How Can African Countries Advance Their Trade and Development Priorities?

HOW CAN AFRICAN COUNTRIES ADVANCE THEIR TRADE AND DEVELOPMENT PRORITIES.

Abstract

This Essay is about how Africa can grow its development priorities. It talks about the wto, the structure of the world Trade Organisation, the most favoured nation and national interest rules and how its supressing the growth of African countries it then talks about how African can develop its development priorities instead of being members of an organisation that stagnates its growth.

Introduction

The WTO was created with the aim of facilitating free trade and creating wealth for member countries. However, the WTO has acted bias on several occasions by favouring the interest of multinational companies over that of African member countries and other developing countries in the world. What is then the essence off being involved in and organisation that does not benefit country. The trade agreement is detrimental to our growth which is the reason we need to look into other modes or policies of creating wealth in Africa. There has to be a way out which is why This Essay will try to propose a way for African Countries to advance their trade and development priorities

The World Trade Organization and Benefits of Being A Member.

With the establishment of the World Trade Organization in 1995, the WTO adopted the GATT (General Agreement on Tariffs and Trade) agreement and made it an enforceable code for all its member state. The key principles of GATT 1947 were; (1) No discrimination of trade; All states endorsing the agreement have to give the same trading privileges and benefits to all other contracting states equally and when foreign goods were imported into one contracting state from another, the foreign goods had to be treated the same way as domestic good; (2) With some exceptions, the only limitation that one contracting state could use to ration the importation of goods from another contracting state were customs tariffs; (3) The trade regulations of contracting states had to be clear, meaning it had published and available to other contracting states and their nationals; (4) Customs unions and free trade agreements between contracting states were viewed as genuine means for relaxing trade as far as they did not generally discriminate against third-party states that were also parties to GATT; (5) GATT-contracting states were permitted to charge only certain charges on imported goods; (a) an import tax equivalent in amount to internal taxes, (b) anti-dumping duties to balance benefits gained by imported goods that were sold lesser than the price charged in their home market or lesser than their actual cost, (c) countervailing duties to offset foreign export subsidies, and (d) fees and other suitable charges for services rendered.[1] The WTO transformed the GAAT agreement which was recognised by member countries into an established membership organization, consequently the WTO serves four basic functions:

1. To implement, administer, and carry out the WTO Agreement and its annexes,[2]

2. To act as a forum for ongoing multilateral trade negotiations,[3]

3. To serve as a tribunal for resolving disputes,[4] and

4. To review the trade policies and practices of member states.[5]

Structure of the World Trade Organisation

The WTO has five primary organs which are; a Ministerial Conference, a General Council which also serves as the WTO’s Dispute Settlement Body and Trade Policy Review Body, a Council for Trade in Goods, a Council for Trade in Services, and a Council for Trade-Related Aspects of Intellectual Property Rights. In the practice of GATT, the Ministerial Conference and the General Council are made up of representatives from all the member states.[6]

Benefits of the WTO to Member State.
The chief decision body of the WTO is the Ministerial Conference.  Every two years the government of member state gathers together for the conference.

 Trade decisions are made by a consensus. But really most of the decisions are made by a few of members. The main deciders are the US, EU, Japan, Canada and Australia. Big multinational companies come from the most powerful governments and as a result the WTO serves mainly their interests.
The outcome of the meeting with this group are then brought to the formal meeting and made into final decisions. Even when some developing countries are invited to the meetings with the big five, it is only in the last moments were there opinion has no significant outcome on the final decisions.
Most African countries are not even invited, and by consequence this decision do not favour developing countries’ interests.

The Structure of these Ministerial Conference particularly the General Council has been

disapproved on the basis of “[m]ass management does not lend itself to operational efficiency or

serious policy discussion’’[7].  Attempts have been made at the Uruguay round to deal with these complaint but Most African countries refused, reason being that the developing countries have relaxed their markets, developed countries have not fully obeyed the Uruguay Agreements and carry on their “protectionist” policies, regarding  products which the developing countries can have an advantage, e.g  textile and agriculture .they keep custom duties high, making it difficult for African countries to penetrate the world market.

