There are a number of regional and international developments which have implications for Sierra Leone’s agricultural sector.
The World Trade Organisation
Sierra Leone’s membership of the World Trade Organisation (WTO) presents both opportunities and challenges. That said, Sierra Leone may be able to exploit the Doha Round to its advantage, by first focusing on where it could have comparative advantage which could be turned into a competitive advantage in agricultural products. Sierra Leone could use the Doha Round to gain better access to foreign markets, not merely in the developed countries but also in the fast growing markets of large developing countries, such as China, India, South Africa and Brazil. Although some of these markets are heavily protected through tariff and non-tariff barriers, China for instance has provided Sierra Leone with fairly comprehensive market access through a trade agreement. Some of the other larger developing countries could be persuaded to do the same thing. The WTO Hong Kong Declaration of December 2005 calls on all developed countries (and those developing countries in a position to do so) to extend duty and quota free market access to least developed countries.
Sierra Leone already has preferential access to its current main overseas trading partners. The EU offers duty free and quota free access to all products under its Everything but Arms (EBA) initiative, for an indefinite period. For its part, the US operates the African Growth and Opportunity Act (AGOA) which offers duty free access for most but not all products, until 2015.73 These schemes however, have not been as effectively used by Sierra Leone; its main agricultural exports are cocoa and coffee, and to some extent ginger, which already qualify for duty free access. Therefore Sierra Leone should be exploring the export of other products which may be eligible under these schemes. Sierra Leone should concentrate on the promotion of exports of new products, particularly agro-industrial products in order to make the shift to a more diverse export base.
Box 3: Sierra Leone in the WTO As a small least developed country (LDC) within the WTO, Sierra Leone is marginalised in international trade. Due to logistical and financial constraints, it does not participate effectively either in the routine work of the committees and other bodies of the WTO or in the multilateral trade negotiations of the present Doha Round. Agriculture is under negotiation through a review of the Agreement on Agriculture. LDCs like Sierra Leone are not required to make any commitments in the negotiations. Instead, developed countries and developing countries must make tariff cuts based on an agreed formula. For Sierra Leone’s purposes, the most important issue to follow in the negotiations is the combination of domestic support (which lead to the huge exportable surpluses) and export competition, i.e. subsidies and credits, to farmers in developed countries. Export subsidies/credits distort markets and affect the terms of competition between producers in various countries. Developed countries are required to cut all export subsidies, trimming both the value of support given and the quantity of subsidised exports. Another issue for Sierra Leone’s consideration is the use of the flexibilities in the Agreement on Agriculture for its own advantage. In particular, Sierra Leone should make use of the provision on special safeguards to provide protection for infant industry and fledgling agricultural enterprises.
At the same time, the opportunities for Sierra Leone for major exports under these schemes are undermined by restrictive rules of origin. The basic rule of origin under AGOA requires that 35% of the price of the product be due to activities in Sierra Leone or other AGOA beneficiaries.74 This precludes the export of finished products derived from processing inputs imported from non-AGOA countries, and there is limited scope for sourcing competitive inputs domestically or even regionally. A relatively high value added requirement makes it particularly difficult for countries with low labour costs such as Sierra Leone.
Sierra Leone should push (in alliance with other countries) for non-restrictive rules of origin to apply (as in the case of apparel under AGOA), which allows it to use third country inputs in the making of finished products from Sierra Leone (cumulation). This would also help with developing and sustaining value addition in agriculture. For instance, a 10% value added rule or regional cumulation would make a significant different to making effective the market access granted under AGOA and EBA. This coupled with the 60% local content rule in Sierra Leone’s package of incentives would help to promote investment in agro-industry.
Sierra Leone should therefore take a strategic approach towards international trade and its membership of the WTO. Effectively, Sierra Leone should use the WTO as a component of its export strategy for agricultural products and services. In the first place, it should decide which agricultural products (both traditional and non-traditional) it will seek to develop its competitive advantage. It should then identify which WTO Agreements and provisions affect its market access in such products. Where negotiation is on-going on such provisions, it should seek to influence the negotiations in order to increase market access in the markets of both traditional and new trading partners. In other areas such as SPS and rules of origin, Sierra Leone should take a bilateral and diplomatic approach to resolving market access issues with trading partners, particularly where interpretation of provisions and flexibility are concerned. In effect, Sierra Leone should seek to use international trade to support capital accumulation, technological change, structural change, employment creation, and poverty reduction. In other words, not just maximise trade but maximise the beneficial effects of trade.
The optimum situation would be for Sierra Leone to establish a presence (permanent mission) in Geneva to defend the country’s interests on trade policy issues. However, given that these negotiations are extremely time consuming and that Sierra Leone, with other competing priorities, may have a limited ability in the short term to influence the outcome of negotiations in its favour, it would do well to associate itself with the decisions and concerns of regional groupings in the WTO, such as the African Caribbean and Pacific (ACP) group, the African group, and the least developed country (LDC) group, in order to defend its interests.
