African free trade

A free trade area for Africa, to help the impoverished continent match the spectacular growth of Far East economies, emerged as a distinctive British initiative at the G20 summit today.

The anti-poverty strategy, which is partly the brainchild of former Labour minister turned G20 adviser Baroness Vadera, has been developed with Jacob Zuma, the president of South Africa.

David Cameron, speaking at a business summit in Seoul today, said: \”We should explain that free trade is good for the poorest parts of our world as well, and one thing the British have been very active in trying to insert into this G20 is a free-trade area for Africa.

\”Africa should be a growing part of the world economy: we should be lifting more people out of poverty in Africa. But we will not do it with all the trade barriers that exist between African countries.\”

A damn good idea.

Despite the fact that both political sides seem to support it, usually proof that a proposal is horribly, wildly, stupid.

For it isn\’t true that \”free trade\” between the industrial nations and the developing is the only good thing about free trade. There\’s hugely, vastly, more benefit to come from intra African trade. For trade between those at roughly the same level of development still allows that division of labour and its specialisation, which is the very definition of the Smithian creation of wealth.

There\’s a passage in Michela Wrong\’s (very good by the way) \”In the Footsteps of Mr. Kurtz\” that describes the licences, allowances and taxes (plus of course huge bribes demanded and the arbitrage done by those, the disabled, who are tax free) that choke trade across the Congo River between Congo Brazaville and DRC. Wiping away all of those would, as with the EU (about which I know I complain but free trade is still free trade: the complaint is that the EU only allows intra EU free trade, not quite getting the point that if intra is good, so is inter) quite simply boost growth and wealth creation.

7 comments on “African free trade

  1. Another reason they’re focusing on intra-African free trade is to allow them to avoid discussing the glaring impediment to free trade and helping to lift Africans out of poverty: the Common Agricultural Policy.

    Dave would rather do the posh boy thing of writing a big cheque for those poor starving Africans and pat himself on the back for “doing what is right”.

  2. What Africa could do with would be a common cxurrency run by somebody fiscally sound. One option would be western sponsorship of a pan-Africa bank printing money & insisting that countries allow it to move freely if they want aid.

    An alternative was suggested as already coming into existence by Douglas Carswell – banking through money backed by the mobile phone system (currently mobile phone credits). http://www.talkcarswell.com/show.aspx?id=1280

  3. The CAP has bugger-all impact on Africans, and pretending it does isn’t helpful to anyone.

    It’s never going to economically viable for farmers in sub-Saharan Africa (given its levels of infrastructure) to export the kind of perishable, low-value-per-kg crops that the CAP covers to the EU. It is, however, economically viable for them to export out-of-season fruit and exotic veg, plus crops like coffee and cocoa that don’t grow in the EU. The abolition of the CAP, although a good idea because the CAP costs EU consumers and taxpayers a fortune in exchange for not much, wouldn’t do anything to change that. It would help North American and Australiasian meat producers, but I’m not convinced that this is a particularly pressing area for poverty relief efforts.

    This free trade area would be a bloody good idea. As for the common currency, we’re halfway there already: http://en.wikipedia.org/wiki/CFA_franc

  4. There is a free trade zone in Africa already – Somalia. Professor Peter Lesson explains this in a piece Published in the Journal of Comparative Economics 35(4) 2007: 689-710. Available here
    http://www.peterleeson.com/Better_Off_Stateless.pdf
    He quotes data sources that show Somalia to be a leading trade economy in the region, acting as a hub for its neighbours. And its not just a farmers market – Coca-Cola and dhl have built plants out there.
    Of course the same statesmen that form the g20 are trying to shut this down with a UN invasion that attempted to install a puppet government. So an indigenous self created free trade zone must be stamped out but one imposed by westerners for their self interest must be created?
    I’d say the real motives behind this western interest in African economies is hinted at in an earlier comment regarding forcible control of African currency. Just Like the eu taking Irish economic sovereignty except Africa is bigger and actually has some resources to plunder.

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