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Written by APF

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Published: 26 November 2011

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The shifting balance of complex forces of political change and governance indicates that a window for democratic breakthroughs has widened in Africa. “The continent aspires to be governed differently,” Chris Fomunyoh, working group member and Regional Director for Africa at the National Democratic Institute, told attendees. Meanwhile, the strengthening of civil society, legislatures, elections, and a range of other democratic institutions in Africa has chipped away at the monopoly on power of the executive branch. This process has also placed more pressure on Africa’s authoritarians and autocrats.

While the Arab Spring has been the focus of conversation and analysis, the report states, a momentous year for democracy south of the Sahara has gone largely unnoticed. For example, watershed elections were held in Guinea, Nigeria, Niger, Côte d’Ivoire, and Zambia. Niger and Guinea, meanwhile, reversed the corrosive effects of military coups.

Welcome remarks by Ambassador William M. Bellamy (ret.), Director of the Africa Center for Strategic Studies and comments  by Joseph Siegle, Working Group Chair and ACSS Director of Research , Christopher Fomunyoh, National Democratic Institute’s Regional Director for Africa , Edward McMahon, University of Vermont Professor and Freedom House Senior Research Associate

Video link: http://www.youtube.com/watch?v=BQmbjmVAIIA&feature=player_embedded
Article link: http://africacenter.org/2011/11/catalyst-of-reform-the-arab-spring-in-africa/

Source: Africa Center for Strategic Studies

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Written by APF

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Published: 03 April 2011

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Doha Development Round: WTO talks collapse after 7 years of Negotiations

By Eric Acha

The Doha Trade Negotiation rounds first lunched in 2001 in Doha - Qatar where aimed at paying special attention to the needs and interest of the Developing Countries. The negotiations were planned to redress the perceived imbalances in the global trading system that mostly favoured the rich developed countries
But unfortunately this vision and commitment seem to have kicked the bucket or to a minimum has been strangulated.
Though it may be disputed by some negotiators, it is evidently clear that the interest of the developing countries was no longer the top priorities of the negotiations as they proceeded.

The difficulties to reach an agreement that addresses the concerns and  interest of the developing countries as well as hold the potentials to raise their income and living standards, while at the same time offering sufficient incentives for the developed countries has been the major obstacle to the negotiations.As a matter of fact, agriculture and the manufacturing sector has been the point of contention and has led the negotiations a couple times to deadlock, and still are the two main issues of concern today, with agriculture being the most controversial. Before looking at where things stand today, let us take a brief retrospect over what has been going on since the first round Qatar in 2001.

Doha 2001

The Doha round which kicked off in November 2001 was actually a continuation of negotiations from the WTO ministerial conference of 1999 in Seattle (Mellinium round) which failed woefully, since some very fundamental issues had been ignored by the negotiators.  It was illusory to dream of a consensus on major issues after excluding the developing countries from agricultural negotiations. This failure led to the birth of the Doha Development Agenda commonly referred to as the Doha Round.

Its agenda was broad and there was little thought on diagnosing how complicated things would be if the objectives of the Agenda had to be met. Fully opening agriculture and manufacturing markets were the main issues on the agenda as

well as trade in services and also expanding intellectual property regulations. In short it was meant to improve the current terms of trade and encourage fair trade.

With so much optimism, the negotiators were convinced things will be concluded within 4 years and hence 2006 was set as the deadline.

Cancún 2003

Two years after the lunch of the Doha rounds, trade ministers met in Cancùn to continue what they started in Doha with yet much optimism and with hopes things were getting close. Little did they know that this round was actually to unveil disparities and realities that would keep them busy and not finding consensus for the next 5 years.

It was at this ministerial meeting that the challenges posed by subsidies and full liberalization of markets really emerged in their totality. Without much wrangling, the negotiations led to a deadlock and subsequently collapsed after four days of negotiating. The sticking point here was a demand by the developing countries that the EU and the US reform their EU Common Agricultural Policy (GAP) and the US government Agro-Subsidies respectively, in order to fully scrap off the agricultural subsidies they were providing their famers. In other words, the negotiations had just begun.

