It is now widely believed that a major challenge to the expansion of trade by African countries is that of increasing access to developed country markets. In other words, if Africa’s external trade is to be significantly expanded, ways must be found to remove the external barriers to African trade, viz., lack of access to developed country markets, reduction of tariff and non-tariff barriers to African agricultural exports, reduction or elimination of trade-distorting domestic farm supports and elimination of export subsidies in developed countries.
It had been hoped that the Doha Round of WTO would be used to solve the problem of improving access for agricultural products exported. Unfortunately, the Doha virtually collapsed as a result of the inability of Japan, EU, and the US to agree on tariff reductions. However, there is no choice but to continue to negotiate to bring down tariffs on agricultural products of developing countries and to reduce trade-distorting export subsidies and domestic subsidy to farmers in developed countries. These issues will now be addressed at the WTO meeting scheduled to hold in Hong Kong in December 2005.
An important initiative likely to improve market access for Africa is the US’ African Growth and Opportunity Act (AGOA). This initiative was introduced in 2000 and is designed to give most African countries preferential access to the US market for some categories of products, mainly petroleum products, agricultural commodities, and manufactured products such as textiles. Already, exports from Gabon, Lesotho, Madagascar, Mauritius, Nigeria, South Africa, and Swaziland have increased as a result of AGOA. More countries are expected to benefit in the future. While beneficial to Africa since it gives African countries an advantage over other regions, its benefits are rather limited as it does not cover all exports from Africa and there are some stringent “rules of origin” requirements enshrined in the Act of Congress.
Also, the EU’s “Everything but Arms” initiative, approved in 2001 has the potential to improve market access to the EU for African countries. The objective of the EU’s initiative is the elimination of quotas and duties on all products except arms imported from 49 least developed countries, most of which are in Africa. Proper implementation of this initiative is likely to significantly increase Africa’s exports to the EU in the years ahead.
African Development Bank Economic Research Working Paper Series Enhancing Africa’s Trade: From Marginalization to an Export-Led Approach to Development Milton A. Iyoha Professor, Department of Economics & Statistics University of Benin, Nigeria Economic Research Working Paper No 77 (August 2005)
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