Better Trade, Not Aid

President Barack Obama is in Ghana right now, and sustainable food security for the African continent is one of his top issues. Obama was able (I think) to get the other G8 leaders to fork over $20 billion to deal with world hunger.

From New York Times:

The food security initiative is designed to transform traditional aid to poorer countries beyond simply donated produce, grains and meats to assistance building infrastructure and training farmers to grow their own food and get it to market more efficiently.

The $20 billion amounts to a substantial commitment if carried out, but it remains unclear how much is actually additional money. The American share of $3.5 billion over three years represents a doubling of previous spending levels.

“The sums just aren’t adding up,” said Otive Igbuaor, head of ActionAid’s hunger campaign. “Is this all really new money? Given the Group of 8’s record on delivery, this is still very much a work in progress. So far they have been counting not just apples and oranges but more like apples, oranges, cauliflowers and beets.”

Well, good on Obama for taking on the mantra of "why give them fish when you can teach them how to fish." I have been saying this for years.

However, in order to do this, there is serious need for Washington to overhaul its trade policies towards developing countries. We can't begin to have a discussion about food security without talking about the business of food.

Africa is the most resourceful place in the world. So, one would believe that the continent should be in better shape economically and be able to feed itself. However, because of disasterous trade agreements the developing world has with many Western powers and the "good" folks over at the World Trade Organization and International Monetary Fund, poverty in the most vulnerable countries have only gotten worst over the last 40 years.

From Christian Science Monitor:

Although American and European chicken farmers do not receive direct subsidies, the grains used to feed their birds do qualify for state aid, and this indirect assistance puts the African farmers at a disadvantage. "Even after shipping it over and the retail markup, the imported chicken can sometimes be 40 percent cheaper than birds reared here in Ghana," explained Mr. Quartey, who has had to lay off 50 workers this year alone.

Global imports of chicken into Ghana are ten times what they were a decade ago. After much lobbying from the industry, which directly employs an estimated 10,000 people, Ghana's government agreed to double tariffs on imported chicken to 40 percent.

However, in March this year, using emergency legislation, parliament overturned the hikes in a move government officials, trade campaigners, and poultry farmers alike attribute to pressure from the International Monetary Fund, which sits atop a pyramid of donors on whom Ghana relies for 45 percent of its money.

So what's a West African poultry farmer to do? Quartey believes the key to pressuring the World Trade Organization into cutting them some slack is banding together and speaking out.

Here are some current stats on US-Ghana trade relations:

Total two-way trade between Ghana and the United States was valued at $840 million in 2008. Ghana is the fifth largest sub-Saharan African market for U.S. goods.

The leading U.S. exports to Ghana were motor vehicles, machinery, and mineral fuel. U.S. imports from Ghana are primarily oil, cocoa, and timber.

The Obama administration has not spent much time discussing trade since coming to the White House, as health reform has been prioritized. Nonetheless, based on some of the language I have seen come from his people, there may be hope for a better, fair trade world.

From 2009 Trade Policy Agenda Report:

Expanded trade can make an important contribution to boosting growth in developing countries and lift their national income levels. Economic growth in these countries benefits the American economy by expanding markets for American exporters. We shall promote trade policies, including technical assistance for capacity building, that will help these countries engage successfully with the world economy.

Trade preference programs help entrepreneurs in developing countries compete effectively in the world trading system. Many of our nation's trade preference programs are coming due for legislative review. We will work with the Congress and public stakeholders on their renewal and reform. We will give careful consideration to proposals to concentrate benefits.

I guess we have to wait and see how sincere Obama is on this issue.