Most favoured Nations  and National Testament Principle

The most essential principle of the GAAT agreement is non-discrimination whilst trading with countries. This provided for in Article I of the GAAT. Paragraph 1 states ‘’. . . [A]ny advantage, favor, privilege, or immunity granted by any member to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other members.’’[8] But the GAATS agreement also provides for an exception for developing countries in the exercise of the MFN principle in article XXXVI, paragraph 8 which provides: “The developed members do not expect reciprocity for commitments made by them

in trade negotiations to reduce or remove tariffs and other barriers to the trade of less-developed members.”[9] This is also known as special treatment. Also Article III, paragraph 4, of GATT provides:

The products of the territory of any member state imported into the territory of any

other member state shall be accorded treatment no less favorable than that accorded

to like products of national origin in respect of all laws, regulations and requirements

affecting their internal sale, offering for sale, purchase, transportation, distribution,

or use. . . . This is also known as national treatment rule.’’[10] This rules are the most fundamental rules of the GAAT agreement.

 But What Does These All Mean For Africa?

Notice that the founding members the WTO are majorly European countries. After a series of trade dispute and trade difficulty which was directly connected to increase in tariffs of goods and services which impeded economic growth at the time and development hence the need for a general  agreement between countries for a reduction in trade tariff and free flow of trade within this countries. There’s a  history here, they have adopted rules and signed agreements that work for them and their socialization. Drawing from the MFN and NI principle, you would notice that you can only benefit from this principle if you require the same trade need. Sectors which African countries have comparative advantage, like agriculture and clothing, face high custom duties apparently higher than other sectors.
 Another issue is the idea of non reciprocity.developed countries use this principle as a way to bribe  developing countries in nontrade areas. This creates a situation to keep multilateral tariffs high. This is clearly suffocating the growth and development of African countries. Even  the developed countries do adhere strictly to this principles as the principles are not enforceable rights.

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African countries do not gain from globalization. Our rich resources are exploited by multinationals and taken to their countries with little or no benefit to Africans.The few new factories offer  low standards of work conditions and pollute our environment.  These trade liberalisations have offered low quality of life for african countries. The concentration of wealth gained from the multinational companies are only in the hands of few elites. The GAAT agreement demands equality amongst member states but the bigger countries do not adhere to this and are getting away with it. The reason developing countries have joined the WTO is to create wealth for their nations but instead the opposite is the resulting consequences of their membership. It is barely benefiting Africa in anyway.

If the West will not subsidise their goods and services in the interest of the wider public, then African countries need find another form of creating wealth or new trade partners that agree with their terms of trade agreement.

Part 3

How Africa can Increase their Trade and Development Priorities.

African countries have waited and tried for years to negotiate their own trade priorities at the WTO round table conferences, but instead more rules are put in place to further cripple our growth.

Lets find our own successful regional trade agreement, grow from their and perhaps join the WTO as a regional organisation like the European union so that we trade on the same level playing ground. New  powerful economies like China and India will continually remain our strategic partners and propose new export prospects.

Tools To Achieve This Growth.

In the former president of Nigeria, president Olusegun obasanjos new year message for 2019, he said that there are five P’s that will facilitate Africa’s growth and development. According to him these are; ‘’(1)Politics – this involves governance. If we do not get politics right, we may not get other things right. Good governance is an imperative for the beginning of getting right for Africa. Democracy is not only elections, election is one very feasible aspect of democracy. Democracy is popular participation satisfying the means of the people. Making the people feel part of the community and nation in which they live. Making them matter. If we get governance right it will be the beginning of getting other things right; (2) Population – using the growing population of Nigeria as an example, he noted that African population was growing really fast, and the best way to benefit from it by educating the populace with different skills and right to proper and relevant education as well as gainful employment. If governance is good we will make our population productive; (3) Protection – with respect to security, in all its ramifications. Eg personal security, security of property, food security and even security of jobs. Security is not what it should be in Africa. There should also be protection of human rights; (4)Prosperity – according to him Africa has heard enough about its poverty. Africa has a lot of quality minerals. We have made ourselves poor. We should stop talking about poverty and start talking about prosperity; (5) Partnership – this includes corporation and collaboration. Partnership in families, communities’ faiths, and among nations in Africa as well as partnership between Africa and the rest of the world. The more we walk together, the farther we will go. We have to go fast also because we have been left behind.’’[11]

And those who have thought of Africa as a forgotten nation, we will surprise them. If we do what we are suppose to do, this 21^st century we be the century for Africa.

