New cuts to US agriculture subsidies unlikely to benefit African farmers, says US Trade Rep

By Gemma Ware

Posted on June 9, 2011 13:21

In a Q&A with ahead of this week’s African Growth and Opportunity Act (AGOA) summit in Lusaka, Zambia, Ambassador Ron Kirk, US Trade Representative said African farmers need more than just cuts to US agriculture subsidies.

The Africa Report: How important is AGOA to the US in the current trade environment?

Ron Kirk: It has substantially increased trade between the United States and Sub-Saharan Africa, but when you dig into that though, we are a little bit sobered by the reality that 90 per cent of the commerce under AGOA is still petroleum-related. Of some 6,000 products that are eligible under AGOA our utilisation rate is probably less than 10 per cent. The challenge we think is an opportunity to help many of the AGOA eligible countries diversify away from oil and begin to look at more value-added products and manufacturing in which you have an opportunity to really spur job growth that can really help not only increase exports but also create jobs and attack poverty.

The Africa Report: On 31 May the House Appropriations Committee agreed a deal to cut back on farm subsidies in the US, something African producers claim have been a huge burden on them. Is this a signal of something larger to come and is it good news for African producers?

Ron Kirk: It speaks of the reality of the challenge that we have in the United States to address our budget deficit and the willingness of this administration and our Congress to examine everything on the table. The current rise in agricultural commodity prices around the world created an environment that gave many in Congress reason to question whether the level of assistance to agriculture production was as necessary as its been in the past.

We understand that for many in Africa see US or European Union agricultural policy as acting to the detriment of poor farmers, but the reality is that the overwhelming majority of poor farmers in the world are agrarian farmers. They operate on less than a hectare of land, they produce just barely enough to feed their families.

Even if the United States should hypothetically do away with all agricultural export subsidies, its hard for me to conceive a world in which one farmer with a hectare of land is all of a sudden going to become a global competitor, particularly if we can’t address the dire need for improving infrastructure within Africa.

In order to successfully compete globally, you have to have a strong ports system, a strong aviation system, a strong railroad and transportation system to get goods… from farm to market. The sad reality is that in many countries that is lacking.

The issue of the United States attacking export subsidies is just one part of the equation. In order to strengthen the export competitiveness of farmers in Africa, I think we have to take a more holistic look at all the other investments that are required to make that leap.

The Africa Report: AGOA is now in its eleventh year. Are African states best served by putting their efforts into these types of bilateral agreements, rather than spending a lot of energy on multinational trade negotiations such as the Doha round or even the long-delayed delayed EPA agreements with the European Union?

Ron Kirk: I think countries that within Africa just like countries around the world including the United States and many in Asia all understand that it is a rare opportunity to have a game-changing multi-national trade pact like the DOHA round, and that if we could work collaboratively to find a way to bring that to a successful conclusion, it has the opportunity to be extraordinarily impactful for many of the least-developed countries as well as liberalising trade around the world.

But as a practical matter, I think that a number of countries have realised that trying to find consensus among 150 of the most diverse economies in the world can be devilishly challenging, [and] can take an extraordinary amount of time. We’re now entering our 11th year of the DOHA round. Against that backdrop, when you have the opportunity to create new markets whether its through the Economic Partnership Agreements with the EU, whether its through preference programmes with the United States as we provide through AGOA – as we say in United States, sometimes half a loaf is better than none at all.

The Africa Report: If Doha were to be signed, would AGOA be superseded?

Ron Kirk: AGOA is not a free-trade agreement. AGOA is essentially a unilateral decision by the United States to extend trade preference to 37 Sub-Saharan African countries. It is our commitment to transform our relationship with Africa to a more economic level and an aid partnership. Right now the AGOA beneficiaries have no current responsibility to us legally. It’s a decision of our Congress and our administration to grant preference to about 95% of what comes from those countries to the US.

If we are able to conclude the Doha round, those would be binding commitments of a permanent nature of all of the members of the World Trade Organisation. And to some degree, you could argue that it might supersede AGOA depending on the will of our Congress and what the provisions of Doha are in terms of granting preferences to many of the countries in Africa.

For more on AGOA, read an op-ed by Johnnie Carson, US Assistant Secretary for African Affairs

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