Monday, July 24, 2006

Mitchell Calls for Free Trade in Africa

Shadow International Development Secretary Andrew Mitchell is making a major speech tonight to the Globalisation Institute, in which he lays out a vision for a pan-African trading bloc, with free trade between all African nations. You can read the speech HERE.

Mitchell reckons such a move could help to lift millions of people out of poverty. He pointed to figures showing that while OECD countries cut tariffs from an average of 23.7 per cent to just 3.9 per cent in the 20 years from 1983, sub-Saharan Africa only cut tariffs from 22.1 per cent to 17.7 per cent. African countries could get a massive economic boost by liberalising their trading arrangements, with gains up to three times as large as any that could result from the Doha round of world trade talks. Andrew Mitchell says:

"Astonishingly, many African countries impose tariffs on the import of medicines, and even Tanzanian-made anti-malaria bed nets.. These are, effectively, killer tariffs. For most Africans, it is harder to trade with those across African borders than with distant Europeans and Americans. In 1997, the World Bank found that countries in sub-Saharan Africa imposed an average tariff of 34 per cent on agricultural products from other African nations, and 21 per cent on other products. The results are clear. Only 10 per cent of African trade is with other African nations. Meanwhile, 40 per cent of North American trade is with other North American countries and 63 per cent of trade by countries in Western Europe is with other Western European nations. While North America and Europe have been getting richer through trade, Africa has been left standing at the touchline. The world has lifted more people out of poverty in the past 50 years that at any point in human history - but Africa is the continent that is being left behind. The lack of intra-African trade is missed opportunity. Africa's barriers are seriously undermining the continent's prospects for development. They are preventing specialisation between African nations, hindering productivity growth, and clogging up Africa's wealth creation engine."

I admit that this subject is not one I'm an expert on, but from what I pick up on the political grapevine, Andrew Mitchell has made quite an impact in this portfolio. It always used to be a cinderella portfolio but in recent years has crept up the political agenda for all parties.

PS Apologies for the lack of posts today. I did send a good one (or so I thought) from my Blackberry this morning on Prescott and Levy, but somehow it got lost in cyberspace.

14 comments:

Peter from Putney said...

"PS Apologies for the lack of posts today. I did send a good one (or so I thought) from my Blackberry this morning on Prescott and Levy, but somehow it got lost in cyberspace."

Iain - yep, shame you lost this piece, I know the feeling!
I wondered whether, in relation to Levy element of your story, you were picking up on the "source" quoted in today's Times,that the Noble Lord read from a prepared statement and then said "no comment" to everything he was asked.
I'm sure I read at the time that he was anxious to assist the police enquiry to the fullest extent possible.

Expat said...

Let's have the Pre$₤a and $leazey story

Anonymous said...

It's great that Mr Mitchell has so much time on his hands that he can spend his time fretting about intra-African trade.

I'm sure the corrupt dictators will be suitably grateful for his words of wisdom.

Of course, it would be nice if the rest of the Shadow Cabinet showed some interest in the UK regaining the right to arrange its OWN free trade links.

Why is free trade fine for the poor Africans, but out of the question for English people?

There must be a jolly good reason, because no Tory PM has seen the virtues of free trade for at least 40 years.

mise said...

Umm!
Please resend your lost post, Iain.

Thanks!

John said...

Sucking up to your old boss's manager, eh Iain?

I follow development economics closely and I have never seen any indication that Mitchell sees much of the nuance of it. I've never heard him say anything remotely off the Washington Consensus.

At the same time, the development economic community has entirely woken up to the fact that free trade + liberalisation are not innately good.

The processes of creative destruction are a lot more destructive than they are creative in the developing world.

Benedict White said...

What a good idea, set up a large free trade zone in Africa, promoting intra African trade, and giving them a larger sway at the WTo as their trade goes.

As Africans get richer they will also be less willing to accept bad governance.

Great ideas with great imagination.

I was also so impressed with Tobias Ellwoods comments on opium poppies in Afghanistan taht I worte a peice on it in my blog.

Iain Dale said...

John, I think Andrew would be the first to agree that that is something I could never be accused of!

Verity said...

anonymous 9:05 pm gets my vote.

Perhaps this Mitchell would like to engage in free trade (as in free of the shackles of the EU) for his own country before he bounces over to Africa to solve that vast continent's problems.

Large hint: countries are best acting and trading independently. The vastness of "Africa" is not manageable by you or your lovely ideas, Mr Mitchell. It is up to us to open our markets and up to Africans in all the countries on that continent to try to take advantage of this market - once we've opened it despite the Union of European Socialist Republics.

James Schneider said...

This sounds like very good stuff. This could save literally millions of lives and help prevent war in sub-saharan africa.
Its perfect for Cameron: its Conservative (trade not aid), its compasionate, and its liberal.

strapworld said...

Living in the third world, as I do, it would be wonderful if this Government would try to do something for Devon and Cornwall.

Shipbuilding is grinding to a halt in Appledore, through a disgraceful, almost corrupt, action by the Scottish Executive, whereby a contract which had been won was withdrawn because they wanted the scottish shipbuilders to get it!

In Cornwall over 800 jobs, more indirectly, because of the French company Imerys closing down their China Clay operation. So having made clay mountains all over the St.Austell area they throw these good people out of a job.

Of course they do not worry because Labour voters here in the third world are as rare as wild wallabies!

Mitchell, and this EU controlled Government, should remember that charity begins at home.

Praguetory said...

John said " I follow development economics closely and I have never seen any indication that Mitchell sees much of the nuance of it...

... the development economic community has entirely woken up to the fact that free trade + liberalisation are not innately good."

You've just attacked, you haven't contributed at all in this post. Presumably you can give us drongos a clue what the nuance is? Observers that I respect such as Bhagwati suggest that it is developing countries that benefit most from free trade.

John said...

"You've just attacked, you haven't contributed at all in this post. Presumably you can give us drongos a clue what the nuance is? Observers that I respect such as Bhagwati suggest that it is developing countries that benefit most from free trade."

TBF - I don't think the comment on this blog is the right place for development debates!

You are right, they do. But the institutions you need in place before any of this can work are very fundamental.

You need to be careful to take barriers down only in a manner which the countries can take. You need to liberalise slowly and appropriately and to respect the wider spontaneous order. The East Asian Crisis was exacerbated by the Washington Consensus's insistence on total banking liberalisation in countries without the capacity to deal with it.

Much of the East Asian Crisis was precipitated by inapporporiate banking liberalisation forced through by the IMF.

I've always assumed there are no development economists at CCHQ - I would be interested to know if my hunch is correct.

Praguetory said...

John - thanks for the fuller post. I do appreciate it. Now that I understand your position more, it doesn't quite sound like your views and Mitchell's differ greatly. I agree that this may not be the place for a detailed development economics debate. And neither do I believe that development economists have all the answers.

Neil Craig said...

I see nothing wrong with a Tory making remarks about how to make Africa more successful. Improving Africa this way (as opposed to just spending money) doesn't hurt Cornwall - economic growth is NOT a zero sum game.

I would also suggest that we should encourage the growth of a single currency, backed by us but run on non-inflationary rules. Some years ago John Major proposed that all EU countries should allow each other's currencies to flow freely (in the optomistic hope that the £ would see off all the foreigners). We are in a position to insist that an AfroThaler be allowed to circulate freely. Since so many African countries have triple digit inflation I think the competition would be slight. This would, in turn, allow ordinary Africans to accumulate savings - thus making real capitalism possible.