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Wednesday, 8 April 2009

Pushing for freer trade (and North- South Project)

A unexpected article from the WTO Director General Pascal Lamy :

Open trade is critical to Zambia’s future, Pascal Lamy, The Post (Subscription), Commentary :

The world is facing an economic crisis, the severity of which we have not seen for a long time. One inevitable victim of this crisis is trade, which is projected to contract by 9% in 2009, the largest since World War II. And this situation could deteriorate further if drastic measures to keep trade open are not taken.

Developing countries and Africa in particular cannot afford for one of the main engines of their growth to stall. There may not yet be a risk that this global economic slowdown will spark high-intensity protectionism like that of the Great Depression in the 1930s. But there is definitely a risk of murky protectionism which could reduce the impact of current measures to stimulate the economy.

This was the message from African leaders at the recent G20 summit in London. Leaders pledged to resist protectionist measures and committed to support efforts by the WTO to monitor the trade measures adopted by countries in response to this crisis. They also pledged to work to rapidly conclude the on-going negotiations under the Doha Development Round, which could inject a sizeable stimulus to the world economies.

Another by-product of the current crisis is the decline in liquidity for trade finance which is impacting on African exports and imports. The fact that around 90 per cent of global trade requires trade finance illustrates the severity of a continued decline in this area. Hence the decision by the G20 to commit $US 250 million in trade finance support over the next two years is a welcome move. It should alleviate the situation of many African companies, in particular small business which have been affected by the drying up of trade credit. I am therefore encouraged that the wok by the WTO in cooperation with the World Bank and with the African Development Bank in this area is starting to bear fruits.

G20 leaders also pledged to maintain their Aid for Trade pledges, despite the economic downturn. This comes timely, as Zambia hosts this week a High Level Meeting on the COMESA-EAC-SADC North-South Corridor, a tangible example of Aid for Trade in action. This meeting is the first in a series of regional events. It will give a snapshot of this region which will feed into the second Global Review of Aid for Trade to be held at the WTO in July 2009.

The joint COMESA, EAC and SADC initiative is a model of what good cooperation among neighbouring countries and the donor community can achieve. The North-South Corridor will link the copper belt region of northern Zambia and southern Democratic Republic of Congo to the port of Dar es Salaam in Tanzania and the ports of southern Africa. The end result will be shorter transit time and lower transport costs for Zambia and its neighbours which will no doubt serve to enhance regional competitiveness.

Aside from building roads, ports and telecommunications that link regional and global markets, Aid for Trade aims at helping developing countries develop trade capacity. For some it means developing capacities to negotiate trade agreements more effectively. For others it means assistance to produce goods and services which can meet international health and safety standards. For others it means assistance to diversify or to move up the value chain. For all it means translating trade opportunities into realities.

The Aid for Trade agenda is the necessary complement to the Doha Development Round. Zambia has been a strong supporter of the Doha Round and it has fought hard to ensure that the interests and aspirations of the world poorest countries are effectively addressed. Zambia has also fought hard to ensure that donors keep their Aid for Trade promises. It is therefore no surprise that this week event takes place in Lusaka.

At this weeks event we will be reviewing progress made by African countries in the region in identifying projects and priorities. We will also ensure that Aid for Trade resources, which have grown by around 20 per cent since 2006, keep flowing.

Keeping the Aid for Trade promises and concluding the Doha Round would send a strong signal of the collective readiness to address the challenges of the current crisis, which is hitting particularly hard African countries.

Rich in natural and human resources, Zambia has great economic potential. Keeping trade open and ensuring targeted Aid for Trade would mean opening many more doors for Zambia's trade, and a good opportunity for growth, progress and more jobs in the future.


  1. Imports can be as useful to developing countries as exports are, according to this article:

  2. Another example I can think of are fuel imports, because fuel is part of the cost of production for many industries. So cheaper fuel imports will make local goods produced more competitive by lowering their price.

  3. I have argued for eliminating import and export restrictions on maize in Zambia. Its an economic no brainer.

    The issue is more about "controlled import" and nurturing "strategic industries".

    No country should just rely on food imports even if they were cheaper because it makes itself vulnerable in terms of national security.

    There are things that a nation must produce on its own.

  4. East Africa's common market begins:

  5. Free Trade Area for East, Southern Africa Making Progress:

  6. SACU revenue sharing:


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