17

# **Box 1**

# **Tariffs Facing East Asian Exporters at the Start of their Industrialization Drive Compared with those Facing Sub-Saharan Africa Today**

One way to assess the current importance of OECD trade barriers facing sub-Saharan Africa is to compare them with those that faced the 'newly industrialized countries' (NICs) when the latter began their successful export oriented industrialization drive that began in the mid-1960s. Since the NICs' experience shows that the external barriers they faced could be overcome, such an inter-temporal comparison could help indicate whether Africa's export problems are largely attributable to OECD countries' protectionism, or to African internal policies and conditions relating to the export sector. Stated differently, are external conditions now facing Africa more or less favorable than those which faced the NICs in the mid-1960s.

The statistics shown below report the average level of tariffs countries like Republic of Korea, Hong Kong, Singapore and Taiwan (China) faced in major OECD markets in the late 1960s. Industrial countries import duties facing their exports averaged about 17 percent and reached a high of 19.5 percent in the United Kingdom. The statistics also indicate that developed countries' tariffs then incorporated a high degree of discrimination against developing countries. This is reflected in the considerably higher than average tariffs on developing countries' exports than on all shipments. Two other points should be noted. First, in the 1960s GSP schemes had not yet been adopted so the Asian NICs had to compete with other suppliers on an equal MFN basis. Second, the degree of escalation in OECD tariffs was far greater than it is today (UNCTAD (1968), Yeats (1987).

|Import Market|Mid-1960 Tariff Averages on<br>Total Imports of Manufactures|Mid-1960 Tariff Averages on Imports of<br>Manufactures from Developing Countries|
|---|---|---|
|United States|11.5|17.9|
|United Kingdom|15.2|19.5|
|European Community|11.0|14.3|
|Sweden|6.6|9.8|
|Japan|16.1|18.0|
|All Developed Countries|10.9|17.1|

Source: UNCTAD, **The Kennedy** Round **Estimated** Effects on Tariff Barriers, (TD/6/Rev. 1), (New York: United Nations, 1968).

In contrast to the situation the Asian NICs faced (and overcame), OECD countries tariffs on African exports now average under one percent and typically incorporate an important preferential component which enhances their ability to compete with many other countries. OECD tariffs facing Africa are, therefore, now far lower than those which the NICs successfully overcame and incorporate preferences that improve Africa's position _vis-a-vis_ other suppliers. Africa's relatively poor general export performance cannot be attributed to OECD tariffs.

Could it be that nontariff measures are now more restrictive against African exports than they were against the Asian NICs? Available evidence suggests the opposite. For example, the Short-Term Textile Arrangement was initiated in 1961 and followed by the Long-Term Textile Arrangement in 1962. Both placed important textile and clothing restrictions on the NICs exports of textile and clothing products. Sub-Saharan African countries are currently (with the exception of Mauritius) largely unrestricted by MFA controls on textile and clothing exports. 'Voluntary' export restraints (VERs) were extensively applied to NIC exports in the 1970s and 1980s, yet no such restraint was ever applied to Africa's exports. Furthermore, while there is evidence that agricultural protectionism has increased (Laird and Yeats, 1989) this has largely been confined to temperate zone products and not the types of goods Africa exports.

In short, the external environment for exports facing Africa today appears to be considerably more favorable than that which faced, and was overcome by, the Asian NICs. This suggests that internal problems are a more important cause of Africa's trade problems than are trade barriers in foreign markets.