FTA signed in 2006 with the United States, which went into effect in May 2012, and the agreement with the European Union, that entered into force in August 2013, besides the FTAs with Canada and Switzerland. Another is currently being negotiated with Japan.

In 2011, Colombia founded the Pacific Alliance with Chile, Mexico and Peru, and Panama as an observer. It also belongs to other regional integration blocs.

“Colombia’s governments, which since the 1990s have had the motto ‘Welcome to the future’, lived up to it: that future has been terrible for Tolima and the entire country,” Gordillo said.

In the last four years, coffee farmers have held strikes until achieving subsidies of 80 dollars per truckload of coffee.

In this South American country of 48.2 million people, agriculture accounts for 6.5 percent of GDP, led by coffee, cut flowers, rice and bananas. But that is down from 14 percent of GDP in 2000 and 20 percent in 1975.

“Agriculture is doing poorly everywhere, and Tolima is no exception,” the department’secretary of agricultural development, Carlos Alberto Cabrera, told IPS.

“Rice, which is strong in our department, is having a rough time,” he said. “In coffee, we are the third-largest producers in the country, and we hope to become the first. There’s not much cotton left. In sorghum we are the second-largest producers. Soy is disappearing, tobacco too, and many products are now just grown for the food security of our farmers.”

In the search for solutions, “we have invited ministers and deputy ministers to the region, but their response has been that we should plant what sells, to stay in the market of supply and demand,” he said.

But Cabrera said that in the case of Tolima, the FTAs weren’t a problem. “We haven’t felt any effect, because the only thing we export is coffee. Rice is for national consumption, and sorghum goes to industry,” he said.

Gordillo, meanwhile, criticised that when ministers visit the department, “they say farmers should plant what other countries don’t produce, what they can’t sell to us. In other words, they insist on favouring others. They forget that the first priority should be the food security of our people, and not the other way around.”

Because of this misguided way of looking at things, he said, “our farmers will hold another national strike. People from Tolima and from many other regions of the country will take part, because the government isn’t living up to its promises, and all this poverty means they have to open their eyes.”

The government says it has fulfilled at least 70 of the 183 commitments it made to the country’s farmers after last year’s agriculture strike.

The farmers were demanding solutions such as land tenure, social investment in rural areas, protection from growing industries like mining and oil, and a fuel subsidy for agricultural producers.

The government says it earmarked 500 million dollars in support for agriculture in the 2014 budget.

In the last few weeks, the ministry of agriculture and rural development has stepped up a campaign showing off its results, and President Santos has insisted in public speeches that “a new farmers’ strike is not justified.”

The authorities are also pressing for dialogue to reach a national pact with farmers, as part of their efforts to ward off the strike scheduled for less than a month ahead of the May 25 presidential elections, when Santos will run for a second term.

Small farmers and other participants in a Mar. 15-17 “agricultural summit” agreed on eight points that should be discussed in a dialogue, including agrarian reform, access to land, the establishment of peasant reserve zones, prior consultation on projects in farming and indigenous areas, protection from FTAs, and restrictions on mining and oil industry activities.

The protests in Colombia have spread to the cities, fuelled by images of police brutality against rural families. Credit: Helda Martínez/IPS

By Constanza Vieira and Helda Martínez
BOGOTA, Aug 30 2013 (IPS)

A strike declared nearly two weeks ago in Colombia by farmers and joined later by truck drivers, health workers, miners and students spread to include protests in the cities before mushrooming into a general strike Thursday, demanding changes in the government’s economic policies.

The protests ballooned after clashes with the ESMAD anti-riot police left at least two rural protesters dead and over 250 under arrest.

Also fuelling the unrest, say analysts, was the attempt by President Juan Manuel Santos to minimise the strikers’ actions. He said on Sunday Aug. 25 that “the so-called national agrarian strike does not exist.”

The authorities, meanwhile, allege that the nationwide roadblocks and protests have been connected to the country’s left-wing guerrillas.

The head of the Fensuagro agricultural trade union, Húber Ballesteros, was arrested Sunday, accused of financing the rebels. He is one of the 10 spokespersons selected by the Mesa de Interlocución Agropecuaria Nacional (MIA) to negotiate with the government.

MIA, a national umbrella movement, emerged from over two months of protests by campesinos or small farmers in Catatumbo, an impoverished area in northeast Colombia, where they are calling for government measures that would make it possible for them to stop producing coca – their main livelihood in the isolated, roadless area — and switch to alternative crops.

Since the campesinos began to protest in Catatumbo in June, the problems facing small farmers around the country have become more visible.

The difficulties they face are especially exacerbated in the central provinces of Boyacá and Cundinamarca and in Nariño in the southwest, where smallholder production of potatoes, onions, maize, fresh produce, fruit and dairy products is the main economic activity of much of the population.