Geneva 2004

A lot is considered to have been achieved during the Geneva Round of August 2004, since a framework agreements was at least achieved. The EU, USA, Japan and Brazil agreed to “reduce” (not eliminate) their export and agricultural subsidies and lower tariff barrier, while on the other hand, the developing countries  agreed to “reduce” (not eliminate) tariff on manufactured goods, but at the same time gained the right to protect what they considered key industries from unfair competition.

Paris 2005

The Paris round was originally intended to round up issues discussed in Geneva and prepares a clean path for the negotiations in Hong Kong. But unfortunately issues that the negotiators thought had been vigorously discussed and concluded in Geneva resurfaced and were becoming major obstacles to any progress. French farmers through their lobbyist group protested all previous moves intended to cut farm subsidies, while the US, EU, Australia and Brazil could not agree on issues relating to chicken, beef and rice. With this, there was a feeling of pessimism since it was evidently clear that failing to find a consensus on such small but technical issues will mean harder days ahead when it comes to large political and more risky issues.

Hong Kong 2005

After 3 years of intensive negotiations and midway to the Doha rounds, the trade ministers (negotiators) finally agreed on a deadline for eliminating export subsidies on agricultural products, though without a framework to ensure its implementation. Despite lots of resistance and obstacles, the Hong Kong declaration had some substance in that, it was able to set 2013 as the deadline to eliminate those subsidies on agricultural exports with the industrialized nations opening up their markets to goods from the developing and poor countries.

Geneva 2006

The sticking issue at this meeting in Geneva was the farming subsidies that had been a point of contention during the Paris meeting. The negotiators failed to agree on the demand to reduce farming subsidies and lowering import taxes. It posed so much threat to the entire negotiations so much that, some sceptics where concluding the Doha-Development Agenda was going to collapse. Many thought since the US trade Act of 2002 granted to the President of the United States G.W. Bush was due to expire in 2007, any subsequent Trade deal will need to be approved by the US congress with the possibilities of amendments, an  issue which will be at odds with most of the negotiators. This fact alone demotivated most negotiators. The round is some how believed to have been saved by Hong Kong, that acted as a mediator to the collapsed trade liberalization talks.

Potsdam 2007

What actually transpired in Potsdam in 2007 that led to a deadlock is still being disputed by many today. But the truth is that, the discrepancies  were nothing new to the negotiators and they all understood that nothing good was going to come out of the conference, since the US, EU, Brazil and India were still unable to find common grounds on a range of issue. What I will term the “old disagreement” which was, and still is, and will continue to be is the call for the full liberalization of the agricultural and industrial market and also the total cancelation of farm subsidies by the US and the EU. These are the sticking issues that led to the break down of the conference. However, the trade ministers left Potsdam with optimism following some consolatory notes from Pascal Lammy, the Derictor General for the World Trade Organization (WTO), hoping things will be easier when the talks resume on July 21^st 2008 in Geneva. How I wish they all knew what awaited them.

Geneva 2008

Prior to the kick off the conference on July 21^st, there was so much optimism that the negotiations were nearing conclusion and could get done before the year runs out. Even the Director General of WTO showed same optimism on many occasions, despite knowing the complexity. During his intervention at the International Monetary and Financial Committee meeting on 12 April 2008 in Washington, he urged financial leaders to push “now” for the conclusion of the Doha Round. Hear him:

“Last year I told you about the risks of a failure in the Doha Round. A sort of half empty glass. This year I am completely convinced that we have it within our means, politically and technically, to finish the Doha Round this year. To do so, the first step we need is for WTO Member governments to agree at Ministerial level by the end of May on the framework for cutting agricultural tariffs, agricultural subsidies and industrial tariffs.”

Looking closely at how the talks ended in Potsdam in 2007, it will beat the imagination of any good thinking human being why there was so much optimism. I am an optimist but as long as these talks were concern, but I could look straight into any face and say without stuttering that the negotiations will go beyond 2008 if actually the differences needed to be sorted out and the Doha development round Agenda maintained.

