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Produced by: Economic and Social Development Department

Title: WTO agreement on agriculture : the implementation experience... Espaol Franais More details

Malawi [85]

1 Introduction

Malawi is a small country with an estimated land area of 11.8 million hectares, of whichLake Malawi occupies one-fifth of the total. Out of 9.4 million hectares of land,approximately 5.3 million ha, or 56 percent, is cultivable. The Malawi economy is

characterized by a high dependence on agriculture, a narrow industrial base and weakintersectoral linkages. The agricultural sector currently accounts for about 42 percent of GDP and 81 percent of export earnings, while the manufacturing sector accounts for 12percent of GDP.

Almost three and half decades after independence, Malawis economy remains fragile,highly subsistent and uncompetitive. Apart from suffering from a negative balance of payments owing to poor trade performance, the country is faced with a heavy debt burden,as indicated by a rise in the debt service ratio from 14.7 percent in 1994 to 20.6 percent in1998. Declining agricultural productivity has resulted in increased importation of maize, thecountrys major staple, in recent years (except in 1999 and 2000).

The decline in economic performance has translated into a deterioration in peopleswelfare most of whom (85 percent) live in rural communities. The countrys GDP per capitahas declined from US$210 in 1992 to $200 in 1997 and to approximately $160 in 1999,while income disparity, as measured by the Gini ratio, has worsened from 0.48 in 1968 to0.62 in 1995. The widening income gap between individuals coupled with rising inflationimplies a worsening situation of food insecurity. The rising cost of capital owing toinflation-driven rates of interest has made both small-scale and large-scale farminguncompetitive in Malawi. A lack of local manufacturing of important inputs such as fertilizer,feed and agricultural chemicals has worsened the situation.

1.1 Structure and performance of the agricultural sector

While maize has been the major food crop in terms of the policy agenda and hectarageplanted, tobacco has been, and continues to be, the dominant cash crop in the economyaccounting for approximately 63 percent of the countrys total export earnings. Tea andsugar are other important cash crops accounting for 8 percent and 7 percent of exportearnings, respectively. Livestock production, which contributes about one-fifth of the valueof total agricultural production, consists mainly of subsistence grazing of sheep, cattle,goats, poultry and pigs (WTO, 2002).

Malawi agriculture is composed of two main subsectors: small-scale farmers and estates.Smallholder farmers comprise an estimated 2 million farm families and cultivate about 4.5million hectares of land. Smallholder production is highly subsistent. It is characterized bylow levels of input and low output levels. Approximately 25 percent of smallholder farmers

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cultivate less than 0.5 ha on average; 55 percent cultivate less than 1.0 ha; 31 percentcultivate between 1.0 and 2.0 ha; and 14 percent cultivate more than 2.0 ha. Despite beingresourcepoor, smallholder farmers produce about 80 percent of Malawis food and 20percent of its agricultural exports.

The estate subsector is the nations principal foreign exchange earner. While it contributesonly about 20 percent of the total national agricultural production, it provides over 80percent of agricultural exports mainly from tobacco, sugar, tea and, to a lesser extent, tungoil, coffee and macadamia. The estate subsector operates on leasehold or freehold land.

1.2 Recent policy developments

Agricultural development is an important component of the Governments Vision 2020 andPoverty Reduction and Growth Strategy. The Governments Agricultural and LivestockDevelopment and Action Plan of 1995 was recently reviewed by the Ministry of Agricultureand Irrigation in announcing its Agricultural Sector Investment Program in 1999. Policiesare based on greater private-sector development. Restrictions on the growing andmarketing of crops, such as tobacco, have been substantially relaxed under its marketliberalization policy. The monopoly of the Agricultural Development and MarketingCorporation in purchasing maize and some other crops from smallholders has beeneliminated, and progress is being made towards the ultimate goal of privatization provideda solution can be found to the problem of non-profitable marketing operations in remoteregions. A National Food Reserve Agency (NFRA) was established in 1999, whicheffectively operated as a state marketing board by purchasing maize within set pricebands. The price bands were terminated in 2000 and replaced by indicative prices. TheSpecial Crops Act, which had reserved the production and marketing of high-value cropsto the estate sector and restricted the entry of smallholders to these activities, wasabolished in 1995. Exchange rate reforms, which allowed the countrys currency todepreciate, also reduced the implicit tax on agricultural exports (WTO, 2002).

