What is Africa worth in the international trading system?

11 November 2015

Despite popular opinion, Africa has been very active on the international trading stage, though results have been disappointing. At the ministerial conference in Bali, Indonesia in 2013, African countries failed to push for their needs. After progress and losses, what is the place of Africa in the multilateral trading system as the continent heads into the WTO ministerial conference in Nairobi, Kenya?

As the world is rushing towards regional and mega-regional trade agreements, it is necessary to review the place and role of the African continent in all of its evolutions. These have already transformed international trade relations and set the next boundaries of the global economic governance system. Africa’s place in the multilateral trading system has often received special attention, even though ithas mostly focused on the contextual and factual analysis of the weakness of the continent’s contribution to global commercial transactions or the vagaries of the participation of African states in trade negotiations.

There has been more than enough criticism suggesting that Africa is not making sufficient effort to take part in international trade. On the contrary, African countries merit a spotlight on their significant progress to open up to trade.

A continent that has come a long way

Africa’s place in the international trading system has often been simplified to a single statistic: less than 2 percent of international trade. The analyses that support the theory that African countries barely participate in international trade are mostly based on a quantitative approach. However, such a static approach hides the profound, crucial development dynamics as well as the extraordinary progress made by African countries – both for trade and trade negotiations, whether multilateral, regional or bilateral – in a global context that clearly has its pros and cons.

The truth is that Africa is not suffering from an integration deficit as much as from poor integration in international trade. Nearly all the African countries are members of the World Trade Organization (WTO) and with 43 out of the 162 members, African countries represent over a quarter of this organisation’s stakeholders. They have almost all widely liberalised and bound their tariffs, even though for many of them – specifically least developed countries (LDCs) – it is not a requirement. All the African countries and their regional economic communities are participating, simultaneously, in a series of multilateral, regional and bilateral negotiations that welcome international commerce. It is therefore impossible to deny the fact that Africa is widening its availability to the international market.

The issue at hand is rather the continent’s capacity to benefit from the opportunities created by  international trade while minimising the negative effects that go hand in hand with liberalisation. Africa’s inability to benefit from opening up to transactions can be explained by its integral position in international trade that offers little in the way of returns and produces little value addition and wealth. Its status is that of a supplier of basic commodities and raw materials in very limited quantities, which restricts it to the bottom of the international value chains. In addition, due to the rushed liberalisation policies that African countries have experienced in the past, their efforts towards industrialisation, valorisation and transformation of raw materials and towards diversification were thwarted by the sudden, forceful competition of imported goods. Many countries continue to suffer from the narrowing of their political space as well as their loss of sovereignty and control of their own economic and trade policy instruments created during this period.

Consequently, saying that Africa is not doing enough to integrate with global trade is wholly unjustified. Between 1995 and now, trade has become a significant issue on the agenda of almost all African states, and its potential for economic growth and combating poverty is recognised by everyone, including the private sector and civil society.

Saying that Africa is not doing enough to integrate with global trade is wholly unjustified.

As early as the WTO’s first year of operation, a group of four countries  Nigeria, Egypt, Morocco and Senegal  created the African Group. Being a “legal fiction” in the trading system, as it does not have a legal existence comparable to that of the European Union for example, the precursors of the African Group did not see fit to provide the African continent with a founding act that would formalise it. This Group has therefore remained informal until now and simply helps coordinate the positions of African countries and bring them in line with those of other groups. Today, nearly three-quarters of the activities of diplomatic missions of African countries to Geneva, Switzerland, the site of the WTO, are dedicated to multilateral trade negotiations. This demonstrates the importance that African countries attach to these negotiations, despite their limited resources.

On the continent, the trade agenda is notable for its series of new initiatives all aimed at strengthening economic development and integration by promoting free trade among African nations. One need only mention the Continental free trade area (CFTA) currently under consideration, the Tripartite free trade area (TFTA) in East Africa, or the implementation of the Common external tariff (CET) in West Africa, among others.

Shattered dreams and roadblocks to results

The Doha Round, which was launched in 2001 to correct the imbalances and imperfections of the trade agreements obtained from the Uruguay Round negotiations (1986-1993), raised much hope among developing countries. By committing to restructuring the prescriptive compromise at the core of economic and trade relationships between North and South, the Doha Round was expected to deliver a new product enshrining the central role of development in international trade negotiations. In Doha, all the African countries contributed to building the dream of an open, transparent, fair, non-discriminatory, and regulated trade and financial system.

Now that it is time to take stock, it is obvious that the statements of good intentions did not survive the states’ conflicting interests and the power of financial lobbies, among others. The multilateral trading system was not able to produce inclusive, fair governance, but, whether consciously or not, established exclusive, unequal governance. Indeed, it is probably no coincidence that no African country has ever had the opportunity or the desire to appeal to the WTO’s dispute settlement body (DSB), although there is no shortage of grievances. The example of the cotton issue, which has been unsuccessfully raised by African countries since 2003, is the most iconic case. Brazil referred the United States to the DSB for less than African countries have suffered  and won. The Africans who, for lack of a better choice, have followed the path of negotiation still continue to ask for the cotton issue to be dealt with “ambitiously, expeditiously and specifically.” Their request is likely to fail.

Significantly, the development theme has been slowly eclipsed by the challenges of emergence, thereby justifying the shift in focus from developing countries to emerging countries. The latter are aware of their strength and are currently throwing their weight around the multilateral trading system, in order to influence it based on their interests and counteract developed countries’ traditional stranglehold on the system. This is one of the elements that have led the WTO to the brink of the abyss over the past few years.

These very same developed countries, exasperated by the impasse the WTO has reached, are the ones creating regional, plurilateral and mega-regional trade agreements to bypass this system and establish new rules that they will later attempt to enforce as universal principles. They only give the WTO the bare minimum needed to keep it alive and to continue to benefit from the advantages granted by the current status quo, in particular when it comes to keeping the possibility of “protecting” themselves or of “subsidising” without having to submit to any legally binding obligations towards developing countries.

Nairobi  Time to act

Despite its recurring setbacks and pitfalls, African countries still want to believe in the WTO. In Bali, in 2013, they showed a unique political commitment to saving the WTO when it had its back to the wall and might have felt the lasting impact of a failure. African countries did not defend any of the topics that they had nevertheless clearly identified and promised to defend during their many consultations. While India, for example, demanded and was granted a tailored agreement, the only ambition of the Africans was to save the WTO. Whether this behaviour is due to naivety or generosity, it now seems as though Africa needs to take responsibility and finally understand that taking part in international trade negotiations is not child’s play. Only through their determination to further their own concerns, through thick and thin, will African countries manage to shift the lines. This calls for strong leadership, better consistency and clear political courage. At the WTO, if a single member country that does not feel included in a consensus refuses to join it, its voice is always heard. If 43 African countries speak together, no one will be able to ignore them.

If 43 African countries speak together, no one will be able to ignore them

During the next ministerial in Nairobi, the WTO’s tenth ministerial and the first one to take place on African soil, the ball will be in their court. They will need to reject prevarication and empty, wishful statements. Nairobi must enshrine the come-back of development, leading to concrete actions and a clear, positive pro-development result. It is time Africa spoke up at last.

 

Author: Cheikh Tidiane Dieye, Executive Director, Centre africain pour le commerce, l'intégration et le développement (CACID).

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Africa
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