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Trade Policy

The World Trade Organisation's Doha Round was intended to be the development round. It was to be the first round deliberately aimed at giving priority to the interests of developing countries. So its collapse is unforgivable.

As Talleyrand once said in similar circumstances - "it is worse than a crime, it is a blunder". The crime is that developed countries have damaged the interests of developing countries. The blunder is that they have damaged their own interests too.

In the first place, freer trade benefits the giver as well as the receiver. If the rich countries reduce their tariffs, cut their subsidies and open up their markets to the goods of the developing countries they benefit their own consumers and taxpayers - even if those changes are not matched by similar cuts from the middle and low income countries. And as New Zealand demonstrated by abolishing all its farm subsidies, they are not necessary for a healthy agricultural sector.

Second, the rich countries cannot hope to persuade poor countries of the benefits of progressively opening their economies if we, the rich countries, are not prepared to take the lead in unilaterally opening our own markets to them.

	a pan-African Trade Area...would cut costs for African consumers, create a large internal market, attract foreign investment, and allow large African companies to develop that could eventually compete in the global marketplace.

If small countries distort their economies by tariffs, subsidies and protection - that may be unwise. But it is their problem. It has a negligible impact on world markets.

By contrast, when big economies protect, subsidise, and dump the resultant surpluses - they seriously damage others. US and EU cotton subsidies, for example, damage the livelihoods of hundreds ofthousands of families in West Africa whose only alternative is subsistence farming.

The only beneficiaries are a few thousand American and European cotton producers who would have viable alternatives were those subsidies phased out. So the priority from the start should have been for the rich nations to agree 'to liberalise without demanding matching reciprocity by the middle income, still less the poorest countries.

The UK should press hard to persuade our EU partners to reform the Common Agricultural Policy by abolishing all remaining production linked subsidies, scrapping import tariffs and removing all export subsidies.

In his evidence to the first public hearing of the Globalisation and Global Poverty Group, Bob Geldof put forward proposals for action if the Doha Round collapses.

He urged the OECD to agree a stand alone trade deal for Africa which would involve:

1. Granting 100% market access for African products.
2. Ending trade distorting subsidies which affect Africa, if need be compensating OECD farmers.
3. Leaving African countries free to determine their own trade policies without being forced into premature liberalisation by the IMF, World Bank or WTO.
4. Vigorously pursuing the Aid for Trade agenda to help with infrastructure and compliance with the quality demands of OECD markets.

The main responsibility for reviving or replacing the Doha Round lies with America and Europe.
But Africa has some options in its own hands.

The highest tariff barriers against African goods and services are those erected by African states themselves. The World Bank found in a 1997 survey that countries in Sub-Saharan Africa imposed an average tariff of 34% on agricultural products from other African nations, and 21 % on other products. As a result, trade between African countries accounts for only 10% of their total exports. By contrast 40% of North American trade is with other North American countries and 63% of trade by countries in Western Europe is with other Western European nations

Surely if Africa created a pan-African Trade Area, this would have significant potential benefits? It would not just cut costs for African consumers, but create a large internal market, attract foreign investment, and allow large African companies to develop that could eventually compete in the global marketplace. And it is something Africa can do to help itself. There is no need to wait for the rest of the World. It would be a sign Africa is not against trade in general and will one day open up to western companies - a sign which could help persuade the developed countries to open their markets now.

Removing trade barriers alone is not enough.