Since Monday Aug. 19, small farmers around the country have been on strike to protest that they cannot compete with low-price food products imported under free trade agreements with the United States (in effect since May 2012) and the European Union (in effect since Aug. 1). They are also complaining about rising fuel, transport and production costs.

Another target of the farmers’ protests is “Resolution 970”, passage of which was required by the U.S.-Colombia FTA, which protects genetically modified seeds under intellectual property rights, making the replanting of them a crime.

In addition, they are protesting large-scale mining projects that have been given the green light in agricultural regions, without consulting local communities as required by law.

It all boils down to the lack of real policies for the countryside, says MIA, which presented a lists of demands before the farmers’ strike began.

The list calls for solutions to the crisis affecting farmers; access to land titles proving ownership; recognition of protected campesino territories; participation in decisions involving mining industry activity; guarantees for exercising political rights; and social spending and investment in infrastructure like roads in rural areas.

On Sunday Aug. 25, the protests spread to the cities, after farmers posted photos and videos on social networking sites of the ESMAD riot police’s brutal crackdown on campesino families, including children and the elderly.

A mission of human rights defenders reported that the riot police had fired live ammunition into crowds of protesters, and that injured demonstrators had wounds indicating that they had been beaten and even stabbed or shot by ESMAD. The mission also documented reports of sexual abuse and rape threats against the wives and daughters of campesinos taking part in the protests.

One woman who reported that the police threw a tear gas canister directly at her inside her home told the human rights defenders: “I was cooking for my kids when I saw an ESMAD agent in the window who, without saying anything, broke the glass and just threw [the canister] inside. I ran out to protect my kids.”

In response to the images and reports of police brutality, people in the cities began to protest, with “cacerolazos” – where demonstrators bang on kitchen pots and pans – which are common in some Latin American countries but are unusual in Colombia.

President Santos apologised and launched a dialogue, in an attempt to negotiate by region or by sector. But his strategy failed and the unrest continued to spread.

Santos said on Wednesday Aug. 28 that his instructions to the security forces to clear the roadblocks, “as they have been doing,” were still standing.

On Thursday, he unexpectedly cancelled his participation in Friday’s Union of South American Nations (UNASUR) summit in Suriname.

Thousands of indigenous people in the southwestern province of Cauca reported Wednesday that they had begun rituals to join the protests.

“The national agricultural strike is the result of problems and demands that have built up over many years,” economist Héctor León Moncayo, a university professor who is a co-founder of the Colombian Alliance against Free Trade (RECALCA), told IPS. “The only solution now is to bring about a major transformation.”

“A true agrarian reform process has never been carried out in Colombia. Every attempt has failed,” he said. The civil war, which has dragged on for nearly 50 years, “was a pretext for building up military power, and in parallel, paramilitary power,” he argued.

“The far-right paramilitaries stepped up the violence against the campesino population, fuelling massive displacement,” he said.
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According to the figures of the Consultancy for Human Rights and Displacement (CODHES), a leading Colombian human rights group, 5.5 million people were displaced from their homes between 1985 and 2012.

From behind the scenes, “the drug lords increased the concentration of land ownership, and today there are very few regions with a small-scale campesino economy. Clear examples are the latifundios (large landed estates) where sugarcane and African oil palm are grown,” Moncayo said.

According to January statistics from the National Agrofuels Federation, 150,000 hectares of land are dedicated to sugarcane and oil palm, of the country’s total of five million hectares of farmland.

The government of César Gaviria (1990–1994) introduced free-market reforms to open up the economy. And more recently, free trade agreements have further undermined the competitiveness of small farmers.

Moncayo said campesinos have lost the ability to make a living by selling their products, thanks also to dumping – the export of products by Colombia’s partners at prices below production costs.

“It would be very hard to get the free trade agreements revoked, but it is possible – and urgently necessary – to design sustainable policies for rural development for campesinos,” he said.

According to the United Nations Development Programme, 32 percent of Colombia’s population of 47 million lives in rural areas, and between nine and 11 million people depend on farming for a living.

“We need to make the transition from traditional agriculture to agroecology, to revive the Colombian countryside,” Adriana Chaparro, a professor at Uniminuto, a private college that offers degrees in agroecology, told IPS.

“Agroecology is a big challenge that would make it possible to obtain the best results from farming, without deterioration of the land,” she said. “It would also prevent what many are calling for: subsidies for agriculture, which would require increasingly large investments, which are difficult to finance.

“These protests, which include fair demands, are also an opportunity to take a close, critical look at our agricultural practices, without falling into the government’s way of thinking,” Chaparro said.

Agroecology student Tatiana Vargas said these practices “should become a way of life, which would help us go back to our essence.”

Ajegunle, a low-lying slum in Lagos, Nigeria. Analysts say that the Nigerian market itself is huge and under-served. Credit: Sam Olukoya/IPS

By John Fraser
JOHANNESBURG , Jun 17 2013 (IPS)

If a Free Trade Area were to be negotiated between Africa’s two largest economies, South Africa and Nigeria, it would have a powerful effect on trade across the sub-continent and would challenge other countries to respond.

