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AFRICA would benefit from expanded trade with other developing economies and ought to widen its focus in world trade talks, an International Monetary Fund (IMF) economist said in a report released recently.
The research policy paper "Africa in the Doha Round" said those representing Africa in current World Trade Organisation (WTO) talks may be too fixated on accessing rich country markets.
"African negotiators may have overlooked the potential market access gains in developing countries, where trade barriers remain relatively high and demand for African imports has expanded substantially," said IMF Africa Department senior economist Yongzheng Yang, who wrote the report.
Ministers from the WTO's 148 member countries head to Hong Kong this month to seek a deal in what is known as the Doha Development Round of trade talks.
The negotiations are expected to hinge on the issue of rich- country agricultural subsidies, which African producers say hurt their exports of cotton and other goods. Agriculture accounts for more than a quarter of Africa's exports.
In the lead-up to the Hong Kong talks, Africa has sought to secure better access to Western markets with limited attention to dismantling the continent's own trade barriers, said the staff paper, which does not represent the IMF's official view but is meant to spark discussion within the fund.
While industrial countries remain Africa's dominant export destination, the paper said, Africa ought to pay more attention to China and other fast-growing developing partners who took in 30 per cent of African exports in 2004.
African nations are also importing increasing amounts from the developing world, the IMF paper said, noting growing purchases from China.
"The growth in Africa's imports from developing countries will increasingly benefit its economies in terms of cheaper consumer and intermediate goods, increased technology transfer, and inflows of foreign direct investment," Yang said.
Preferred access for some African products in Europe and the United States -- such as special status for Mauritius sugar and Lesotho garments -- has helped in some cases but has limited utility, Yang said.
"To promote overall trade, African countries need to strike a balance between seeking or retaining preferences and undertaking further domestic reforms, and between improving market access to developing and to developed country markets," he said.
The World Bank estimated last October that $287 billion could be gained from global trade liberalisation, which would lift 66 million people out of poverty. Developing countries would reap $86 billion of the total gains, the lender said.
The IMF paper said African agricultural exporters could expect "large" benefits from market openings under a Doha deal but noted the continent's agriculture importers could feel pinched from higher prices after liberalisation.
Yang urged African nations to focus on opening up intra-continental trade, and breaking down national barriers.
"If many African countries avail themselves of a 'round for free,' their arguments for greater market openness in industrial countries would be less persuasive," Yang said.
"A strong commitment to liberalise their own trade would make African countries' position in the negotiations much stronger," he said, adding such a move would also give Africa leverage to seek more trade assistance from rich donors.
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