PRESSURE MOUNTS FOR INTRA-AFRICAN TRADE. Most of the 142 nations planning to participate in the November WTO conference in Doha, Qatar, are intent on broadening their trade horizons beyond their own continents, but a growing number of African nation's want to prioritize the expansion of intra-African trade.
According to World Bank data, trade among African nations amounts to just 10 percent of the continent's total international commerce. To date, the greatest barriers to intra-African trade are protective tariffs that restrict the flow of raw and semi-processed materials that abound in Africa, while facilitating the importation of technology from developed nations.
South Africa's Trade Minister Alec Erwin says it is crucial to correct the tariff imbalance, which he claims protects the manufacturing process rather than raw materials. In a Reuters interview Erwin said, "We are keen to boost trade on the continent, which ties in with proposals for an African recovery plan drawn up at the final meeting of the Organization of African Unity in Lusaka, Zambia, last July. We may propose a specific arrangement for Africa that will allow us to have greater inter-regional trade."
Erwin added that within the context of the WTO it is important for developing nations to rally behind a common position. He stated, "The common position for developing countries essentially deals with agriculture, services, and a host of implementation issues. The latter include intellectual property rights and trade-related investment rules."
African leaders have expressed concern that the position of developed nations with regards to world trade stifles the industrial and agricultural potential of their continent. This is especially apparent in the agricultural sector where developed nations have implemented stringent importation standards that many African nations cannot consistently meet. The situation is further complicated by the fact that Africa, Latin America, and much of Asia are viewed by developed nations as external consumer markets with exceptional growth potential. As the product offerings of developed nations become more sophisticated, it is becoming increasingly difficult for African nations to nudge their products up the value-added ladder.
A new trade round may be launched at this year's WTO meeting. The last attempt in Seattle during 1999 collapsed in bitter recriminations between rich and poor nations, and a falling out between the United States and Europe.
On many developing national issues, Africa has aligned itself with
India-a nation that will play a key role in determining the stance of developing nations in Doha. India has already expressed strong reservations about entering a new trade round until several major concerns of developing nations are addressed. Two sticky issues involving trade with the United States are import quotas and anti-dumping laws.
The advent of major regional trade blocs has worked against the interests of Africa. African nations feel that major trade blocs like the EU and NAFTA are preventing their products from penetrating the world's leading consumer markets. The situation is further exacerbated by Africa's inability to form a trade bloc of its own to foster intra-African commerce.
Recent efforts at establishing trade blocs among African nations have been fraught with infighting and skepticism. Even if viable blocs emerge, the potential for intra-African trade continues to be limited by a weak consumer base and an oversupply of basic export commodities.
An inadequate supply of African-made value-added products has led many African consumers to the false conclusion that non-African products are simply better. The best hope for African products to bridge the sophistication gap is through alliances with companies in developed nations. Such alliances attract essential investment capital and the technology needed to achieve cost-efficient production techniques.
The United States is making a stab at bridging the trade gap with Africa. Recently U.S. House Republican Conference Chairman J.C. Watts headed a delegation of governmental and business leaders to Mali, Ghana, Ivory Coast, and Nigeria. Participating companies included Coca-Cola Co., Exxon Mobil Corp., Halliburton Co., J.P. Morgan Chase & Co. Inc, Monsanto Co., Phillips Petroleum Co., The Procter & Gamble Co., Qualcomm Inc., and Target Corp. The purpose of the trip was to forge partnerships that can lead to the production of more value-added products in Africa.
Most African nations are locked into a system under which they supply the developed world with low-cost raw materials, while purchasing value-added products from developed nations on other continents. One of the greatest challenges faced by African leaders is to interest multinational corporations based in developed nations to establish African operations that can supply African consumers with African-made products.
The September 11th attacks on the United States and subsequent economic downturn there underscored the urgency of increasing trade within the context of African trade blocs. The importance of intra-African trade is likely to increase during 2002 as a result of declining demand for African exports in the traditional foreign markets of Europe and North America.
At present there is a mismatch of supply and demand within Africa.
The first step in bringing them back into balance is to increase African production of finished goods.