Did External Barriers Cause the Marginalization of Sub-Saharan Africa in World Trade?

March 1996 Sub-Saharan African countries' policies contributed more to that region's 30-year decline in world trade than did OECD trade barriers, but policy options available to the OECD countries could improve the environment for African exports. Highest priority should be given to policies favoring African agricultural exports whose growth could greatly alleviate the extreme rural poverty in Africa. OECD trade barriers were not a significant factor in Sub-Saharan Africa's declining position in world trade between the mid-1950s and 1990. Far more detrimental were the African countries' own policies, including those affecting transport costs. It is essential that African countries adopt reforms aimed at achieving cost competitiveness. Anti-competitive cargo reservation policies in many African countries help inflate international transport costs, which eat up a disproportionate share of African countries' foreign exchange earnings. Deregulation of international shipping and the promotion of competitive shipping services, together with improvements in transport infrastructure, could significantly reduce freight costs. But policy options available to the OECD countries could also improve the external environment for, and competitive position of, African exports. Policies involving preferences should be viewed as a step toward general trade liberalization. Highest priority should be given to policies favoring agricultural exports. Among policy options the OECD countries should consider: ° Regional arrangements such as the European Union and the North American Free Trade Agreement discriminate against African and other developing countries. Policy initiatives are needed to at least place them on an equal basis with OECD members in these arrangements --- especially for labor-intensive products. ° African exports are concentrated in primary commodities. When further processing is suitable, OECD preferences should be extended to all stages of the processing chain. ° Given the extreme rural poverty in Africa, measures are needed to reduce protection against African food exports. One option would be to extend (ceiling-free) generalized system of preferences for tariffied agricultural nontariff barriers.
° Ceilings and quotas should be eliminated from industrial-country preference schemes to be made consistent with unrestricted intra-OECD preferences extended under free trade agreements. ° OECD countries could also provide technical, finance, development, and policy analysis assistance aimed at alleviating Africa's international transport problems, especially for landlocked African countries. This paper --- a product of the International Trade Division, International Economics Department --- is part of a larger effort in the department to identify barriers to developing countries' exports and assist in their removal.