Given the current political situation in Somalia, do you believe it is a good place to potentially invest?
There is an incredibly dynamic investment climate in Africa which I think we completely underestimate in our understanding from this side of the world. Even a place like Somalia is good at making miracles out of stone. Somalia exports more than five-million livestock—which is more than double many other African countries. The animals come from Ethiopia, Kenya, etc and head out.
They have been investing in sesame production that passes through Dubai on to Europe…this is produced in a very high quality way because it is produced for bakeries in Northern Europe. They are doing all of that near the conflict in South Central Somalia.
Where do you see the livestock industry headed in Somalia?
There is quite little of transformation in Somalia which could be done quite more. Just the transformation of meat as opposed to live animals would be quite interesting just in terms of technology, know how, and business opportunity—especially to the Arab states. This is becoming more and more of a business opportunity especially because a couple years ago meat from Australia was not able to export livestock…There is an increasing demand of live animals in the Gulf and Saudi Arabia but still there is a huge market for processed animals.
How about Somalia’s fisheries, do they have potential to propel Somalia’s growth?
There are a number of agreements that are not being utilized properly. The current problem with fishing near Somalia is that the existing laws are not easily enforced. Somalia only gets ten percent for the value of the fish as far as licensing fees. Somalia’s exporting fleet is poor but for large vessels this would work quite well. “In the North of Somalia there are coastal towns so something there is feasible.
Somalia was recently awarded 1.3 billion US dollars, from the UN, for development. How much of this money is anticipated to go to agribusiness activities?
Under twenty million US dollars, or 10% will go to agriculture. The government plans to intervene with substantial support for the small producers which are in need of more capacity and we help the big producers with the proper legal framework to help them invest properly n the area where they want to invest. Most of the 20 million will go to the poorest of the farmers.
What is currently happening in Somalia to protect the livestock farmers already have?
Every few years there is a high risk of major disease for livestock…we are on the last year of an initiative which covered sixty percent of sheep against PBR, which is a pest, and was very important for protecting the small producers which for us as an international agency is more important.
Do you think that in the future Somalia could greatly benefit from free trade, how so?
We are working out free trade on a regional level. There are quite a lot of needs and opportunities to be made inside the region and that should be done tax free. Imagine sugar, where Sudan makes enormous amounts of sugar, Somalia which is a he importer of sugar, and Kenya which fluctuates”.
What is being done to ensure Somalia is prepared to deal with famines?
During the last famine, we decided as a way to intervene, to use cash for work program. Basically, we convinced the poorest not to emigrate from rural areas. By giving them cash for a few weeks and later cash for work. This work consisted of excavating 1/3 of a cubic meter per day, of dirt, for a canal. To increase their productive capacity later on.
How were these workers able to purchase food if there was such a critical shortage?
Well, I kind of shocked the system by gong to Dubai and setting up a deal to get food to retailers in proper quantities relative to the paid workers. It was just information sharing.
There has been some criticism about humanitarian assistance hurting local farmers, how does the international community adapt to these complaints, are they valid?
We realized there were a number of agencies trying to target the same people. The three biggest agencies of the UN decided to work together on this concept of resilience. Most of our resources were used on that objective and sequencing the different types of intervention with the proper logic. Going local when we can and international when it can’t be done locally. Because that is what the community needs.
How has Somalia’s food security improved?
Since last year’s drought the food security situation has improved a lot. We have moved from 4.2 million in extreme need to 2.12 million. However, we are still talking about 28% of the population. A large amount of the population is flat on the poverty scale—where a small thing can push everyone into a serious problem. This is why we need to focus on resiliancy of people. Without a state, the people are losing their communities and we need capacity to keep them up to a certain level. Internationally we need to help the government strengthen. Need sustained support for two or three years to prevent the people from collapsing. When it gets better we can start to pull out and they can go ahead. Give them some support and they can be strong and pick themselves up.
What advice would you give to potential investors?
As far as investment areas in Somalia, there is quite a lot that can happen in livestock and fishing. Agriculture is weak but things could change quite well. Unfortunately, a solid legal framework to protect investment is missing.
Honestly, I would be ready to invest in most of Africa. Look at how much GM is investing in Africa, and they are getting a humongous amount of money. China’s investments, even in places like Sudan, which you would not expect to be good, are huge. Furthermore, China does not add conditionality to their investments and they support and protect local governments while the West adds too much conditionality.