The issues at stake are so technical and politically complicated so much that finding a win-win compromise will require many political and economic sacrifices from all parties. But this willingness was lacking despites the fact that the conference took off on a positive node in Geneva.

Even though taking off on a good foot, the negotiations where in a deadlock for four days until a consensus was reached on the extent of farm subsidies reduction within the EU and the US. It was agreed that the EU will cut its farm subsidies by 80% while the US will do same by 70%. France and Italy reluctantly bowed to this proposal but with lots of reservations. The percentages sound really much but the fact is, in reality it is not enough to avoid the distortion these farm subsidies are causing to world prices and the havoc it brings to millions of poor farmers in the developing countries.

On the other hand, it was not possible to fully convince India, China and Brazil to fully accept the terms of opening up their markets to industrial goods from the developed countries. China and India are being accused for being behind the current deadlock.

The nature of these negotiations is so complex that even the developing countries that ought to be speaking with one voice are more often divided than united when their interest is at stake. This was once again proven on Sunday 27^th, when the Latin American countries and the EU came out celebrating after settling their long standing dispute over EU imports of Bananas. Until this day the deal had favoured only former European colonies in the African, Caribbean and Pacific (the so called ACP countries) that were exempted from import tariffs on Banana. The ACP cried foul at this move and threaten a total blockade of the negotiations if the agreement was not reversed and overhauled.  The fact is, the deal had been stroked and the cries were falling on deaf ears.

The EU had once more outsmarted the ACP member states with this move and at this point,  good thinking minds should start questioning the true intensions of the bilateral Economic partnership Agreement the EU signed with most of these ACP member states. One can now have an understanding of why there was so much pressure exerted on the ACP member states by the EU negotiators to sign the Economic partnership Agreement (EPA) at the beginning of this year.

I will attempt making some analysis in my next post on the technical reasons delineating why the Doha Agenda is practical impossible, though if attained will end a lot of mass suffering in most developing countries. But until then, the DOHA ROUND IS DOOMED!

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Written by APF

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Published: 17 July 2011

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The security challenges facing Africa are enormous and multifaceted. These challenges are both conventional and non conventional, e.g violent extremism, insurgency, armed robbery, piracy, narcotic trafficking, human trafficking, post-conflict stabilization, resource, identity conflict and other forms of organised crime. Terrorism is also on the rise in some regions of the continent.

Given this wide array of challenges, coupled with the high level of unemployed youth and bad governance across most of the continent, there are growing concerns of a long term deteriorating effect.

On one hand proponents of democracy have argued that good governance is the key solution to this problem while on the other hand, development experts see the problem through a different prism. They argue that under development and the lack of opportunities for a better life are the driving factors behind much of the insecurity on the continent. The struggle over scarce and natural resources has been identified as the core of the major conflicts in Africa.

Oil, Gold, Diamond, Bauxite, Timber and even water are some of the many resources that have recently pushed countries and communities across Africa into costly wars. The rise of piracy in the Somalia waters has opened a new front that needs urgent attention.

Both regional and international partners are engaged in a fierce battle to curb and mitigate as well as prevent all these security concerns. The rise of political instability as a result of bad governance as well as bad diplomacy by the international community in some cases is exacerbating pressure on these efforts.

How the continent will fairy and overcome these security challenges over the next years is an issue occupying the minds of most Africa security experts.

Making Africa safe is fast becoming a priority to many external partners given the strategic importance of the continent as the world economic dynamics continue to evolve with the compass pointing toward the continent.

It is in this light that the Africa Policy Forum has made security one of its core are areas of interest. We shall be engaging our experts and partners in this field for insightful debates, as well as making available selected publications on the issue for our audience.

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Written by Eric Acha

Category: Latest

Published: 03 April 2011

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Where the Doha Development Round stands, and what is holding it?

By Eric Acha

This post is a recap of a mail I sent to a friend a few days ago, on answering his question on what are the sticking points to the Doha Development round.  However, I have covered the issue more extensively than in my previous response.

