African agriculture in the WTO framework

This paper attempts to analyse what impact the Uruguay Round Agreement on Agriculture (URAA) will have on African agriculture within the new WTO framework.The paper begins with a broad analysis of the structure and growth of African agriculture and identifies key internal and external factors that seem to explain the structure and performance of Africa’s agricultural production and trade. Next, the paper discusses the main elements of URAA and explores the effects of its different provisions on the agricultural sectors of various categories of African countries. Finally the paper gives an analysis of the long-term strategic issues associated with the development of African agriculture in the context of a more liberalized global trading system.The paper acknowledges the structural, institutional and environmental constraints faced by African agriculture but highlights the importance of the incentive structure related to agriculture to sector’s performance. It argues that the traditional agricultural export commodities structure was penalized up to the early 1980s by mechanisms including over-valued currency that reduced the real domestic prices of export crops, export licensing and controls that discouraged exports, high export taxes, and marketing boards whose monopoly control over both domestic crop purchases and export sales enabled them to offer low prices to export producers. Unilateral liberalization strategies have produced some favourable results, in particular, agricultural performance indicators such as productivity and output growth have generally been better since the mid 1980s than they were during the 1970s and early 1980s. However given Africa’s poor infrastructure, its lack of technology, as well as its missing and imperfect markets, the extent to which liberalization (as the single policy focus) can serve as an appropriate and adequate approach for the development of African agriculture remains questionableThe paper makes the following observations about the potential and actual impacts of the implementation of the URAA the process of transforming prohibited NTBs into tariff equivalents has resulted in extremely high tariff rates for the major agricultural staple foods (such as cereal, dairy products, meat, and sugar)tariffs facing African agricultural exports in the markets of developing countries are down by 32–48% but reductions are unlikely to have a substantial impact on African export volume because they apply to existing tariff rates that are already quite lowwhilst full implementiation could have negative impact on particularly the food import bill of some African countries, this is likely to be minimal Exports of some African producers who currently benefit from some commodity protocols in the EU market are likely to suffer price declines in the EU market as Lomé Convention protocols give way in the light of URAA provisionsthe post-UR world agricultural market is likely to constrain African agricultural exports from at least two directions, crucially tariff peaks and tariff escalationThe paper makes a number of slightly different observations about the negotiation of the agreement and the obligations it places on the agricultural sector in Africa:the process of trade liberalization in Africa predated the UR, hence, the UR negotiations had no direct influence on Africa’s liberalizationin negotiations, no concerted effort was made to link African domestic liberalization strategies with the multilateral negotiations , nor were the unilateral liberalization achievements used to bargain for better access for African exportsAfrican countries have bound 100% of their agricultural tariff lines but have set tariffs very high allowing space for policy reversal<lI>the remaining policy changes mandated under URAA place many African countries under invited obligations, because they do not cover the typical policy distortions that characterize African agricultural trade and pricing policy and because many African countries are classified in the “ least developed country” category and are therefore exempt The paper argues that developing African agriculture in the emerging more liberalized global trading environment requires that more attention be given to measures for enhancing agricultural productivity. Part of this requirement should be met through further liberalization and rationalization of Africa agricultural trade and pricing policies. Liberalization should be pursued multilaterally not unilaterally in order to:allow negotiation of better markets for African exports in trade partner countriesenhances the credibility of liberalization which could induce quicker and more robust output and export supply response