ACDI/VOCA Learning Event Reviews 50 Years of Learning in Development
The Oromia Coffee Farmers Cooperative Union (OCFCU) in Ethiopia—the birthplace of coffee—is the largest organic coffee exporter in the world. The union collects six types of high-quality, organic Arabica coffee beans, all with distinctive and highly desirable flavor characteristics, from more than 250,000 farmers across the Oromia region.
In only 15 years OCFCU’s exports have grown nearly a hundredfold, with sales of $40 million, making it the largest coffee producer and exporter in Ethiopia. Key to the union’s success has been to link Ethiopia’s smallholder farmers directly to export markets. The prior central auction marketing process did not allow for quality distinctions.
Beginning in 2000, ACDI/VOCA, a nonprofit development organization, aided the young cooperative union under a USAID program, training cooperative members to improve coffee quality and productivity, and working with farmers, processors, exporters and others to strengthen the overall coffee value chain in Ethiopia. Improvements included creating a system of traceability to guarantee coffee quality from farm to cup.
The general manager of OCFCU, Tadesse Meskela, recently reflected on the pivotal capacity building by ACDI/VOCA and others that spurred OCFCU’s growth. As one of the four panelists at a learning event held in conjunction with ACDI/VOCA’s 50th anniversary in June, he discussed his experience as a former aid recipient and recounted OCFCU’s progress. AAB sat down with him after the learning event for his perspective on capitalizing on export markets, effective marketing and next steps in helping the Ethiopian coffee sector to flourish.
AAB: What led to your cooperative union’s success over the past 10 years?
Tadesse Meskela: The key to success is promotion. As soon as Oromia was organized as a cooperative union, the challenge was getting the market.
With support from ACDI/VOCA, we came to San Francisco in 2000 [for a Specialty Coffee Association of America conference] with 146 kilograms of different coffees. Roasters took the coffee for free, cupped it and found that our coffee is the best.
It was eye-opening for us to learn how the coffee industry works in the West. Before that, we didn’t have any experience and did not know how coffee is consumed in the developed world. After coming to San Francisco we identified how people care for the product and what kind of certifications are required. In the first two years Oromia participated in the specialty coffee conferences with support from ACDI/VOCA. Since 2006 we have financed ourselves by renting a booth with fair trade coffee buyers.
The other thing is training—training to all the farmers. When we participated in the specialty coffee conferences we got feedback on the quality of the coffee. Based on this we trained our farmers so that the quality of the bean improves. In the 2012 Coffee of the Year competition, coffee from Oromia was the first out of 250 different coffees.
This is all because of the feedback we got from coffee roasters and the training we gave to our members to improve quality.
What are some of the current challenges for the cooperative?
We do have banks [OCFCU recently created its own bank, a great benefit to its members for much-needed preharvest financing] but still to capture the value chain, cooperatives have to receive all the product from their members, which would be facilitated by access to finance.
The other thing is capacity building. We have to train farmers from year to year. It’s not a one-time job, it has to be continuous. ACDI/VOCA supported us in the beginning. We have done a lot with ACDI/VOCA, but these trainings have to continue. It’s a dynamic process—training, awareness creation for farmers to get organized to come out of poverty—it’s very important. This is has to be accompanied by finance; they have to come together.
What are the techniques you’ve found most successful for training?
The way we communicated to members at the beginning of ACDI/VOCA’s intervention was through bringing in volunteers [ACDI/VOCA’s expert volunteers serve on short-term assignments that complement long-term projects] to talk to the farmers; so that has to be there.
We also use video classes on cooperatives to change the minds of farmers to enable them to come together, because we used to have bad cooperative experiences during the socialist regime, where farmers had no control over the product or pricing. So by the time we started with ACDI/VOCA, we had to educate farmers and show them how to change their lives through cooperatives by capturing the value chain, the comprehensive process of producing, processing and exporting.
You mentioned in ACDI/VOCA’s learning event that cooperatives receive 250 percent more by participating in OCFCU as opposed to selling to middlemen. Can you give an example of what the price difference would be for an individual coffee farmer operating alone?
