Bridges Weekly Trade News Digest • Volume 8 • Number 7 • 26th February 2004

UNCTAD Releases Report On Commodity Dependence In Africa

Do More

Subscribe to Bridges

* required

Email Address: *

Country: *
Albania Algeria American Samoa Andorra Angola Anguilla Antarctica Antigua And Barbuda Argentina Armenia Aruba Australia Austria Azerbaijan Bahamas, The Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bermuda Bhutan Bolivia Bosnia and Herzegovina Botswana Bouvet Island Brazil British Indian Ocean Territory Brunei Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Cayman Islands Central African Republic Chad Chile China Christmas Island Cocos (Keeling) Islands Colombia Comoros Congo Congo, Democractic Republic of the Cook Islands Costa Rica Cote D'Ivoire (Ivory Coast) Croatia (Hrvatska) Cuba Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic East Timor Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Falkland Islands (Islas Malvinas) Faroe Islands Fiji Islands Finland France French Guiana French Polynesia French Southern Territories Gabon Gambia, The Georgia Germany Ghana Gibraltar Greece Greenland Grenada Guadeloupe Guam Guatemala Guinea Guinea-Bissau Guyana Haiti Heard and McDonald Islands Honduras Hong Kong S.A.R. Hungary Iceland India Indonesia Iran Iraq Ireland Israel Italy Jamaica Japan Jordan Kazakhstan Kenya Kiribati Korea Korea, North Kuwait Kyrgyzstan Laos Latvia Lebanon Lesotho Liberia Libya Liechtenstein Lithuania Luxembourg Macau S.A.R. Macedonia, Former Yugoslav Republic of Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Martinique Mauritania Mauritius Mayotte Mexico Micronesia Moldova Monaco Mongolia Montserrat Morocco Mozambique Myanmar Namibia Nauru Nepal Netherlands Antilles Netherlands, The New Caledonia New Zealand Nicaragua Niger Nigeria Niue Norfolk Island Northern Mariana Islands Norway Oman Pakistan Palau Panama Papua new Guinea Paraguay Peru Philippines Pitcairn Island Poland Portugal Puerto Rico Qatar Reunion Romania Russia Rwanda Saint Helena Saint Kitts And Nevis Saint Lucia Saint Pierre and Miquelon Saint Vincent And The Grenadines Samoa San Marino Sao Tome and Principe Saudi Arabia Senegal Seychelles Sierra Leone Singapore Slovakia Slovenia Solomon Islands Somalia South Africa South Georgia And The South Sandwich Islands Spain Sri Lanka Sudan Suriname Svalbard And Jan Mayen Islands Swaziland Sweden Switzerland Syria Taiwan Tajikistan Tanzania Thailand Togo Tokelau Tonga Trinidad And Tobago Tunisia Turkey Turkmenistan Turks And Caicos Islands Tuvalu Uganda Ukraine United Arab Emirates United Kingdom United States United States Minor Outlying Islands Uruguay Uzbekistan Vanuatu Vatican City State (Holy See) Venezuela Vietnam Virgin Islands (British) Virgin Islands (US) Wallis And Futuna Islands Yemen Yugoslavia Zambia Zimbabwe

Employment Sector: *

First Name:

Last Name:

Organisation:

Enter the letters shown above:*

Download this issue

See also

On 26 February, the United Nations Conference on Trade and Development (UNCTAD) released a report entitled "Economic Development in Africa: Trade Performance and Commodity Dependence". As part of the revival of UNCTAD’s work on commodities, the report attempts to put in perspective Africa’s declining share of world trade, reviewing the structure and composition of Africa’s trade and considering the various impacts of commodity dependence (which include long-term decline in export values vs. import values — or terms of trade, and unstable foreign exchange earnings). The report notes that while trade has grown relative to gross domestic product (GDP) in African countries, as elsewhere, Africa’s diminishing share of world exports has been a phenomenon that "has as much to do with the structure of international trade as with the composition of Africa’s merchandise trade, the trade policies applied on the continent in the past 20 years, market access and trade policies in developed countries".

After briefly surveying previous national and international measures taken to address the commodity ‘problématique’ — and the fact that the "commodity trap" has become a "poverty trap" — the report moves on to consider possible future measures that may be adopted to overcome these problems. According to the report, a stable, predictable and transparent framework is needed, and commodities should be treated as an integral part of development policy. In particular, the report focuses on policy issues in both the domestic and international spheres for i) providing adjustment mechanisms to help Africa manage commodity dependence in the short to medium term and ii) promoting longer-run diversification and productive development in African economies. Specifically, it calls for a compensatory financial mechanism for African producers to meet short-term price shocks and declining incomes, as well as a "diversification fund" to support the diversification of production structures in African economies.

The report also advocates new international initiatives on commodities and greater institutional capacity in developing countries in areas such as research and training, transport infrastructure, information management and quality control, and the management of rationalisation schemes. It calls on the international trading system — especially the WTO — to accelerate negotiations on reducing and phasing out distortive agricultural subsidies in advanced economies and strengthening technical assistance in areas such as quality control and health and safety requirements.

In conclusion, the report states that the three last decades have shown that markets alone cannot solve the problem of commodity dependence. Comparing Africa today to the newly-industrialising economies (NIEs) in South East Asia in the 1970s, the report notes that although there are similarities between the domestic conditions prevailing in Africa today and those in the NIEs in the 1970s, the international context has changed. African countries have to operate within the WTO framework, which limits the use of measures that the NIEs used in the process of development — "special and differential measures notwithstanding". The report indicates the need for derogations from WTO rules for clearly defined development programmes. While the report stresses that African governments are shouldering the responsibility for reducing their commodity dependence themselves, the international community should support this process by providing as consistent and coherent a policy framework as possible.

The issue of declining commodities prices was also discussed at the latest meeting of the WTO Committee on Trade and Development (see related story, this issue), where Kenya followed up on an initiative by some African countries to address the negative developmental consequences of the downward trend in primary commodity prices.

The UNCTAD report is available at http://www.unctad.org.

ICTSD reporting; "UNCTAD Study on African Development Prospects Echoes President Chirac’s Call For Ending "Conspiracy Of Silence" On Commodity Issues," UNCTAD PRESS RELEASE, 26 February 2004.