As the title of the blog delineates, I have decided to look at where things are at the moment and where the round could be heading to. More importantly is my fair criticism to what Professor Robert E. Baldwin recently put forward as an ultimate solution to the current sticky issue on the additional agricultural safeguard measures holding the DR negotiations. It takes much courage to dispute the views of such a senior scholar, but being an economist, he will take no offence for he knows the discipline is what it is, thanks to the fact that your thoughts are open for criticism as long as a valid one can be found.

For those not familiar with the negotiations, since the first phase in Quarter, each round starting from Doha through Cacün, Paris, Geneva, Hongkong, Geneva, Potsdam, Geneva have had its sticky point that led to a deadlock or a suspension of the session.

However, the early phase of DR negotiations was marred with disagreements on the scale of agricultural subsidies elimination and the liberalisation of the manufacturing sector in the developing       countries.
The sticking point here was a demand by the developing countries that the EU and the US in particular, should reform their EU Common Agricultural Policy (GAP) and the US government Agro-Subsidies respectively, in order to fully scrap off the agricultural subsidies they were providing         their     farmers.

On the other hand, the US was demanding more access (liberalisation) of the manufacturing markets in these developing countries, an issue which was of big concern to the emerging markets especially India, Mexico, Brazil and China.

On a face value, the demands from the both sides might sound quite simple, however, the duration and difficulties on reaching an agreement speaks for itself and makes clear how complicated the whole negotiations are. It has kept the smartest economists and trade experts busy for about a decade today and models have been build to explain the gains and loses that will be involved when a complete agreement is finally reached under the current Doha Round agenda.

Some economists have question if the anticipated gains from DR (in welfare terms) are worth all these negotiations and resource squandering. This thus, has led to the claim that the mercantilist approach of most negotiators involved should shoulder part of the blame.

Going back to the issue, when a deal and compromise was finally brokered on how the US and EU should eliminate their subsidies, many thought the DR would be finalised without much technical difficulties, given that proposals were also made on how the developing countries would liberalise their markets without putting their home industries at risk.

Under the WTO work program, the Doha Ministerial Declaration commits WTO members to providing special and differential treatment with regards to agricultural products for developing countries. This obligation does however, fall short of detailing a special agricultural safeguard measure for these countries.

It was based on this lapse that the developing countries, under the auspices of India requested at the start of the negotiations in 2001 that additional agricultural Safeguard measures be introduced to protect the farmers in these countries in the event of a surge in imports from the developing countries or a decline in world prices that could put the livelihood of their home farmers at risk.

As opposed to the standard safeguard provisions of the GATT/WTO (that require proof of injury or threat of injury before tariffs can be imposed), the requested agricultural safeguard measures will allow the developing countries to raise tariffs in case of such a threat (without due procedure)

The measures were introduced and this seem to have been the stumbling block that led India and US into a confrontation at the last meeting in     July     2008.
This may be, explains why India and the US are thought by many to have been the reason behind           the       last            deadlock.

There was no major objection to the overall idea of increasing tariffs, and hence at the Hong Kong ministerial conference in December 2005 WTO members formally agreed that such a special safeguard mechanism covering both quantity and price triggers should be part of the final deal. But the technical difficulties that led to a deadlock was when, by how much and for how long should such special tariffs be in place.

What would be the volume of product inflow that will justify a tariff increase?

So as you can see, what is holding the DR is merely a technical issue, but that seem more complicated than many including the negotiators are taking it to be. It could require just some simple arithmetic but the economic implications and interpretations has magnified the issue and turn to pose more stumbling blocks as it seem to be the case now, and truly, in trade agreements (as Professor Baldwin put it) the devil is in the detail, and yet the problem with his proposal is sort of another devil in the details.

As I pointed out in the last post the stalemate is centred on three issues which are :

• The amount imports must increase before additional protection would be permitted;

• The amount tariffs could be increased; and

• How long they could be maintained.

