Doha’s impact on Africa

Pascal Lamy says that Africa needs to give ground in the Doha negotiations:

“If we conclude this round, there will be many winners. If the negotiations fail, no doubt who will be the biggest loser: Africa. We all know that. This is the reality,” said Lamy. Africa states must “alter their position in negotiations to avoid a return to deadlock,” added Lamy during a visit to the African Union’s headquarters in Addis Ababa for talks with trade ministers from the continent.

A June 2006 Focus on the Global South brief by Aileen Kwa summarizes research skeptical of this position:

Contrary to these expectations, however, research from the World Bank, the Carnegie Endowment, the European Commission, and also the FAO, reveal that the majority in Africa will be faced with losses in both agriculture and industrial goods liberalisation. Even if agricultural export markets were open to Africa, the majority of African farmers – subsistence farmers – will not be in a position to compete. In addition, they will lose through having to open their domestic markets in the negotiations. The poorest countries in Africa will be worst hit – many are LDC countries in Sub- Saharan or East Africa.

Here’s a summary of the Carnegie research done by Sandra Polaski:

Ms. Polaski enumerated three reasons why agricultural liberalization could actually harm many developing countries.  First, many poor countries are net food importers.  Eliminating agricultural subsidies would reduce production and increase the price of agricultural goods to the detriment of net food importers.  Second, many rich countries apply lower tariffs to exports from developing countries.  Reducing overall tariff levels would narrow the margins of these preferences.  Finally, due to the small scale of agricultural production in most developing countries, the prospects for competing on global markets are poor.  However lower tariffs could lead to cheaper imports of competing products, leading to a reduction of farmers’ incomes.  The Carnegie model showed that developing countries could shield certain crops essential to farmers’ incomes without significantly diminishing the benefits to other countries of agricultural liberalization. 

The World Bank research is less clear. Kwa writes that “the Bank concluded that the gains were expected for only a few large developing countries such as Argentina, Brazil, India. ‘Bangladesh and many African countries benefiting from preferences are likely to face losses.'” She cites Kym Anderson and Will Martin, Agricultural Trade Reform and the Doha Development Agenda (2005) as the source of the quotation, but the 2006 publication (full text available here) does not contain that sentence. Moreover, that quotation appears to be describing the impact of preference erosion, not the net impact of the Doha agenda. Anderson and Martin’s summary runs contrary to Kwa’s characterization:

Most developing countries gain in our Doha scenarios, and all would if they participated more fully in the reforms. Our simulations of alternative scenarios for possible outcomes of the Doha negotiations show that middle-income countries certainly stand to gain, but so too would poorer developing countries so long as they do not exercise their claims to special and differential treatment in the form of lesser requirements to reform. An important part of this result comes from the increases in market access—on a nondiscriminatory basis—by other developing countries.

Preference erosion may be less of an issue than commonly assumed. Some least developed countries in Sub-Saharan Africa and elsewhere appear to be slight losers in our Doha simulations when developed countries cut their tariffs and these poor countries choose not to reform at all. Our simulations overstate the benefits of tariff preferences for least developed countries, however, since they ignore the trade-dampening effect of complex rules of origin and the grabbing of much of the rents by developed-country importers.

So the World Bank work seems to support Lamy’s argument that African nations need to reform.

I don’t have time to dig into the EC and FAO research, but those interested in the skeptics’ arguments might use Kwa’s piece as a starting point. For another skeptical view of the DDA’s impact on poor countries, see Dani Rodrik’s take. And for skepticism regarding all these simulations (CGE models), check out the Economist‘s July piece (courtesy of Ben Muse).

1 thought on “Doha’s impact on Africa

  1. student's avatarstudent

    Maybe we are missing the point. This posting “Time for crazy ideas” raises questions about whether the full set of assumptions about demand for food products, and hence the World Bank (and others I guess) estimates on the Doha Round is right or not. He is just a professor here, so maybe I am just reflecting what he has been saying in class, but these sound like good questions. Why do we want food prices to go up, if they will go up anyway, if we care about the poorer foor importers? More fundamentally, maybe these studies are just noise.

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