Mzansi Afrika

From Johannesburg South Africa, a window on the world

Monday, July 04, 2005

Trade not Aid

How Africa is losing out from the current hypocritical global trade system:

It is estimated that African cotton-producing countries (including Benin, Burkina Faso, Chad, Togo, Kenya and Mali)in 2004 lost up to $400 million in potential export revenue as a result of western cotton sunsidies. In 2003, Malian cotton farmers received just 33 cents per kilogram for their cotton, whereas subsidised US cotton producing corporations received $1.45.

The Mozambican sugar industry, which employs 26,000 people, is in jeopardy due to the EU subsidies and tariffs. This is despite the fact that Mozambique can produce cane sugar for between $108 and $144 a tonne, whereas European beet sugar costs $577 a tonne to produce. The EU gives subsidies to its big sugar companies, such as British multinational Lyle and Tate, of $990 million a year.

The EU imposes import tariffs of more than 200% on non-EU cane products. This impacts harshly on sugar-producing African countries like Mozambique, Ethiopia, Malawi and Zambia. On top of this, European overproduction of sugar results in 5 million tonnes being dumped on world markets, driving prices down, in many cases to below the cost of production in Third World countries. A small amount of sugar is bought from poor countries at preferential prices, as a result of a 2001 agreement, but the EU wants to slash the price it pays by 40%.

In 1990, many Senegalese made a living growing tomatoes. After the introduction of ``free trade'', prices farmers got for their crops were halved and production tumbled from 73,000 tonnes in 1990 to just 20,000 in 1997. The market was flooded with cheap bottled European tomato products, which caused local factories producing tomato paste and other value-added products to close.

In Ghana, the local poultry industry collapsed, impoverishing 400,000 small farmers, after the market was flooded with cheap, subsidised EU and US frozen chickens, which sell at half the price of fresh local chooks. In 1992, local farmers supplied 92% of the market; by 2001 their share had plummeted to just 11%. Ghana's attempt to raise tariffs to prevent this dumping has been blocked by the IMF and WTO. The EU gives annual subsidises its poultry producers of $52 billion a year. Cameroon and Senegal have also had their markets flooded with cheap EU chickens.

Earlier this year, Christian Aid released a study that revealed that the last 20 years of trade ``liberalisation'', a condition for aid, loans and debt relief, have made sub-Saharan countries a massive $272 billion worse off than they otherwise would have been. The figure represents the income lost as a result of being forced to open their markets to heavily subsidised imports from rich countries.

This amount is about the same as sub-Saharan Africa has received in aid during the same period. It could have paid off much of the region's $300 million debt, or allowed all of its children to go to school and be vaccinated against major diseases, Christian Aid notes. In 2000 alone, sub-Saharan Africa lost income worth $28 billion, enough to halve the number of people living on $1 day, based on United Nations estimates. While in 2000, Africans lost almost $45 per person due to trade liberalisation, aid per person was just $20.

The Christian Aid study found that contrary to promises of the advocates of free trade, when poor countries phase out measures such as tariffs, quotas and import duties designed to protect their local industries and consumers, imports climb sharply and local producers are priced out of the market by cheaper, often subsidised, Western goods. This also depresses prices.


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