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Post-Cancun Expert Group Meeting for African Trade Negotiators and Officials
Statement K.Y.
Amoako
Honorable Alan
Kyerematen, Minister of Trade and Industry, Republic of Ghana,
In particular, I want to offer our thanks to the Honorable Minister of Trade and Industry who has been the key driving force behind this meeting. Minister, your energy and commitment to the issues we are here to discuss is greatly valued by all of us.
In that regard, I am obviously not the only one who is feeling very much “at home” here this morning. It is also a great honour to be joined in Accra today by such a distinguished group of African trade negotiators and officials. On behalf of the ECA, I would like to thank you all for working so tirelessly and selflessly to defend Africa’s interests in the multilateral trading system. Mr.Chairman, As you all know, the Fifth Ministerial Conference of the World Trade Organization held in Cancun, Mexico ended in a “stalemate” as Ministers were unable to reach agreements on any of the key issues on the agenda. This morning, I want to briefly stress why a prompt revival of the negotiations under the Doha round is absolutely critical to Africa’s development agenda. I will also explain why we, at the ECA, believe this Expert Group meeting is so important.
It is now acknowledged that trade is a vital engine for growth and poverty reduction. For instance, 40% of the GDP of Sub-Saharan African countries in 2001 came from the export of goods and services. A majority of African exports are produced in the agrarian sector, where the majority of our people live. In most cases, countries that have expanded their links with the global economy through trade and investment have grown more rapidly over a sustained period. They have also experienced larger reductions in poverty than other developing countries. It is an accepted fact that while free trade among countries has the potential to generate global growth. But there is no built-in guarantee that the aggregate benefits generated by trade will be equitably distributed among the trading partners. This potential for uneven gains may explain the anxiety in some quarters about the process of trade liberalisation in Africa. In our view at the ECA, this anxiety is understandable but misplaced. Indeed, while we accept that there is a justifiable, concern that the continent’s growth crisis is partially the consequence of its long-term role in the international division of labour---- as an exporter of primary commodities and importer of manufactures---- we do not see trade liberalization as the main problem. Instead, we constantly stress that much more needs to be done to enable African countries to maximize the benefits of trade. All of our countries need to be better integrated with the global economy, beginning with closer integration with their neighbours. The evidence, nonetheless, suggests that a large share of the blame for Africa’s failure to benefit from globalization should be apportioned to the developed world, due to its reluctance to open its key markets to African producers. But, as I will explain later, it also points to the significant negative effects of inadequate domestic policies in our countries. The WTO-based multilateral system provides two broad types of opportunities for improving trade and investment policies in developing countries. First, it is an avenue for improving access to export markets. Second, it provides a commitment mechanism to secure and lock in politically sensitive or difficult trade policy reforms. Africa certainly has much to gain from reductions in industrial country protection and improvements in market access, especially in certain key sectors such as agriculture. Under current mechanisms and negotiating processes, however, African countries individually have insufficient bargaining power to influence the outcome of negotiations. Taking this vulnerability into account, our collective participation in the multilateral system can help us derive enormous trade, economic, and welfare benefits from it. This is one rationale for Africa to maintain its commitment to the Doha Development Round.
While fully committing ourselves to the multilateral system, we must also continue to pursue the goal of regional integration. The recent profusion of regional trade agreements across the globe has provoked some discussion and controversy, on how they can be reconciled with the goals and principles of the multilateral trading system. The question is not whether or not multilateral trade provides a better avenue to achieving the above goals than regional trade. For us in Africa, both are essential. But the costs and benefits of regionalism depend critically on how regional initiatives are designed and implemented. The agreements must be designed with a view to promoting competitiveness in and integration with global markets--- an approach known as “open regionalism”. They must not seek to create ‘fortresses’ that insulate members from the international economy. Under open regionalism, preferential schemes are part of a general strategy to integrate with the global economy. Regional trade liberalization in this case supports and promotes trade and industrial policy reform. It is therefore designed to move in parallel with non-discriminatory trade liberalization. In this regard, the recent experience of Latin America, where members of integration arrangements have lower tariffs and non-tariff barriers than non-members, is instructive. For Africa, with its multiple, small and fragmented economies, open regionalism may be a requirement for effective integration with the new global economy. More than any other continent, Africa needs to create sub regional markets that promote sustainable development and gradually build its capacity and the competitiveness required to participate in the multilateral trading system. So we must promote regionalism in order to enlarge markets and exploit economies of scale while also participating fully in the WTO process, to benefit from market access and gain safeguards against unfair protectionist measures. The ECA’s in-depth assessment of regional integration in Africa, to be published early next year, candidly highlights where we are with intra-African trade and the work that is needed to improve our regional integration efforts. The facts are sobering: intra-African trade remains very low and very undiversified. Our findings show that for Africa to attain inter-regional trade levels comparable to those realized by other regions of the world, the pace of internal trade growth must more than double. Mr.Chairman, It needs to
be stressed that under both multilateral and regional approaches, the
key to success is domestic policy. As I indicated earlier, inadequate
policies in the past have hampered our ability to maximise the benefits
of trade.
Third, Improving Export Competitiveness: Institutional support for export promotion and incentives for export diversification can help in this regard. Fourth, Strengthening Trade Facilitation: This involves policies to reduce transport costs, improve the institutional environment and reform custom procedures in order to increase international trade flows. And finally, Buffering the Fiscal Implications of Trade Policies: Given that the process of trade liberalization can have relevant budgetary implications, there is a need to address the question of how to maintain the overall fiscal balance. Options include compensating for reduced revenues from international trade tariffs with an increase in domestic taxation, especially indirect taxation.
We, at the ECA, will be devoting the 2004 edition of our annual Economic Report on Africa to studying these factors and drawing lessons from several countries under the theme “Maximising the Contribution of Trade to Africa’s Development”. Let me emphasise that due to the crosscutting nature of these policy issues, trade is not just a matter for trade ministers. It should also be high on the agenda of ministers of finance and planning as well. In other words, coherence between trade, fiscal, monetary and sectoral polices is of critical importance. Our trade ministers and our finance and planning ministers simply need to talk to each other more. I am pleased therefore to inform you that the next Conference of African Ministers of Finance and Planning, in May 2004, will be convened under the theme I have just mentioned. It is my intention to invite several African trade ministers to that meeting as well. This will provide a real opportunity for our finance ministers and their trade counterparts to engage in a substantive discussion of these matters.
I want to conclude by focusing on what this meeting should hope to achieve. First, we need to agree on what is at stake for Africa Post-Cancun. Second, we need to clearly identify Africa’s interests and agree on several effective strategies for achieving outcomes at the next talks that yield the best results for our people. Furthermore, it is my hope that the outcome of this meeting can send a clear message to political leaders of the developed countries which will encourage them to make significant concessions on such matters as cotton and agricultural subsidies at the next General Council meeting. By doing so they would show that they are indeed responsive to the development aspirations of poorer countries. They would also set the stage to make the Doha round of talks a real “Development Round”: a round that positively contributes to the global goal of reducing poverty by half by the year 2015. Thank you for your kind attention. Thankyou all
for welcoming me back home. |