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Thursday, December 29, 2005

Malawi to benefit from US subsidy removal
by Tadala Makata-Kakwesa, 29 December 2005 - 05:17:43
The announcement by the American government at the World Trade Organisation (WTO) summit that it has removed 100 percent export subsidy on cotton, is expected to benefit Malawi as one of the commodity’s exporters to that country once the programmes is implemented.
Trade and Private Sector Development Minister Martin Kansichi said in an interview on Friday that the move taken by the US government is a welcome development.
An export subsidy is when a government subsidises on its people’s exported products for them to be able to compete on the international market.
This, according to Kansichi, will be beneficial to Malawian exporters in that prices will not be artificially depressed.
He said the subsidies have been a burden to farmers since they were costly, forcing them to realise a relatively small amount of money from the sales.
“The good thing is that America has said it is going to phase out the subsidies, but the period has not been given. These are the subsidies we are saying are costly to our farmers,” he said.
Apart from the export subsidy removal, it was also agreed during the WTO summit that rich countries should start providing technical support to least developed countries to improve their trade-in services such as banking and tourism.
Kansichi indicated that his ministry intends to come up with an action plan that will comprise all ministry officials in order to try to benefit from the resource in time.
The removal of the export subsidies by developed countries means that Malawi’s products will compete on a level playing field in the markets of the developed countries unlike in the past where most products were being sold below the cost of production.

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