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13 January 2000

Research in recent years, accompanied by the economic performances of countries with liberalized trade regimes, have definitely confirmed the benefits that can result from open trade regimes. The main policy prescription to African countries has therefore centered on openness in economic, social and political systems. Overall the policy regime of the typical African country, compared to the mid-1980s situation, can be characterized by improved market access to foreign markets for both goods and services, lowered barriers to entry into African markets, competitive exchange rates with an overall shift from import substitution to policies encouraging export-oriented growth; the adoption of market-oriented reforms in other areas, an increased role for non-central administration and of non-governmental organizations and contested political systems.

At the global level there has been substantial expansion in total trade in goods and services with trade volume growing by more than 3 percentage points above growth of real Gross Domestic Product. While these trends globally apply to developed and developing countries it is important to note that African countries have been marginalized by these developments. Despite recent reforms in trade regimes African countries have experienced a steady decline of their shares in world trade. At the international level, the share of export in total GDP increased from 17% to 21% between 1970 and 1990; while the share of African exports in world trade dropped from 0.8% to 0.3%. This is due, among other reasons to their concentration on a few primary agricultural and mineral products whose importance in international trade has been declining; to the low level of integration in dynamic production and distribution networks; and because of their weak industrial and technological bases. At the global level trade in services has grown slightly faster than trade in goods; trade in manufactures has continued its long-term historical trend of growing faster than trade in agricultural and mining products, both in value and in volume terms; world prices of traded agricultural and mining products have lagged behind those of manufactures, leading to significant terms of trade losses.

African countries have not been major beneficiaries from these developments. As a result the benefits from globalization and liberalization of world trade have been unevenly distributed. An important policy challenge to African countries and the international community is the creation of a balanced and equitable multilateral trading system, which benefits the majority of the world population. African countries are likely to face increased protection in their export markets through "contingent" protection mechanisms such as sanitary and phytosanitary measures, technical barriers to trade, anti-dumping and safeguard measures. These instruments are being used as substitutes for the old-fashioned protection. The cost of abiding by the requirements of these measures is very high, as firms are expected to restructure their production and distribution infrastructure.

Regional integration will assist this process, especially as regards the exploitation of economies of scale and in overcoming the limitations of market size. African countries are committed to a gradual integration of the continent, over the next three decades, within the framework of the Abuja Treaty establishing the African Economic Community. Commitments made by African countries in international trade negotiations will therefore need not only to be consistent with the regional integration objectives, but also aim the enhancement of their implementation. It is therefore urgent to provide a legal framework for entering into arrangements that could facilitate the long-term objectives of integrating African economies together and into the world trading system.

The marginalisation of African countries in international trade is also due to the fact that most countries face considerable administrative, institutional and financial problems at several levels. First is the lack of ownership of the rules and provisions contained in the Agreements. "Ownership" of the rules is an important element in the functioning of a rules based system such as the WTO, where the central organization has limited power to enforce. Building among members a solid sense of ownership of such rules begins with participation in establishing them. In the context of the WTO, many African countries feel no sense of "ownership" mainly because they did not effectively participate in their establishment. These countries lack the capacity to engage substantively on the wide range of WTO issues. Weaknesses are primarily at the following levels:

a. the Geneva-based delegations of these countries are often small and lack persons with technical backgrounds needed to participate effectively and the links between the WTO delegations and the governments at home are not well developed;

b. the involvement of stakeholders, such as business community and civil society is minimal.

c. because of the complexity of the entire system African countries made commitments beyond their administrative and institutional capacity.

d. Other difficulties are related to sometime conflicting policy recommendations arising from the WTO and other institutions involved in policy formulation and implementation, notably the Bretton Woods Institutions.

In summary international trade accords must take into account the market disadvantage of developing countries. They must acknowledge the differences in circumstances between developed and developing countries, and the fact that developing countries often face greater volatility, that opening to trade in fact contributes to that volatility, that developing countries have weak or non-existent safety nets, and that high unemployment is a persistent problem in many of these countries. Furthermore, it should also be accepted that developed and developing countries play on a 'playing field' that is not level.

Overall the willingness of African countries to open their markets is real. The difficulties for doing so are mainly due to weak capacity (human, financial, institutional, etc). Accordingly capacity building/technical assistance should be included in all international development initiatives through for example systematic inclusion of relevant special provisions in all agreements for developing and Least Developed Countries. The Special and Differential Treatment should be linked to the progressive elimination of supply and other constraints to competitiveness of African firms. International Agreements shall be commensurate with African capacities and their efforts at economic and financial reforms as well as diversification of their production and export bases. Likewise these Agreements shall ensure there is consistency and coherence with other policy commitments and that these do not conflict with development goals of African countries. There is a need for African countries to build strategic partnerships and form coalitions among themselves, or with other developing countries.

Fortunately conditions are better today and there are several reasons to be optimistic:

1. All countries have initiated important policy reforms addressing the main constraints to production and trade.

2. Policy makers and economic operators have a better appreciation of the challenges and opportunities facing their respective countries.

3. The international community is prepared to base their assistance on sound economic rather than ideological considerations.

4. The outcome of the Seattle WTO meeting suggest that all partners have an interest to build a more equitable and balance system.

An important outcome of this round-table could be an articulation of a strategy that help capitalize on these opportunities to definitely put African countries on a lasting footing.

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