By Omar Alieu Touray
The report that the Gambia had concluded a free trade agreement (FTA) with the Peoples Republic of China came initially as a big surprise to some of us. For one thing, an FTA could not have been negotiated within the few months of the two countries’ resumption of diplomatic ties. On average, it takes 2 to 5 years to negotiate an FTA. The China- Australia FTA was negotiated over a period of 10 years. The ECOWAS Trade Liberalization Scheme (ETLS) took several years to negotiate before it came into force in 1979. And it would take another decade for industrial products to be included in the ETLS. It is the complex nature of FTAs that partly explains the sense of unease that gripped me.
Most significantly, I felt it would be disastrous for the Gambia to enter into an FTA with China given the gulf between the two economies. China is not only a world power; it is also the second largest economy in the world. Ours, unfortunately, is at the bottom of the list in various aspects. An FTA between such two asymmetrical economies could only be at the detriment of the Gambia. The Gambia’s traditional trade partners, too, would not have remained indifferent to such a deal. Despite the small size of the Gambian market, duty free access of Chinese goods would have been seen to be discriminatory at best and, in the case of neighbouring countries, a threat to their economies.
It has turned out that the trade deal that President Barrow announced in his address at the National Assembly was not actually a Free Trade Agreement (FTA), but an agreement that gives Gambian exports duty free access to Chinese market (The two concepts may sound similar but are technically different).
In essence, the Gambia-China trade deal is similar to the preferential market access that the Gambia enjoys with the European Union under the framework of the Cotonou partnership agreement and with US under the American Growth and Opportunity Act (AGOA).
Generally, the objectives of trade preferences is to promote, diversify and increase the beneficiary country’s trade. But the history of Africa’s trade with the European Union shows that trade preferences might be necessary condition for increased trade, but they are not sufficient. Preferential market access can only increase a country’s trade if supply-side constraints (such as the inability of the beneficiary to produce goods for export) are addressed adequately.
Even in the absence of supply-side constraints, there are a multitude of non-tariff barriers (NTB) that reduce the utility of trade preferences to developing countries. Key among these are the various administrative, technical and sanitary and phyto-sanitary (SPS) measures that come in various forms including quantitative restrictions, voluntary export restraints, customs valuation and rules of origin as well as unilateral sanitary and phyto-sanitary standards. In various instances, these NTB closed EU markets to exports of groundnuts from the Gambia and Senegal, citrus fruits from Southern African and fish from East Africa. In addition, the rules of origin that some trade agreements provide for are generally so complex and stringent that developing countries find them to be trade distorting.
While we fully welcome China-Gambia trade deal, we do hope that the preferences that the deal accords to Gambian exports will not be eroded by the various NTBs that stymied preferential trade arrangements between African countries and other trade blocs.