Africa English Panel – Food and Agricultural Trade in the New Policy Environment: How can WTO members support economic recovery and resilience?

Policies affecting agricultural trade and markets must be part of Africa’s response to COVID-19 and to recent trade tensions between major economies, said participants at a virtual regional dialogue for English-speaking Africa on December 8, 2020.

The event, organized by the International Institute for Sustainable Development (IISD), the International Food Policy Research Institute (IFPRI), and AKADEMIYA2063, came three weeks after a similar dialogue for francophone African countries and was the third in a series of four such virtual meetings.

While the pandemic and trade tensions formed a major focus of the discussion, participants also explored how governments could better ensure that trade policy supports food security and environmental sustainability, and the role of both regional integration and multilateral trade talks at the World Trade Organization (WTO).

COVID-19 and Africa’s Agricultural Trade

Event moderator Jonathan Hepburn, senior policy advisor at IISD, asked participants how COVID-19 had affected markets for food and agriculture.

“The main story is a big shock in terms of demand,” said David Laborde, Senior Fellow at IFPRI. He told participants that trade in staple foods had been relatively resilient, although some sectors such as cut flowers or fruit and vegetables had been more seriously affected.

Falling demand for many products had led people’s income to fall, Laborde added, highlighting the particular vulnerability of poor people in the crisis.

Elizabeth Nderitu, Senior Regional Manager with TradeMark East Africa, told participants that COVID-19 testing requirements for truck drivers had initially caused long queues to form at borders until government agencies agreed to online certification and other mechanisms that eased the movement of goods and people.

However, despite being more resilient than other sectors, the farm sector was also vulnerable to the impact of the pandemic on trade in services and manufactured goods, noted Doaa Abdel-Motaal, Senior Counsellor in the WTO’s Division on Agriculture and Commodities.

She highlighted in particular the impact of reduced trade in fertilizers and farm machinery for the farm sector.

Trade Tensions: African households hit

Meanwhile, African countries had not been left unscathed by the trade war between major economies, participants said.

“Africa depends heavily on China and the US as their primary trading economies,” said Elizabeth Nsimadala, President of the Pan Africa Farmers Organization and the Eastern Africa Farmers Federation.

She highlighted especially the impact on exports of fresh fish, horticultural products, vegetables and fruit, beef and pork, milk and dairy products, and maize. A lack of storage infrastructure was a key problem that producers faced, she said.

Nderitu concurred, noting that many export commodities are produced largely by small-scale farmers, and underscoring the impact of weakened prices “on household economies at that level.”

Nsimadala told participants that a shortage of storage infrastructure was a particular problem facing farmers. Falling foreign exchange earnings and debt servicing requirements had also pushed governments to raise taxes on agricultural inputs, pesticides, fuel, and mobile financial transactions, creating a double burden for producers.

Regional Integration: From rhetoric to action?

Participants highlighted the significant challenges that producers and consumers in Africa still face—and the potential for closer economic integration on the continent to help overcome these.

Nsimadala highlighted conflict, poor infrastructure, inadequate transport and communication networks, poor road and railway connections, and insufficient telephone connectivity, which she said “really makes it difficult to trade and move food within the continent itself.”

Closer economic integration under the African Continental Free Trade Area (AfCFTA) could help address some of these challenges, Nderitu said.

She highlighted the agreement’s potential to “ensure the flow of goods from regions and countries with food surpluses to regions that experience seasonal or chronic food shortages as a result of their climatic environment.”

Different regional economic communities, ministries, and stakeholder groups should collaborate across areas where action was needed, she added. These areas included improving intermodal transport, enhancing the physical connectivity of markets, digitalizing trade processes, addressing non-tariff barriers, and ensuring that rules of origin facilitate intra-African trade.

Nsimadala said that African governments have excellent policies in place on regional and continental integration: the challenge was now to move “from rhetoric to action.”

Adding Value, Meeting Standards

One participant highlighted the issue of value addition, asking panelists how governments can best help firms meet international regulations and standards.

Nsimadala emphasized the importance of building an ecosystem of different actors who can support value chain development.

“Value addition should not be looked at as just a stand-alone, but it should be in a holistic approach where we look at the entire production chain from the farm to the fork,” she said.

Laborde reminded participants that most African countries already benefit from duty-free, quota-free access to markets such as the EU, although this alone has not been sufficient to support significant value addition in African countries. More important will be the emergence of domestic and regional markets in Africa, he said.

He noted that, for a long time, Africa did not have a “middle class” of urban consumers demanding more processed food.

“Now we have it,” he said.

What Role for the WTO?

Hepburn asked panelists what they were hoping governments would do at the WTO in the run-up to the global trade body’s next ministerial conference, as well as afterward.

Abdel-Motaal emphasized that WTO members can and should make progress on outstanding issues outside of the context of high-level conferences and large negotiating rounds. “We needn’t await a ministerial conference in order to have a result,” she said.

She also drew participants’ attention to the possibility of harvesting “low-hanging fruit,” i.e., negotiating topics where agreement may be easier to achieve, as broad consensus already exists.

These include issues such as food export restrictions, where WTO members are discussing how to improve transparency, as well as a possible exemption for the UN World Food Programme’s purchases of humanitarian food aid. In the area of agricultural market access, this could involve more clarity for exporters on the tariff duties that can be imposed on shipments of goods already “en route.”

Nsimadala emphasized the importance of fairer competition in global markets, highlighting in particular the challenges African producers face when subsidized production is dumped on the continent’s markets.

“There should be stricter and more stringent measures taken on countries and companies that deliberately misuse their production subsidies to distort the African market,” she told participants.

This issue was on the WTO agenda, Abdel-Motaal said, with governments exploring options for new disciplines on domestic support to the farm sector: along with other more complex issues, the question could form part of a work program that WTO members pursue after the next ministerial conference.

Laborde noted that Africa’s participation in both regional and international markets was set to grow, meaning the continent needed to play an active role both in helping shape global trade rules and participating in settling disputes about those rules.

Africa’s involvement in WTO talks and in reform of the global trade body is now “more important than ever,” he concluded.

The video recording is now available at this link.

This event was the third of a series of events on the same topic, each with a regional perspective. The events, organized by IFPRI and IISD, will cover Africa, Asia, and Latin America. For more information on the Regional Series of Dialogues check out this page (in English and in French).