Trade negotiations are recognized as an important tool for increasing trade prospects and facilitating Africa’s integration in the world economy. However, negotiations are still far from realizing the continent’s expectations. Much was expected of a successful Doha Round. Likewise, it is often suggested that Economic Partnership Agreements (EPAs) with the European Union (EU) would result in an improved business environment in African countries, allowing for more investments and enhancing the prospects for diversification of their economies.
Unfortunately, on the World Trade Organization (WTO) negotiations front, progress has been limited and below the expectations of African countries. One main reason for the deadlock in WTO negotiations appears to be the disagreement with the levels of demand and offers on agriculture, a critical area for Africa’s development prospects. This lack of progress has clearly been a setback for the multilateral process, prohibiting the international community, and especially poorer countries, from significant improvements in the multilateral trading system.
The limited progress in the WTO negotiations is impacting negatively on the cotton initiative, which was sponsored by some African countries for the elimination of cotton subsidies by the developed countries. While the cotton-textile sector in Africa holds a tremendous opportunity for diversification, delays in finalizing the Doha Round is hindering the exploitation of these opportunities. As it were, the Hong Kong Ministerial Conference of December 2005 reached agreement on the elimination of cotton export subsidies, but agreement has yet to be reached on the elimination of domestic cotton subsidies. There was expectation that progress in the WTO negotiations would allow for an expeditious agreement on cotton.
Probably one of the most significant developments has been the evolution of the participation of African countries in the actual negotiations. African countries were not only engaged actively in the definition of the mandate for the negotiators, but have been active at every stage, as the negotiations have progressed. This active participation has not translated to concrete results whereby African priorities are holistically addressed.
There has been growing concern in Africa that EPAs, while representing significant potential for growth and development, also pose great challenges in terms of adjustment costs. The standstill in WTO negotiations also complicates the EPA process.
In the absence of evolutions on rules for preferential trade arrangements, important uncertainties remain on the degree of flexibility African countries would have on the length of transition periods and on the coverage of liberalization. EPA negotiations are probably the major task ahead of African trade policy makers, especially given the slow pace of the Doha Round. They pose great challenges but also real opportunities in terms of development for the continent.
In light of the slow progress in the WTO negotiations and the ongoing EPA process, African countries have an ever greater interest in diversifying their export markets.
They are involved in a number of regional and free trade agreements negotiations.
Fostering regional integration has been a long-standing objective, but African regional integration remains hampered by several obstacles including political and security factors, and also by poor transport and communication infrastructure, a low degree of complementarity in the structures of production and the overly complex web of memberships across different Regional Economic Communities (RECs).
Preferential trade arrangements are considered promising complementary platforms for diversification. Thirty-seven African countries are eligible to the African Growth and Opportunity Act (AGOA), which grants African countries quasi duty-free, quota-free access to the US market. Thirty-four African countries are LDCs and therefore are eligible to the EU’s Everything-but-Arms (EBA) scheme. Other non1LDC African countries are either beneficiaries of the EU’s General System of Preferences (GSP) or are party to a bilateral free trade agreement with EU.
Several African countries or groupings are also involved in bilateral or trade negotiations in order to diversify their export markets and enhance their integration in the global economic system. For example, West African Economic and Monetary Union (WAEMU) countries are currently negotiating free trade agreements with several North-African countries. The US and the South Africa Customs Union (SACU) are also engaged in free trade talks. South Africa is also discussing with India and MERCOSUR countries on a potential free trade agreement. With the recent explosion of trade flows between Africa and China and India, several countries also envisage talks with these two Asian nations.
To learn more about this author, visit United Nations Economic Commission for Africa's Website.
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