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IMF Working Paper Summaries (WP/95/1 - WP/95/61)
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Summary of WP/95/48: “The Burden of Sub-Saharan African Own Commitments in the Uruguay Round - Myth or Reality?”

Author(s):
International Monetary Fund
Published Date:
August 1995
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This paper finds that, in contrast to the various statements made on the “cost” or burden for developing countries from their Uruguay Round commitments, the Round is unlikely to burden sub-Saharan countries with many new “obligations”. First, apart from South Africa, most sub-Saharan countries made few substantial commitments to liberalizing border protection in agriculture, industry, or services. This was partly a reflection of the nature of the agreements concluded. As many of the reductions in nontariff barriers were designed to cover the types of policies applied in industrial countries, the often different policies in developing countries will be less affected. For example, many developing countries do not subsidize agriculture but tax it; this practice is not covered by the agreement. Partly, however, the lack of change reflected the unwillingness of sub-Saharan African countries to make meaningful commitments to bind protection to reasonable levels (applied rates will not change).

Second, the agreements offer much flexibility in the adoption of the new rules. Their adoption is subject to long transition periods, which in most cases can be further extended. Also, many of the general exemptions, as well as those for balance of payments support, remain available for unwilling liberalizers wishing to seek legal cover for trade restrictions. Apart from the increase in transparency arising from the notification requirements, few changes to policies are required by sub-Saharan countries in the short run. Some review may be required for export subsidies and local content requirements. While the benefits of the intellectual property agreement can be questionable for most of sub-Saharan Africa in the short run, the application of the rules in subsidies in most cases should promote sound economic policies.

The paper notes that the sub-Saharan countries have not used the Round to support domestic efforts at trade policy reform. The Round provided an opportunity for countries to go beyond their unilateral liberalization efforts in exchange for multilateral concessions, or to bind their domestic reforms to an international framework. As most models showed that most gains from the Round would come from countries’ own liberalization efforts, not making liberalization commitments in the Round may have cost sub-Saharan countries one opportunity for gains. The exception was the Southern African Union, which used the Round to consolidate ongoing domestic reform programs. In the end, therefore, structural change and trade liberalization in most of sub-Saharan Africa will depend on unilateral initiatives taken independently or in the context of World Bank or Fund-supported adjustment operations. The paper concludes that, unless these are pursued, the ability of sub-Saharan countries to take advantage of the emerging opportunities in their export markets may also be lost.

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