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Office for the Coordination of Humanitarian Affairs (OCHA)
Integrated Regional Information Network (IRIN)

AFRICA: Campaign for fairer trade

JOHANNESBURG, 23 May (IRIN) - Northern governments are guilty of rigging the
rules to protect their own markets while calling for developing countries to
open their economies and trade themselves out of poverty, fair trade
campaigners argue.

The debate over debt forgiveness has largely been won by activists looking
to reform the international financial system. But as US treasury secretary
Paul O'Neill, accompanied by Irish rock star Bono, tours Africa this week to
see first hand conditions on the ground, the issue of protectionism and
demands for fairer market access for developing countries are taking centre
stage.

"When developing countries export to rich-country markets, they face tariff
barriers that are four times higher than those encountered by rich
countries. Those barriers cost them US $100 billion a year - twice as much
as they receive in aid," said an Oxfam report, 'Rigged Rules and Double
Standards', released last month.

The $70 billion that Africa would generate through a one percent increase in
its share of world exports is about five times the amount provided to the
region through aid and debt relief, the report said.

"Apart from the financial benefits, export growth can be a more efficient
engine of poverty reduction than aid. Export production can concentrate
income directly in the hands of the poor, creating new opportunities for
employment and investment in the process.

"However, the 'aid versus trade' dichotomy can be overstated; aid can play a
critical role in enabling poor people to benefit from trade, notably by
supporting investments in health and education services and economic
infrastructure," said the report.

Northern protectionism through tariff and non-tariff barriers are especially
damaging for the developing world because the bulk of their exports are
directed to industrialised countries. Agricultural barriers are a
particularly difficult hurdle for small producers. Subsidies to northern
farmers are worth $1 billion a day, generating over-production with the
resulting surplus dumped on world markets.

According to Oxfam's Double Standards Index, a system of measuring trade
barriers, the European Union emerges as the worst offender closely followed
by the United States and Japan. Oxfam has recommended reforms including
duty-free and quota-free market access for low-income countries; a reduction
of tariffs to no more than five percent for exports from developing
countries; a comprehensive ban on export subsidies and recognition of the
right of developing countries to "protect their agriculture".

However, some activists have condemned Oxfam's embrace of global trade.

"The idea is that a growth in trade would be good for the poor masses in
Africa. But the trickle down theory hasn't worked. These benefits reaped by
a few hasn't meant more clean water or clinics ... There is a certain logic
that before you export you should make sure everybody in your country can
eat," said Njokwe Njaiwu of the Washington-based '50 Years is Enough'
campaign.

Njaiwu is dismissive of the US government's Africa Growth and Recovery Act
(AGOA) which, signed into law in 2000, is aimed at giving producers from 35
eligible African countries zero-tariff access to the American market on a
large range of export items. Some countries, typically clothing producers,
have been able to take advantage of the agreement to boost export sales.

"AGOA was always going to work for business people, our concern was whether
it was going to work for ordinary people," Njaiwu told IRIN. "It is
hypocrisy to say small farmers in Africa can compete with American farmers."

One country that has apparently used AGOA successfully is Madagascar,
earning $32 million in the first three months of 2002, mostly from apparel.

However, research by the Clean Clothes Campaign suggested that dramatic
growth in Madagascar's Export Processing Zones has left textile workers
faced with labour laws that are "hardly observed", demands for overtime
where "workers have to work the whole night through, and even the next day",
and where unions are protected by law "but are in reality powerless". Jobs
may have been created, but the basic salary is about $24 a month.

However, according to James Lennox of the South African Chamber of Business
(SACOB), the South African experience has been radically different. In 2001,
United States imports of AGOA-covered goods earned South Africa $417
million. In the first three months of 2002, that figure stood at $162
million representing a year-on-year increase for that period of more than 80
percent.

While South African-produced cars are now exported to the United States (the
largest export item by value in 2001) and manufacturers like BMW have
increased their investment in the country, Lennox said the real success
stories are the "family-owned and medium-sized businesses who have taken
advantage of AGOA".

But with the exclusion of oil producers such as Nigeria and Gabon, the only
other countries that seem to have reaped a reward from AGOA are textile
manufacturers in Lesotho, Madagascar, Mauritius, Kenya and Swaziland.

Africa has suffered a significant de-industrialisation over the past two
decades as it opened its markets to cheap foreign imports, while facing a
decline in direct foreign investment. Debt has also sapped Africa's ability
to compete. Lennox pointed to the infrastructural and capacity problems
facing South Africa's neighbours that have prevented them from taking fuller
advantage of AGOA.

"Trade can realise its full potential only if rich and poor countries alike
take action to redistribute opportunities in favour of the poor. This
requires action at the national level, new forms of international
cooperation, and a new architecture of global governance at the WTO [World
Trade Organisation]," the Oxfam report said.

National policies, the report noted, included tackling inequalities in
health and education services, ownership of assets and access to land,
financial resources and marketing infrastructure. At the international
level, unsustainable debt burdens and the lack of effective representation
of developing countries at the WTO has meant further marginalisation.

"We need a new world trade order, grounded in new approaches to rights and
responsibilities, and in a commitment to make globalisation work for the
poor," the Oxfam report concluded.

See IRIN focus on exploitation in Lesotho textile industry
http://www.irinnews.org/report.asp?ReportID=27897

US trade statistics on AGOA
http://dataweb.usitc.gov

[ENDS]

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