Especially during the time of the coffee crisis, 2000, when the price was at a three-year low, 4 cents a pound, [by participating in the Oromia Cooperative Union] farmers were getting more than double what they could get on the local market. Even now they are getting more than double because we certify the coffee organic fair trade and trace all of it to the cooperative. So the certification creates an additional price over the quality. We are also given a quality premium from our customers because our coffee is always top of the top. These together give our coffee a higher price and make us able to give back dividends to the unions. So this is how the lives of the farmers change.
And also through the fair trade premiums [an additional payment above the market price that must be spent on social and economic development in the producing communities], we build schools and other infrastructure. We’ve built 14 elementary schools, 10 high schools and more than 100 clean water supply programs. All in all, we have done about 226 different projects from the fair trade premium—success we got by creating quality and sustainability and supplying good quality coffee to our customers.
Our relationships with our coffee roasters and buyers, who started buying coffee from us in 2002, are now family-like. They visit us every year or every two years. We visit them. They give us feedback and based on the feedback, we train farmers. Our relationship is very strong.
What do members do with the extra money?
You can’t say the money the farmers are getting is beyond their expenses, because farmers are living hand to mouth. The price of coffee is going up and down, so with the extra money they get they send their kids to school, they buy good food for their families, they change their houses from thatch to corrugated iron.
What do you think are the current constraints in the Ethiopian coffee sector?
The government needs to support characterizing the different coffees in the country. This has to be given a big emphasis, so that the country—and we—can win in delivering the high premium prices in the international market.
The biggest concern is agronomic. In most of the rural parts in the country the coffee is getting older, and there should be a stronger extension activity around agronomic practices. In the 1980s we had a coffee improvement project funded by the European Union for maybe eight years. That brought a drastic change to the Ethiopian coffee industry, with nurseries to raise coffee trees, training for farmers and stamping the old trees. This really has helped the industry. But since the culmination of the coffee improvement project, these programs are not there. So we have to work harder now.
Watch Tadesse Meskela and others discuss sustainable economic growth in developing countries at ACDI/VOCA’s learning event, “Moving Forward Together” here: http://www.acdivoca.org/site/ID/Video-50-Anniversary-Learning-Event
The sun-drenched province of Mpumalanga in north-eastern South Africa is one of the country’s burgeoning agricultural hubs, and as thousands of emerging cattle, sugarcane, citrus and wheat farmers pop up across the region, an urgent need has emerged for viable financial structures to support them.
With the South African government punting the formation of co-operatives as a key strategy for economic growth, the African Farmers Association of South Africa (AFASA) have heeded the call. They have kick-started the development of a revolutionary co-operative bank which the association says will benefit more than 300 000 farmers operating in the small but fertile province.
Established in 2011 after a year-long consultation with developing farmers country-wide, AFASA now has over 11 000 members from all nine of South Africa’s provinces, and has placed the needs of emerging farmers on the top of their priority list.
Often struggling to establish themselves due to lack of funding and formal financing mechanisms, little access to market information and poor money-management skills, emerging farmers find themselves swimming in the deep end of South Africa’s agricultural pool. AFASA’s plans are to lift them out.
“The goal is to establish a bank which will be strong, sustainable, independent and supportive of farmers, enabling members to have easy access to affordable banking services,” says AFASA Mpumalanga President Dr Job Mthombeni, who is head of the bank’s newly formed 15 member board.
With support from the Cooperative Financial Institute of South Africa (COFISA) and the Mpumalanga Department of Agriculture, Rural Development and Land Administration (DARDLA), the operations of the bank are scheduled to begin by the end of October.
Discussions regarding the bank commenced in April and focused on mobilizing farmers and co-operatives to join hands in establishing the institution. In order to build the initial capital for establishment, prospective members have been encouraged to invest R600 ($59) each after which time they will have full access to the comprehensive range of services that the bank will offer.
“With an experienced board of directors and a well trained staff complement, the bank will have on tap a wealth of agricultural specific financial expertise for members to utilise. A thorough understanding of the challenges facing emerging farmers and how to solve them is what makes this bank unique,” Mthombeni explained.
AFASA have recognised the need for easily accessible branches for all members, the absence of which has historically been a major cause for the failure of numerous co-operative banks formed in South Africa.
“The bank will launch branches in all the districts of the province, depending on which area is more active as a matter of which one will start first. It is expected that not less than 300 000 farmers will be able to benefit in the next five years within the province,” Mthombeni added.