“In my view it would bring substantial economic benefits to both sides in terms of exports, investment, competition enhancement and, ultimately, productivity,” Peter Draper, a senior research fellow at the South African Institute of International Affairs, told IPS.

The countries have already entered into an informal agreement of cooperation. In May, South African Trade and Industry Minister Rob Davies announced during a visit to this country by Nigerian President Goodluck Jonathan that South Africa pledged to help Africa’s most populous nation make the automotive sector the West African nation’s flagship industrial sector.

However, there are concerns that an FTA would give one-sided benefits to the South Africans, who have a developed manufacturing sector, at the expense of the less-industrialised Nigeria.

“That is not to say South Africa is not favourably disposed, but rather to suggest that to the extent there is political will behind the idea it would be in favour of a limited trade arrangement and not a comprehensive one,” Draper said.

Johannesburg-based businessman R J van Spaandonk has the official licence to import Apple computers, phones, tablets and other products into both the South African and Nigerian markets. He told IPS that the proposed FTA would send a very positive signal, as the two governments seem to be getting closer and closer all the time.

“But in practice the benefits may be limited. Many South African companies operate in Nigeria through non-South Africa entities, so it is not clear if they could be considered as beneficiaries of such an FTA.”

However, he did suggest that it would be a welcome move if it were to make it easier to trade between Nigeria and South Africa.

“I would welcome more transparency on what rules and regulations apply – in terms of import restrictions, product certification, visas, and so on – and faster execution and processing. On both sides, probably.”

Jabu Mabuza, president of Business Unity South Africa, said that there is big potential for closer relations between the two countries, but said he would need more time to decide whether or not an FTA was the best approach.

“I personally welcome the coming together and reigniting of the relationship between our two nations.

“To the extent we can have mutual socially and politically-rewarding relations, we should do all that it takes.”

Jabu Mabuza, president of Business Unity South Africa, said that there is big potential for closer relations between the South Africa and Nigeria. Credit: John Fraser/IPS

However, Dianna Games, the chief executive of consultancy ‘africa @ work’, told IPS that she believes there is enough current and future trade between both nations to look at the issue of an FTA. However, she is concerned about the lack of non-oil trade from Nigeria to South Africa.

“The manufacturing sector in that country is still at a fledgling stage, partly because of serious power shortages,” she explained.

“Although Nigeria is one of South Africa’s main suppliers of crude oil, there is almost no non-oil trade taking place.”

The South African Revenue Service reported that in the first three months of 2012 Nigerian exports to South Africa were worth 750 million dollars, with 740 million dollars made up of mineral products, mainly oil. In the same three months, South African exports to Nigeria were worth 150 million dollars.

“The Nigerian market itself is huge and under-served so what capacity exists is easily swallowed up by the local market itself, with some trade into the West African region. There is nothing to suggest that South Africa will be a market of choice for Nigerian goods and services for some time to come,” she said.

This caution was echoed by Foluso Phillips, the chairman of Lagos-based Phillips Consulting, a business consultancy of branding advisors.

“There is much that South Africa can offer Nigeria, but there has been a problem of attitude and lack of trust as well as divergent objectives by both parties,” he said.

“However, there must be a strong spirit of win-win, as the track record and perception makes it all look one-sided in South Africa’s favour.”

He said that any agreement between both countries had to be on real technology transfer and of value to Nigeria. He added that if an FTA were negotiated, “South Africans (could) not come to the table with a ‘smarter by half’ attitude.”

He insisted that there would need to be a focus on bringing value to Nigeria and not on making his country a dumping ground for South African goods if his country’s borders were to be thrown open to South African exports.

“Nigeria cannot continue to fund imports paid for by oil – so if the value proposition from South Africa is predicated on local input but joint ownership, then we are on to a winner.”

Games said that while there was recognition of the importance of both countries to each other and the continent generally, Nigeria would need to be persuaded of the benefit to its market.

“Such a move has positive spinoffs in terms of South Africa assisting Nigerian companies to build industrial scale and capacity.

“The discussion about developing linkages between South Africa and Nigeria in the auto industry (which took place when Jonathan was in South Africa) is an example of something that could be replicated in other sectors.”

She also believed that it would be important symbolically to highlight a greater level of cooperation between the two countries, which she sees as the two pivotal states in Africa, both politically and economically.

“The economic success of each is important not just to their respective hinterlands but also to the broader development of the continent, and if an FTA proved to be politically acceptable – not just to politicians but also other stakeholders such as business – it would help to cement ties between the countries,” she concluded.

Meanwhile, Draper said that if Nigeria and South Africa were to bring their regional neighbours into the negotiation “it could lead to a juggernaut effect of competitive liberalisation incorporating southern and western Africa. Managing this would be, to say the least, challenging.”