UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
AFRICA ACTION Africa Policy E-Journal June 29, 2003
US/Africa: Trade Wars, 1 (Reposted from sources cited below)
As President Bush prepares for his trip to Africa from July 7-11, trade is high on the agenda. The official speeches during the trip are sure to tout the mutual benefits of trade, as host countries hope to gain additional access to U.S. markets. At the same time, however, U.S. and African agendas are diametrically opposed on most issues being considered by the World Trade Organization which will hold its summit in Cancun, Mexico in September. The trade summit is held every two years, with Cancun following four years after Seattle's protests and two years after the meeting in Doha that was labelled as beginning a "development round" of trade talks.
Since Doha, in fact, the rich countries have fought a stubborn and so-far successful battle to block advances on priorities laid out by African and other developing countries, with the U.S. taking the hardest anti-African and anti-development line. The details of these debates are so buried in technical language and diplomatic understatements that it is difficult to discern the issues at stake, or the scale of the disagreements. Nevertheless, the consequences, in areas ranging from agricultural subsidies to the availability of generic AIDS drugs, are matters of life and death. The casualties easily compare with those from more visible armed conflicts. Clear statements such as the one below by Mali President Amadou Toumani Toure, laying out the damage done to West African cotton producers by international trade rules and calling for compensation to be paid, deserve far wider attention.
This set of two e-journal postings focuses on key trade
issues, by highlighting recent African statements as
well as analyses from the Third World Network, a group
that closely monitors global negotiations on these
issues. In order to cover a range of issues, the e-mail
version of these postings contains brief excerpts only
(as non-technical as possible) from a variety of documents.
More details can be found in the archived version of
the postings (goto http://www.africaaction.org/docs03/chr03.htm)
or in links to other websites.
These issues will also be among topics covered at a July 2 Briefing for White House Press Corps and other media "Heart of Darkness: The Truth about Africa Policy under the Bush Administration" [http://www.africaaction.org/desk/adv0306a.htm]
For recent speeches and documents highlighting official perspectives on expanding trade, see the website for the African Growth and Opportunity Act at http://www.agoa.gov as well as the allafrica.com section on AGOA http://allafrica.com/agoa
The latest U.S. African Trade Profile, released in March, shows U.S./African trade for 2002 down 15% over the previous year, with both exports and imports declining [see http://www.agoa.gov/resources/TRDPROFL03.pdf]
(1) Double Standard on Subsidies - President Amadou Toumani Toure
While rich countries and international financial institutions press for minimizing "market-distorting" government subsidies in African countries, often at enormous human cost, the most massive interference with international agricultural markets comes from European and U.S. subsidies to rich farmers. This issue has gained new attention in recent years, as the World Bank has critiqued rich country governments and Europe and the U.S. have pointed their fingers at each other's offenses. But there has been little progress in changing this double standard.
West African cotton-producing countries have now filed a formal complaint with the World Trade Organization for damages to their cotton industries. In a statement submitted to the House Inernational Relations Subcommittee on Africa last week, Mali President Amadou Toumani Toure noted the damage done to African agriculture around the continent by $300 billion of U.S. and European subsidies. "We have decided to pull the alarm bell," he said.
For additional background see:
Cultivating Poverty. The Impact of US Cotton Subsidies on Africa http://www.africaaction.org/docs02/ag0209a.htm
Additional statements from the hearing, from Subcommittee Chair Edward Royce and ranking Democrat Subcommittee member Donard Payne, are available on the committee's website at http://wwwa.house.gov/international_relations/afhear108.htm
- - -
Mali President Says Agricultural Subsidies Undercut Development
House International Relations Committee. Africa Subcommittee
June 25, 2003
U.S. and European agricultural subsidies have undercut the ability of developing countries to export their products, weakened the commodity prices on world markets, and severely undermined African economies, Malian President Amadou Toumani Toure told members of Congress June 24.
In written testimony presented to the House International Relations Subcommittee on Africa, Toure said these subsidies paid by developed countries to their farmers have been the major reason, for example, for a "drastic" fall in world cotton prices. The consequences of the subsides for developing countries have been significant, he reported: Mali's GDP dropped 1.7 percent and export receipts fell 8 percent in 2001; Burkina Faso lost 1 percent of GDP and 12 percent of export receipts; and Benin lost 1.4 percent of GDP and 9 percent of export receipts.
Toure cited cotton as an example of low prices created by subsidies in developed nations having caused poverty, which he warned, "leads to rural depopulation," unrest and terrorism.
"The paradox in the situation is that African producers can no longer live on their cotton," he told the lawmakers, "which still remains the most competitive product in the world."
Illustrating his point, Toure said "when the price of cotton was 35 cents a pound, in late 2002, the production cost was, on average, 47 cents a pound in Western and Central Africa against 73 cents a pound in the United States. Production costs in Europe (Greece and Spain) were even higher.
"African cotton-producing countries draw no profit from this comparative advantage because international trade rules, as defined by the World Trade Organization, are biased by the substantial subsidies granted to European, American and Chinese cotton producers," he said.
