The “Bali Package” and Africa

Introduction. The World Trade Organization (WTO) Ministerial Conference is the top decision-making body of the WTO and takes decisions on all matters relating to the multilateral trade agreements. The 9th WTO Ministerial Conference was held in Bali (December 2013) and the result of this meeting was a number of legally-binding measures called the “Bali Package” that will impact on African economies and populations.

 

On the one hand, the developed countries wanted to conclude agreements on matters such as trade facilitation and measures to help Least Developed Countries (LDC) implement these measures. Trade Facilitation measures are a set of procedures that control the movement of goods across national borders. The implementation of these new international measures aims at improving the efficiency and reducing the cost of the transactions which are of benefit mainly to big companies. On the other hand, the developing countries were more interested in obtaining agreements on other issues related to agriculture and food security.  When these measures are fair they can be good for African countries and have direct impact on the population. Improved negotiations on agriculture could release the growth potential of African economies because this sector employs many people in Africa, so improvements focusing on family farming will enhance the life of the people.

 

Outcomes: The “Bali package” took into account the ambitions of developed countries while the aspirations of developing countries were postponed for future meetings. It shows the lack of political will to advance on matters that are good for the people and how developed countries are more interested in imposing their economic interests than committing themselves to reducing poverty. The Trade Facilitation agreements are administrative measures that save money for big companies and reduce the border revenues and control of African governments. Moreover, the cost of implementing these measures for poor countries has been ignored by the WTO Ministerial Conference and nobody can explain what the benefits for the people are if governments reduce the money they receive for the transactions because this represents revenue that can be used on social policies such as education and health.

 

The Trade Facilitation Measures. Among the agreed Trade Facilitation measures of the “Bali Package” there are three issues that directly affect African countries and increase the power of big enterprises:

 

Firstly, the most relevant agreement on Trade Facilitation was to simplify customs procedures. This looks to improve the efficiency of the international transactions and reduce costs of the operations. Countries must review documentation requirements for imports and exports that have become cumbersome formalities. The purpose of these measures is to reduce the bureaucracy and streamline the customs procedures at the border. The agreement stipulates that customs authorities will have to publish all information related to imports, exports and transit traffic.  

 

Secondly, the Trade Facilitation measures also impose some restrictions on customs authorities such as preventing the inspection of certain goods and products. The customs authorities will only be able to charge for the service rendered by each import or export operation and they will be sanctioned if they apply extra charges. The interests of companies will have supremacy over those of national authorities and enterprises will be able to refuse inspections that have not been communicated in advance.

 

Thirdly, there is a group of measures on Trade Facilitation regarding electronic documents and payments. The agreements allow big companies to use electronic support for all documents required by customs services for import, export and transit traffic. The national authorities will have to accept these electronic methods and facilitate customs procedures throughout their own territory.

 

The Consequences for Africa. Trade facilitation measures have considerable consequences for developing countries. Among others, national governments accept the control of the WTO authorities and reduce controls at their borders. Foreign and large companies will have strong influence over customs controls of African countries which means a threat to their national sovereignty; not only will the control of their borders have to be renounced, but also the revenues that are needed for the implementation of social policies such education and health. Western countries are imposing standard measures that are already implemented in developed economies but that imply a high cost for the African countries with fewer resources.In particular, African governments will have to create legislative and infrastructural changes to adapt their legislation to these international customs standards. It would create problems at regional level where some African countries have already implemented regional trade agreements.

 

African governments and civil society expected progress in the negotiations on agriculture, especially on issues like subsidies, export taxes, tariffs, anti-dumping measures and food security; progress on these issues would allow Africa to grow economically by itself without depending on western aid.The issue of food security is serious as developing countries cannot decide their own policy. The trade facilitation measures will reduce revenue, squeeze government budgets and so slow down the development of industry and increase job losses. The “achievements” of the Bali package appear to be favourable only for those countries which have a developed industry as well as strong export activity and modern customs authorities.

 

Other measures. The Bali Package also approved Special and Differential (S&D) provisions applicable to Least Developed Countries (LDCs) that could break the balance in African regions. The S&D provisions give LDCs special rights and help them to implement those measures that are economically challenging. However, as the African regions are formed of LDCs and non-LDCs, these provisions in favour of some countries could distort the regional tax balance.   

 

It is important to mention an agreement on domestic support for cotton that will be negotiated in 2014 in order to reduce the distorting subsidies that this sector receives in developed countries and that make it very difficult for cotton producers in developing countries to offer competitive prices.

 

Looking to the future. Africa’s importance in the global economy is growing and a common position of all African countries in further negotiations would allow them to protect their economies from imposed neoliberal rules from abroad. Africa has the potential to give its countries the opportunity to develop policies and to counter the current global attempt to pretend there is only one way of doing trade. 

 

Jose Luis Gutierrez Aranda

AEFJN Policy Officer