Already off the world radar because of the war in Iraq, Africa toppled further when World Trade Organisation (WTO) negotiators missed deadlines vital for the economic growth of the continent last week.
This places in jeopardy progress in Cancun, Mexico, in September, the next big date for world trade talks. Activists have dubbed the talks Seattle by the sea, in reference to the breakdown of WTO talks in 1999, regarded as the start of the rise of the anti-globalisation movement.
Agriculture negotiations, the most important, stonewalled; efforts to secure cheap and legal generic drugs were thwarted by the United States; and the spectre of greater trade protectionism in the wines and spirits sector looms for South Africa.
But this depends, crucially, on our ability to access rich world agricultural markets in the European Union and the US. Agriculture is the one sector in which Africa has a clear comparative advantage.
But getting products into the Organisation of Economic Cooperation and Development markets is difficult, since their agricultural sectors get an average $360-billion a year in state subsidies.
“The annual cost in lost export revenues and related economic activities is estimated at about $100-billion a year,” says Faizel Ismail, South Africa’s ambassador to the WTO in Geneva. Total world aid is only $50-billion a year, and Africa gets about half of this. The sums seem to point to a simple answer for the developed world: open up your markets and the aid drain on your purse strings could decline over the medium term.
At the launch of the Doha round of trade negotiations in Qatar in November 2001, the promise to open markets and reduce subsidies was crucial in convincing the Africa Group to give their thumbs-up to trade talks geared at kick-starting the failed Seattle meeting.
But trade talks are never simple. Not even two years on, the failure to make the March 31 deadline to decide on a negotiating framework could jeopardise the success of Doha talks, say Ismail and other developing world ambassadors at the WTO. They now feel cheated.Â
The US and EU pay the biggest subsidies to their domestic industries, though the EU faces more difficulties trying to cut them: agriculture accounts for just 4% of the EU’s gross domestic product but farmers are a powerful political lobby. By contrast, two-thirds of the poor in Africa are in rural areas and work in agriculture.
The effect of the Brussels subsidies is felt directly in South Africa’s sugar industry, for example. Because the sugar used by European confectionery producers is one-third cheaper than that available to local producers, they are able to land sweets in South Africa that are often cheaper than local products. The result: Beacon, for instance, is struggling and laid off 1 000 workers between 1997 and 2000. Â
Largely black small-scale sugar producers are being displaced from export markets because they cannot compete with subsidised European sugar. “South Africa loses about â,¬100-million a year in potential export earnings,” says Ismail.
The biggest disappointment for the continent has been the US failure to agree to amend effectively the Trade-Related Aspects of Intellectual Property (Trips) agreement to allow developing countries to import patented drugs cheaply, as agreed in Doha.Â
The agreement was a triumph for developing countries because it elevated public health above patent protection. It should have allowed poor countries — most of which are in Africa — to bring in drugs at a fraction of the patented costs to fight HIV/Aids, malaria and other diseases.
Once Trips is implemented globally by 2016, “life-saving drugs will become almost totally … unaffordable for the poorest and least able developing countries”, says Ismail, explaining the need for the amendment.
But, lobbied by the pharmaceutical industry, the US put a spoke in
the wheel of the negotiations. Big Pharma, as the industry is called, fears that countries with generic manufacturing potential, such as India and Brazil, will use the Trips amendment to copy and export drugs like Viagra.
“It’s the most important issue confronting us now. It’s important to ensure patents are not eroded across the spectrum, but it’s recognised that flexibility is needed in public-health crises,” says WTO spokesman Keith Rockwell.
South Africa faces another problem with Trips: tightened protection of wine and spirit trade names. When Department of Trade and Industry negotiators concluded the Trade and Development Accord with the EU in the late Nineties, it floundered for months on product names such as port and sherry, held to be the intellectual property of producers in the areas where production originated: port in Portugal, sherry in the Jerez valley of Spain.
The accord was completed only when local producers agreed to phase out the use of these terms.
At the WTO negotiators are now trying to tighten protection of such “geographic indicators” by establishing a register of terms. The debate over port and sherry could be the harbinger of a bigger fight. Â
But the tussle over trade names is not always North/South.
India wants to patent “basmati” rice and “Darjeeling” tea. Jamaica wants “Blue Mountain” coffee recognised as its own, and South Africa may do the same with “rooibos” tea, which is doing a roaring export trade.
The promise of Doha was to rebalance world trade in favour of developing countries, but as the Cancun review looms, the round looks to be working, again, against the South.