By Punsarani Jayawardhana
Liberalization of trade being quintessential in the modern development of state and economies. The role of World Trade Organization (WTO) is influential in every part of the world. However, the WTO’s resonance to the needs of developing regions, like the African continent, are still in want of.
This analysis will be professing that the real predicaments of the region have not been catered for, by the WTO, but instead are forced to be met with artificial implantation of WTO moulded economic policies and practices.
As for UNECA (United Nations Economic Commission for Africa), WTO is aimed to create global environment for free and unhindered trade to foster world peace through trade liberalization. In its application in the African region, it needs to be observed if the trade liberalization helps to alleviate poverty and promote development. Schulze notes that states generally have chosen it liberalize their trade to encourage Foreign Direct Investments (FDI), as they will increase employment, income from taxes and due to the knowledge by foreign firms.
Despite these envisioned fortunes of the free trade, it has always been sandwiched between the developed and developing worlds which has made the concept to be met with discrepancies in its practice. This is mostly due to reasons like the West refusing to reduce their subsidiaries, the reluctance of the developing states to mitigate their trade barriers and the consequent accusations by the West on the trade barriers. Also, the protection of the Intellectual Property Rights by the developed countries, in the developing world’s view, has an adverse effect on them. Particularly owing to, but not exclusively due to, these factors, liberalization of trade as emancipated by the WTO finds hard in its application.
Free trade is undoubtedly, a pre-requisite for the economic prosperity in Africa. Nevertheless, it cannot guarantee such, as liberalizing the trade alone may not lead for Africa’s economic boost. Once the structural policies of the WTO and the domestic sensitivities of the African region are unveiled, traces as to how the two do not resonate with each other can rather be figured out. This may not find WTO as succeeding in the region for the betterment of African people but may in a way catering to the needs of the West and the developed world, while being rather challenging for Africa to deal with and have a control of, in order to deploy the WTO policies and practices for its economic wellbeing.
This paradox would be present, as long as it is not addressed that the needs for better economic initiatives in the African continent, like the South- South agreements, regional agreements are outside the ambit of the WTO and that, as Tupy (2005) studies, the Sub Saharan Africa’s poverty is not due to want of access to the world markets but by reasons of political instability and of inadequate policies and institutions. Along with this, it ranks as one of the most protectionist regions of the world.
The crux of this incongruity lies on the fact that, while domestic sensitivities are just a far cry from the envisaged political ambiance needed for a prospering free trade, these sensitivities also are completely, though may not be absolutely outside the purview of the WTO agenda.
For instance, agricultural and industrial protection, trade in services and obstruction of trade by red tape at the border are important more for other countries than Africa. Pressing issues in Africa like commodity prices, commodity dependence is not within the purview of the WTO agenda. Many of the major impediments to the African trade like the macroeconomic stability, poor infrastructure, low and skewed foreign investment are also not in the ambit of the WTO. Areas that would have given competitive advantage for developing countries like liberalization of trade was not successful in the Doha Rounds as the developed economies were not going to do away with their wealth on subsidiaries to their farmers.
This ambiance has made Africa’s presence in the global economic management institutions still marginal. Ake notes that African region entered global capitalism only through colonialism. This can be observed as another source for the incongruity lies between the WTO and the necessities of the region. Diop claims that the region was having a self-sufficing economy before being colonized by the West and that it got distorted with the penetration of European capitalism.
Since the continent became a mere supplier of basic commodities and raw materials (as many other colonies outside Africa), the dependence of the region on the Western markets was fatal to the region’s economy and the current status quo can rather be traced to this dependence.
This claim can be affirmed with the economic recession in 1970/80 which devastated the region, leading it to the debt crisis which still plagues the continent. Low credit worthiness made the region to seek refuge in financial assistance by the International Monetary Fund and the World Bank. They in turn-imposed conditions on their own terms which were rather to ‘discipline’ the region rather than helping it. The region still undergoes the Structural Adjustment Programmed enacted by these institutions as ‘panacea’ to the economic crisis.
Thus, it can rather be held that for the recent past of WTO and its allies and predecessors have not identified the very ‘African’ issues in implementing their policies in the region. This had led to the argument that the WTO and the like hurt Africa rather than helping it out. For instance, Jenson and Gibbon illustrates that by lowering of Most Favoured Nations (MFN) rates, the competition that Africa faces has increased.
Nevertheless, a completely negative picture on the Africa’s development should not be traced in this discussion. The region has 10 of the 16 fastest growing economies in the world. Its economic growth has speeded up by 5% per year. The emerging global markets like China has shown an exceptional interest in investing in the region. Yet, this economic advancement can hardly be credited for the WTO endeavours. The incongruity between the two lies and gets broadened if it is not scrutinized and addressed.
Owing to the recent steps forward in the African economy, the reality of WTO’s influence in the region may get overshadowed. The contemporary Africa needs proper research as to how the WTO policies can be moulded ‘pro- Africa’ rather than a mere ‘wait and see’ attitude. As emphasized in the analysis, these policies implemented need to resonate with the region’s sensitivities to envisage the true essence of trade liberalization meriting the region.
(The opinions expressed in this article are solely those of the author and do not necessarily reflect the views of World Geostrategic Insights)