Will Africa finally benefit from global trade mix after WTO’s trade facilitation agreement?

There have been demonstrations that Powerful industrialized nations continue to bully developing nations towards getting their way in the global trade mix.

In 2000, at a round table trade negotiations, Africa trade ministers boycotted the summit because African countries, according to them, were being marginalized and generally excluded on issues of vital importance to their future, they declared in a public statement.

The next day the summit adjourned with no agreement, as developing countries rebelled at being pushed aside.

Seven years later, the wound seems to have healed, as today in Geneva, The International Trade Centre welcomes the entry into force the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA), aimed at cutting red tape, making the international flow of goods more seamless, and ease border delays and transit bottlenecks.

The multilateral deal is the first in the 21 year history of the World Trade Organization, meaning 164 members including 47 African countries will enjoy simplification, modernization and harmonization of export and import processes to ease world trading system,  why WTO said the world’s least developed countries including Africa will be gaining the most by 2030.

Although this is not the first time, hopes of African countries have been raised, to bridge the gap of trade  deficit between African countries and the world.

A case in point is the cocoa and chocolate industries. Even though Africa produces 75 per cent of all the cocoa in the world, the continent gets only 2 per cent of the $100 billion revenue from the chocolate industry.

Over the years, WTO has failed to clarify the deliberately ambiguous rules on concluding trade agreements that allow the poorest countries to be manipulated by the rich states.

In Africa, in negotiations with the EU, countries have been forced to eliminate tariffs on up to 90% of their trade because no clear rules exists to protect them.

Also the rules for developing countries, called “special and differential treatment” rules, were meant to be reviewed to make them more precise, effective and operational. But the WTO has failed to work through the 88 proposals that would fill the legal vacuum, meaning Africa still only commands a meager 0.38 percent of global manufacturing output contributions, according to United Nations Industrial Development Organisation 2015, compared to a 21.7 percent share for the Asia Pacific region, 17.2 percent for East Asia and North America’s 22.4 percent share.

For example Cotton, the Fairtrade Foundation revealed last year said that $47bn in subsidies paid to rich-country producers in the past 10 years has created barriers for the 15 million cotton farmers across west Africa trying to trade their way out of poverty, and how 5 million of the world’s poorest farming families have been forced out of business and into deeper poverty because of those subsidies.

But the ITC Executive Director Arancha González, has promised that implementation of this TFA Agreement is a major Milestone, and will lead to a reduction in the cost and time of exporting and importing goods and will be a critical input into making trade happen on the ground by over a day and a half the time needed to import goods, and cut nearly two days from the time needed to export goods.

“The TFA will enable more SMEs to break out of local and national markets, and tap into regional and international value chains. Faster, more efficient and predictable exports will allow SMEs to climb up the value chain into higher-margin products.”

“In receiving four more ratifications for the Trade Facilitation Agreement (TFA), the WTO has obtained the two-thirds acceptance of the agreement from WTO’s 164 members. “Rwanda, Oman, Chad and Jordan submitted their instruments of acceptance to WTO Director-General Roberto Azevêdo on 22 February 2017, bringing the total to over the required threshold of 110.

“The entry into force of this Agreement, which seeks to expedite the movement, release and clearance of goods across borders, launches a new phase for trade facilitation reforms all over the world and creates a significant boost for commerce and the multilateral trading system as a whole”.

DG Azevêdo describes the Agreement as a  landmark trade reform, “This is fantastic news for at least two reasons. First, it shows Members’ commitment to the multilateral trading system and that they are following through on the promises made in Bali. Second, it means we can now start implementing the Agreement, helping to cut trade costs around the world. It also means we can kick start technical assistance work to help poorer countries with implementation.”

The agreement projection

“But this is not the end of the road. The real work is just beginning. This is the biggest reform of global trade in a generation. It can make a big difference for growth and development around the world. Now, working together, we have the responsibility to implement the Agreement to make those benefits a reality.”

“The Agreement is unique in that it allows developing and least developed countries to set their own timetables for implementing the TFA depending on their capacities to do so.”

He noted that developed countries have committed to immediately implement the Agreement, which sets out a broad series of trade facilitation reforms. Developing countries, in comparison, will immediately apply only the TFA provisions they have designated as “Category A” commitments. For the other provisions of the Agreement, they must indicate when these will be implemented and what capacity building support is needed to help them implement these provisions, known as Category B and C commitments. These can be implemented at a later date  with least-developed countries given more time to notify these commitments.