Supply of all inputs has been decontrolled, and most subsidies have been removed. Theremoval of fertilizer subsidies reduced its use by farmers, and the Government respondedwith the Starter Pack Initiative in 1998 to provide farm extension support and free fertilizer and seeds to the rural poor primarily to help alleviate poverty. Initially supplied to allfarmers, the scheme contributed to the bumper maize harvests in 1998 and 1999,generating large surpluses that were bought and stored by the NFRA. The Starter PackProgram has now been redesigned by targeting the beneficiaries and is now calledTargeted Input Program (WTO, 2002).

1.3 Trade policy developments

Despite some policy setbacks, the Government remains committed to trade andinvestment liberalization as part of its longstanding recovery programme that began in themid-1980s and deepened in the mid-1990s. Since embarking on trade liberalization in thelate 1980s, Malawi has substantially rationalized its tariff structure by lowering andamalgamating duty rates. Maximum MFN tariffs of 70 percent were cut to 45 percent in1988, and to 40 percent in April 1996, when the number of bands was also reduced. From

April 1997, the maximum tariff was lowered further to 35 percent, and tariffs wereeliminated on raw materials used in manufacturing. Consequently, unweighted averagetariffs declined substantially during the late 1990s, from 21 percent at the end of 1997 to15.8 percent at the end of 1998. The maximum tariff rate is currently 25 percent (WTO,2002). Other policy measures included elimination of restrictions on payments for currenttransactions and transfers, and reduction of the scope of export licensing.

Malawi is an original Member of the WTO. It is also a signatory and beneficiary of anumber of bilateral and multilateral trade agreements. These include the SADC Trade


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Protocol, COMESA, the Malawi-Zimbabwe bilateral trade agreement and Malawi-South Africa bilateral trade agreement, the Cotonou Agreement between the EU and the ACPcountries, and the US-AGOA initiative for concessional exports to the US market.Malawis membership of overlapping regional and bilateral arrangements with differentgeographical coverage, trade liberalization agendas and trading rules makes its traderegime more complex (WTO, 2002). Furthermore, as a developing country and a member of the WTO, Malawi is entitled to utilize the various GSP schemes offered by developedcountries. Despite Malawis membership in these organizations, inter-regional trade hasnot been a strong component of Malawis exports.

2 Experience wi th implementing the agreement on agriculture

2.1 Market access

Tariff reductions

In the context of the UR, Malawi bound tariffs on all agricultural products at a ceiling rate of 125 percent, except for a few products with ceiling rates of 50 percent (rye, barley andoats), 55 percent (cocoa paste, butter and chocolate) and 65 percent (cocoa powder).Tariffs were bound on less than 1 percent of tariff lines for non-agricultural products, at

ceiling rates between 30 and 65 percent Other duties and charges on all these products arebound at a ceiling rate of 20 percent (see Table 1). As an LDC, Malawi made nocommitments to reduce these ceiling bindings.

Table 1. Tariff indicators, end-2000/2001

Indicator All goods Agriculture Non-agriculture

Bound tariff lines 17 100 0.3Duty-free tariff lines 4 11 2.8

Simple average applied MFN rate 13.6 15.2 13.3Range of MFN applied rates 0-25 0-25 0-25

Applied MFN tariff standard deviation 9.3 9.4 9.3 Ad valorem duties (percent of tariff lines) 100 100 100

Source: WTO (2002).

