Relations With China - Into the Claws of Another Predator?

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Originally published in Inter Press Service

More and more, China seems to be taking up any commodity that can be had from Ghana. From copper waste and scrap, timber and natural rubber to aluminium waste and scrap and vegetable products are being exported to the upcoming Asian superpower.

Cocoa is the latest addition to the list. Ghana is to export 6,500 metric tonnes to China this year, says Isaac Osei, chief executive of the Ghana Cocoa Board (COCOBOD).

This uptake of cocoa is meant to pay for the construction of the ongoing hydro-power project at Bui, north-east of the capital Accra. Government sources indicated last year that an arrangement had been entered into where cocoa production would be increased to supply extra cocoa to China.

Trade between the two countries has blossomed over the years, with China benefitting most.

By 2000, exports to China totalled only 25 million dollars with imports of 93 million dollars. Exports grew to 32 million dollars in 2003 with imports of 180 million dollars. In 2006, the figure went up to 39 million dollars for exports while imports surged to 504 million dollars.

Despite the Bui project, some Ghanaians are concerned that China is benefiting from trade liberalisation by African countries while the same is not true the other way round. Virtually every African country has opened its doors wide to cheap Chinese imports.

Osei pointed out in April this year at the United Nations Conference on Trade and Development (UNCTAD) meeting in Accra that Ghana’s efforts to promote cocoa trade with emerging industrial giants such as China and India were being undermined by trade tariffs applied to developing producers.

Osei said developing countries such as Ghana and Cote d’Ivoire faced higher tariffs on cocoa imports to China and India than less-developed producers such as Benin, Guinea, Haiti, Togo or Uganda. “For us, it discourages investment in the cocoa sector here.”

There is disquiet within the cocoa industry because of the way consuming nations have continued to create distortions in the pricing of the commodity. Speaking on the same platform as Osei, finance minister Kwadwo Baah-Wiredu said there was an imbalance in the cocoa pricing system and urged cocoa-producing states to join forces.

“The current cocoa-chocolate value chain is characterised by an imbalance where the manufacturing and processing end is well positioned at the high value end, compared to the cocoa producers who receive a low share of the final price,” he said. With China’s heightened visibility through cheap goods, some Ghanaians are particularly unhappy about the Asian state’s approach to Ghana.

Alfred Neimann, a commodity analyst at BMT Associates in London told IPS this development “is really surprising since China and India have maintained profiles as leading the development cause of the developing world.

“China needs to open up more and be flexible, especially when she is dealing with countries in the South. That is the only way that China can show that it is on the side of development,” he added.

Neimann said it is unfair that China — having taken advantage of the free trade environment to flood poorer countries, especially Africa, with cheap imports which may not necessarily be of high quality — turns round to prevent the flow of goods into its territory.

Gabriel Orji, an official working in the Nigerian ministry of trade, said that “there is no friendship when it comes to trade. What is happening between China and African states now is an evolving relationship that has to be properly defined and nurtured.

“Africa cannot move away from one predator only to get herself into the claws of another,” Orji said. The governments of African states should use their encounters with their Chinese counterparts to get them to see things from the African perspective, he added.

Getting proper rules in place is important for Ghana. The country is on course to meeting a national target of one million tonnes of cocoa a year by 2010. Consequently, it is keen to find more markets for its produce, apart from other attempts to add value to products locally.

China is a potential market and, with improved trade relations, Ghana is likely to sell more cocoa since local processing facilities are not strong on the ground yet.

An alternative is to find other ready markets. Already there have been diplomatic moves to export cocoa to Cuba but this will take time. Thus there is the need to find ways to create favourable trade environments devoid of hindrances.

Employing about a million people in the six cocoa growing districts throughout the country, the cocoa industry is a major contributor to government revenue. It earned about 1.2 billion dollars last year.