Okonjo-Iweala calls for trade integration among African countries amid tariff tensions

Add us on Google

The Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, on Friday called for conscious efforts to deepen trade integration among African countries.

Join the Premium Times WhatsApp Community For Quick Access To News and Happenings Around You.

Open in WhatsApp

This is amid global uncertainties caused by the new tariff wars between the United States and other economies of the world, notably China.

Mrs Okonjo-Iweala gave the advice while speaking to reporters on the sidelines of the World Bank/IMF meetings in Washington on Friday.

The US-China tariff war reached its crescendo earlier in the month following the decision by President Donald Trump to slap a 134 per cent tax on Chinese imports as part of his “Liberation Day” that set a minimum 10 per cent levy on nearly all of America’s trading partners.

Beijing retaliated by hiking its levies on imports of United States’ goods to 125 per cent, hitting back at Mr Trump’s decision to single out the world’s second biggest economy for higher duties.

At the IMF/World Bank meetings in Washington this week, discussions have centered on the impact of the tariff war on the global economy, especially its implications for weaker economies in Africa and other parts of the developing world.

Mrs Okonjo-Iweala told reporters Friday that the African continent as a whole is not that impacted by the tariff war.

Stay Ahead with Premium Times

Follow us on Google News and never miss breaking stories, investigations, and in-depth reporting.

Add as a preferred source on Google

“We’ve done the analysis. 6.5 percent of Africa’s exports only go to the U.S. and 4.4 percent of its imports come from the U.S. Okay, so the impact for the continent as a whole is not that bad. However, it’s both good news and bad news. Good news is that it’s limited,” she said.

“Bad news is, well, we’re not trading that much, which is not a good thing. But the problem is that within Africa, there are a handful of countries that are very severely impacted because they’ve got high reciprocal tariffs put on them, and these are poor countries. I’ll just use two as an example.

“One is Lesotho that everybody is talking about that has 50 percent reciprocal tariffs. It exports $200 million worth of textiles to the U.S., imports about $3 million worth of goods from the U.S.; so very little. And if you look at that, if those tariffs are implemented on Lesotho, it will lose almost half a percentage point of its GDP growth, which is huge for a poor country. It will lose a lot of its exports to the U.S., even though it might gain a little bit by exporting elsewhere. So, the issue is, how can we avoid having such reciprocal tariffs on Lesotho?”

The former Nigerian finance minister explained that efforts are being made to make the United States review the policies.

“So, we are asking the U.S. to look at least developed countries, the poorest, and to try to waive these reciprocal tariffs, to remove them so that the poorest countries and Africa as a whole, that we don’t have these tariffs on us. So, Cote d’Ivoire, the same, 21 percent reciprocal tariffs, while Ghana next door is 10 percent.

“Guess what? Cote d’Ivoire’s export is what? Cocoa. Almost a billion dollars worth to the U.S., so it’s going to disappear across the border if you have differential reciprocal tariffs.”

Looking Inwards

The WTO DG noted that as a whole, the continent is not as impacted, but certain countries are definitely hit, they have to be taken care of.

“So, from the global environment, the message to Africa is you have to rely more on more self-reliance. We have to do more in Africa to rely on our own resources. It’s very clear. Aid is disappearing. Okay, there may be a little left, but it’s disappearing. We need investment.

“So, when you need investment, you have to do so much more in terms of mobilising domestic resources to put infrastructure in place, removing bureaucratic barriers so investment can come in. And this is what we need to do, and we need to trade more. We cannot trade more externally, where our trade is only 3 percent of world trade, or internally, where intra-Africa trade is 16 to 20 percent at most.

ALSO READ: Nigeria must harness artificial intelligence to drive development- Okonjo-Iweala

“If we don’t add value to our products, keep exporting the same things, commodities that are not processed. We don’t create jobs. We must attract investment to change that, and then trade internally.”

Mrs Okonjo-Iweala explained that Lesotho is exporting $200 million worth of textiles to the U.S., and there are concerns the market will be taken away even though Africa spent $7 billion importing textiles.

“So, why can’t Lesotho sell its textiles in the African markets? It’s making jeans. We import jeans, whether it’s first-hand or second-hand. Why can’t Lesotho trade within Africa and sell? This is the kind of thinking we need,” she said.