Applied tariff rates are well below these ceiling rates, particularly for agriculture. The simpleaverage MFN tariff was almost 14 percent in 2000/2001, down from almost 16 percent in1997/1998 and 21 percent in 1996/1997. Virtually all tariffs are ad valorem . The tariff structure is escalatory, with six bands; rates of zero or 5 percent apply to necessities,and 10 percent to intermediate goods. The maximum duty rate applied to consumer goodsis currently 25 percent. With a coefficient of variation of about 0.7, tariffs were moderatelydispersed in 2000/2001.

Applied tariffs on agricultural goods are slightly higher than the average for manufactures,at 15.2 percent. The structure of applied tariffs is shown in Table 2. The lowest tariffs areapplied on imports of oilseeds and cereals on average, while higher tariffs are applied onprocessed food products.

Table 2. Selected MFN tariff rates by HS 2-digit level, 2000/2001

HScode

Short description Number of lines

Simpleaverage

Range Standarddeviation


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01 Live animals 17 9.4 0-25 9.3

02 Meat and edible meat offal 53 11.4 10-25 4.404 Dairy produce 28 17.0 0-25 8.4

05 Products of animal originnes

17 8.2 0-10 3.9

06 Trees, plants, flowers 12 16.3 10-25 7.707 Vegetables 65 15.8 10-25 7.4

08 Fruits and nuts 55 22.0 10-25 6.109 Coffee, tea 32 22.7 10-25 5.510 Cereals 16 5.0 0-10 5.2

11 Products of milling industry 41 17.9 0-25 10.412 Oil seeds 46 1.8 0-25 10.416 Meat preparations 26 25.0 25 0.0

17 Sugar and sugar confectionery

17 17.9 10-25 7.7

18 Cocoa and cocoapreparations

11 22.3 10-25 6.1

Source: WTO (2002).

Under its bilateral and regional trade agreements such as the SADC Trade Protocol,COMESA, the Malawi-Zimbabwe bilateral trade agreement and the Malawi-South Africabilateral trade agreement, some of Malawis imports enter at preferential rates below theMFN applied rates quoted above. COMESA is intended to be a customs and monetaryunion. Its Free Trade Area was launched on 1 November 2000, and Malawi met thisdeadline. The free trade agreement under COMESA provides for across-the-board dutyfree trade on all products as long as the rules of origin criteria have been met. Thecustoms union is to be implemented by 1 November 2004 with a CET consisting of four tariff bands: zero, 5 percent, 15 percent and 30 percent (on capital goods, raw materials,

intermediate goods and final goods, respectively). However, since most COMESAmembers, including Malawi, have maximum tariff bands below 30 percent, discussions areunder way on the possibility of reducing the agreed CET rate on final goods (WTO, 2002).

As regards the SADC Trade Protocol, tariff reductions were started in September 2000 byMauritius and South Africa, and by July 2001, they had been followed at different times byall other Trade Protocol members except Mozambique (Imani-Capricon, 2001). The aim of the Protocol is to reduce tariffs for 85 percent of all trade to zero by 2008 and 98 percentof all trade by 2012. Malawis offer to non- SACU countries is presented in Table 3. Allimports including those from COMESA and Zimbabwe (under the bilateral tradeagreement) face a surcharge of 20 percent, but this can be claimed back by the importer.

Table 3. Malawi tariff reduction schedule in SADC

Category Description

A Products currently attracting duty of 0-5 percent would be immediately reduced tozero (representing 33 percent of total tariff lines)

B Products with duty of 6-30 percent would be phased down gradually, starting Year 3for some products and Year 5 for the rest

C These are sensitive products consisting of sugar, confectionery, beer, textiles,matches and motor vehicles

Source: Imani-Capricon Economic Consultants (2001).


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Bilateral tariff arrangements especially with its major traditional trade partners, South Africaand Zimbabwe, vary in their scope and extent of reciprocity. Between Malawi andZimbabwe, there is a reciprocal agreement providing for duty-free trade on all goods,provided that they (1) meet the origin criterion which is 25 percent local value added and(2) conform to the required national standards of the importing country. This appears topresent a two-country free trade area within the larger (COMESA) free trade area, thedifference being in the rules of origin requirement. Malawi has raised concern with theweak certification rules and the absence of any provision for dispute settlement, andaccordingly, it has urged that the agreement be renegotiated to tighten up on manufacturingcertification and include cumulation, dispute settlement mechanisms and a list of sensitiveproducts (Imani-Capricon, 2001). A revised draft agreement has been prepared and isawaiting ratification by both parties.