Now I would like to break this down in the way that I understand it. For politics with respect to governance, African politicians are selfish. What has plagued that continent for years is greed by politicians, no doubt colonialism contributed greatly in the confusion that the continent has been in for long, but African leaders have since carried on the legacy of colonialism which was to steal from the continent and take it out to develop their countries. That agenda still lives on till this day as African leaders have no business investing in that continent but have instead entered into destructive international agreements that has made the African populace perpetual slaves to the developed world. This has to change. We have to stop suffering from inferiority complex and drive our destiny to the promise land. population. You will agree with me that one of the reasons why the world trade order has moved to Asia pacific is because of population. They are able to produce things at a cheaper amount because enough labour force. African countries can take advantage of this for the creation of wealth and development. We can do this by investing in education of skilled and talented persons, investing in this individualf while in return they can contribute their skill and talent to the growth of Africa through gainful employment but Of course this can only be achieved by a well set up system of governance that works. With respect to protection, there’s no doubt that most developed countries in the world are fairly safe to live in, the system have been set up in such away to support the citizens, there’s justice. Almost all African countries are not safe. There’s either terrorism, kidnapping, human right abuse and lack of employment. So many skilled and educated individuals are stranded and wasting away because the government is corrupt, which is why so many skilled Africans who  would have helped develop their country have travelled to developed countries where there skills and level of knowledge is appreciated and harnessed, therefore contributing to the growth of developed world and leaving Africa with just ‘bones’( the skilled individuals being the ‘meat’). This has to be addressed quickly and changed. I am sure if this is addressed africans in the diaspora will come back en masse to come contribute their acquired skill and knowledge to the continent we know that most the best skilled and educated individuals in the developed world are africans. There will be an overwhelming growth in Africa when this group of individuals come back. Contributing their skill and knowledge to Africa. The fundamental Instruments African Countries need to put in place are:

Efficient Infrastructure.

An efficient infrastructure is important for two main reasons; first, lack of it places added financial and material burden on firms. [12]Second, inadequate national infrastructure makes networking among firms extremely difficult; for instance, transaction costs are high where communication is hindered either by poor telecommunications or frequent power outages. [13]In some situations  linkage is not made difficult only, but impossible. In most African countries, agricultural and industrial production is constrained by inadequate backward linkage to exploit agricultural raw materials located within inaccessible but rich rural communities.[14] This maybe due to poor road networks, lack of information and inadequate storage facilities

.

Frequent power outage compels firms to acquire standby pesower generating sets. [15]Firms that areunable to acquire private facilities either cut down production or in rare cases, share power with nearby firms with generating sets. There is the constant risk and realities of damages to sensitive machinery resulting from unplanned power cuts. [16]The perennial poor state of infrastructure leaves manufacturers with little confidence in the ability of public enterprises to meet their supply requirements.[17]

 Accessibility of infrastructure is critical to achieving competitive advantage for trade. Infrastructure are a prerequisite for networking. Firms suffer for this public policy failure, through provision of alternative utilities.

Education

One of the key factors behind the phenomenal economic success of industrial latecomers, such as the South-East Asian economies was their emphasis on forming human capital and a dynamic system of innovation.[18] These countries, employing a mix of selective and functional policies, developed an education structure that effectively provided the requisite skills for their industrialization initiative.[19]

Public spending was concentrated on primary and secondary education while the demand for tertiary education was primarily financed by the private sector. Public spending at the tertiary level focused on science and technology education, while the humanities and social sciences were privately funded.

The governments, to varying degrees, intervened in curriculum development toensure that it was compatible with the needs of their evolving industrial policy.[20] To this end, they interalia encouraged private sector involvement in universities. Additionally, some countries, notably Singapore, imported expatriate skills where domestic capabilities were limited.[21]

By contrast, the current educational structure in Africa has been described as “unsuitable for industrialization”. [22] so many reasons have been given to explain this account.

