Africa-France summit ends with push to overhaul key trade rules

The global trade rules largely dictated by the developed economies have been challenged in the just-concluded Africa Forward Summit, where Heads of State from the continent insisted they must be reviewed.

They say the global economy runs on unilateral and uncoordinated rules by the West, which depresses commodity prices to the disadvantage of the African countries.

This is through overcapacity, where developed economies get to buy raw materials from African countries only to flood the same markets with cheap products, which then stagnates the continent’s bid for industrialisation.

They emphasised that developed economies have a responsibility to reduce this imbalance, which can be done through revising their domestic policies.  A call to action from the Heads of State and Government of African countries who took part in the summit details how these rules have stunted the growth of economies on the continent, which is viewed mainly as a source of raw materials.

It is this perception that African countries seek to change, with Kenya tasked to present the declarations of the Africa Forward Summit to the upcoming G7 meeting in Evian, France, slated for June this year.

Drafted rules

The G7 is made up of some of the world’s major economies: France, the United States, the United Kingdom, Germany, Italy, Japan, and Canada. The African Heads of State say that despite the economic potential seen in the continent’s population and richness in natural resources, developed economies have always drafted rules and regulations that only see Africa as a source for raw materials and not a participant in the growth of the global economy.

The leaders acknowledged that the challenges of the continent are exacerbated by the consequences of global macroeconomic imbalances.  “The persistent reliance on raw material exports in international trade (hydrocarbons, cocoa, vanilla, coffee, and minerals), increasing sovereign debts, the growing development financing gap, and the limited diversification of African economies constitute a source of vulnerability,” the Heads of State say in their Call to Action.  They noted that this, if left unaddressed, would see excessive global imbalances across the world’s major economies further deepen this vulnerability.  “Indeed, we observe that structural overcapacities, together with distortive non-market policies and practices, hinder the industrialisation and the economic development of exports from the African continent,” their statement adds.

The statement adds that the proliferation of unilateral and uncoordinated trade measures weighs on the continent’s ability to integrate into the global economy.

 It explains that these overcapacities artificially depress global commodity prices, undermine the competitiveness of nascent African industries, and discourage foreign direct investment in productive sectors across the continent. This then hampers structural transformation and job creation.

“These dynamics also contribute to elevated borrowing costs, constrained fiscal space, exchange rate volatility, and reduced access to affordable long-term development finance for African economies,” the statement adds.

The leaders are pushing for a rules-based, non-discriminatory, fair, open, inclusive, equitable, sustainable, and transparent multilateral trading system. This system should address overcapacity, curb distortive subsidies, and ensure fair market access to grow the continent’s industrialisation bid.  

The leaders insist on the need to promote African regional value chains, which are capable of creating decent jobs, fostering technology transfer, and strengthening the continent’s industrial resilience.

They put major economies on the spot, saying that if they tweak their domestic policies, the global economy can be balanced.

“We urge the world’s major economies to recognise their shared responsibility in reducing excessive imbalances, and to move towards decisive commitments to enact the appropriate domestic policies in a coordinated manner, aiming to rebalance their growth models in a way that supports a balanced and sustainable growth for all countries, including emerging and developing countries, while decisively reducing global macroeconomic imbalances,” the statement says.

The Africa Forward Summit, co-convened by France and Kenya, while being the entry of France into the Anglophone markets, saw leaders on the continent, among them President William Ruto, use the platform to agitate for better trade, political, and financial systems.

Among them is the push for better ratings of the continent’s economies when seeking funding from multilateral institutions such as the International Monetary Fund and the World Bank. President Ruto maintained his stand that rating agencies do not take into account the continent’s natural resources, even as he pushed for domestic resource mobilisation and the creation of a continental credit rating agency as an alternative.