by Masimba Tafirenyika in New York
While industrial nations were toasting the successful conclusion of the General Agreement of Tariffs and Trade (GAIT), African diplomats in Geneva found themselves strenuously browsing
through the 550-page document in search of any news worth celebrating.
Despite all the talk about boosting national incomes by courtesy of GATT, discerning Africa’s Immediate benefits from the trade deal has proved to be no simple task.
Dubbed the mother of all negotiations, the Uruguay Round Table first launched in September 1986 in Punta del Este, Uruguay — was wrapped up on 15 December 1993 in tortuous negotiations that
involved 117 nations.
The new GAIT deal seeks to create a kind of global peace agreement, opening doors to greater trade in farm products, manufactured goods and business services while reducing arguments over
global economic competition. The Paris-based Organization for Economic Cooperation and Development (OECD) estimates gains from trade will add some US$270 billion annually to world
Incomes at the end of 10 years when most of the cuts in tariffs are expected to come into effect.
Attitudes ranging from guarded optimism to outright scepticism quickly replaced the initial euphoria generated by the new GAIT deal. Sober assessments of the agreement’s impact on
developing countries are painting a picture not as rosy as rich nations would like them to believe.
To the chagrin of African nations whose total share of the global trade continues to shrink, the agreement was another painful reminder of their on-going marginalization in a world that is
increasingly being dominated by powerful regional trading blocs. As with previous rounds of talks, industrialized nations emerged clear winners from an agreement charting new ground rules for
international trade.
“As far as market access is concerned, there is a feeling that developing countries have put in more than they’ve got in return,” complained India’s ambassador to the GAIT, Balkrishan Zutshi. In New Delhi, lawmakers protested bitterly at their country endorsement of the new trade agreement.
Despite their active participation, which was more visible than in previous rounds, developing countries were forced either to make more concessions than their rich counterparts or to
accept compromises reached between the European Community and the United States.
On balance, Africa has emerged the biggest loser, most notably in agriculture. Since only a handful of African countries are not food exporters, virtually the whole continent will pay more for
food imports, putting a further squeeze on balance of payments already strained by falling commodity
prices.
The new rules will phase out subsidies that had artificially depressed world prices for food. Africa’s food exporting countries such as Zimbabwe have complained in the past that high
farm subsidies and protected markets in Europe and the US have led to overproduction and dumping of cut-price surpluses, squeezing out their grain exports. In contrast to trade – distorting
subsidies by the North, they argued, Third World subsidies are meant to achieve food self-sufficiency. Zimbabwe for example, increased the price of maize by 80 percent between 1979 and
1981 and production more than tripled in the following five years.
What African countries expected from GAIT was for northern countries to drastically reduce farm subsidies to grain producers while exempting developing nations from reciprocal action. Some
kind of compensation would then be given to African food importers who will be forced with high market prices for food
African countries argued that government support programs and subsidies contribute towards attaining food security in contrast to the ECs subsidies which results in food mountains and
depressed market prices. They had consequently called for special treatment under the Uruguay Round of talks. Furthermore, some analysts had called for African countries to retain some
protectionist measures to consolidate food production and shield them from low-priced imports.
They lost on both counts. Instead, under GAITs new rules, developing countries will be required to reduce income support for farmers by 13.3 percent. Food importers will have to face the music
without any form of compensation. For industrialized nations, the cut in subsidies will be a modest 20 percent.
Furthermore, under a special arrangement exempting direct payments, EC farmers will still be paid for growing less under the community’s Common Agricultural Policy. In addition, EC
farmers stand to gain even more protection than they currently enjoy. The new agreement provides for the introduction of tariffs to imports where nontariff barriers previously existed. But the tariffs will be reduced by 36 percent over six years for industrialised nations and 24 percent over 10 years
for developing countries.
Developing nations have been hurt further by the failure of GAIT to overturn some provisions on unfair trade practises. Under these rules countries may retaliate against dumping, a practise in which nations unfairly subsidize their exports or sell below their cost of production. But some industrialized nations, notably U.S., have abused that right by raising tariffs on legitimate goods from developing countries to protect their domestic industries.
Regrettably, on trade in textiles and clothing, where most developing countries have a comparative advantage over their rich counterparts, most gains from this sector will not
be realized until after 10 years from 1995 when tariffs will come down and quotas dismantled.
Although the new deal phases out the Multi-Fibre Arrangement which imposes ceiling on the amount of textile products which Zimbabwe, for example, can export to Britain, developing countries failed to gain the free access to textile markets in rich nations they had fought for. Even after 2005, when most tariff cuts will come into effect, tariffs on textiles will not disappear entirely because countries such as the U.S. and Australia will continue to have higher tax barriers than most of Europe and East Asia.
For the first time, international rules will protect copyrights and patents on books, computer software and other intellectual property, hurting developing countries who had long enjoyed the
fruits of piracy without paying the price. For years, pirated computer programs, record albums, video cassettes and prescription drugs have been available in developing countries.
During negotiations, developing nations, mostly Asian countries, unsuccessfully tried to have the protection of intellectual property excluded from any GATT agreement. But mounting pressure from industrialized nations saw their position reversed from outright opposition to grudging acceptance. The result will be higher prices for drugs and seeds, for example, for most developing countries especially those with weak patent protection laws. The new laws give 11 years to least developed countries such as Tanzania to implement the agreement, five years to most developing nations such as India and Thailand, and one year to industrialized countries.
Even a few weeks before the agreement was signed, it was already becoming obvious that developing countries were heading for second place in sharing the spoils from free trade. According to the London-based Financial Times, using figures based on offers made by members a month before the GATT deal was struck, the GATT secretariat in Geneva estimated that the percentage of. Industrial exports from the South
now subject to tariff bindings has risen from 21 to 65 percent, while agricultural tariff binding has risen even more dramatically from 17 to 89 percent, thanks to the Uruguay Round of talks. The North’s binding percentages, said the paper, remained higher but the increases were less dramatic. The net effect is that developing countries appear to have got less from trade liberalization in the North than richer countries.
Nevertheless, despite the seemingly huge losses facing developing nations, particularly in Africa, some modest gains were realized.
The new GAIT rules are expected to boost income levels in many countries. Africa is most likely to benefit from free trade if it can increase its food production and end dependency on food imports. Higher food prices will boost farmer’s incomes and eventual food production.
(Masimba Tafirenyika is a senior SARDC staff member currently on sabbatical leave at Columbia University in the United States, where he is studying for an MA in International Relations.)
