Several countries, including China, Indonesia, and India among others, strongly supported the African Group’s proposal on “policy space for industrial development- advancing WTO Committee work to support structural transformation and industrial development in developing countries” during the WTO’s General Council meeting last week, said people familiar with the discussions.
Amidst aggressive industrial development policies being implemented by the trans-Atlantic nations and China among others, the African Group’s proposal seeks “policy space” and flexibility in the various provisions of the WTO agreements that were negotiated during the Uruguay Round more than 30 years ago, said people familiar with the developments.
At the GC meeting, Chad tabled the African Group’s proposal saying that the purpose “is to inform WTO Members of the activities and initiatives regarding policy space for industrial development.”
The African Group said, “through a series of discussions focused on this topic, including on key raw materials in the context of the green transition,” it aims to “reaffirm the priority and to stress the importance of broadening policy space and the policy tools provided in certain WTO Agreements to unlock Africa's productive capacities and support the structural transformation and industrialization of its economies.”
Lamenting that the WTO’s 13th ministerial conference failed to provide “firm political guidance” on their proposal, Chad said "the need for policy space to advance industrial development of developing countries" was recognized at the conference.
Based on an earlier proposal it had presented early last year (WT/GC/W/868), the African Group said it wants to step up engagement on its current proposal following MC13.
The group said it wants to focus discussions on the “development perspective” emphasizing that it is at the center of the approach that is envisaged in its proposal.
“The introduction of a sectoral dimension to this discussion, with critical minerals as, but one example, will allow for more meaningful and rich engagements,” it maintained.
With “the deepening economic divergences, especially between developing country economies and developed or advanced economies,” the African Group said that “developing countries face significant constraints in implementing industrial policy measures to transform their production structures due to among others, existing rules that uphold the status quo.”
Against the backdrop of the increasing use of industrial policies by developed countries, the African Group said that “this situation highlights a critical oversight by developed countries that historically used similar measures to advance their industrial development.” Further, “in response to the reality of unequal distribution of the gains from trade and share in global value chains, there is a need to rebalance and recalibrate the WTO policy toolbox,” the African Group said in its proposal (WT/GC/W/936) submitted May 14.
More so, at a time when countries are facing existential climate change crises, it is imperative to address “contemporary challenges such as mitigating climate change and promoting sustainable development.”
The imperative of structural transformation is more pronounced now, and the time has come for a radical rupture from the traditional patterns of dependence on commodity exports, it suggested.
“This reality amplifies the importance of manufacturing and value addition as the bases for developing sustained industrial capabilities,” the African Group said. It argued that “multilateral trade rules cannot remain static in the face of these extant challenges and historical patterns of international trade that have inhibited structural transformation and crippled the resilience of many developing countries, especially African economies.”
The AG said that “the WTO has an important role to play in contributing to inclusive development and, principally, meaningful integration of developing countries in global value chains.”
Emphasizing the importance of “export diversification” which is a crucial factor for “resilience”, the AG observed that “overcoming the trust deficit in the multilateral trading system and bolstering the relevance of the WTO will entail making the institution responsive to developing countries' development needs.”
“Fundamentally,” according to the AG, “this must include supporting a shift in Africa's structural profile so that the continent is not trapped in a commodities-based growth path but also produces and exports a diversified range of products.”
More importantly, “this transformative possibility will require more than just structural reforms; it also needs to draw on industrial policy measures and tools to help developing countries close the existing industrial development gap,” the AG stated.
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