First, some researchers argue that the present education system in Africa is a legacy of colonialism[23]. It seems that the missionaries, in concert with the metropolitan powers, implemented a highly academic, subject-centered curriculum in Africa. This curriculum, with its focus on producing an academic elite, was largely irrelevant to Africa’s development needs.[24]

African countries, partly influenced by the British and French colonial elite with their classical education and lack of technical knowledge, viewed academic education as the sole means of social and economic mobility. [25]

Only a privileged minority benefited from this elite education. In 1960, the gross primary enrolment in SSA was a mere 36%. This was roughly half the levels found in Latin America (73%) and Asia (67%) (World Bank 1988).[26] Several countries have attempted to bypass the formal education system by establishing non-formal training activities that are largely funded by non-governmental organizations (NGOs). They involve such activities as literacy, agricultural extension and vocational skills.[27] However, it appears that the activities offered by the informal system are vulnerable to disincentives and are of poor quality [28]

The economic conditions in most African countries and declining employment prospects in the public sector that historically, has been the largest employer, have resulted in growing levels of unemployment. And underemployment of graduates. A recent study conducted in Nigeria places the level of

unemployment among tertiary graduates. However, they are still far behind the rapidly industrializing developing countries.

We can apply education to relevant skills then by putting curriculums or courses in both primary and tertiary institutions that are relevant to the Skill development that will take Africa to the next level.

There should be an arrangement were a course gives you an opportunity to undergo consistent training in your field. For Instance, if you like sales or marketing, there should be an arrangement for you to apply your experience in marketing while studying. Thereby applying both theory and experience to your profession. Upon graduation, a graduate is immediately ready for the labour Market and employers are not scared to employ because of lack of experience, and by extension unemployment is curbed.

Agriculture

Much has been said of how agriculture will take African to the next as agriculture is the largest sector in most sub-Saharan countries But what africa truly needs to do is to upgrade strategy in primary commodities .Process upgrading aimed at quality improvements and certification can support Africa’s growth eg. cashew nuts, cocoa beans, and cotton lint. In cotton, West Africa already enjoys

a good reputation, but more needs to be done to penetrate the fast-growing market for certified organic cotton. In the cashew nuts and cocoa beans value chains. Policies aimed at improving quality such quality control boards and

agricultural extension programmes can play an important role in countries currently producing at the lower end of the quality scale.  African countries need to invest more in agriculture and revive some areas in the agricultural sector that has been redundant. They also need to develop a way agricultural produce can make profit in a processed form as opposed to just producing it in its raw form.

 Information Technology .

ICT services have been the fastest growing sector in world services trade, even more so in developing countries. ICT as a sector includes various elements: infrastructure, ICT services and goods, access by households and businesses, and international trade in services and goods. In the early stages, ICT systems supported trade in basic call centre services, simple software coding, and generation of digital content. India’s experience in seizing export opportunities with business process outsourcing (BPO) is well documented. 

ICT is now critical both as a source of direct exports of telecommunications services, information tech ICT-enabled services include the application of ICT to sales and marketing services, education, and e-government.

Social Media a particular ICT Tool for African Development.

An important element in social media economics is its job creation potentials. Job opportunities that exist on

social media are unlimited. Examples include publishing, trading, advertising, teaching, counseling, and all sorts of services. Availability of these online services implies that social media is a job creator. By offering people these opportunities to become employed, productivity and wealth distribution

are enhanced in the society through the agency of social media technology

It can also be used to create business relationship and marketing. ential to serve as platform for marketing/business

collaboration. The interactive structure of social media is good for marketing. Youths are always on social media so its an avenue for SMEs to market their brand. It is cheaper and easily accessible to everyone. So many big brands in the world have taken advantage of this and are having great business success so far.

 Free Trade Agreements in Africa

In 2018 the leaders of 44 African countries endorsed the African Continental Free Trade Agreement (AfCFTA). The agreement is anticipated to favour small and medium-size businesses, usually known by the acronym SMEs, which are responsible for most of africas employment and GDP.  Meaning opening countries up to international trade and competition which differs from the previously protectionist policies. It also surfaces the continuing shift from trade with western markets to a more intraregional trade. Reducing dependence on other continents will help to increase production and build self-sufficiency of the member countries. The AfCFTA will ease the procedure of importing raw materials from other African countries. It will also enable SMEs to set up assembly firms in other African countries, in order to access cheaper means of production and thereby increase their bottom lines. It will also put forward the comparative advantage of the resourceful countries. Many contend that the FTA will reduce Africa’s dependence on international aid and investment, seen by scholars as another form of colonialism.

