Participation of African member states in the World Trade Organisation (WTO) multilateral trading system

Abstract

The core purpose and goals of the World Trade Organisation (WTO) are to enhance growth by allowing each country to trade freely according to its comparative advantage. The other stated main objectives of the WTO are: raising standards of living; providing full employment; reduction of tariffs and non‐tariff barriers; and the elimination of discriminatory treatment. According to the current orthodox economic view, trade openness is essential for growth: countries that liberalise their imports and orientate production towards exports are assumed to have faster growth than those that do not, and the faster the rate of opening, the greater will the prospect be for development. The emphasis on trade liberalisation and export orientation in the past ten years following the adoption of the Uruguay Round has led to phenomenal growth in world merchandise trade, which has grown consistently faster than output. The orthodox view approach is today expanded and modified with the view that liberalisation measures are not sufficient by themselves and should be accompanied by other factors such as sound macroeconomic policies, good governance and a modern infrastructure. Africa's dependence on primary commodities as a source of export earnings has meant that it is vulnerable to weather conditions, market vagaries, and price volatility, arising mainly from supply shock and the secular decline in real commodity prices. The attendant terms of trade losses have exacted heavy costs in terms of incomes, indebtedness, investment, poverty and development. Therefore, the basic approach that liberalisation has a direct link to economic growth and should be undertaken as fast as possible is being questioned and has been challenged by empirical studies in recent years. The relevant studies have shown that there is a lack of relationship between the degree of trade liberalisation and the rate of growth. The emerging paradigm accepts that there are possible costs, as well as potential benefits of trade liberalisation to a particular developing country, depending on the conditions in that country, and the type of liberalisation undertaken. The other impediments and weaknesses identified as affecting effective, efficient and economical participation of African members in the WTO include rapid liberalisation as potential source of fiscal instability; general absence of peace, security and democracy; globalisation and lack of competitive ability; supply‐side constraints; high export concentration ratio; problems of implementation; exclusion and/or marginalisation from knowledge‐based economy; and lack of capacity. The Doha Development Round was initiated to attend to, and address, these problems, and it is still too early to predict the outcome. African countries need to look for African solutions to their socio‐economic and political problems, adopting transdisciplinary approaches in the context of the African Renaissance paradigm.