In the interests of Africa

30 May 2006

Following our recent article on fair trade in the March issue of Leather International (pages 76-77), we received a letter from Gustavo Gonzalez-Quijano, Cotance, who takes issue with some of the comments made at the end and points out that: 'Industrialised countries are not putting any pressure on African governments to drop import tariffs and to open their markets to manufactured products from industrialised countries as stated in the article 'When is fair competition unfair?' African countries are mostly LDCs (Least Developed Countries) or small and vulnerable economies and will benefit therefore from the offer not to make tariff concessions at all. They will get the Round 'for free', if it is after all concluded. It is very important that everybody knows it so that the WTO negotiations are carried out on a sound basis, without misperceptions and misinterpretations! 'It is true, however, that African countries are very much courted by many WTO players. African governments are under a lot of pressure from many sides (not to open their markets but) to align themselves with certain positions regarding the opening of markets by others, notably emerging markets. 'African WTO members have a crucial role in this trade round because they are many and their final vote counts as much as any other. As I said in my presentation at the last FAO Hides & Skins Sub-Group meeting in Arusha (Tanzania), their position can make or break the Round. This is why it is important that Africa understands where its interests lay and to push for them. 'The worse that can happen to Africa is that misleading information makes its governments take a position that put these poor nations in technical 'off-side', as it is currently the case. Many are following the G 90 (Group of 90 developing countries following India and Brazil's negotiating tactics) fooled by the belief that the best way to defend their interests are other developing countries. This is very sad. Brazil, Argentina and India are only defending their own interests if they oppose ambitious tariff cuts in industrialised goods (NAMA) by developing countries. That allows them to keep their (growing) markets protected from the competition from developed countries and poorer developing countries. 'If LDCs don't have to make any trade concessions as is the case, wouldn't it be in their interest to push for ambitious tariff cuts for others (richer nations) so that they can develop exports also to other developing countries? (Note: The EU has no tariffs on products from ACP countries. Remember the Everything but Arms initiative from Pascal Lamy when he was Trade Commissioner?) 'One should not forget that more than 70% of all duties paid by developing countries are paid to other developing countries. The truth is thus that Poor Nations are held hostage by the unwillingness of more developed developing countries (emerging markets such as India, Brazil, Argentina and others) to open their markets to industrial products. And it is absurd that this happens with the support of African governments. 'Incidentally, the EU is the WTO member that most looks after the right of poor nations in this developing Round (Doha Development Agenda) with impact assessments, trade assistance, preferences etc. It wants LDCs to understand that it is in their own interest to get rid of a maximum of red tape by others and that most of it is to be found in richer developing countries, where the markets for industrial products are growing. Isn't it rather the position of Brazil, Argentina and India 'denying poor nations the same opportunity' as Europeans or Americans gave them during their industrialisation?' In a further message, he writes: 'I understand and share your disappointment about the African leather industry. So many efforts and financial resources have been spent, notably in Eastern Africa, and the results? What a shame! It needs more than just courage and skills to succeed in Africa. Africa needs above all a sound political leadership that erradicates corruption and that creates the right internal and external business environment for enterprises. Is it wishful thinking? 'The right external business environment for African tanners (International Trading Environment) would be so easy to get now through the WTO negotiations. The right political decision at the right time would be worth 1,000 times all the money that the African leather industry has received over the past decades in funds and subsidies. 'African trade authorities now have the possibility to express their support to the EU initiative for the WTO Round to curb export taxes on tanners' raw materials as a rule. The EU proposal gives LDCs and other poor nations the opportunity to keep these restrictions over a reasonable period of time once all other trade partners have eliminated them. 'This is a real opportunity for Africa entering more significantly in the international leather trade. It would make African leather much more competitive on the global market allowing exporters to grow and position themselves in market segments that are today occupied by unfairly playing trade partners. 'Africa and LDCs need a WTO Deal that assures their leather industry: - trade protection: by being the only nations being allowed to retain export taxes for some time after their overall elimination - market access: by pressing for an ambitious tariff reduction in countries hosting growing leather markets = emerging economies 'Export taxes/restrictions of hides, skins and wet-blue applied today by Argentina, Brazil, India, Pakistan and other nations better endowed in raw materials than each individual African country make the former so much more competitive than the latter. There is no better dissuasive for investments in Africa's leather industry! On April 19, 2006, the EU has organised an informal meeting at the WTO in Geneva where it will explain its proposal ahead of the ministerial scheduled for the last week of April (ending on April 30). I am looking for an African tanner who would be willing to come with me to that meeting to tell trade diplomats that it is also in his interest that export taxes/restrictions are eliminated once and for all and that tariffs on leather should be brought down to a level that allow African leather to compete. Gustavo Gonzalez-Quijano Cotance

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