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Question of the Day
Americans generally agree that if giving someone a fish is good, teaching him how to catch fish is far better. We believe self-reliance is preferable to dependency and work is better than welfare. But when it comes to the neediest continent on the planet, the main use we make of these principles is to shred them.
President Bush surprised everyone in this year’s State of the Union address by proposing big increases in humanitarian aid to Africa, particularly to fight AIDS. This week, he became only the third U.S. president to visit Africa in the last 25 years. He asserts, “It’s in our interest to make Africa a prosperous place.”
Yet that interest goes only so far. As a result, he may find on his trip that African gratitude is surpassed by African resentment. Take Mali, for example. Though it got $37 million in assistance from the United States in 2001, Mali’s finance minister recently denounced us and other wealthy countries as “hypocrites.”
The problem is that, as everyone knows by now, the surest remedy for poverty is trade, not aid. Countries that have learned to compete in world commerce have far outdistanced countries forced to rely on international handouts. But the trade policies of the U.S. and other industrialized countries have closed off the best escape route.
Africa, with 13 percent of the world’s people, accounts for only 2 percent of global trade. Why? One reason is that it has been deprived of access to the most lucrative customers. As the international aid group Oxfam pointed out last year, “When developing countries export to rich country markets, they face tariff barriers that are 4 times higher than those encountered by rich countries.”
This was supposed to change when the U.S. enacted the African Growth and Opportunity Act three years ago. The law, signed by President Clinton, allows duty-free imports from nations meeting certain conditions. It was intended to boost Africa’s sales in the U.S., and to some extent, it has worked: Imports from countries covered by the new law rose from $8.2 billion in 2001 to $9 billion in 2002.
But that’s a pretty unimpressive increase. The Washington Office on Africa says 16 of the 38 eligible countries shipped nothing to the U.S. under the new rules, and only six have significantly increased their exports. Some 75 percent of what we buy from Africa consists of oil, platinum and diamonds. Yanking raw materials out of the ground doesn’t exactly provide the foundation of an entrepreneurial economy and a thriving middle class.
For that, you need to give ordinary people the chance to do productive work and be rewarded for it. But the world trading system, of which the U.S. makes up a huge part, is rigged against Africans. We’re more intent on protecting a few American producers than on helping the vast mass of the world’s poor.
Cotton, for example, is a major crop in many African countries, where it can be grown much cheaper than in most places. But cotton prices have plunged in the last decade — mainly because the U.S. and other countries pay our farmers to grow it. The more we subsidize cotton farmers, the more cotton there is on the world market, and the lower the price.
Our growers don’t feel the pain so much because of all their federal aid — they each get an average of $50,000 a year in subsidies. But African dirt farmers, who are poor to begin with, don’t enjoy such protection. They get the full brunt of the artificially low prices. American cotton subsidies cost Africans some $300 million annually. And $300 million is real money to people accustomed to living on less than $1 a day.
The African Growth and Opportunity Act has also turned out to be less than meets the eye. It was supposed to have a big impact on apparel and farm products, which generally faced high tariffs. But the effect has been modest, partly because hundreds of items were excluded, and partly because the law has onerous rules to qualify for open access to the U.S. market. A study by the International Monetary Fund found the benefits to Africa were only one-fifth what they would have been under a genuine free-trade regime.
Americans are not crazy about funding foreign aid, and Africans are not crazy about needing it. We would all be better off if the people of Africa were able to provide for themselves. But it is hard to stand on your own two feet when you’ve been cut off at the knees.
Steve Chapman is a nationally syndicated columnist.
By Mark Davis
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