Integrating African Agriculture into Global Markets Moving African Agriculture Up the Value Chain African Agriculture Through a Trade Lens By Christophe Bellman, Programmes Director, International Centre for Trade and Sustainable Development (ICTSD) Presentation at the High Level Meeting on «African Agriculture in the 21st Century: Meeting the Challenges, Making a Sustainable Green Revolution» Organised by the Namibian Ministry of Environment and Tourism and the UN Department of Economic and Social Affairs
4 35 3 25 2 15 1 5 Value of Total Agriculutre Exports by Region 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 Source FAOSTAT Africa South America Europe Northern America Asia LDCs
Value of Agriculutre Imports and Exports in Africa and LDCs 4 35 3 25 2 15 1 5 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 Source FAOSTAT LDCs Imports Africa Imports LDCs Exports Africa Exports
Enhancing African Agriculture Productivity and Moving Up the Value Chain: The Role of Trade Measures Policy objective Trade instrument 1. Enhancing access to markets Tariff protection Preference erosion SPS/TBT measures 2. Promoting Domestic Transformation Removing tariff escalation 3. Removing trade distortions and anticompetitive practices in OECD countries 4. Enhancing competitiveness of domestic producers 5. Reducing risks associated with ag production (price volatility, unfair competition) Export subsidies Domestic Support Domestic Support Aid for Trade Special/sensitive products Safeguard mechanisms
1. Market Access Conditions: A Focus on Tropical Products Overall, 87% tropical products at %. With the exception of bananas and sugar ACP benefit from similar preferences as their direct competitors (e.g. Latin America) on main markets (GSP+, CAFTA, ATPDEA). Peaks remain: e.g. Cassava (EU), tobacco (US), groundnuts (US+Japan), Citrus (EU+Japan). Africa unlikely to be severely affected by preference erosion resulting from WTO cuts: real causes are elsewhere free trade agreements (FTAs), EU Common Ag. Policy reform, etc. *Latin American countries covered in the calculation here include: Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Peru, and Venezuela
Applied and MFN Tariff in the US on Selected Tropical Products Tobacco 9 8 7 Peanuts Cane and beet sugar Chocolate Extracts coffee/tea 6 5 4 Tariffs (AVE %) Vegetables, fresh or chilled Melons Soybean oil 3 2 1 62 63 64 71 79 711 713 714 82 83 84 85 87 81 811 812 813 814 92 94 98 91 116 118 122 127 128 1211 1212 131 132 141 142 143 157 158 1511 1512 1515 1516 1517 1518 171 173 183 185 186 193 21 24 25 26 27 28 29 211 213 228 235 236 241 242 243 331 Margarine Tariff Lines (HS4) Average ATDPEA Tariff Average CAFTA Tariff Average LDC Tariff Average AGOA Tariff Average GSP Tariff Average MFN Tarif Source: Elaboration ICTSD, based on data in Bureau, J-C., Disdier, A-C. and Ramos, P., (27). A Comparison of the Barriers Faced by Latin American and ACP Countries Exports of Tropical Products. Issue Paper No.9. ICTSD
Applied and MFN Tariffs in the EU on Selected Tropcial Products Cassava Tomatoes Bananas Citrus fruits Fruits and Nuts Starches Cane or beet sugar Locust beans sugar beet and cane Margarine Tobacco Fruit Juice Chocolate Tapioca 5 4 3 2 Tariff (AVE %) 1 62 63 64 71 72 79 711 713 714 82 83 84 85 87 81 811 812 813 814 91 92 94 95 97 91 116 118 128 1211 1212 132 157 158 1511 1512 1513 1515 1516 1517 1518 1521 171 173 183 184 185 186 193 21 24 25 26 27 28 29 211 213 228 241 242 243 331 Tariff Lines (HS4) EBA tariff Average Cotonou tariff Average GSP+ tariff Average GSP tariff Average MFN tariff Source: Elaboration ICTSD, based on data in Bureau, J-C., Disdier, A-C. and Ramos, P., (27). A Comparison of the Barriers Faced by Latin American and ACP Countries Exports of Tropical Products. Issue Paper No.9. ICTSD
How are African Exports Affected by Sanitary and Phytosanitary (SPS) Measures? Share of Developing Country Exports of Tropical Products Affected by SPS/TBT Measures in Major Markets % of DC Exports Affected by SPS/TBT Measures 1 9 8 7 6 5 4 3 2 1 99.9 97.5 96.8 6. 58.7 55.5 53.6 46.5 4.9 36.5 25.9 26.9 22.3 8.6 9.6 1.1 9.8 11.4 EU25 Japan Switzerl. US Canada Australia ACP Latin America Asia11* *Asia 11 includes: Bangladesh, Brunei Darussalam, Burma, Cambodia, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam Source: Disdier, A-C., Fekadu, B., Murillo, C. and Wong, S., (28). Trade Effects of SPS and TBT Measures on Tropical Products. Issue Paper No.12. ICTSD, Geneva. Switzerland.
