Africa's exports to China and India are growing at an average rate of 18% a year and growing faster than exports to any other region in the world. See previous post here. This is in sharp contrast to Africa's exports to the world which have declined sharply over the past few decades to about 2% of total world exports.
One reason why exports to Asia have grown rapidly is linked to the high growth rates in China and India and the high demand for raw materials and natural resources thus contributing to a relative increase in prices of certain commodities. In addition, there is a growing middle class in these two highly populated countries and hence a higher demand for certain consumer products.
While African exports to Asia are largely fuel and mineral based (a familiar trend in Africa's export profile), there are increasing exports of processed commodities, light manufactured goods, household consumer items and tourism.
However a key growth barrier to trade between the two regions is high tariffs in both China and India and in key exportable products from Africa. Therefore while both have reduced tariffs for a few products over recent years, tariff escalation and high tariffs are still prevalent in key product areas including coffee and cocoa products.
Some experts have called for a Pan-Asia-Pan Africa FTA however this approach could be cumbersome to say the least. In this regard there is no trade agreement between Africa and Asia however there are negotiations between India and SACU. A more structured approach could be envisaged through a possible outcome of the Doha Round. Failing that African countries could lobby China and India (2 countries whose population consists of one third of the world's population). Africa-China/India could craft a negotiated outcome under the auspices of the Enabling Clause at the WTO in order to address the mutual reduction of barriers which would facilitate South-South trade and investment without necessarily concluding an ambitious FTA.
No comments:
Post a Comment