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70 Finance and economics The Economist December 9th 2017
2 are toothlessagainstChina’s“state-capital- Trade in Africa gan in 2015, aimed at forming the CFTA by
ist model”, which is far more influential the end ofthisyear. In contrastto the WTO,
than was envisaged. A case working its Africa, unite! African trade talks are makingprogress.
way through the dispute-settlement sys- At a meeting on December 1st and 2nd
tem concerning China’s treatment by its in Niamey, the capital of Niger, African
biggest trading partners (see box) high- trade ministers agreed on final tweaks to
lights an old tension between the WTO’s the text. Headsofstate will probably sign it
KAMPALA
most important members. Acontinent-wide free-trade area inches in March, once an accompanying protocol
If the frustrations are familiar, the strat- on goods has been concluded (agreement
egy is not. To brandish a stick at China, the towards completion on services has already been reached). But
previous American administration sued it FRICA must unite,” wrote Kwame trade barriers will not tumble overnight.
at the WTO for subsidising export indus- “ANkrumah, Ghana’s first president, The CFTA will come into force only when
tries. Dangling a carrot, it negotiated a big in 1963, lamenting that African countries 15 countries have ratified it. Even then, the
regional trade deal with “21st-century sold raw materials to their former colonis- deal only sets a framework, within which
rules”. This administration is all stick and ers rather than trading among themselves. some details oftariffreduction have still to
no carrot. Asked whether she thinks the Hispan-African dream neverbecame reali- be worked out. Separate negotiations, cov-
Trump team wants to destroy the system, ty. Even today, African countries still trade ering competition, investment and intel-
Ms Malmstrom says: “I don’t know.” Mr twice asmuch with Europe astheydo with lectual-property rights, are yet to begin.
Trump may thinkthat the system is so bro- each other (see chart). But that spirit of un- Nonetheless, technocrats are keen to
ken that it must be smashed before it can ity now animates a push for a Continental talkup the agreement. ChieduOsakwe, Ni-
be fixed. His approach risks making that Free-Trade Area (CFTA), involving all 55 geria’s chief negotiator and chairman of
view self-fulfilling. 7 countries in the region. Negotiations be- the negotiatingforum, sees it as a “massive
historical opportunity” to escape the colo-
nial legacy. Some 82% ofAfrican countries’
China at the WTO
exports go to othercontinents; they consist
Market failure mostly of commodities. By contrast, over
half of intra-African trade is in manufac-
tured products. Supporters of the deal ar-
gue that it will create larger, more compet-
The dispute overChina’s status as a non-marketeconomyheats up
itive markets, helping to ignite Africa’s
OTall trade tension is made in Amer- temporary and expire after15 years. But stalled industrialisation.
Nica. China is suingthe European as the deadline loomed and the share of African leaders also have an eye on re-
Union at the World Trade Organisation imports covered by anti-dumpingduties lations with the rest of the world. No lon-
(WTO). Hearings began this week. China rose (see chart), the EU and America ger able to count on unilateral trade con-
thinks it deserves treatment as a “market balked at the idea ofgivingup their trade cessions from rich countries, they are
economy”. The EU, supported by Ameri- defences. On December4th the EU ap- instead being forced into reciprocal deals,
ca, disagrees. As they lockhorns, each proved new rules to drop the label of which involve more give-and-take. A
side sees the otheras breakinga promise. “non-market economy”. But it will still strong CFTA would give Africa extra
China’s entry into the WTO in 2001 apply third-country pricingon a case-by- weight in talks with Europe and America,
was part ofa grand bargain. In return for case basis. Mei Xinyu ofthe Chinese argues George Boateng ofthe African Cen-
market access, it promised economic Academy ofInternational Trade and tre for Economic Transformation, a pan-Af-
reform. The deal laid out unusually strict Economic Co-operation, an official body, rican think-tank.
terms. Any members’ exports can face calls this “a trickthat avoids calling China Yet political pressure to rush negotia-
anti-dumpingduties ifsold too cheap. a non-market economy”. tions may weaken the final text. The CFTA
But China’s accession agreement allowed The legal dispute will take years. On aims to eliminate tariffs on 90% of pro-
others to erect strongerdefences, and November30th the Americans pub- ducts over five to ten years, which is less
assume that it was a non-market econ- lished theirlegal arguments in support of ambitious than it sounds. Much intra-Afri-
omy when calculatingthe “fair” duty— the EU. They outlined historical instances can trade is already between members of
usingthird-country prices forcompari- where economies in transition were smaller free-trade areas, such as the South-
son. In practice this meant highertariffs. treated as non-market economies. When ern African Development Community.
China expected this treatment to be Poland, Romania and Hungary acceded, The rest is concentrated in a small range of
they got the same non-market treatment goods. Peter Draper ofTutwa Consulting, a 1
as China. As longas WTO members
In the dumps show that Chinese prices are distorted,
Share of imports from China subject to they say they are within theirrights to Continental preferences
anti-dumping duties, % referto different ones. Africa, merchandise exports by region, 2016, $bn
The Chinese say that there is no Primary commodities Other
10
United States agreed definition ofa market economy, 0 30 60 90 120 150
8 and dispute the EU and American in-
terpretation oftheiraccession agreement. Europe
6 Whateverhappens, at least one large
memberofthe WTO will be extremely Asia
4
European Union upset. “IfChina loses, the WTO will lose Intra Africa
2 its fairness,” says Wei Jianguo at the
China Centre forInternational Economic
0 Exchanges, an official think-tank. That is Americas
1990 95 2000 05 10 16
an awful lot ofpressure to put on a panel Oceania
Source: Peterson Institute for International Economics
ofjudges in Geneva.
Source: UNCTAD