Towards an African Common Market for Agricultural Products Implications of EPAs by Dr. Victor Mosoti

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Towards an African Common Market for
Agricultural Products Implications of
EPAsbyDr. Victor MosotiLegal Officer
Development Law Service FAO, Rome, Italy
Dr. Suffyan KoromaEconomistTrade and Markets
DivisionFAO, Rome - Italy

• African Workshop on EPAs
• Addis Ababa, Ethiopia
• 8-10 October, 2008

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• Outline of the Presentation
• What is the problem?
• Why a Common Market on Agricultural Products?
• What is the link between trade liberalization
  under EPAs and under the CMAP?
• What are strategic products?
• What is the scope of intra-regional trade in
  Africa? What are the key product groups?
• Policy and legal implications?
• What are the options for establishing a CMAP?
• FAOs role thus far?
• Going forward?

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Highlighting The Nature of Problem

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• Why A Common Market for Agricultural Products?
• help eradicate poverty and overcome food
  insecurity problems
• create larger market of 53 African countries 39
  have fewer than 15 million people and 21 have
  less than 5 million, many landlocked
• reduce food dependency from elsewhere
• Strengthen Regional Integration
• improve bargaining power in international trade
  negotiations
• reduce regional conflict
• Similar Rational given for EPAs

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• Abuja 2006 Declaration
• Abuja 2006 Food Security Summit, calls on
  African countries to ............ promote and
  protect rice, legumes, maize, cotton, oil palm,
  beef, dairy, poultry and fisheries products as
  strategic commodities at the continental level,
  and cassava, sorghum and millet at sub-regional
  level, without prejudice to focused attention
  being given also to products of particular
  national importance ......

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• Abuja 2006 Declaration
• Abuja 2006 Food Security Summit, calls on
  African countries to ............ Fast track the
  implementation of trade arrangements adopted in
  the RECs through lowering tariffs both technical
  and non-technical by 2010, and to take account of
  this measures during global negotiations in the
  Doha Round and Economic Partnership Agreements
  ......

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What are Strategic Commodities?

• The strategic commodities would be those
  commodities that
• carry an important weight in the African food
  basket
• hold an important weight in the trade balance in
  the region through their contribution to foreign
  exchange earnings or are imported in large
  quantities to make up the gap between Africas
  production and demand and
• have considerable unexploited production
  potential in Africa, owing mainly to internal
  supply-side constraints as well as external
  impediments such as agricultural subsidies and
  support measures used by Africas trading
  partners.

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Scope of Intra-Trade in Africa Key Product
Groups, 2002-05

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PUTTING EU-ACP TRADE PEFERENCES IN CONTEXT
(1) Comparision with other Developing
CountriesTotal Export

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PUTTING EU-ACP PEFERENCES IN CONTEXT (2)

• Disappointing results
• Reduced market share of ACP in EU market
• Limited product diversification in ACP
  countries
• Trade preferences served to narrow ACP
  economic focus
• ( 60 of trade in only 5 products and 9
  African Countries represent 60 of ACP export)

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PUTTING AGOA IN CONTEXT
.........Limited Agricultural product coverage
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Policy implications

• International community through the WTO
• Doha may lower risk of trade diversion for
  members and minimizes effects on excluded
  countries
• High income countries have systemic
  responsibility
• Widen coverage in FTAs (i.e. agriculture)
• Move toward conformity in rules of origin, and
  make less restrictive
• Promote rules tailored to local capacities,
  standards
• African Countries should adopt a 3 part strategy,
  using each instrument to its most appropriate
  objective
• Unilateral driving competitiveness, investment
  in Agriculture should benefit poor farmers
• Multilateral seeking broad market access
• Regional deep market access and institutional
  reforms Focus on regional markets.

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Establishing a Common Market in Strategic
Products3 Options

• Continental Liberalization - Under this scenario,
  the programmes already adopted by the RECs would
  be superseded, so far as agricultural products
  go, by the AU programme. The main advantage of
  such a broad agreement is that it would create,
  at one stroke, a continental common market with a
  single set of rules to be followed by all African
  states. This would increase efficiency by
  reducing transaction costs. It would also act as
  a mechanism for expediting the creation of a
  continental common market for all goods

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.......Options

• 2 REC-based liberalisation
• A second possible option is to continue along the
  path laid
• down in the Abuja Treaty and work with each REC
  to liberalise
• trade in strategic products and to ensure that in
  doing so,
• they adopt, to the extent possible, identical
  standards and
• timelines.
• This option would have the advantage of working
  with already
• established RECs in the context of the trade
  liberalisation
• programmes that they have already undertaken.
  The main
• disadvantage of this option is that it would fall
  some way short
• of creating a common market covering the entire
  continent and
• it would leave the question of overlapping RECs
  unresolved.

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.......Options

• 3. Fast-track availability
• The third possible option would be a blend of the
  first two
• options. Under this scenario, the RECs would
  form the basis of
• the common market but there would be a fast-track
  option for
• those countries/RECs wishing to liberalise trade
  with all African
• countries immediately. This would, however, be
  dependent on
• whether the countries/RECs in question had
  already
• established a common external tariff with other
  Members of the
• REC of which they are a part or not. In the
  event that they had,
• the individual countries might not be able to
  fast-track
• liberalisation, but the REC in question itself
  could.

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What FAO has Done

• FAO funded project to help the AU in developing a
  feasibility study and a strategy for a CMAP.
• Thus far In collaboration with the AU, ECA and
  RECs
• undertaken a feasibility study on the
  establishment of a CMAP (economic and legal
  analysis)
• Results summarized in the report.
• Prepared a draft Convention on the Establishment
  of a CMAP.
• Facilitated discussions towards this end, and
  made additional recommendations.

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Going Forward

• Initiative adopted by the AU fully.
• Broad regional consultations.
• Presentation and negotiations on the draft
  Convention on establishing a CMAP.
• Hopefully, adoption before 2010.