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Professor Yash Tandon, Ugandan political activist and author is the previous executive director of South Center based in Geneva.
He was one of the speakers at the ‘Continental free trade area matters for Africa,’ conference organized by PACCI and held in Addis Ababa, Nov.28-29, 2013. In his address, he unequivocally stated that ‘Trade is War’.
He sat down with Capital after the conference and elaborated his views. Excerpts:
Q: In your presentation to the PACCI conference (Pan African Chamber of Commerce & Industry) that took place in Addis last week, you described trade as a weapon of war. Can you please elaborate on this?
A: Don’t get me wrong. Trade can, potentially, be a tool for development. But as far as Africa goes, historically, trade has always been a weapon of war that Europe has ceaselessly used against Africa – from slave trade 500 years ago to commodity trade today.
Q: But how can you be part of the international system without engaging in trade?
A: I agree, but one has to look at the terms of this engagement. Africa entered the global system of production not on its terms. In the global system, Africa was consigned by the powers that colonized us to the role of providing cheap labor and cheap commodities for their industrialization and development. The other side of this coin was Africa’s underdevelopment.
Q: But surely this changed since Africa’s independence. We cannot go on blaming the West for our underdevelopment.
A: Yes, of course. For a short period after our independence, Africa had a breathing space during which some of our countries could engage in industrial production. But this lasted for no more than two decades. Beginning the onset of globalization, around mid-1980s, we are back to the colonial-type of situation. We have been forced to liberalize our trade regimes, especially since joining the World Trade Organization. The WTO advocates the removal of all trade barriers to free trade. This is based on the assumption that free trade eventually enables countries to specialize in the production of goods and services in which they have a comparative or competitive advantage; that it gets rid of inefficient domestic producers when faced with competition from abroad.
Q: So what is wrong with this? Is it not the case that we do need competition to get rid of inefficient domestic producers?
A: Yes, we do need competition within the domestic arena. Let our domestic producers compete against one another and oblige them to be efficient. But when we compel our domestic producers to compete against global corporations, then given our conditions in Africa, there is no way for them to compete in the global market. There are many reasons for this, among them access to capital, technology and markets. The developed countries have been around for a long time, and they have an unequal advantage over producers in Africa. All countries that have entered the global system of production and trade later than those before them – and these include the USA, Germany and Japan – had to protect their local industries from global competition for decades before they could compete with those that came before them. Africa never has that opportunity.
Q: But then why do you describe trade as war?
A: Because that is what trade is. Today, as we talk, there is Resource War going on between the older industrialised countries – Europe, America and Japan, and the newly emerging countries of China, India, Brazil, etc competing for Africa’s resources. It is a war fought on the soil of Africa.
Q: Can you elaborate on this? May be you can give some concrete examples.
A: Okay. Let us examine the ongoing negotiations between Africa and the European Union on the so-called “Economic Partnership Agreement” (EPA). The negotiations have been going on, in one form or another, since Africa’s independence (Lome, Cotonue…) I won’t go into the details, but there are three major issues of contention between Africa and the EU. One is the EU’s demand that Africa does not impose taxes on commodity exports. Why? Because European corporations, for example, in the food sector want cheap food imports from Africa so that they can then compete with producers from other parts of the world. But we need these commodities for our own food processing industries. Now Europe is prepared to use all kinds of means – including threat of withdrawal of concessionary market access to Europe and of the so-called “development aid” – to pressurize Africa not to impose these levies on our commodity exports. Another contentious issue is the WTO principle of MFN –Most Favoured Nations principle. It is the most absurd principle of the global trading system. It means that if country A provides a concessionary term in a trade agreement with country B, then A is obliged to offer the same concession to country C, D, E, etc. For example, Africa is engaged in trade negotiations with China. Now Europe demands that Africa must extend to Europe all the concessions we offer to China. This is totally absurd. Africa engages China in tough negotiations, and Europe wants a “free ride” on it. As you see, both on the two issues of Commodity Export Levy and the MFN principle, it is war between Europe and China (also, of course, India and other newly industrialising countries), and the target is Access to Africa’s resources and markets. Trade is war.
Q: In your presentation you made a distinction between growth and development. Can you elaborate on this please?
A: Growth and development are two different things. These days people talk about the high growth rates in Africa – between 5 and 7 percent. But growth does not translate into development of the country or of the people. For example, Tanzania produces gold, and the value created enters into the GDP calculation of Tanzania. But only 5 percent of the value created is actually retained in the country. 95 per cent of the value is externalised. This is true about practically all our commodities from cocoa in Ghana to coffee in Ethiopia, for example. Africa is rich in resources, so why are the people of Africa so poor? Because, the “growth” figures hide the fact that very little of that is retained in Africa. Africa is subject to what I call a “Global Nakbah”.
Q: I have never heard this term. What do you mean by “Global Nakbah”?
