We Must Go Market Hunting

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By Wezi Tjaronda WINDHOEK Although a reduction of domestic support by the European Union will have a lowering effect on the prices of agricultural products and negatively affect Namibia’s exports, the country will have to look at other more sustainable markets. Namibia, although not a major agricultural exporter in the world, has agriculture as its significant export earner. Its position to the WTO Ministerial meeting held in Hong Kong last December was that there should be modalities that would ensure that allowable domestic support levels should be cut in order to prevent distortions in trade. The domestic support in developed countries such as those in the EU bloc, which provides the highest subsidies, has kept prices of its respective products artificially high, thus making Namibia’s meat exports benefit from the situation. Messag Mulunga, a WTO Desk Officer in the Ministry of Trade and Industry, said yesterday if the Hong Kong declaration were implemented, Namibia’s exports of agricultural goods to the EU markets would no longer enjoy premium prices. He told a public dialogue on the ‘Implications of the Hong Kong Ministerial meeting for Namibia and Sub-Saharan Africa’ that even though this would affect Namibia negatively, in the long term, more opportunities especially in the G20 might present themselves on a more sustainable basis. The G20 is one of the groups into which countries with common interests on various issues have configured themselves. The other groups are the African Group, Africa, Caribbean Pacific (ACP), Least Developed Countries (LDC), G90, G33 and the Non Agricultural Market Access (NAMA) 11. Namibia forms part of the Africa Group, ACP and NAMA 11. “However, subjecting the EU farmers to international competitive market forces will potentially create alternative and more sustainable market opportunities for Namibia’s agricultural exports,” he said, adding that the greatest beneficiaries of this move would be the major agriculture producing countries, namely, Brazil, South Africa and Australia. Namibia’s agricultural exports such as beef enter the EU market on a preferential basis under the ACP/EU Cotonou Agreement. Domestic support, market access and export competition are referred to as pillars of agriculture negotiations. Considered as of extreme importance to developing countries for food security and poverty alleviation through trade, the agriculture agreement allows developed countries to provide high levels of support to their farmers under the domestic support and export competition pillars, giving them an unfair competitive advantage over farmers from developing nations. This, added Mulunga, has frustrated potential exports of agricultural products by Sub-Saharan nations that have the potential to enjoy a competitive advantage in the products. As a country with no AMS commitments, the declaration provides Namibia and other developing countries the opportunity to provide domestic support to its farmers when the country finds it necessary and is in a financial position to do so, said Mulunga. The negotiations under the export competition focused on the deadline for phasing out export subsidies and whether food aid in kind should be allowed considering that it distorts trade on members. Namibia’s nascent textile industry benefits from the world’s low prices, which come about due to subsidised products. Being a country that imports most of the cotton the textile and clothing industry uses, Namibia has been benefiting from this as it allows it to source cotton at affordable prices. But, as part of the African group, Namibia is in support of the elimination of export subsidies to allow its fellow African countries that have the potential to trade competitively to do so in a fair manner. The deadline for all forms of export subsidies is end of 2006, while the parallel elimination of all forms of export subsidies and disciplines on all export measures is end of 2013. Mulunga said that although Namibia would be negatively affected by the outcome of this, it would be on a short-term basis because the prices would stabilise in the long term. However, he said the situation called for the country to develop a national strategy to counter the envisaged adverse effect of expected developments of cotton in Namibia. The country’s strategy for Hong Kong was to have a gradual elimination of the subsidies while promoting an increased production of cotton in the country and Southern Africa, from where the raw material could be sourced on a competitive basis. As far as food aid is concerned, Namibia’s position is that food aid should be allowed especially under Net Food Importing Developing Country (NFIDC) to avoid trade distortions and becoming detrimental to food production or threatening food security. Mulunga said the Hong Kong Declaration took these concerns on board although specific modalities for disciplines will still have to be negotiated. Namibia is a NFIDC because it is prone to droughts.