Through proper organisation of co-operatives and holistic support of smallholder farmers, AFASA aims to follow the path of countries such as Kenya, Italy and Brazil, whose co-operative movements are widely recognised as the most successful in the world.
From a global perspective, the importance of co-operatives can be highlighted by figures from the International Co-operative Alliance which show that their combined turnover totals some US$2 trillion annually, and in August 2005 a new Cooperatives Act (No.14 of 2005), based on international cooperative principles, was signed into law by the South African government.
The Act sees a major role for co-operatives in promoting the economic and social development of South Africa, in particular by “creating employment, generating income, facilitating broad-based black economic empowerment and eradicating poverty”, a sentiment which is at the cornerstone of AFASA’s constitution.
History demonstrates that white co-operatives played a significant role in the South African agricultural sector during Apartheid- in 1993 there were about 250 of these cooperatives with total assets of R12,7 billion ($1.26bn) and a total turnover of R22,5 billion ($2.2bn).
“Black farmers did not receive the same form of support, and this has led to them not being able to meaningfully participate in the mainstream economy,” said AFASA Secretary-General Aggrey Mahanjana.
“Therefore servicing these people and co-operatives while equipping them with the financial support they need to make a living for themselves and meaningfully contribute to the economy is a top priority for AFASA and South Africa as a whole,” Mahanjana added.
Mahanjana believes that provision of finance should not be the only support mechanism for smallholder farmers and presents what he terms “the wagon holistic approach” to farmer support and development.
“The approach places land and infrastructure at the centre and lists other support mechanisms such as logistics, market intelligence, business knowledge and networking to maximize profit and growth,” he explains.
With the right support, a lucrative potential market lies in wait for the developing farmers of Mpumalanga, who are delighted at the concept of the new bank.
Johnson Mtshali, who owns eighteen cattle on a farm in the Western Mpumalanga town of Emalahleni, believes that the institution will give him the financial support he needs to get his cattle-farming venture off the ground, while giving him access to the market.
“I have been struggling here and don’t have the right business knowledge to make a success of my life. I need a place where I can go to for financial support and to learn from people who have been successful in the farming industry so that I can achieve my dream of becoming a prosperous farmer. It has been very difficult to understand everything I need to do to get to that dream,” Mtshali said.
Dennis Nkuna, a farmer from the Nkomazi Cotton Farmers Association in Steenbok, highlighted the independence of the new institution as a major advantage.
“This is a great idea. We will be able to have ownership, access finances and loans in our own co-operative bank; I believe this is a remarkable step to greater things in the agricultural industry,” Nkuna said.
With AFASA’s innovative concept of a bank fully dedicated to assisting co-operatives and facilitating the province-wide boom of developing farmers, they seem to have tapped into something truly special, and much more importantly, sorely needed.
As Mahanjana concludes: “We cannot remain subsistence farmers. To contribute to food security in this country, we will have to become commercial producers.”
Cassava is an important staple in sub Saharan Africa and provides daily calories for about 500 million. It is a generally hardy crop that thrives in marginal environments where other crops may fail due to drought, poor soils or other abiotic stresses making it a premium food security crop. Cassava is fraught with myriads of diseases chief of which are cassava mosaic disease (CMD) and cassava brown streak disease (CBSD), both viral diseases. CBSD is a huge threat to the entire cassava growing African nations because there is limited or in some cases no known sources of resistance in the cassava germplasm. It is spreading like wild fire from its hotspot zones of eastern Africa to central Africa and a debut in West Africa will pose a phenomenal disaster for West Africa especially in countries like Nigeria and Ghana where it is a major food. There are other important diseases like cassava bacterial blight (CBB) and pests such as cassava green mites (CGM) among others.
The Next Generation Cassava Breeding (NEXTGEN Cassava) project aims to significantly increase the rate of genetic improvement in cassava breeding.The project aims to test a new breeding method known as Genomic Selection that relies on statistical modeling to predict cassava performance before field-testing. Cornell University researchers has partnered with other scientists at cassava breeding programs at NaCRRI; the National Root Crops Research Institute (NRCRI) and the International Institute of Tropical Agriculture (IITA), both in Nigeria; as well as the Boyce Thompson Institute (BTI) for Plant Research and the US Department of Energy Joint Genome Institute (DOE-JGI) of the Lawrence Berkeley National Laboratory, both in the U.S. NEXTGEN Cassava is supported by the Bill & Melinda Gates Foundation, which donated $25 million, and the UK Department for International Development.