Compliance with Sanitary and Phyto-Sanitary Measures
One of the most important issues in development of agricultural trade is sanitary and phytosanitary (SPS) standards. Sierra Leone has only limited and isolated capacity to manage food safety, agricultural health and environmental risks. Thus, market access for many of Sierra Leone’s agricultural products is eroded due to weak SPS standards and poor quality assurance systems. Cases in point are cocoa and fisheries products. However a distinction should be made between quality issues and SPS measures. A product may not necessarily face any mandatory SPS standards, but may still be subject to quality issues in the importing country. This is the case for cocoa, which has been discounted in European markets on the basis of quality. On the other hand, a product may be of sufficient quality, yet has to comply with strict SPS standards set by the importing country. This is the case for fish from Sierra Leone, for which specific mechanisms must be set up to prove compliance with SPS standards established by the EU. It should be noted that according to the WTO Agreement on Sanitary and Phyto-sanitary (SPS) Measures, a country can maintain higher SPS standards than international standards. This is the EU’s justification for its high SPS standards on food generally.75
At the same time, distinctions should be made between standards set by public and private institutions. International trade in agricultural products is increasingly affected by the establishment and maintenance of privately run standard setting bodies. This is the case for many organic products. Many of these standards are driven by the market based on consumer preferences and tastes. They are typically higher than the official standards, and involve rather burdensome and costly procedures for compliance. For instance, compliance would involve up-front investment in infrastructure, equipment, management systems, and human capital. They also typically include certain recurrent costs such as inspection and testing. Although government run standards are subject to the rules of non-discrimination in the WTO,76 privately run standards are not, yet they may have a greater impact on market access for Sierra Leone’s agricultural products than the standards officially set by governments.
The bedrock of Sierra Leone’s agricultural export development should be compliance with SPS standards and quality requirements. Yet, Sierra Leone has no law on SPS or other food safety standards. Under the Standards and Trade Development Facility, a six agency initiative hosted by the WTO, a project proposal has been discussed which seeks to develop the institutional structures and the regulatory framework for compliance with SPS standards in Sierra Leone. This process is being led by the Sierra Leone Standards Bureau. As a matter of urgency, Sierra Leone should seek funding for the implementation of this programme, with a priority on the drafting of legislation on SPS systems and management.
Sierra Leone Standards Bureau
Sierra Leone has rather rudimentary institutional capacity for management of standards. The Sierra Leone Standards Bureau (SLSB) is the coordinating body for all standards issues in the country. However, many public and private institutions should be involved in the setting and enforcement of standards. The SLSB, under the supervision of the Ministry of Trade and Industry, develops and adopts standards, is responsible for inspection of goods and provides testing and quality control services. Although its current efforts are focused on consumer protection, since its mandate is to ensure the safety of food consumed in Sierra Leone, the SLSB (in collaboration with MAFFS) should quickly turn its attention to the standards of goods exported from Sierra Leone. In such case, the challenge for Sierra Leone would be to facilitate the emergence of standards infrastructure in the medium term which supports export diversification into new, higher value-added products where standards are critical to market access.77
As a WTO member, through the development of legislation and institutional structures, Sierra Leone should therefore seek to comply with both the SPS and TBT Agreements. One of the requirements of the agreements is for the establishment of both TBT and SPS enquiry points.78 The SLSB has been nominated as the TBT and SPS enquiry point for Sierra Leone. However, an effective notification and enquiry point requires trained staff and the technical and logistical resources to undertake inter-agency and inter-ministerial contacts and coordination and the necessary flow of information. SLSB will need technical assistance to obtain the necessary training and to establish the required systems and internal lines of communication needed for the notification and enquiry roles for both the TBT and the SPS to be effectively undertaken. In the medium term, the SLSB in conjunction with MAFFS and SLIEPA should establish an information centre for Sierra Leonean agricultural exports regarding information on standards in overseas markets.
The SLSB does not have its own laboratory. Generally in Sierra Leone, laboratory capacity is weak. As part of the development of SPS infrastructure, Sierra Leone should build capacity in testing services. Here the SLSB should separate its consumer protection role from that of trade and export facilitation. Exporters of new products will require internationally recognised conformity assessment services for testing, inspection and certification. Conformity assessment procedures can be developed for specific products or sub-sectors. Sierra Leone should approach its development partners to explore the development of a laboratory, possibly based in the University of Sierra Leone which already has some basic infrastructure but no equipment. The benefit of a University based lab is that it can also be used to improve teaching through practical lab experience. An increase in the number of scientists with practical experience would be of relevance to firms in the longer term which could develop their own testing capacities and to private labs that would emerge as the economy develops and diversifies. 79