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US/Africa: Trade Wars, 1
AFRICA ACTION
Africa Policy E-Journal
June 29, 2003 (030629)
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 a
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.africafocus.org/docs03ej/chr03.php>) or in links to other
websites.
These issues will also be among the 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]
+++++++++++++++++end summary/introduction+++++++++++++++++++++++
(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.africafocus.org/docs02/ag0209a.php>
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 is the text of the Malian President's remarks, as
prepared for delivery:
(begin text)
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
I would like, first of all, to express, on behalf of the people and
Government of Mali, most profound gratitude to the Congress and all
its August Members, for the opportunity thus given to me to come
and bear witness on the adverse consequences of agricultural
subsidies on the cotton producers in Mali and all over the African
continent.
I deem it a great honor for me to stand before you and talk to you
on behalf of Mali and on behalf of my brother heads of Sates of
Burkina Faso, Benin and Chad.
Mali and the United States share several common values. We both
believe in an open and vibrant democracy; we believe in freedom of
Speech and worship; we believe in human rights; we believe in
market economy. Mali closely works with the United States in
keeping peace and regional security, and remains a credible
partner in the struggle against terror. We have come to the United
States with the will to propose a sound partnership between our
two countries, but not as beggars.
Over the past 12 years, we accomplished huge progress in Mali. We
have established a strong tradition of democracy, held peaceful
elections, promoted political decentralization, which led to the
blossoming of the civil society, and undertaken in -depth economic
reforms. The cornerstone of these reforms was the liberalization of
our agricultural market starting with the cereal market. We have
highly appreciated the assistance granted to us by the United
States through the USAID, and the technical assistance from
American universities when we initiated those reforms, including
the competitive agricultural markets.
You will have a still clearer picture of our initiative, through
some indicators on the importance and weight of agriculture in our
economy. 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. It creates other
job and income generating activities in other sectors of the
economy such as food industry and women's micro-enterprises. It
supplies capital needed for investment in our rural areas, from
enterprises to roads. It secures decentralized communities with
incomes that enable them to pay for their schools and health
centers. Unless agriculture prospers, Malian children will not
learn how to read and write, families will be sick because of
polluted waters, women's micro-enterprises will not be
operational, and people will die from avoidable diseases. Our
youth will be jobless, and feel frustrated and alienated.
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.
Therefore, it is on behalf of all these countries that I
congratulate the Congress for this initiative, and I express our
gratitude to the Foreign Affairs Committee, the Sub-Committee on
Africa of the House of Representatives. Your initiative is a token
of your great compassion towards the development of our countries.
The assets to promote such development are, unfortunately, not too
many. Among them, cotton often occupies a prevalent position. I
have come here to talk to you precisely about the difficulties
facing this cotton on world markets.
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.
Although several factors concurred in this situation, agricultural
subsidies are the main cause of this market deregulation, which has
serious consequences on our economies.
As an example, in 2001 Mali lost 1.7% of her GDP and 8% of her
export receipts; Burkina Faso lost 1% of her GDP and 12% of her
export receipts; Benin lost 1.4% of her GDP and 9% of her export
receipts.
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. This situation generates
poverty among African rural folks, and particularly in cotton
producing areas. Poverty leads to rural depopulation. 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.
The paradox in the situation is that African producers can no
longer live on their cotton, which still remains the most
competitive one in the world. As an illustration: when the price
of cotton was 35 cents a pound, in late 2002, the production cost
was, in average, 47 cents a pound in Western and Central Africa;
against 73 cents a pound in the United States of America.
Production costs in Europe (Greece and Spain) were even higher
than in the USA.
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. 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, so that along with our partner countries we could come
out with an equitable solution in favor of African cotton
producers.
We are delighted to note that the US Congress has understood our
message and decided to offer us such a forum. The request from
Western and Central African cotton producing countries does not aim
at any form of confrontation. It is a hand stretched out for
dialogue and negotiation.
Each of the countries granting agricultural subsidies to their
cotton producers has an important responsibility in our countries'
development.
The Meaning of Our Sectoral Initiative on Cotton at the WTO
The recourse to WTO itself is an expression of our countries' trust
and confidence in the system of world trade regulation and
arbitration, in the inception of which the United States played a
major role.
The sectoral initiative on cotton is based on principles stated in
the new trade negotiations under the Doha cycle, which is aimed at
establishing an equitable and fair trade system tallying with
market rule.
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.
Your debates here are of crucial importance to Mali and other
African countries striving to tread the path of globalization,
which, in their opinion, should lead to reducing poverty and
famine. We are not requesting a special transaction; but we simply
wish the globalization race field to be an arena where competitors
shall have equal opportunities. We feel that, in working together,
the international community as a whole will be able to make trade
an instrument that can benefit all of us.
As we recommend the work initiated by your sub-committee, we are
convinced that we can rely upon the support of the US Congress and
Administration for the success of this initiative on cotton.
Thank you for your attention.
(end text)
(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 in such areas as
investment and government services. As in Seattle and Doha,
however, 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.africafocus.org/docs99/wto9912.php> and
http://www.africafocus.org/docs01/wto0111.php>] Even in not in the
official spotlight, these issues will be key behind the scenes
on President Bush's Africa trip.
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:
http://www.twnafrica.org/news_detail.asp?twnID=372=372
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." And, "taking
into account the potential serious implications of these issues on
our economies", they called "for further clarification on these
issues to continue."