Those subsidies were estimated, in 2001, he said, at $700 million in Europe, $2.3 billion in the U.S. and $1.2 billion in China.
"Facing the growing deterioration of our economies and the threats on the survival of our cotton sector, we have decided to pull the alarm bell" and seek "an equitable solution in favor of African cotton producers," he said.
Toure said African leaders are "delighted" that the U.S. Congress has come to understand the problem and has begun holding hearings on the subject.
[The Malian President was referring to opening remarks by Ed Royce (Republican of California), who chairs the Subcommittee on Africa. Royce said that "no sector of the world economy ... is more laden with rules, tariffs, quotas, subsidies and other government interventions in the market than agriculture. While tariffs worldwide average roughly four percent on industrialized goods, the average on agricultural products is 62 percent." These tariffs effectively shut out many African products, deterring investment in African agriculture, he said. Farm subsidies, he said, "are another hurdle," encouraging overproduction, depressing world market prices and reducing the competitiveness of African agricultural products, both domestically and as an export."]
Following are excerpts from the text of the Malian President's remarks:
Written Statement by H.E. Mr. Amadou Toumani TOURE, President of the Republic of Mali, to the International Relations Committee, Sub-Committee on Africa, House of Representatives.
June 24th, 2003
More than 70% of our fellow-citizens live in rural areas, and if the economy were to develop, it would surely do so through agriculture. Agriculture is the backbone of Mali's economy. As such, it stands for 42% of our country's GNP, and provides both the government and communal authorities with 75% of our exports receipts as well as a large portion of tax revenues.
That is why we are committed to make intensive agriculture the driving engine of Mali's development.
Agriculture provides us with more than food. It is the source of income for most of our 11 million fellow citizens. ... To put it simply, a prosperous and profitable agriculture is absolutely essential to enable Mali pursue her democratic development in peace. That is why, my Government has placed agriculture and rural development at the core of our economic development strategy, and last year we increased our budget allocated to agricultural development by 30%.
In underscoring Mali's case, I wanted to concretely illustrate my talk. What you should retain from it is mainly the fact that I could have said the same thing talking about Burkina Faso, Benin and Chad: because the problem facing our cotton sectors is the same.
A few years ago, cotton was a source of wealth for us. Nowadays, it has turned into a burden, a factor of impoverishment. This trend mainly worsened over the last three years, marked with a drastic fall in world prices, which reached their lowest level, at 35 cents a pound in late 2002. ,,,
Beside the macro economic impact of these losses in receipts caused by subsidies in developed countries, it is worthy to note the socio-economic repercussions on the 15 million people out of which two million producers live directly on cotton. ... According to a survey conducted by the International Cotton Advisory Board, the withdrawal of US cotton subsidies shall increase Malian cotton farmers' income by more than 31%, from $500 to $659 a year, a huge amount in a country where very few people earn $1 a day. For the Malian economy as a whole, that will generate a gain of more than $55 million per year, a sum that is higher than the total value of the United States' assistance to my country. ...
international trade rules, as defined by the World Trade Organization, are biased by the substantial subsidies granted to European, American and Chinese cotton producers. Those subsidies were estimated, in 2001, to $700 million for Europe, $2.3 billion for the USA and $1.2 billion for China.
Facing the growing deterioration of our economies and the threats on the survival of our cotton sector, we have decided to pull the alarm bell ...
A lasting settlement of the African cotton crisis shall be achieved through:
1 -- A recognition of the strategic importance of cotton in our development and in cutting poverty in our countries;
2 -- The total elimination of support measures to cotton production and export;
3 -- The setting up in Cancun, by the 5th WTO ministerial conference to be held from 10th to 14th September 2003, of a system to gradually reduce and eventually totally eliminate -- all cotton subsidies;
4 -- In appliance with the results of the Doha cycle, and until a total withdrawal of subsidies, compensations to be paid to the least advanced countries producing cotton in order to make up for the losses they incur. ,,,
(2) African Trade Ministers Declaration
Meeting in Mauritius June 19-20, 2003, trade ministers of the African Union re-affirmed African demands that the World Trade Organization address development issues that have been stalled, and rejected demands that the Cancun meeting in September move on to new issues requiring further market liberalization.
The U.S. agenda for Cancun will be key behind the scenes, if not in the public spotlight, on President Bush's Africa trip. As for previous WTO meetings, the pressure from the U.S. and Europe to divide African and other developing countries and push through new agreements will be enormous. [On Seattle and Doha, see, for example: http://www.africaaction.org/docs99/wto9912.htm and http://www.africaaction.org/docs01/wto0111.htm]
- - -
African Ministers Affirm Opposition to New Issues in Cancun by Tetteh Hormeku, TWN-Africa Grand Baie, Mauritius, 20 June, 2003
Third World Network Africa http://www.twnafrica.org
See also statement from Civil Society Organizations
present at the Mauritius meeting:
African Union ministers of trade, meeting in Mauritius, have re-affirmed the long-standing position of African countries that the forthcoming Cancun Ministerial Conference of the World Trade Organisation (WTO) should focus on addressing their developmental concerns in the existing agreements, instead of starting negotiations for new agreements, particularly on the so-called Singapore issues i.e. of investment, competition, government procurement and trade facilitation.