The bilateral trade agreement between Malawi and South Africa is asymmetric, providingthe former with duty-free status for its commodities as long as they met the 25 percentlocal value added, while the latter receives only MFN treatment. This bilateral agreementwill remain in force until 2008 when SADC tariffs reach zero.

Because a large component of Malawis trade from SADC countries, excluding South Africa, already receives COMESA preferences, the Malawi reductions under the SADCTrade Protocol do not involve major tariff cuts overall. After eight years, the trade-weighted average tariff on imports from SADC countries, excluding South Africa, would fallfrom 2.5 percent to 1 percent. However, because South Africa previously received nopreferences from Malawi, the average tariff on imports from South Africa would drop from10.4 percent to 2.9 percent. These falls are back-loaded and will not commence until themid-2000s. The main direct impact of SADC on Malawi will thus be the extension of dutyfree access to imports from South Africa, by far its main single trading partner (WTO,2002).

Special Safeguard (SSG) Measures

Malawi notified its anti-dumping legislation to WTO in 1995 and is currently redrafting it tobring it into line with WTO requirements (WTO, 2002). Malawi has no safeguard legislation.It does not have access to the SSG clause in the AoA because it made use of the optionto use ceiling bindings. Owing to pressure from local producers especially livestock andtobacco, the Government has sometimes temporarily imposed a ban on imports of poultryand tobacco, respectively.

Customs valuation

The Government has a contract with Socit Gnrale de Surveillance (SGS) to carry out,in the country of supply, pre-shipment inspection (PSI) of the quality, quantity,classification, value and related services of imported goods. The contract, in effect sinceJune 1996, has a WTO PSI agreement appended to it. It has clear guidelines, proceduresand standards that importers, suppliers and SGS have to observe to speed up theinspection process. Pre-shipment inspection will result in either a Clean Report of Findingsor a Discrepancy Report. A Clean Report of Findings is required for importers in Malawi toclear goods through customs and for exporters to collect payment.

Tariff rate quotas

Malawi does not apply TRQs.

Import licensing arrangements

Malawi operates a liberal import and export licensing system with restrictions largely based


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services are also subject to MBS reviews.

2.5 Compliance w ith TRIPS

In principle, Malawi is committed to introducing TRIPS, but implementation is limited bylack of technical capacity. With a rising poverty level countrywide and the difficulties theGovernment is facing in meeting its social obligations, it is unlikely that this will be a priorityarea unless there is foreign assistance.

3 Review of food and agricultural trade

Agricultural exports are central to Malawis trade performance. The share of agriculturalexports in total exports has declined only slightly from 87 percent in 1993 to 81 percent in1999 (WTO, 2002). Agricultural exports have been higher in the post-AoA periodcompared with earlier periods, although the pace of growth has slowed (see Table 4).Closer inspection of the trend shows that the value of exports peaked in 1998 and hassince fallen back. Buoyant prices received for tobacco accounts for much of the post-1995improvement, and there was little change in the overall volume of exports. The increase inthe volume of trade during the 1990s can be attributed partly to SAPs, which weredesigned to improve pricing policy and the incentive structure of the agricultural sector, as

well as promote private sector participation in the marketing of smallholder farmers inputsand produce. The disappointing volume performance can be attributed to a number of factors. While SAPs addressed price constraints, they ignored non-price issues, which inMalawi constitute formidable obstacles to agricultural development. These include marketand physical infrastructure as well as investment risk. Additional bottlenecks impinging ontrade not well addressed by the SAPs include inadequate producer incentives,unfavourable internal terms of trade and poor access to credit and extension services.Limited foreign exchange capacity to import agricultural inputs such as fertilizer andagrochemicals further weakened the export base of the economy.

