EU Trade Commissioner Peter Mandelson will participate in the African Union Trade Ministers’ meeting on the WTO Doha Round of trade negotiations in Cairo, Egypt today. Commissioner Mandelson will reinforce the EU’s commitment to the development goals of the Doha Round, which he will argue can be “the round for Africa”. On top of recent initiatives by the EU to shape the development aspects of the round with new commitments to flexible treatment and tariff and quota-free market access for the poorest countries, Commissioner Mandelson will today urge African Trade Ministers to back new rules for trade facilitation that could dramatically increase developing countries’ capacity to trade. He will also call for strong backing for trade facilitation efforts through EU and G8 aid for trade assistance. Commissioner Mandelson will also meet with Egyptian Prime Minister Ahmed Nazif and Trade Minister Rashid Mohamed Rashid.
Speaking in Cairo Commissioner Mandelson said: “Lowering the costs of trade by efficient trade facilitation measures is another example of how the Doha Round can deliver for developing countries in addition to market opening and phasing out farm export subsidies. This Round will only work if developing countries gain from it. I am determined to see this happen.”
Commissioner Mandelson will call for African states to back trade facilitation negotiations in Geneva in which the EU has worked hard to broker agreement on new and better rules for customs procedures. Reforming customs systems boosts developing country revenues, attracts investment and improves the speed with which goods can be brought to market. Commissioner Mandelson will commit the EU to increasing Africa’s capacity to trade through trade development assistance. He will also call for the G8 to commit to increases in trade assistance by backing a substantial aid for trade initiative at their Summit in July. He said: “Trade is the engine of economic growth. In expanding trade we must also ensure that developing countries are able to participate in these opportunities.”
Shaping the “Round for Africa ”
The EU has led the way in shaping a package of development priorities for the Doha round:
- The EU will not push for tariff cuts for weak and vulnerable countries as part of the Doha Round. This will allow least developed countries to open sensitive sectors at a pace determined by their development needs. Commissioner Mandelson has called for WTO negotiators to reach early agreement on the exact form such special and differential treatment may take.
- The EU has called for accelerated Doha Round agreements on reducing support for cotton producers in industrialised countries and fair rules for African producers.
- The EU is reviewing its rules of origin to make it easier for developing countries to exploit market access to the EU.
- The Commission has called on the G8 to provide much higher levels of trade development assistance. It has also called on all other developed countries to extend quota and tariff free access to all least-developed countries as the EU does under its Everything But Arms preferential access scheme.
20 days in Casablanca: why Trade Facilitation matters
Trade Facilitation is the name given in the WTO to measures to simplify and modernise customs and other trade procedures. For business, the benefits of Trade Facilitation are widely accepted. It promotes transparency, cuts red tape and stops a proliferation of incompatible requirements in export markets. In summary, it cuts costs and saves time.
Trade Facilitation strengthens security through more effective controls, improves the investment climate, and promotes higher customs revenues. Revenue loss from inefficient border procedures in some developing countries may exceed 5% of GDP. Given that customs revenue is the major source of government income in some developing countries, the potential gains are clear.
There are some Trade Facilitation success stories in Africa. During the first two years of a reform programme in Mozambique, customs revenues increased by over 50% despite significant cuts in tariffs. In Morocco, releasing a container in the main port of Casablanca took on average 18-20 days in 1996. Following reforms, customs clearance times fell to 1-2 hours. This is equivalent to a massive expansion of port facilities, at a fraction of the cost.
To build on these success stories, new WTO rules have a crucial role to play. They provide the top-down pressure to overcome vested interests and implement reforms. They set clear standards worldwide and lock-in beneficial reforms.