Cairo Magazine - Africa unite

African ministers saw eye to eye on what they wanted, but now the tough part comes.

Issandr El Amrani

The past week has been a good one for Africa. At a meeting of finance ministers from the G8—an informal grouping representing the world’s richest countries—in London on 13 June, 18 countries had their debts to international financial institutions forgiven. Close to $40 billion, owed mostly by African countries to the World Bank, the International Monetary Fund and the African Development Bank, will be forgiven under the scheme, which has been given high-profile backing by politicians such as Britain’s Chancellor of the Exchequer Gordon Brown as well as pop stars like U2’s Bono and former Live Aid organizer Bob Geldof.

The push to restructure or entirely eliminate the rising debt burden of African countries comes at a time when the African Union (A.U.) is urging more unity among African states to face common problems such as poverty and under-development. An example of this was seen last week, when Cairo hosted a meeting of A.U. ministers of trade to hammer out a common position on an area in which African nations have long been the underdogs: trade.

Although the current round of trade negotiations taking place under the World Trade Organization—called the “Doha Round” after the Qatari capital, where negotiations began—is supposed to focus on development issues and reducing rich countries’ subsidies to allow for fairer competition for less developed countries, negotiations thus far have hit major obstacles.

Progress on the Doha Round has been put on hold since the spectacular failure of the W.T.O. meeting in Cancun, Mexico, in September 2003. That meeting ended in a deadlock as poor countries refused to accept terms pushed by the United States and the European Union. Western countries have been particularly reluctant to cut the agricultural subsidies that have distorted international trade in commodities, such as cotton or coffee, which often play a vital economic role in less developed countries.

The Cairo meeting of trade ministers that took place on 5-9 June sought to form a common African position ahead of a December meeting of the WTO in Hong Kong that will seek to pick up where Cancun left off.

“The Africa Group is in fact a microcosm of the W.T.O. as a whole. All types of different economies are represented: from industrialized countries such as South Africa and Egypt at one end of the spectrum to Least Developed Countries such as Chad and Mali on the other. As a result, issues range from those countries concerned with the systemic management of the multilateral trading system to those barely eking out a living,” said Magdy Farahat, one of the senior Egyptian negotiators at the W.T.O. in Geneva.

The “Cairo Declaration” published at the end of last week’s conference reiterated the standard demands of African countries: fairer terms on agricultural trade, more protection for manufacturing industries and a greater emphasis on development rather than trade in this current round of negotiations. African countries agreed that they are increasingly becoming the losers in world trade, with African trade with the rest of the world diminishing over the past two decades and inter-African trade still low.

But they also placed one controversial issue at the center of Africa’s trade debate: the vast subsidies the U.S. give its own cotton growers.

World cotton prices have dropped 30 percent in the past 18 months, increasing rural poverty in many African countries. Even in Egypt, for which cotton is not a crucial commodity, this shift has caused farmers to switch to growing rice, despite the fact that Egyptian long-staple cotton is considered to be one of the best in the world—whereas Egyptian rice has no particular competitive advantage. According to the British-based anti-poverty NGO Oxfam, “This system [of U.S. cotton subsidies] pits a typical Malian producer, farming two hectares of cotton, who is lucky to gross $400 a year, against US farms which receive a subsidy of $250 per hectare.”

“For the past three years, African cotton producers have not been able to make a decent living because of American subsidies,” said Sero Zorobouragui of the African Cotton Producers Organization, which campaigns with Oxfam on the issue.

In September 2004, a W.T.O. dispute panel found that $3.2 billion in annual cotton subsidies and $1.6 billion in export credits paid by the U.S. in cotton and other commodities were illegal under W.T.O. rules. The case, brought by Brazil and supported by some African cotton-producing countries, was appealed by the U.S. last October. In March of this year, the W.T.O. ruled again that U.S. subsidies were illegal. That decision is final and the U.S. has until 1 July to comply or face possible trade sanctions by Brazil.

The decision may have given African nations a chance to strengthen their own cotton initiative, which was originally launched in 2003. In last week’s Cairo Declaration, the A.U. countries stressed their key demands on cotton: for rich W.T.O. members to grant duty-free and quota-free market access for African cotton; eliminate all export subsidies and domestic support measures for cotton; and set up an emergency support fund for African cotton. They also added for the first time that they expected these conditions to be met by the Hong Kong meeting in December.

Speaking at a press conference on 8 June, representatives of both the E.U. and the U.S. were loath to endorse that timetable. E.U. Trade Commissioner Peter Mandelson said that the cotton initiative “should be implemented by 2007,” adding that Europe generally supported it. U.S. Deputy Trade Representative Peter Algeier, on the other hand, said that while his country is committed to reducing cotton subsidies he only envisaged negotiations on the schedule for the cotton initiative beginning “at the end of 2006.”

“The developed countries are interested in postponing,” said Juma Ngasongwa, Tanzania’s Minister of Industries and Trade. “We want things to move on so that we can benefit from the Doha Development Round.”