Chiedozie Egesi is an assistant director and head of the cassava breeding team at the National Root Crops Research Institute, Umudike, Nigeria. He has led efforts at developing and releasing to Nigerian cassava farmers several improved varieties of cassava including pro-vitamin A cassava. His research activities involve the use of cross-cutting biotechnology tools in the genetic improvement of cassava including transgenic technologies. Chiedozie supports several African NARS cassava breeding programs in developing adaptive breeding schemes. He has worked previously as a university teacher and a yam breeder and have participated in the development and release of 6 yam varieties. The following is an interview he did for the magazine.
What is the importance of cassava on the African continent and the globe as a whole?
Cassava is the African crop par excellence in terms of the number of people who depend on it daily for food and livelihood. Its advantages include the ability to store the roots in-ground for up to 2 or more years enables piece meal harvesting. Even though it contains cyanogen compounds these can easily be removed as the roots are processed into ready to eat forms. The cyangogenic compounds in turn protect it against animal attack. It is also an important raw material for starch and flour. It is excellent in the starch and flour yield per unit area surpassing most carbohydrate sources. It is also has potential use in biofuels.
What is open data?
Open data is the state of making all data freely available for use by any interested member of the public without restrictions. This is an adherence to what is called the Toronto Agreement on prepublication data release to foster transparent and accessible data sharing for the good of the public. It is important that the huge datasets being generated by the use of modern technologies in science are put together in standardized formats for unrestricted access by all who are interested.
What is the significance of data within the agricultural sector?
Scientists and policy or development workers make decisions daily based on available data. The quantum of information being generated in recent times will enable agricultural scientists make better decisions that will in turn benefit millions of people going hungry daily. Open data for agriculture will increase agricultural efficiency globally.
What implications would open data have on Africa?
Open data for Africa means that African scientists will have access to Agricultural data generated by the developed countries. These data should be stored in databases that are easy to use, access, and with tools that will enable their utility in developing countries.
What challenges does this initiative face?
Challenges for the use of open data in crop improvement will include the ability to manage the huge data sets that are now available and how to make use of them to the benefit of mankind. Digitized agriculture should be the way forward in enabling higher precision research with most likelihood of success.
Manchester Trade has had two decades of successful business in Washington, DC, providing strategic trade and business advisory services to domestic and international clients in areas such as trade negotiations, export development, investment promotion, and legislative advocacy. Their Principals and Associates work closely with clients to advance domestic and global business and policy interests in the U.S. market and abroad. Stephen Lande is the President of Manchester trade and is a distinguished international trade expert in the United States. Mr. Lande has been involved in international trade since the 1960s He had a twelve year career with the Office of the United State Trade Representative as the Senior Trade negotiator and the first of a long-line of Assistant USTRs. Mr. Lande has negotiated many bilateral and multilateral trade agreements on behalf of the US Government in Asia, the Middle East and the Caribbean.
Welcome to the interview Mr. Lande. I would just like to start by asking you what AGOA is?
AGOA: African Global Opportunity Act. It is considered a flagship program of the U.S. in terms of our economic relations with Africa. It was developed, actually, by the Clinton Administration, in the last century! As an old program, an in one sense maybe not, it went into effect in the year 2001, it has received bipartisan support; meaning support from both Republicans and Democrats. It is mainly a Tariff Preference Program. Tariff preferences are generally available to developing countries. It is usually subject to conditions and limits. The U.S started a goal with the theory that we should designate every product for duty free. We didn’t quite make it. We missed a couple products, but particularly some agricultural products that we can discuss later.
I recently read a document stating that Manchester Trade has some recommendations to improve AGOA. What might those be?
Well, a lot depends on how you define AGOA: If you define it as a program that provides market access, obviously we have several recommendations but they are more limited. If you describe AGOA as being the US approach to Africa, then we can go beyond market access to include provisions which promote U.S investment, which supports regional infrastructure, which a real necessity in Africa as you know that now. (And) We support regional integration and relationships to developing pre-trade agreements common markets, giving Africa the required economic space to operate.