Table 4. Agricultural and food t rade (annual averages)

1985-89 1990-94 1995-2000 Increase Increase(A) (B) (C) (B) over (A) (C) over (B)

US$ million % %

Total exports of agricultural products 248 402 356 603 447 364 43.6 25.5Total imports of agricultural products 37 691 129 641 75 203 244.0 -42.0

Agricultural trade balance 210 711 226 962 372 161 n.a. n.a.

Food exports excluding fish 44 169 30 257 45 942 -31.5 51.8Food imports excluding fish 30 960 122 599 68 593 296.0 -44.1

Food trade balance 13 210 -92 342 -22 652 n.a. n.a.

Source: FAOSTAT.

Agricultural imports increased very significantly between the end of the 1980s and the firsthalf of the 1990s, partly because of increased maize imports in the early 1990s. Sincethen, until the disastrous harvest in 2002, the incentive programmes in the late 1990s toencourage maize production meant that maize imports faded away, and food imports fellin the post-1995 period.

Malawi has always run a surplus on its agricultural balance of trade, and this surplusincreased based on the available data up to 2001 in the post-1995 period. However, thebulk of Malawis agricultural exports are non-food crops (tobacco, tea, cotton), and there


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has only been a slight diversification away from these traditional exports in recent years(see Table 5) The balance on food trade alone has evolved rather differently, moving froma surplus in the late 1980s to a deficit in the 1990s. The reasons for these trends are nowexplored on a commodity-bycommodity basis.

Table 5. Principal agricultural exports by main commodities 1994-2000

Commodit y 1994-96 1998-2000

Tobacco 64.2 61.4Tea 6.9 8.7Sugar 6.9 6.9Cotton 1.8 0.9Groundnuts 0.1 0.0

Rice 0.3 0.4Coffee 3.9 1.8

Pulses 1.8 1.3Maize 0.6 0.0Other exports 10.8 12.5

Total domestic exports 97.7 95.3Re-exports 2.5 4.5Total 100.0 100.0

Source: National Economic Council, National Statistical Office, Treasury andReserve Bank of Malawi.

Tobacco

The sharp increase in tobacco exports from 1990 onwards and the slower increases in theyears to 1998 can be traced to the entry of the smallholder subsector into the production

of burley tobacco, which was an estate monopoly prior to this period. In the 1990/1991growing season, the Government for the first time granted smallholder farmers a quota of 3 million kilograms of burley tobacco to be sold at the auction floors without requiring thattheir lands be registered either as leasehold or as freehold. The ban on smallholdersgrowing burley tobacco was completely lifted in 1995. Output from smallholder farmers(with up to 2 ha) has grown substantially, from 69 000 tonnes in 1996 to around 90 000tonnes in recent years. However, this has been offset largely by declining output from theestates (WTO, 2002). Tobacco prices have fallen in recent years, although in the five-year period to 2000, they were significantly higher than in the pre-AoA period. However,reduced export volumes have led to a reduction in the contribution of tobacco to overallagricultural export earnings in the most recent period (Table 6).

Table 6. Value, volume and unit value of agricultural exports, 1985-2000

1985-89 1990-94 1995-2000

Tobacco

Exports (tonnes) 59 140 95498 107 187

Exports ($US thousand) 152 460 270038 338 489Unit value ($US/tonne) 2586 2833 3 203Tea

Exports (tonnes) 37 261 37104 40 788


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Exports ($US thousand) 37 277 36477 38 859

Unit value ($US/tonne) 998 979 964Coffee

Exports (tonnes) 3862 6531 4 359

Exports ($US thousand) 8832 10555 11 047Unit value ($US/tonne) 2303 1740 2 532Sugar

Exports (tonnes) 89 345 38904 53 095

Exports ($US thousand) 26 763 22160 28 097Unit value ($US/tonne) 313 592 556

Source: FAOSTAT.