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. Expressing concern at
this evidence of general lack of progress on the issues of critical
concern to their countries, they challenged the members of the WTO
to "inject momentum into the negotiations on these issues in order
to ensure that the Cancun WTO Ministerial yields positive results
for African countries and makes the Doha Work Programme a truly
'Development Agenda'."
The declaration invoked the outcomes of earlier meetings involving
African ministers such as the COMESA meeting in Nairobi, SADC in
Lusaka, and the LDCs in Dhaka. It was adopted with little drama and
no fuss, in an efficient display of unity of purpose and will. This
was at the end of a day of deliberations in which 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.
Apart from their position on the new issues, the Declaration
contained specific positions in all the major areas of the on-going
work in the WTO, including agriculture, services, industrial
tariff, TRIPS, special and differential treatment, capacity
building, and the lack of transparency and inclusiveness in WTO
processes.
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. At the
same time they emphasised the respect to the principle of
progressive liberalisation subject to the principle of flexibility,
as well as the need to promote and facilitate the participation of
African countries in international trade in services. Developed
countries only should therefore liberalise their sectors and modes
that are of export interest to African countries.
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. These must be reflected in
the modalities and actual negotiations by addressing tariff peaks
and escalations, and take fully into account the special needs and
interests of developing and least-developed 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 Declaration welcomed proposals to exempt LDCs from making fully
reciprocal commitments, and the proposed studies on tariff
liberalisation on LDCs. While cognisant of the special situation of
LDCs, it calls for the studies to be extended to other African
countries, and should take into account the effects of previous
liberalisation measures undertaken by these countries as well as
the potential impact of any proposed modalities for liberalisation.
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.
On special and differential treatment, the declaration re-iterated
Africa's oft-stated demand that all S&D provisions in the WTO
agreements be reviewed with a view to strengthen them and make them
more precise, effective, binding and operational. As on
implementation issues, Ministers called for urgent need to complete
work in this regard, as a matter of priority before Cancun.
In another declaration on the Economic Partnership Agreements
(EPAs), Ministers affirmed the importance of consistency between
these negotiations and the aims and objectives as set out in the
Constitutive Act of the African Union, with the various regional
economic groups as the building blocs of African integration. The
EPA declaration also emphasised the importance of the unity and
solidarity of the ACP group as necessary for the EPA negotiations.
In clear reference to the pressures by the European Union to rush
the process of negotiations and fragment the collective ACP
strategy, the Declaration on the EPAs emphasised the "importance of
phase I of the negotiations in which ACP groups as a whole
negotiated the applicable principles, as a foundation and framework
to phase II of the negotiations, during which groups of countries
are expected to set out to negotiate free trade agreements with the
EU. It also urged the ACP and EU to address all outstanding issues
under the phase I negotiations.
Both declarations were adopted following focused deliberations on
the measures needed by Africa to ensure that its interests
prevailed in the face of stark balance sheet of the disappointed
hopes of Doha. 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. The negotiations have failed to yield
"balanced outcomes in which the interests of all, particularly
those who are in most need are truly attended".
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".
In a similar vein, Ambassador Vijay Markham, Interim African Union
Commissioner, cautioned that while trade is important Ministers
need to beware of those who sing the praise and play the tune of
unbridled trade liberalisation. He reminded them of the case of the
former UK trade minister, Stephen Byers who, while in government
promoted trade liberalisation as panacea to problems of
development, only to confess once outside government, that his
optimism had not been borne out in practice. Markham argued that a
"conducive international trading environment is as important, if
not more important, than efforts at national level to make trade an
effective instrument for development". This requires action on the
imbalances and inequities of the international trading system, such
as the persistent deterioration in the terms of trade for primary
commodities, tariff peaks and escalation, the asymmetry in the
treatment of capital and labour in the area of services, as well
agricultural subsidies in developed countries which are daily
destroying the livelihood of African farmers.
Referring to the failures in the Doha agenda to address these
problems, Markham said that this created a situation where "once
again pressure will be brought to bear on us to compromise on our
stand so that Cancun can be a success. This cannot and should not
be allowed to happen."
On her part, Adelaide Mkhonza, Assistant Secretary-General of the
African, Caribbean and Pacific (ACP) countries stated that the
glimmer of hope contained in the Doha development agenda for ACP
and other developing countries to rebalance the rules of the WTO
has been undermined by a stalled process. The missed deadlines are
set to over-load and stretch the agenda to the detriment of
countries with limited resources. The African Union provided a
foundation of collective action of African countries, together with
other countries of the ACP group, for the necessary action to
redress these imbalances.
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, miniministerials,
and such other untransparent devices as "friends of
the chair". Aware of the pressures by developed countries to derail
African countries from their concerns in the trade negotiations,
they pledged to work with ministers as they strive for rules and
agreements which will serve the interest of African women and men.
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.
According to Thomas Deve of MWENGO from Zimbabwe, this gap between
civil society demands and the Ministers' positions sets a mark for
judging how far the Ministers will go in the coming months to hold
up to their collective positions in the face of pressure. It also
outlines the tasks ahead of civil society groups in Africa and
beyond to ensure that Ministers live up to their commitments to
Africa.
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Date distributed (ymd): 030629
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+
The Africa Action E-Journal is a free information service
provided by Africa Action, including both original
commentary and reposted documents. Africa Action provides this
information and analysis in order to promote U.S. and
international policies toward Africa that advance economic,
political and social justice and the full spectrum of
human rights.
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