Special Products

1
Special Products

• Protection is not enough Need to focus on
  investments and productivity improvements
• African Trade Policy Centre

2
Motivation for special products criteria

• Agriculture main source of livelihood.
• 70 of employment in developing countries.
• Subsistence helps provide food security.
• Economic growth of most African countries hinges
  on agriculture
• Increase in rural incomes with multipliers
  ranging between 1.5 2.7 can drive the
  continents economic transformation.
• Export crops account for sizeable revenues.

3
Agriculture liberalisation and African agriculture
4
Agriculture liberalisation and African
agriculture contd

• On the whole, a lot of agricultural related
  sectors would be significantly affected.
• In SSA
• Some cereals, sugar, livestock, agro-processing
  would experience contraction.
• In North Africa
• Cereal, livestock and associated products would
  also be affected.
• Even the sectors that benefit, the positive
  growth in output is not significant.

5
For this reason, the case for special products is
founded

• Special products might not reverse fully the
  challenges of liberalisation, but they could
  minimise the impacts.
• Ideally, special products would allow for
  domestic production and less reliance on imports.
• What is the empirical evidence then?

6
On the methodology of selection

• Several country level studies including
  Seychelles, Swaziland, Gabon, Mali, among others.
• The criteria has ranged from poverty reduction,
  diversification, revenues, employment etc.
• Identifying these sectors has been one thing, but
  what are the economic impacts?
• Do we see domestic production increase and import
  dependence decline?

7
Special products will have positive impact on
African countries.
8
What then is the implication?

• Without special products, a lot of African
  sectors would be affected.
• But special products will have positive impact on
  African economies. This supports the case for
  protection of the relevant sectors.

9
But protection is not enough, impact on trade
still negative
10

• As would be expected, the higher the percentage
  of special products, the lower the negative trade
  imbalance.
• However, as long as it is negative it is an
  indication that protection is not enough to build
  competitiveness of African agriculture.

11
Even considering value added, protection is not
good enough
12
Need to focus on two sides of the special
products story

• There is a case for the designation of the
  special products as a means to help African
  agriculture on identified criteria.
• But the impacts on value added and trade balance
  of this protection are too weak and need to be
  complemented with increased investments and
  improvements in productivity.

13
The message is the same for North African
countries
14
And the import dependence continues
15
To conclude

• The case for special products is not in doubt.
• The broad criteria clearly addresses the
  challenges that deep liberalisation would have.
• But special products are not enough to overcome
  weak domestic outputs and import dependence.
• Investments and productivity improvements are
  essential.