Daily Monitor | 10 April 2018
Free trade and its pitfalls: Lessons for Africa
By Samuel Kasirye
Early this month, Rwanda was suspended from accessing the US market under the Africa Growth and Opportunity Act (Agoa) after Kigali’s rejection to withdraw an embargo on used apparel and shoes. This should serve as a reminder to Uganda and EAC member states about the pitfalls of concluding trade and investment agreements.
Too often, African governments have been quick to conclude lopsided trade and investment agreements particularly with major economic powers yet the nature of these agreements are laden with passages that are designed to diminish the space poor countries.
It is ironic that while the US under President Trump pushes the “America First” agenda using a host of protective instruments such as hiking tariffs on steel and aluminium to 25 per cent and 15 per cent respectively.
Our countries through such initiatives such as Agoa and EU Economic Partnership Agreements are instructed to eliminate trade barriers, leaving our industries without safeguards from subsidised imports.
Without a development perspective, these trade agreements are intensifying trade without expanding production which has led to balance of payment problems, deindustrialisation and a host of social and economic challenges. Though considered archaic by some economists, the capacity to trade should be preceded by a capacity to produce. While trade policy integration is vital, even more important is for Africa to integrate its productive capacity and take advantage of our shared resources.
Despite having several trade and investment agreements from 1975, the inability for Africa to build substantial productive capacity has in effect rendered the continent a net importer, unable to meet even its own food requirements. While earlier errors in shaping our development options could be forgiven, Africa knows better now having witnessed firsthand the failed prescriptions and subsequent ramifications of IMF and World Bank Structural Adjustment Programmes.
No country has ever successfully industrialised without protecting its own markets and Africa should not assume otherwise.
Even more perilous with new trade and invest agreement lies in the fact that they are legally binding and permanent. Such skewed agreements should be resisted and I salute Tanzania for the precaution it has taken in engaging with these new initiatives.