A: Nakbah is an Arabic term. It means “catastrophe”. It refers to the 1948 Arab-Israeli war when approximately 725,000 Palestinian people were uprooted and expelled from their homes. I’m using this term to show that this is what is happening to the people in the countries of the South, including Africa. At its most conservative, 4.2 billion people (60 percent of the current world population of 7 billion) are uprooted and de-settled. They are abused every day. If they have jobs they are made to work to their bare bones for them and their families to survive. Often they are economic refugees in their own countries and in their own regions from which escape is impossible. There is a miniscule minority of the able-bodied that dares to scale “Fortress America”, “Fortress Europe” or “Fortress Australia”; but they risk death or a fate worse than death. Recently, for example, just last month, 300 Africans trying to migrate to Europe by boat drowned in the sea near the Island of Lampedusa. These were mostly young people who dared to take the risk rather than stay in Africa. But for every one person that dares to risk, there are about a million who are compelled to stay in Africa and try to make ends meet. This is what I call “Global Nakbah”. For example, the LandGrab phenomenon that is rampant in Africa is uprooting people from their lands and food production. They are victims of Global Nakbah.
Q: So, then, how do you define development?
A: At the level of the continent, I define development as struggle – struggle for Africa to control its resources and policies. As I said earlier, Africa has enormous natural resources, but African countries do not control their production and marketing. I gave the example of gold, but as I said, it applies to practically all Africa’s agricultural and mineral resources. Also, and this is equally important. African governments do not control their policies either. I’m talking in general terms. For example, in exchange for the so-called “development aid”, African countries are obliged by the IMF, the World Bank and the so-called “donors” to adopt Structural Adjustment Progammes (SAPs) as the basis of Africa’s macro-economic policies. SAPs have been disastrous for Africa over the last thirty or more years. So “development” means struggle, or to put it differently, resistance against the policies imposed on us by those who trade with Africa or provide capital or “aid”.
Q: So how do you see a way forward for Africa?
A: This is a very big question, of course. The over 500 years of pillage of Africa from slave trade to commodity trade, and the structures put in place for Africa’s exploitation, cannot be removed in a matter of years or even decades. But we must begin somewhere. And the place to begin, first and foremost, is to liberate our minds. We have inherited a very poor education and knowledge system. Most of our people believe that growth and development are the same thing, and that growth comes out of following the policy prescriptions of the IMF, the WB and the donors. So that mindset has to change radically. We need to go through what I call “Cognitive Reframing”. How do we recognise the reality out there? Sadly, most of our policy makers in Africa see the “reality” through the lenses of others. Also, there is a lot of wishful thinking. So the first thing is to think independently, to make policies that enable Africa to control its own destiny. I can elaborate on this if you wish.
Q: Yes, please.
A: I can make a lot of suggestions, but I’d make four specific ones.
One is to refuse to accept foreign aid. Aid is an instrument of war waged on Africa by the so-called aid “donors”. I wrote a book in 2008 during my time when I was the Executive Director of the South Centre. It is called “Ending Aid Dependence”. I suggested a seven-step strategy that we might put in place to get rid of this dependence.
The second is to decouple from production based on what is called the “”Global Value Chain” (GVC) to production based on “Local Value Chain” (LVC) and “Regional Value Chain” (RVC). It is a bit technical and it would take time to explain it here. However, I have written on this too. You may want to look at my website www.yashtandon.com. I write a fortnightly blog that is embedded in my website, and a recent piece there is about explaining why Africa needs to “decouple” from GVCs and move towards LVCs and RVC.
A third suggestion – and this flows from the second – is that African countries should protect local industries the way the US, Japan and Germany (for example) did during their phase of early industrialisation. Academic literature maligns “protectionism” as a dirty word. It is not. So we must protect our industries. Africa must raise trade barriers against foreign imports. I know that the developed countries will bring Africa to the WTO judicial process, and Africa will face developed country sanctions system. My answer to that is: so let them do so. If Africa stays united, and refuse to export our commodities to them as a united front, we would then be able to negotiate our terms of equitable engagement.
My fourth suggestion is for Africa to create an African currency. This too is a bit technical. Right now the US dollar is the global reserve currency. But it is failing. The European Union has its own currency – the Euro – to protect intra-regional trade. China, too, is seeking to project the Yen as a potential global currency. In Africa we had a common “trading currency” called the Unit of Account for PTA (UAPTA). It was created in August 1988, by the Preferential Trade Area of eastern and southern Africa (PTA) – now renamed COMESA. The UAPTA was a mechanism for minimizing the use of hard currencies. It also enabled Member States’ citizens to travel within the region without having to use foreign currency. However, within 9 years, in June 1997, the UAPTA was discontinued, as a result, largely, of pressure from outside forces.
The Abuja Treaty had suggested an African currency to be created by 2028. But I think the need for it is now more urgent. I suggest the African Union Commission should set up a committee of experts to start working on an African currency.