The current rejected proposal by the WTO Director General Pascal Lamy, which also answered the question on whether the tariff increases could exceed pre-Doha Round rates. He proposed that developing countries be allowed to raise tariffs by up to 15% if the increase in imports of an agricultural product over a three-year moving average exceeded 40%. He also proposed pre-Doha round rates could be exceeded on no more than 2.5% of a country’s tariff lines, and aspect India, China and a host of other countries vehemently rejected on grounds that it will hinder their ability to prevent their local farmers in the event of an import surge, and as a result counter -proposed that: the permitted tariff increase could rise to 30% over pre-Doha Round bound rates on up to 7% of tariff lines.

The major flaw with the current proposal as Prof. Baldwin points out, is the inability of the current rigger mechanism to distinguish between import surges that do not threaten the livelihood conditions of developing country farmers and those that do.

Agricultural safeguard measure triggers under the Doha Round as opposed to the those under the Uruguay Round (based on market access opportunities defined as imports as a percentage of the corresponding domestic consumption) are expressed simply as percentage increases in the volume of imports over the preceding three years or percentage decreases in a product’s import price compared to its monthly average over the preceding three years.

Using some arithmetic, Baldwin argues that, the effect of a given percentage increase in the volume of imports on the livelihood conditions of domestic farmers varies greatly depending on the level of import penetration. For example, he points out that if the initial import penetration ratio is 5%, a 20% increase in imports means the domestic supply of the product doesn’t change much. This imply that the supply on the domestic market only by 1%, and thus will have no effect on the food security concerns that may guarantee protectionist response. But if the initial import penetration were 50%, a 20% increase in imports would mean a 10% increase in the product’s and thus a credible threat to the local farmers likelihood and hence a justification for protectionism. As Baldwin points out the proposed mechanism failed to distinguish between such obviously different cases and hence a source for conflict.

What he proposes as a better mechanism will be that which distinguishes between when developing countries do and do not need additional import protection to maintain food security and livelihood conditions of their poor farmers, and should be simply the percentage increase in imports divided by the average consumption of the product over a recent period. Many any historical effects of increases in developing country agricultural imports that will warrant protectionism should be calculated as a percentage of the domestic consumption of that particular product.

Now this is where I find a problem with the reasoning and implications behind this proposal. Though the technical calculation is accurate, the reasoning is some what flawed. Specifying safeguards based on this imply that triggers will be specified based on the consumption ratio of the particular product observed over the preceding three years. The proposal does not accommodate the possibility of a surge in an unobserved but closely related substitute. The surge in such a substitute could certainly divert consumption from the observed and the to-be protected product.

For example, if there are major concerns that the local farmers likelihood will be at risk, if there is a surge in the importation of grains (e.g rice) that is also exported and consumed locally then certainly the consumption and trade in rice will be observed very closely, without much attention paid to other grains. Not monitoring Wheat that is not grown locally and that can act as a perfect substitute for rice could lead to the same adverse effects on the livelihood of the local farmers if there is a surge in the importations of wheat.

Under the current safeguard measures and Baldwin proposal such substitutes are not taken into consideration, and even if these where to be included in the proposal, the next problem I already foresee will be the definition of the substitutes and what will constitute such substitutes. My reasoning may be wrong as well, so I will very much welcome any constructive criticism or corrections.

It was rumoured before the G20 summit in London last week that some compromise had been reached and that talks [between India/US] will continue at the summit, and may be finalised. This was wishful thinking, firstly because as long as there is yet no optimal solution to this stalemate, one can’t see the Doha round ending any time soon and secondly it would have been naive to think that the London summit will abruptly finalise negotiations that have been on going for close to a decade now just because Obama has been elected president.

Again the new Obama administration needs time to familiarise itself with the negotiations even if the negotiators are still the same, and as we all saw, nothing more could be expected than the promise to fully recommit itself to the negotiations and see them finalised as soon as possible. Many critics think this was a somewhat vague statement given that no date line was set by the world leaders if really there wanted to see the negotiations finalised.

But any honest economist will tell you the Doha round is far from over if the key negotiators are not willing to make sacrifices and disease from their mercantilist practices.