Additionally, there are talks that the new zone will increase intraregional trade from 12% to 30%. Also with removing protectionist trade policies, this will increase competitiveness and productive efficiency of the goods traded between these countries. In the short term, this will increase exports and expand the members’ circular flows of goods and services. In the longer term, the trade zone will make TFTA countries more competitive globally, increasing their competitiveness across every continent. The resulting growth in GDP, if used correctly by the African leaders, will only push forward development.

It will also encourage more SMEs and it will encourage local manufacturing and production as Africa major resources are imported for a more expensive price as finished goods. There should also be regional infrastructure for the free trade zone to be successful.

Recommendation.

When all this are put in place Africans can be encouraged to invest in their own economy. The governance in Africa is really killing most of the amazing ideas some individuals have. We do not have an excuse Look at how China and other Asian Pacific countries are all economic power house africa has to arise weigh of all the scourge that colonialism put on them. What used to work before economically does not work again, the European idea of business of making things expensive for low quality product does not work again.  We have the knowledge now, lets use it to our advantage.

Strong economies are facing recession, because there has been a change in world economics. Let’s use this to our advantage ,create bilateral agreement with Asia and develop our country.

The WTO says if you sign one you sign all, lets leave, we do not need that,  because we can’t be paying for products and services we do not need. Create agreement with Asia and develop our selves .

Conclusion

I have discussed about the WTO, try to unveil if the WTO has African countries in any way, I came to the conclusion that they haven’t. I then briefly addressed the problems Africans have and that needs a complete overhaul, then proceeded to how Africa can further harness their growth and development priorities. 

BIBLIOGRAPHY

1. Ray August, Don Mayer, Michael Bixby ‘’ International Business Law, Text, Cases and Readings (Pearson Education Inc. 2013) .
2. Agreement Establishing the World Trade Organisation. (1994).
3. Jeffrey J, Schott and Johanna W. Buurman, ‘’ The Uruguay Round; An Assessment’’.( Washington DC: Institute for International Economics. 1994)
4. Banji Oyelaran-Oyeyinka ‘’ how can Africa Benefit from Globalisation? Global Governance of Technology and Africa’s Global Exclusion. ATPS Special Paper Series, No 17.
5. Lall, S ‘’ structural problems of African Industry’’(F. Stewarts, S. Lall and S. Wangwe edition, 1992)
6. Clark N. ‘’ Public Policy and Technological Change in Africa. Aspects of institutions and Management Capacity’’ Journal of Economics Studies. 2000

[1] Ray August, Don Mayer, Michael Bixby ‘’ International Business Law, Text, Cases and Readings(Pearson Education Inc. 2013) pg343.

[2] Agreement Establishing the World Trade Organisation, Article III, paragraph 1(1994).

[3] Ibid at para 2

[4] Ibid at para 3

[5] Ibid at para 4.

[6] Ray August…supra at pg349.

[7] Jeffrey J, Schott and Johanna W. Buurman, ‘’ The Uruguay Round; An Assessment’’.( Washington DC: Institute for International Economics. 1994) pg 139.

[8] General Agree…supra, article I para 1

[9] Supra at Article XXXVI

[10] Supra Article III

[11] Former President Obasanjo’ New Year Message.

[12] Banji Oyelaran-Oyeyinka ‘’ how can Africa Benefit From Globalisation? Global Governance of Technology and Africa’s Global Exclusion. ATPS Special Paper Series, No 17. Pg 25.

[13] Ibid

[14] ibid

[15] ibid

[16] ibid

[17] ibid

[18] Banji… supra at pg 14.

[19] ibid

[20] ibid

[21] ibid

[22] Lall, S ‘’ structural problems of African Industry’’(F. Stewarts, S. Lall and S. Wangwe edition, 1992) pg 119.

[23]  Blakemore R and Cooksey, R ‘’ A Sociology of Education For Africa, (London: Goerge Allen and Unwin. 1982)

[24] Banjo, supra at pg 14.

[25] ibid

[26] Ibid

[27] Ibid at pg 15.

[28] Clark N. ‘’ Public Policy and Technological Change in Africa. Aspects of institutions and Management Capacity’’ Journal of Economics Studies. 2000 at pg 27.