TOWARDS EQUITABLE AGRICULTURAL DEVELOPMENT IN THE EAC:

Fostering Equitable Agricultural Development in Africa (FEAD) Project

An Analysis of the Multilateral Trading

System

STRUCTURE OF THE PRESENTATION

Agricultural disciplines in the Multilateral

Trading System (MTS)

Equitable Agricultural Development

Towards an Enabling Environment

(Opportunities & Constraints)

Conclusion and the way forward

AGRICULTURAL DISCIPLINES IN THE MTS

The WTO Agreement on Agriculture disciplines:

Market Access

Domestic Support

Export Subsidies

AGRICULTURAL DISCIPLINES IN THE MTS: MARKET ACCESS

Current disciplines Under negotiation

Tariffication of NTMs provided transparency and predictability

HOWEVER…

Resulted in tariff peaks for politically sensitive products

• Tiered formula seeks to redress tariff peaks

• Highest tariff rates to receive biggest reduction

• Developing count. lesser tariff cuts

• LDCs exempted from tariff reductions

• Tariff reductions and elimination of tariff escalation for tropical products

Special Safeguard Measures for Developing Countries

STRATEGIC INTEREST OF EAC REGIONWould facilitate value-addition on their agricultural products, sold at higher prices on world market and increasing incomes for farmers

AGRICULTURAL DISCIPLINES IN THE MTS: EXPORT SUBSIDIES

Current disciplines Under negotiation

Progressive elimination of subsidies contingent upon export performance, which account for depressed international prices and market instability

Seeking commitments to eliminate export subsidies

General consensus on a 2013 deadline for developed countries to eliminate these subsidies, and a 2016 deadline for developing countries

STRATEGIC INTEREST OF EAC REGIONWould guarantee stable international prices for EAC agro-products, hence increasing livelihoods

AGRICULTURAL DISCIPLINES IN THE MTS: DOMESTIC SUPPORT

Current disciplines Under negotiation

Reduction commitments on domestic support, except for responses to special circumstances

Further constrain domestic support and leave flexibilities to developing countries

“green box” measures (e.g. domestic food aid) are not distorting, hence not subject to tariff reduction commitments

“blue box” measures (payments under production-limiting programmes) are not subject to tariff reduction commitments

Proposed ceiling to avoid “box shifting”

“amber box” measures are distortive and subject to tariff reductions

Members required to notify their domestic support periodically to WTO

Enhanced monitoring and surveillance mechanism for domestic support

THE COTTON ISSUE

Cotton issue has received specific attention in DDA.

Initially introduced by 4 cotton-dependent W.African countries affected by heavily subsidised cotton producers in developed countries

Current WTO negotiations aim to :› dramatically reduce these subsidies› provide development assistance to LDCs dependent on

cotton

STRATEGIC INTEREST OF EAC REGIONEAC countries are cotton producers with great potential, and 4 would be eligible for development assistance

AN INTRODUCTION TO EAD MTS being an avenue for growth, development and

poverty reduction

EAC endowed with great potential in agriculture

THUS…

Strong need for an enabling environment that… Harness opportunities in MTS towards equitable

agriculture development

MTSTrade

Opportunities

EAD

Enabling Environmen

t

EAD CONTINUED… Equitable Agricultural Development

entails:

Reformed international and regional trade disciplines in agriculture;

Increased investment to improve productivity;

Redress of agriculture related trade facilitation constraints;

Prioritizing capacity building of small and medium sized farmers and traders;

Encouraging multi-stakeholder consultations and coordination.

REAPING BENEFITS FROM THE MULTILATERAL TRADING SYSTEM…

…towards and enabling environment for equitable agricultural development

TOWARDS AN ENABLING ENVIRONMENT: REFORMED INT. TRADE DISCIPLINES

Further reforms necessary for equitable development;

Tightening of domestic support;

Elimination of export agricultural subsidies;

Meaningful market access (DFQF);

Enhanced monitoring and survaillance mechanism

TOWARDS AN ENABLING ENVIRONMENT: INVESTMENT OPPORTUNITIES & THE MTS

Increased market access and value added for EAC products will be an incentive for investment in EAC agriculture, thereby improving agricultural productivity

To ably harness new market opportunities, the EAC agriculture sector will need: Supporting policy measures

Sufficient resource allocation

Supportive business environment

Investing in the great potential of the EAC region in ORGANIC AGRICULTURE could contribute immensely to poverty reduction

TOWARDS AN ENABLING ENVIRONMENT:

TRADE FACILITATION & THE MTS

Trade facilitation constraints hinder effective participation in MTS, with factors such as:

› Trade infrastructure constraints (transport

networks, storage facilities etc.)

› Fragmented and imperfect markets

› Inefficient and cumbersome border procedures

Redressing these constraints will contribute to an enabling environment towards EAD

TOWARDS AN ENABLING ENVIRONMENT:

REDRESSING TF CONSTRAINTS

A number of initiatives undertaken to redress these constraints in the region include:

Initiative Assessment

East Africa Trade and Transport Facilitation Project (started 2006)

9% annual growth in goods traded at Mombasa port

Annual trade growth > 20% in Uganda

Crossing Uganda-Kenya border is now 15 min (3-5 days before)

The North-South Corridor Project (forthcoming)

Will expand markets by linking Eastern and Southern Africa

Standards & Trade Development Facility (STDF)

Better awareness and resources to meet SPS requirements

Other Aid for Trade and EIF programs

Specifically designed for trade facilitation

AfT should be additional and access to EIF funding less cumbersome

TOWARDS AN ENABLING ENVIRONMENT:

BUILDING STAKEHOLDERS’ CAPACITIES

Smallholder farming practices in most EAC

Agriculture a way of life for self-consumption rather than commercial

Need for capacity building for SMS farmers

Capacity building needs of farmers and traders: - More and better information about the potential of trade and trading opportunities for them

- Training in better farming practices for improved productivity

- Information about rules and requirements to conform withSTAKEHOLDER INVOLVEMENT IN WTO TRAININGSGovernments should select stakeholders from all sectors to participate in Training Workshops provided by the WTO

TOWARDS AN ENABLING ENVIRONMENT:

ENCOURAGING DIALOGUE Multi-stakeholder consultative forums in policy-making

processes would ensure:

Reality-linked policies

Ownership by the society, leading to more effective implementation

Trust-building and knowledge-sharing among and between all stakeholder groups

EAC MULTI-STAKEHOLDER COORDINATION MECHANISM would:Foster mutual learning about utilizing the potential benefits of trade policy

Facilitate better interactions between national and international processes

SPECIFIC STAKEHOLDER CONSTRAINTS Inefficient marketing systems and market availability

No access to financial services

Reliance on weather conditions

Poor quality extension services

Affordability of inputs

Poor infrastructure (transport, storage, irrigation, comm…)

Farmer capability

Policy frameworks and government actions

CONCLUSION

The MTS presents opportunities for EAD in the EAC

HOWEVER…

The constraints faced by the agro-sector need to be redressed for the region to effectively harness the opportunities

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