As far as improvements go to AGOA. Using the same standard I will explain a few. For the market access provisions we basically suggest three proposals. We suggest that AGOA be extended indefinitely. Meaning, the trade preferences be extended indefinitely for two reasons: number one, when the provisions are allowing Africa to use fabric or to incorporate fabric, produced in the Far East, which is only available- no other country can do that. A lot of people can import apparel to the U.S duty free, but they all have to use their own FRAVRIC. Very few can use the very competitive Far East Fabric. That was to expire, if I remember correctly, in October 2012. And it took us up until the last second to get it renewed. Well, by that time people cancelled their orders, they said “Wait a minute, I have a Christmas order coming in on December, I don’t know whether to pay Duty or not… How can I import those products?”. So you had what was called the ‘cliff’. What we argue is that we should make things permanent so that we don’t have the ‘cliff’.
Also, what happens when you negotiate a free trade agreement (negotiate reciprocity), you don’t increase duties, you keep your zero duties in place but you get paid for them. That’s what is called reciprocity; the other country reduces duty. So, at the end of the day you have a free trade agreement where there is no duties on either side. So that is why, by extending it duty free indefinitely, but also saying that we are going to give you a hiatus of ten years because of your development, because of the fact that in order to negotiate as a group, you have to be unified. That takes ten years to put (together) the reasonable economic communities. The African Union has a proposal for a continental free trade agreement. The Abuja treaty, which kind of regulates economic integration within Africa as an African common market, also to be completed at the end of the decade.
So what we basically say, is let us first extent the duty free treatment indefinitely. Let’s give Africa ten years so it can complete its own regional integration and then Africa should be strong enough as a group to negotiate with the U.S. Since duties don’t go up, the permanent duty free remains in place, the only difference is that Africa gradually gets to begins to provide the same rights to U.S duty free imports.
Can we talk a little about the Trans-Atlantic South Partnership?
Well, that is one of our ideas, we appreciate the question. As you may know, the Obama administration has two major trade initiatives: One is called the Trans-Pacific Partnership, which is designed to bring, I believe 18 countries that boarder the Pacific, not necessarily right on the border because some of them are inland but we still use that language. And this specifically based countries either in Latin America; so we include countries ranging from Chile, Peru, on up to Mexico. Canada now has joined too. To countries in the Pacific area including going as far as inland as Malaysia. But these countries have got to a Free Trade agreement.
Similarly, we are negotiating an agreement with the Europeans, called by what you had said the Trans- Atlantic South Partnership, in short we call T-TIP. So, we have TPP negotiations and T-TIP negotiations. Well, I looked at the map the other day, I didn’t have anything better to do, and guess what I discovered? That the Atlantic is a big ocean, but to be honest, it’s only the North Atlantic that separates the U.S from Europe, and the South Atlantic separates the United States from Africa. So, we said, “Okay, I’m very happy so let’s call it what it was, I would call T-TIP, TN-TIP, but I don’t wanna go there because that name has already been given by people, so they can keep it… so, why don’t we then put together, well, Manchester Trade said, why not put together something we call the Trans-Atlantic South Partnership. Which, in fact, if you look at the growth rate of the country is probably more economic promise in the Trans-Atlantic South than there is in the Trans-Atlantic North, or the U.S/ Europe Free Trade Agreement. So we say, “what should we include in it? We are not ready yet for Reciprocal Duties, We are ready for making AGOA permanent, we are ready, certainly, to work together with the country to eliminate barriers to U.S trade. ” So, there is a number of things we can do in the TASP which are similar to perhaps a little more development, perhaps moving into a few more areas than the T-TIP, but certainly not having yet the free trade component that we have, or the Custom Union support.
The document states that the EU is part of a problem to this reform. Could you tell us a little bit about that?
You did read the document, I’d like to point that out, that you asked all the right questions. So, this is the challenge, and it’s a hard challenge. The problem with trade policy and the reason it puts everyone to sleep, the concepts are not very hard- it’s not nuclear science, it’s just that you have to go through all these long tedious stories to explain what happened so you can get to where we are today. Many years ago, two things occurred: number one, the Europeans, back in the 1970’s, they decided that they were going to come up with an agreement with their former colonies, which took place at the Lome Convention, where they were going to get back reciprocity. They were going to give them duty free treatment. And the U.S said “no, no, no, no that’s not how we picture it, these preferences should be given unilaterally, you’re not supposed to get a special position, or a special foothold in your market so that it gives you an advantage over everybody else, and so on.” So, we had a big fight with the Europeans, and we won. What we agreed was that one would have a system they called the Generalized System Preferences (GSP) where you would include all preferences, all products to the extent necessary, all developing countries that meet your criteria and you would not ask for Reciprocity. There would be non-Reciprocity.
