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Date: Sun, 29 Jun 2003 19:17:45 -0500
From: Africa Action <[log in to unmask]>
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Subject: 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
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]
+++++++++++++++++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.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:
http://www.twnafrica.org/news_detail.asp?twnID=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." ...
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. ...
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Date distributed (ymed): 030629
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+
************************************************************
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