Tea, coffee and sugar

The export value of tea has fluctuated around a trend depending on the prevailing level of world market prices, and there is little evidence of a trend, despite an apparent jump in thevolume of tea exports in the FAOSTAT data in 2000. The value of coffee exports is much

smaller and has been falling steadily since the mid-1990s. The volume of sugar exportshas increased in the post-1995 period, although the impact of increased volume on exportrevenue has been offset by a fall in the unit value of exports. Malawi exports mostly rawsugar, mainly under quota to preferential markets such as the EU, United States and South

Africa. Only about one-quarter of Malawis sugar exports are sold on the open market, atmuch lower prices (WTO, 2002).

3.1 Agricultural imports

Maize imports fluctuate over the period 1985-2000, peaking in the early 1990s at the timeof a drought, which necessitated substantial maize imports at that time. The high unit priceof imports reflects Malawis status as a landlocked country. Wheat imports have been

increasing steadily, although a sharp fall in their unit value in the post-1995 period meantthat expenditure on wheat imports fell during this period. This is not the effect of food aidas food aid inflows were much higher in the early 1990s period (see Table 7). Dairyimports, though small, show a small increase in the late 1990s compared with a decadeearlier.

Table 7. Value, volume and unit value of agricultural imports, 1985-2000

1985-89 1990-94 1995-2000

Maize

Imports (tonnes) 115981 308869 93 153 a

Imports ($US thousand) 27447 76032 21 544 a

Unit value ($US/tonne) 235 264 251 a

Wheat

Imports (tonnes) 21675 59903 73 895Imports ($US thousand) 5314 13565 11 232Unit value ($US/tonne) 253 240 151

Dairy product s

Imports (tonnes) 2612 3356 3 060


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Imports ($US thousand) 3302 6079 4 419

Unit value ($US/tonne) 1274 1833 1 587

Source: FAOSTAT.

4 Food security impacts of the AoA

4.1 Food security indicators

The average per capita calorie intake in Malawi is very low (Table 8). There was a sharpdecline in the first half of the 1990s compared with the earlier period, but there was somerecovery in the post-AoA period. Virtually all food energy is supplied by vegetableproducts with very limited consumption of meat and animal products. The share of foodimports in total import expenditure increased significantly in the early 1990s, but has fallenback in the post-AoA period as domestic food availability increased.

Table 8. Food security indicators

1985-89 1990-94 1995-99

Energy (kcal/capita/day)

Total 2 018 1 899 2 081

Vegetable 1 951 1 840 2 030 Animal 67 59 52

Protein (g/capita/day)

Total 57.4 51.4 52.9Vegetable 51.8 46.6 48.8

Animal 5.7 4.7 4.1

Fat (g/capita/day)

Total 29.9 26.0 27.8

Vegetable 25.7 22.2 24.1 Animal 4.2 3.9 3.6Food imports as a percentage of t otal imports 7.8 19.5 12.7

Source: FAOSTAT.

4.2 Food security strategy

For more than 30 years, government policy has emphasized food self-sufficiency as themain pathway towards food security. The countrys food security agenda has beendominated by maize, a crop which occupies more than 60 percent of cultivable land in the

smallholder subsector. Although efforts to develop alternative crops have been made,maize-based research and development in the past have been accorded a high degree of prominence. Thus, it is not surprising that for a long time, a disproportionate share of customary land has been devoted to maize production even in areas where theenvironment is not suitable for the crop. This ill-conceived strategy could also help toexplain the ineffectiveness of extension education in which farmers access to credit wasconditional on adoption of improved maize varieties.

Approximately two million tonnes of maize is considered sufficient to satisfy the countrysdemand. However, in spite of allocating more than 60 percent of the cultivable land tomaize alone, production levels have often been below the countrys demand. Only in twoyears (1999/2000 and 2000/2001) in the past decade has the maize production level


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exceeded the estimated demand. This was mainly due to government interventions,notably the agricultural productivity investment programme, which expanded access tocredit, and the starter pack programme, which provided limited quantities of free inputs tosmallholder farmers. Cost implications and sustainability concerns forced the governmentto reorient the starter pack programme towards resource-poor and disadvantagedsegments of the rural communities, thus significantly reducing the number of beneficiaries.The reduction in the size of free input programme was a major factor contributing to thedecline in maize production in the 2001/2002 season.