This system worked well until the beginning of the century. Because, in the meantime, the Central Americans were very upset, because the Europeans had a number of “Regional Agreements” and the agreement with the African-Caribbean Pacific states were not subject to GSP. The old GATT (General Agreement on Tariffs and Trade) was really a general agreement to talk and talk because there was no way to enforce a decision. If you found someone that was violating it then, big deal. I remember, when they formed the WTO after 1994; according to those dispute agreements, even if the people disagreed with you, but if you lost a case you were out or you would have to change your trade law or be subject retaliation. So, the Europeans kept losing the trade laws because ACP is not a generalized system it was only available to former African colonies and specific colonies of Pacific Africa and the Caribbean. The U.S wanted to do something for Africa so we got a WTOA, but the Europeans didn’t want that so the Europeans told the ACP countries that they either had to sign a Reciprocal agreement (not outlawed by the WTO), or they would lose preferences. Based on that history the Europeans were able to sign with the Caribbean countries possible because there were no Least Developed Countries (LDC) in the Caribbean, except for Haiti that had its own special interests, but they couldn’t sign with Africa!
Africa has two types of countries; they have those which do rely on the special preferences of loamy????, but there is another group of countries and I probably should have been done with that in my introduction, which are called Least Developed Countries, counties with a General Per capita income of less than 1400 bucks, they had to have a certain low on the human value poll and so on. There is a way to measure it. You had to provide duty free treatment for all LDC’s countries. So, you end up with this problem, on one hand you have some African countries that are going to lose market access but are not least developed. The Europeans end up saying “if you do not sign, they put a date on it- 1st October 2014- , if you do not accept agreements with us by that date you’re going to lose preferences.” So, we feel “wait a minute, that’s crazy. Since you are a common market and you hope to be a single market, you are moving in the right direction, you are partial already; why are you telling Africa it has to sign an agreement ahead of time?” We are saying to the Europeans; “forget it, you wait- give Africa ten years to form their Customs Union or their Free Trade agreement and then then they can negotiate with you as a group.” The Europeans are saying, no, we have to finish by this given date. We asked for a WTO weaver, we got it, they never asked for a WTO weaver.
Part of the tactical approaches that you’re looking at to further the Trans-Atlantic South Partnership is reconstructing the market access provisions, promotion of U.S investment in Africa and Regional integration. Can you tell us a little bit more about those approaches?
One idea I would like to put on the table is that we should renew AGOA; renew the preferences permanently but indicate that after a ten year period, if they are to continue, there has to be some kind of Reciprocity when you negotiate with Africa as a whole. I said when we began, that some things you can say are AGOA measures and some things you could say are beyond AGOA. I always like to say you need a coordinator, I don’t care if it’s with AGOA or not, that’s just wording. [They have various committees]. I don’t care if we have separate legislation or not, you may need it, it’s the requirement of the system, every committee has legislation, every committee has its jurisdiction. But what I do care (about) is that you coordinate this on the top. Maybe by the speaker himself, maybe by ranking leader of the majority, I don’t know. Maybe you do it with the Committees themselves, with the Chairman and the Ranking Member, the ranking member means the person from the other party that has the leadership role. Republicans control the House so every single chairman is Republican, and the Ranking Member would someone the Democrats have chosen to kind of be the alter-ego, so that’s what I mean by Ranking Members. So, again, what we have basically argued is even though there are different pieces of legislation they should be coordinated; either by the Committee Chairmen as a group or by the Speaker of the House, open issue and so on.
The U.S doesn’t have much money, but we do have off budget funds which we call Export/Import Bank. OPIC- Overseas Private Investment Corporation, we have these funds and the U.S Trade Development Agency. OPIC is the most exposed to Africa. What we are basically saying is what can we do in our program to increase the amount of money that can be loaned and the effectiveness of that money. So that is one important ingredient. Another agreement I mentioned is that we don’t want the Europeans to keep pushing their Free Trade agreement because they will get a Free Trade agreement other countries will be piling on. I mean, you’ll never have to have an independent African trade agreement anymore. So part of our proposal is that you work within the T-TIP framework and you try to develop agreements like I said earlier.
