The World Trade Organisation (WTO) estimates that world trade will expand by 9.5 percent during 2010 as the global economy starts to recover from the global financial and economic crisis. Exports from developed countries are expected to increase by 7.5 percent and exports from the rest of the world, including developing countries, by 11 percent in value terms. Although it is expected that it will take another year before world trade values reach, and even surpass the high trade values recorded for 2008, the expected recovery is a significant improvement over the 12.2 percent decline in value terms and 23 percent decline in terms of US dollars recorded for world trade in 2009.
It has been determined that the sharp decline in trade values during the global recession has not been due to an increase in protectionist measures, but rather due to a major decline in global demand. This was exacerbated by the type of products for which demand fell and the fact that the decrease in demand happened across countries and regions. However, some countries implemented more trade restrictive than trade liberalising policy measures and African countries have implemented more post-financial crisis protectionist policies than China. Thus far discriminatory measures have remained the most prominent post-crisis policy response for most African trading partners in 2010.
The 5th Global Trade Alert Report focuses on Sub-Saharan Africa and argues that most African countries have been successful in resisting the temptation to implement protectionist policies, while many of their trading partners have implemented trade restrictive and distortive measures. These include various policies ranging from financial bailouts and export subsidies to government procurement and local content requirements. However, relatively developed African countries, like South Africa, have been able to retaliate against these measures.
Although many developed countries, like Japan and the United States implemented trade restrictive and distorting policies, many emerging countries like Brazil, China and India followed suit. For the G8 countries alone there are 226 trade restrictive measures indicated in the Global Trade Alert database. These measures affect 181 trading partners and 674 tariff lines. In comparison less developed countries implemented only 21 trade restrictive measures which affect 31 trading partners and only 15 sectors.
Some African countries have also implemented fiscal stimulus plans, following in the footsteps of their developed and emerging counterparts. In Mauritius the Government provided a stimulus package for the increase in domestic demand and job creation, while Nigeria provided bailouts for 5 banks. In South Africa the Department of Trade and Industry (DTI) made loans available to distressed manufacturing sectors, including automotives and clothing and textiles while the Industrial Development Corporation (IDC) made funds available to firms in different sectors and approved loans to various companies. Some countries did not have the necessary funds available to provide fiscal packages, rather focussing on the revision of their budgets to generate additional revenue or targeted assistance programs to support only those sectors of economic importance.
Of those trade policy measures which were implemented by African countries, most have been highly discriminatory with South Africa being one of the most protectionist African countries. 65 percent of the measures South Africa implemented during and after the financial crisis have been highly discriminatory policies. Other African countries which are relatively protectionist include Egypt, Morocco, Tunisia and Kenya. What is worrying is that Africa’s traditional trade partners implemented more discriminatory and less liberalising measures. Discriminatory measures were also applied by emerging African countries and other emerging trade partners like Brazil. This can disrupt the sustainability and the real and potential benefits for African countries from their trading relationships with traditional and emerging country trading partners.
The restrictive and protectionist policies which have been followed by most of Africa’s trading partners have indicated that African countries need to broaden their production and exports. African countries were mostly affected by those measures which discriminated against their agricultural commodities entering the markets of their trade partners and third countries. The continuation and increased production and exportation of primary commodities will intensify the competitiveness problems African countries are already experiencing, while building capacity and diversifying exports to higher value products will provide countries with policy space to adapt to the impact of a financial and economic crisis and improve negotiating power in their trading relationships.
Another important consideration for African countries is the need to reduce supply-side and cost constraints. These constraints limit the ability of African countries to participate in international trade by increasing the cost of production and thus worsening the competitiveness of African countries in the global market. To increase the competitiveness of African countries urgent attention needs to be paid to infrastructural deficiencies, including roads, railroads and electricity. A reduction in these constraints can decrease the cost of production which in turn will improve market access for African goods and services.
http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&cause_id=1694&news_id=87861&cat_id=1030
Source: WTO; 5th Global Trade Alert
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
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