Africa Needs Fair Trade, Not Charity

Since the July G-8 summit and Live 8 concerts, the topic of African development has received unusual public attention. While the conversations have focused primarily on aid and debt relief, according to Mary Robinson, one topic has received inadequate treatment in international policy circles: free trade. Recalling her travels to cotton producer Mali and sugar producer Mozambique, Robinson discusses the crucial role of trade in facilitating economic and social development. Western subsidies have depressed prices and resulted in massive export losses for African producers; these losses, in turn, have trapped the countries in a cycle of poverty and foreign aid dependence. All is not lost, however; by crafting smart and properly managed trade policies – that is, eliminating subsidies so that African producers may compete in global markets – Western countries may help Africans help themselves. Robinson insists that these changes have nothing to do with charity: "They are about fairness." She continues, "They are about granting all people the right to a decent livelihood and a sustainable future." – YaleGlobal

Africa Needs Fair Trade, Not Charity

Allowing producers to export to a subsidy-free world market will lift many out of poverty
Mary Robinson
Tuesday, August 23, 2005
Can the world cotton up to Africa? Mali's farmers cannot compete with subsidized American fiber

DUBLIN: The leaders of the G-8 nations made some progress in fighting global poverty at the Gleneagles Summit in July through new commitments to increased aid and debt relief. No previous G-8 meeting has done as much to support development in the world's poorest countries, particularly in Africa.

But while the G-8's steps were welcome, they are insufficient to ensure that all developing countries fulfill the UN Millennium Development Goals by 2015. A major stumbling block continues to be the reforms needed to create a more just world trade system.

If the world's wealthiest nations truly are committed to supporting African efforts to foster sustainable development and good governance, they must also be prepared to actively reform trade rules so that Africa can do more to secure its own future, rather than relying solely on aid.

If poor countries could increase their share of world exports by just one percent, they could lift 128 million people out of poverty. In Africa alone, this would generate US$70 billion – more than five times what the continent receives in aid.

In recent months, I have visited two African nations, Mali and Mozambique, to better understand the critical role of cotton and sugar trade in fostering economic and social development. The success or failure of these two industries – the Mali cotton industry and the Mozambique sugar industry – is directly linked to current and future US and EU trade policies.

Experts generally agree that the current regimen of US cotton subsidies has adversely affected world cotton prices – down by 30 percent between 2004 and 2005 – resulting in substantially reduced income to West and Central African cotton growers, like those in Mali. Estimates from Iowa State University's Food and Agricultural Policy Research Institute suggest that since 2001, the four West and Central African cotton producers (Benin, Burkina Faso, Chad, and Mali) have suffered export losses of around US$382 million due to US policies.

This slump has had a terrible impact on African countries. More than 10 million people in West and Central Africa depend on cotton for their livelihoods. There are few alternatives for generating income for social services, such as education and healthcare, and for maintaining macro-economic stability. For these countries to escape the poverty trap and move away from foreign aid dependence, improving their ability to trade – on fair terms – in products which they can produce competitively is crucial. Cotton producers in Mali want to work their way out of poverty, not to receive development handouts.

The situation for sugar producers, like Mozambique, is similar. Mozambique is third from the bottom on last year's UN human development index. Three out of four people live on less than US$2 a day. An HIV/AIDS infection rate of 15 percent coincides with a high incidence of malaria, cholera, and tuberculosis. Infrastructure is virtually nonexistent – only one decent road runs up the edge of the country – but the land is fertile and could develop quickly with more agricultural production and trade.

The sugar industry currently employs at least 22,000 people and supports many thousands more. Estimates suggest that Mozambique could double its sugar production by 2007, given support and time to grow. The women in a village near the sugar factory I visited had benefited from their cash crop, but feared this was about to change. They questioned me closely about what exactly I would do about it. "We need a tractor," they said. "We need money to sow a new crop of sugar cane. We need to continue to sell our sugar at good prices in Europe."

But the future of the industry in Mozambique and other sugar-producing African countries, including Malawi, Zambia, and Ethiopia, is under threat. WTO rules require the EU to bring its sugar regime into line with world commodity trade rules. A complex and long-standing system of price support, tariffs, and quotas, must be reformed to stop overproduction and dumping. Managed properly, these changes could benefit many poor countries. Managed badly, they will protect the biggest and richest EU producers at the expense of small farmers, both in Europe and the developing world.

Current proposals include a 39 percent price cut for sugar in Europe by 2008. This sudden and dramatic change would hurt both fledgling industries, like Mozambique's, and small farmers in Europe. The proposals would not even eliminate Europe's surplus, which is being challenged at the WTO. The least developed countries will get unlimited access to the EU market for their sugar from 2009, but the value of this access would be seriously compromised by the proposed price cut.

Fairer trade policies comprise only one component necessary for lasting and sustainable development in Africa. Equally important is increasing the level of domestic and foreign investment in local economies, as well as steps towards good governance to which many African countries are committed – from fighting corruption to building up effective institutions such as the courts, police, and public services.

Improving the status of women is also vital. Women already provide up to 80 percent of household food production in sub-Saharan Africa. Still, in too many countries, the continued denial of women's rights to land and property, in addition to unequal wages and working conditions, is holding back efforts to improve living standards and achieve sustainable development.

Trade is a key engine of development, and American and European policymakers must consider the impact of their trade policies on people in the developing world. It will not be easy to design a fairer system that pleases everyone; I am acutely aware of the political difficulties involved in reforming agricultural policies in the US and EU.

Support for domestic agriculture – for instance, subsidies that promote environmentally friendly farming and rural development – is certainly justified. But the current system is simply unfair. It concentrates payments on large-scale commercial agri-business while failing the vast majority of domestic small-scale farmers and consumers, at the same time harming millions of people in the world's poorest countries. We need to bring home the fact that trade is not only a key engine of development; it is also a crucial factor in economic justice. Trade policies can directly affect people's access to fundamental rights – to an adequate standard of living, health, food, and education. Trade ministers should wake up every morning with this in mind.

In the lead-up to the UN World Summit in September and the WTO Ministerial in December, a real opportunity exists to achieve the further reforms needed to make 2005 a truly historic moment in the fight against global poverty. What must be at the forefront of our thinking is the notion of shared responsibility. The changes needed – in rich and poor countries alike – to lift millions of people out of poverty have nothing to do with charity. They are about fairness. They are about seeing our fates as one human family being increasingly interconnected. They are about granting all people the right to a decent livelihood and a sustainable future.

Mary Robinson, former President of Ireland and former United Nations High Commissioner for Human Rights, is President of Realizing Rights: The Ethical Globalization Initiative

© 2005 Yale Center for the Study of Globalization