We have a big emphasis on working with equity funds, because we think that that is where the investment is coming in from for Africa. That is what now collects money from small to medium sized investors, so we have that possibility as well. We have been arguing very specifically for agriculture. There are three products that Africa produces in great number which are currently subject to Tariff Rate Quotas. Which means that if your traditional supplier, within the traditional amounts, you can chip inside the Tariff Rate Quota. However, with your new supplier you have to chip outside the Tariff Rate Quota. The problem is, and I will use tobacco as an example, that in tobacco if you are an AGOA beneficiary you ship for nothing under the Tariff Rate Quota. If you have to pay a duty it is about 6%, meaning for people that don’t have AGOA benefits but they get it. But if you’re an importer, like an African importer that doesn’t have a tradition of being in the market, they don’t a market share of the Tariff Rate Quota, they have to pay a duty of 350%. So, that is a very specific example, the same is true for sugar, the same is true for ground nuts or peanuts. What we would like to see happen, is that we would like these products of interest to Africa to be granted duty free treatment just as if they were an LDC.
Would you like to make any comments about Regional integration?
We touched a little bit on it earlier because we did mention the need for the Europeans to give up on reciprocity, to try to push the Europeans, and to try to energize the Africans to finish these agreements. One thing people have to realize is that there are two things involved when it comes to Regional integration, one is easier than the other: The first thing is the absence of obstructions –you can’t have tariffs every ten minutes along the way- you can’t have arbitrary import charges you’re not expecting to be levied on you. So we have been pushing for negotiations that eliminate the tariff barriers between countries and addresses the non-tariff measures. We include this as an AGOA approach. The challenge is the EU is asking for Reciprocity. We have argued, and we are suggesting, is that the way you solve the problem is like I said that under my task you negotiate under the context of the T-TIP a common approach to Reciprocity in Africa with the Europeans. And that is how you begin to solve the problems; that is what we are recommending.
We have spoken a little bit about the shortcomings of AGOA and the tactical approaches that Manchester Trade plans to implement; I was wondering if you could comment about any foreseeable challenges?
Well, we have got a lot of challenges: number one is the Congressional agenda which is always full, so it is very hard to include these ideas. Number two is the fact that some people who have current benefits are nervous they are going to lose them even though there are only four or five countries who export apparel under AGOA. South Africa is the only country that is in many different product groups which is representative of its development level. On the whole, countries are not benefiting from AGOA. It’s not bad, it delivers a message to the importance of the private sector, it delivers messages for good governance (you have to have them in order to be eligible), but it’s not generally as effective as Chinese program. So we are trying to convince people that they should push it.
I don’t know how the AU is going to come out, but I think what is very important is that President Obama, on two occasions, while he was in Africa, talked about the need to improve AGOA. So, that is already on the agenda. The question is what ideas do you need to improve it, and I think that is what will be researched and available well before. When President Obama was speaking to the Africa press or the African young businessmen, he looked at Froman, his USTR (United States Trade Representative), and said “Mike over there is going to begin this process of the AGOA forum.” The AGOA forum begins in August 2013 in Addis, and that is why it is so important that the Africans get together a position and they propose it in that particular meeting.
In your opinion, do you see a bright future for the African Union playing a positive role in this?
Yeah, because the movement, the evolution is from small to larger groups, that is what we saw happen in Europe. A lot of resistance was in the beginning when they had six members. Now, it has 28 members and growing and certainly with power. There are always all kinds of fringe issues but there is no question that the AU will increasingly become more enhanced.
You mentioned that you are particularly interested in agriculture; why that sector more than any other?
Well, I have two answers for you: first, even though by 2023 the actual population in the rural areas will is going to be less than the population in urban areas, there is this movement going on and it does call for increased productivity in the agricultural section because we have less people working there and yet there will be more demand. That is why I think we need to keep on focusing on agriculture. Two, you have these three strange items which because of the Trans operation of the TRQ system Africans are denied benefits. That does not make sense. Obviously AGOA is designed to modify, during a period when something happened domestically, but there is no right to just say I can permanently give it to you. So that is what are arguing for. The U.S hasn’t said “no, they won’t do it.” We are just arguing and we will see what happens.
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