In response to drought and escalating fertilizer prices, smallholder farmers have resortedto planting cassava and sweet potatoes in addition to maize in the past decade. Thehectarage of cassava is estimated to have increased from 71 919 ha in 1990 to 202 338ha in 2001, representing an increase of approximately 200 percent, according to Ministryof Agriculture and Irrigation estimates. Output is estimated to have increased from 167818 tonnes in 1990 to 3.4 million tonnes in 2001.

Similarly, the hectarage for sweet potatoes is estimated to have increased from 43 384 hato 192 457 ha between 1990 and 2001, representing an increase of 300 percent, whileoutput is estimated to have increased from 176 999 tonnes to 3.4 million tonnes over thesame period. While it is generally accepted that production of cassava and sweet potatoeshas been on the increase over the past few years in the country, there is less agreementon the magnitude of this increase. Some stakeholders have called Ministry of Agricultureand Irrigation estimates of cassava and sweet potato production questionable and evenhigher than in predominant cassava-producing countries in Africa. In times of low maizeproduction like the year 2002, overestimation of alternative sources of food such ascassava and sweet potatoes creates a false impression about the famine status of thecountry and delays emergency food aid from both domestic and international donors.Delayed reaction to emergencies resulting from lack of, or poor, information has welfareand financial implications, which could undermine social and economic development.

4.3 Food aid

Cereal production shortfalls over the past decade have been offset predominantly by foodaid as depicted in Figure 1. The volume of imports and food aid reached an all-time high in19921/1993 following the 1992 drought. The trend in cereals aid and imports has beendeclining between 1994 and 1999. This could be attributed to increased dependence oncassava and sweet potatoes as alternative sources of food. However, surplus productionin 1999/2000 and 2000/2001 growing seasons resulting from the free distribution of smallquantities of fertilizer and seed to smallholder farmers under the starter pack programmeenabled the country to meet its maize requirements as well as export surplus maize for thefirst time in more than three decades.

Figure 1. Malaw is cereal commercial imports and food aid (thousand tonnes).


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5 Negotiating proposals for the future

Malawi believes that the current round of trade negotiations should have a developmentalagenda with five priorities (currently covered under the WTO framework): assistance todevelop trade infrastructure, especially for landlocked LDCs; further debt relief;examination of commodity markets and resulting low prices; establishment of permanentinstitutions to facilitate technology transfer; and creation of a trust fund to ensure thatdeveloping countries have sufficient finance to implement their multilateral obligations(WTO, 2002).

In agriculture, Malawi believes that developed countries must substantially andprogressively reduce trade-distorting domestic support measures as well as exportsubsidies, with a view to their elimination, while the multilateral trading system shouldprovide more flexibility for developing countries to apply domestic support measuresnecessary to develop agriculture and food security.

Assessment of Malawis interests in the WTO negotiations indicates that there iswidespread lack of knowledge and understanding among the Malawi business communityof the results of the UR trade negotiations and of the role of the WTO. This is attributableto inadequate dissemination of relevant information to the private sector resulting fromsevere constraints on human and financial resources in the Ministry in charge of WTOmatters. Technical and financial assistance is needed to assist a broader participation inpolicy formulation in the current round of negotiations.

References

Imani-Capricon Economic Consultants. 2001. The impact of regional trade agreementsand formation of a strategy with regard to rationalising participation in these agreementsand maximising the benefits to Malawi . Durban, Malawi Trade Policy Project.

WTO. 2002. Trade policy review: Malawi . WT/TRP/S/96. Geneva, WTO.

[85] Study based on a draft prepared for FAO by Charles Mataya, Malawi.


Malawi[85]

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