2. Tariff Escalation Average Most Favored Nation (MFN) Applied Out-of-quota Duties (%) EU US Japan 35 16 25 3 25 2 15 1 5 14 12 1 8 6 4 2 2 15 1 5 Coffee Cocoa Fruits Veg Seafood Coffee Cocoa Fruits Veg Seafood Coffee Cocoa Fruits Veg Seafood raw intermediate final Source: World Bank, Global Agriculture Trade and Developing countries
The need to Take Preferential Schemes into Account: the Case of Cocoa in EU Cocoa beans, raw or roasted Cocoa paste Cocoa butter, fat and oil Cocoa powder, not containing added sugar Cocoa powder, containing less than 5 % of sucrose Cocoa powder containing 5 % or more but less than 65 % of sucrose Cocoa powder containing 65 % or more but less than 8 % of sucrose Cocoa powder containing 8 % or more of sucrose Cocoa powder containing 31 % or more of cocoa butter or milk fat Chocolate milk crumb Chocolate flavour coating Chocolate filled Chocolate filled with added cereal, fruit or nuts Cocoa preparation containing alcohol Cocoa preparation filled Cocoa preparation not filled Sugar confectionery containing cocoa Spreads containing cocoa Preparations containing cocoa for making beverages MFN tariff % 9.6 7.7 8 8 27.7 26.2 66.4 42 23.5 24.2 14.6 22.8 19.4 25.9 23.4 21.7 GSP tariff % 6.1 4.2 2.8 2.8 22.5 22.7 62.9 28.4 23.5 18.7 Sugar Content Tariff «des-escalation» 58.4 53.9 43 38.5 2 2.7 11.1 19.3 15.9 22.4 19.9 18.2 GSP+ tariff % 19.7 18.2 58.4 33.7 15.2 15.9 6.3 14.5 11.1 17.6 15.1 13.4 Cotonou tariff % Protection of Domestic Transforming Industry 19.7 18.2 58.4 15.1 13.4 EBA tariff % Source: Bureau, J-C., Disdier, A-C. and Ramos, P., (27). A Comparison of the Barriers Faced by Latin American and ACP Countries Exports of Tropical Products. Issue Paper No.9. ICTSD
3. The Importance of Removing Trade Distorting Policies Source: World Bank
. And the Doha Round is Unlikely to Remove them. Overall Trade Distroting Support in the EU and US 12,. 1,. 8,. Mio Euro/Moi USD 6,. 4,. Base Applied Projected 213/14 DDA final 2,.. EU US
4. Enhancing African Agriculture Productivity: the Role of Domestic Subsidies Overall, Africa has enough policy space to address supply side constraints through WTO compatible subsidies However, as a ratio of agriculture gross domestic product, agriculture spending declined from 7.4% in 198 to 6.7 % in 22. (This declining trend in ag. spending is occurring within the context of rising total public sector spending in many African countries.) No clear picture of trends in domestic support: few countries have consistently notified the WTO. Non trade distorting measure form a substantial proportion of total domestic support (1% in Kenya, Zimbabwe, Zambia and South Africa since 21) Spending on extension service, research and training are the most frequently reported spendings followed by disaster relief, and regional assistance programmes.
Total Amount of Domestic Support Reported to the WTO by African Countries 16 14 12 US$ (million) 1 8 6 4 2 Botswana Egypt Gambia Kenya Morocco Namibia Tunisia Zambia Zimbabwe South Africa 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 Source: Dhar, B Use of Green Box Measures by Developing Countries: An Assessment, ICTSD, 27
Enhancing Competitiveness: Early Lessons from EU Support to ACP Banana/Sugar Producers Initial focus was on enhancing competitiveness. Increasingly also on diversification and social adjustments The efficiency of aid delivery in supporting time sensitive adjustment processes. Programmes for enhancing competitiveness are most effective (transparent and quick) where assistance is provided directly, on a cofinanced basis in support of economic operators-own investment plans (Cameroon). Delivering support within smallholder farming systems is extremely difficult. Often intermediate structures needed to be established to deliver assistance. High transaction costs Need to focus on: Transition to luxury markets & moving up the value chain (cofinancing vs sectoral plans) Diversification: infrastructure for food safety compliance (training, low cost loans, incentives for small holders) Diversification in ag. based on a market led approach Supporting Social Adjustments (budgetary support, e.g. health, education, housing, small loans facilities) Soruce: The ACP Experience of Preference Erosion in the Banana and Sugar Sectors and Possible Policy Responses, by Paul Goodison, ICTSD, 27
5. Import Competing Sectors: Reducing the Risks Associated with Agricultural Production Price volatility and unfair trade practices: The need for an effective safeguard mechanism to deal with import surges and price depression (ideally based on prices as opposed to volumes) Careful/targeted liberalisation to protect livelihood: WTO unlikely to affect tariff levels in majority of African countries Need to focus on gentler tariff reductions for key special products (SP) in EPAs and FTAs 19 ICTSD Studies using a methodology based on 22 indicators of food/livelihood security and rural dev. Lessons from ICTSD studies: On average SP represent 12% of ag. tariff lines and roughly 2% of ag. imports Series of «core products» highlighted in studies
Special Products Most Frequently Identified in ICTSD Country Studies* 1.% 9.% 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% Poultry Meat Rice Milk and Dairy Bovine Meat Sugar Maize Pork Meat Potatoes Vegetable Oils Sheep Meat Wheat Tomatoes Onion and Garlic Beans, Peas and Legumes Sorghum/millet Citrus Fruits Nuts including ground nuts Soybeans Chilies * Countries covered include Barbados, Peru, Pakistan, Sri Lanka, Kenya, Honduras, Philippines, Fiji, Vietnam, Ecuador, Nicaragua, Papua New Guinea, China, Indonesia, Tanzania, Ghana, Cote d'ivoire, Mali, Nigeria