In a declaration adopted unanimously in Grand Baie, Mauritius, on Thursday June 19, the trade ministers noted that "WTO members do not have a common understanding on how [the Singapore issues] should be dealt with procedurally and substantively." ...
At the same time, the Ministers focused attention on the missed deadlines in the current negotiations on issues such as agriculture, TRIPS and public health, special and differential treatment and implementation-related issues. ... a diverse range of speakers - Ministers, representatives of sister groupings like the ACP group of countries, as well as African civil society organisations -- all urged unity around a common African position as necessary to ensure that the core concerns of Africa prevailed in Geneva and Cancun, whatever pressures are brought to bear on these countries.
The Ministers stated that agriculture was of critical importance to Africa's development, with the potential to "lift millions of our people" out of poverty. They added that progress in the agricultural negotiations was essential for the successful conclusion of the Doha work-programme, and strongly urged members to fulfil their Doha commitments. Ministers also noted the need for African countries to continue to enjoy agricultural trade preferences, calling for action to address the erosion of these preferences. Finally, they called for LDCs to be exempt from any obligations to reduce tariffs.
In relation to services, the Declaration charged the Services Council (of the WTO) with failure to satisfy the requirement in the General Agreement in Trade in Services (GATS) to carry out an assessment of trade in services. Furthermore, in a clear reference to the pressures from developed countries to liberalise their service sector against their will, the Ministers called for due respect for their rights to regulate trade in services and liberalise according to their national policy objectives. ...
On the Doha mandate regarding measures to enable countries which lack manufacturing capacity to access medicine for public health, the Ministers re-stated their support for their compromise deal reached in December last year, and wrecked by the United States. This deal, they added, still remains a means for members to fulfil their obligations as required by the Doha declaration.
For industrial tariffs, the Ministers stated the objectives of the negotiations as being to facilitate the development and industrialisation of African countries. ...This required, among others, fulfilment of the principles of special and differential treatment, as well as the principle that developing and least developed countries must not make full reciprocal commitments to reduce their tariffs. ,,,
The Ministers also expressed deep concern that the proposed modalities for liberalisation do not take into account the vulnerabilities of African industries, especially in clothing, fisheries and textile sectors, as well concern of African countries over the erosion of their trade preferences. They called for appropriate modalities to address these concerns. ...
In his welcome address to the Ministers, Honourable J Cuttaree, Minister of Industry and International Trade of the Republic of Mauritius asked Ministers to draw their strength and decision of purpose from their unity in order for Africa's pressing concerns over the core issues of the Doha agenda to be recognised in Geneva and Cancun.
He reminded ministers that nineteen months after the hope and optimism evoked with the launch at Doha of trade negotiations under the "title of Development Round", the development agenda is stranded in missed deadlines. ...
Cuttaree stated that "had the WTO been effective in finding expeditious solutions to the problems of TRIPS and Public Health, we should have seen an improvement for millions of people in Africa who are suffering from deadly diseases". Nor have African countries had any comfort "on their basic concerns in the areas of special and differential treatment, agriculture, and textiles.
He pointed to the double standards at play in the area of industrial tariffs. Here, proposals to drastically cut and eliminate tariffs, which African countries have already declared a recipe for disaster, are being pursued by countries that had themselves used this instrument in the early stage of their industrialisation process. "Having used the ladder for so long, it is not fair that they should kick the ladder off to the detriment of our countries". ,,,
African civil society organisations, who for the first time were allowed to meet under the auspices of the conference and to address the Ministers, underscored their support for the collective effort of the Ministers for international trade rules which reflected the needs and interests of the people of Africa.
In their statement, presented on their behalf by Jane Ocaya-Irama of Uganda, the civil society organisations called on the Ministers to focus on addressing the inequities of the existing agreements of the WTO, and reject any attempt to launch negotiations on the Singapore issues in Cancun. They made detailed recommendations for redress of imbalances in areas such agriculture, TRIPS, services, S&D.
In addition they drew attention to the undemocratic, and untransparent processes of the WTO, and called for the elimination of such abusive practices such as exclusive informal meeting, mini- ministerials, and such other untransparent devices as "friends of the chair". ...
The very presence of civil society organisations formally at the gathering of Ministers and the fact that they addressed their concerns directly to the Ministers was a welcome precedence for AU. But while the civil society organisations lend support to the Ministers, it was clear that their demands were stronger, and went far beyond what the Ministers were able to adopt in their Declarations. ...
Date distributed (ymed): 030629 Region: Continent-Wide Issue Areas: +economy/development+ +US policy focus+
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Message-Id: <200306292315.h5TNFtH28095@marduk.africapolicy.org> From: "Africa Action" <email@example.com> Date: Sun, 29 Jun 2003 19:17:45 -0500 Subject: US/Africa: Trade Wars, 1
Editor: Ali B. Ali-Dinar
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