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Bloc In sub-Saharan Africa

Trade Bloc in Sub- Saharan Africa WailNuri

Colorado Heights University

This research is being submitted on March, 04, 2012 Wail Nuri, To Prof. Jon Wilkerson

Bloc In sub-Saharan Africa

Abstract

Sub-Saharan Africa is on the knife edge. In the next two years, perhaps in the next few months, this vast storehouse of human energy and natural wealth can become a danger to the United States and Europe on a par with the worst the globe has yet presented a glowering miasma of anger and slaughter. Or the ancient homeland of humanity can become the center of a new departure for the human enterprise. It can spark economic and social development in which humanity will find a new base for hope. Imagine twenty Darfurs and Zimbabwes. Alternatively, imagine twenty South Africas. One or the other, it will come out of Africa, our part of Africa. We wish to gauge whether there is political support for the United States side of a proposed bargain which would greatly benefit the United States economically and militarily, contributing much to the security of the entire first world both now and in the future.

Bloc In sub-Saharan Africa

Most of the natural resources that are essential for the developed countries are located in the developing ones. Most often difficult problems start out of trade between developed and developing countries, causing un-stabilized prices for the raw materials that are produced by the developing countries (highly competitive market and prices are subjected to changes, depending on markets supplies and demands). In comparison to more stable prices for the manufactured goods that are produced by developed countries. This research will be discussing the great opportunity for many Sub-Saharan African countries to stabilize the prices and unify their negotiation efforts as one entity Sudan, Chad, Libya, Eretria, and Ethiopia. Therefore, the domestic economy for many of these countries will be often experiencing large fluctuations in the ratio of export prices to import prices. Many efforts have been taken to stabilize the prices and over all the out put control, some of them were successful and others were not. The deceleration of the growth of manufactured imports from the developing countries can be attributed to the decline in GNP growth rates in the developed countries rather than to increased protection. In fact, the noticeable income elasticity of demand for manufactured goods imported from the developing countries (the ratio of the rate of growth of these imports to that of GNP) continued to increase (Similar conclusions are reached if one considers the share of imports from the developing countries in the apparent consumption of manufactured goods

Bloc In sub-Saharan Africa

(production plus imports minus exports) in the developed countries. This ratio increased from 0.9 per cent in 1973 to 1.5 per cent in 1, and again to 2.0 percent in 1981, with incremental shares (the ratio of increases in imports to increases in apparent consumption) rising from 2.4 per cent in 1973-78 to 3.8 per cent in197881(USAID 2010). In the past twenty years, the statistics indicated a tremendous growing in the interdependence trade within those countries. Moreover, the needs and demands for manufactured goods are growing which lead to increase in the developing countries imports in general, which are usually financed through World Bank as well as the International Money Fund. Therefore we believe forming trade blocs among the developing countries can help to stabilize the prices, and negotiation advantages in their deals with developed countries. The opportunities for the North America and Europe are huge. Africa represents a potential market equal in size to India, and close to the size of China Africa is the world's second largest and second most populous continent, after Asia. At about 30.2 million km (11.7 million sq mi) including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area. With 1.0 billion people (as of 2009) in 65 territories (including 54 recognized states), it accounts for about 14.72% of the world's human population) (Wikipedia.org). In debating stimulus to the US/Canadian automobile industry, for example, the members of Congress, should realize that simply reinstating commercial relationships between Sudan and the United States could each year for years to come, Sudan alone could absorb

Bloc In sub-Saharan Africa

several million cars produced by the Big Three. Between 2000 and 2010, six of the ten fastest-growing economies in the world were in sub-Saharan Africa (Relation, 2011), for that Sub-Saharan Africa presents many opportunities for U.S. businesses and manufacturers as an emerging potential market for the American exports, especially Africa needs virtually everything the US and Canada produce easily and at attractive prices. Wind Turbines, Solar power generation, Well pumps, Pipelines, Transmission lines, and everything. If Africa were to become fully developed, these markets would independently cause as much as two percent continuous annual growth to the economies of North America and Europe. In August 1999, Sudan, and Chad from SSA started exporting oil. About 70-80 percent of the oil production is exported. In 1999-2000, the 2 country experienced their first trade surplus. That surplus rose to US$500 million in Sudan alone in 2000 on exports of US$1.7 billion and imports of US$1.2 billion. Technology besides the Foodstuffs is the most important import into Sudan. But steel and alloy products were the main industrial items having been imported to Sudan, in addition to spare parts import, computers, audio and video devices, refrigerators, air conditioners (A/C), personal cars, lorries and trucks, and Agricultural equipments and products (chemicals, fertilization, seeds, as well as water pumps).

Bloc In sub-Saharan Africa

Since approximately 2000 policy has been more flexible and open, since then the export and import policy has been liberalized. In the past, Sudan was isolated, and foreign trade was highly restricted. All import embargoes were removed with the exception of drugs, hazard playing machines, and weapons, but foreign trade has been applied and encouraged in 2 free zones/areas: *Red Sea Free Trade Zone. *Al Gaili Free Trade Zone. Any future failure of the US and Europe to enter productive relationships with these countries will inevitably lead to capture of both sides of the African market by China, India, Russia and Brazil. Foe example while the majority of Africa's exports to China are in oil, it also exports iron/metals, and other commodities, as well as a small amount of food and agricultural products. At the same time China exports most of those countries needs, in-term of machinery and transportation equipments, high tech and communications equipments, and electronics in-general (cfr.org). In 2009, China surpassed the United States as Africa's largest trade partner (WSJ). According to the Chinese Ministry of Commerce, in 2010 Sino-African trade reached $126.9 billion, while the trade volume between China and Africa grow by 30% during the first three quarters of 2011 (focac.org). China's top trading African partners are Angola, South Africa, Sudan, Nigeria, and Egypt. The paper main focuses on the role of trade and its possibility to achieve long-term growth and sustainability. We concluded that, the trade policy in SSA works the

Bloc In sub-Saharan Africa

same way it does everywhere. For example: *High levels of trade restrictions obstacle to exports as in the past. *And their reduction significantly improved trade performance in the entire region. *Africa poor infrastructures, and transportation other trade obstacles exports are not responsive to prices or to the traditional instruments of commercial policy. As a result, in most cases the ground rules for long-term growth are: *Human resources. *Physical infrastructure. *Macroeconomic stability. *The rule of law.

Bloc In sub-Saharan Africa

The keystone role of Sudan


Geographically, Sudan is a keystone for the economic and social development which must under gird peace and prosperity, especially in sub-Saharan Africa. This research is suggesting that, forming a bloc between sub-Saharan countries (Sudan, Chad Central Africa, Ethiopia, Eretria, and Libya) all of these countries do not have sea ports except Sudan (in Read Sea), and Libya (in Mediterranean Sea). The real opportunity is in its huge natural resources, and population (approximately 150 million citizen, and over 75 million head of animals). Never-the-less, this bloc is desperate, and in a great need for infrastructure such as roads and railways to connect the production areas to the ports and the international markets. Also we have to take in consideration the man-power of Ethiopia, Sudan, Eretria, in addition to the huge oil resources in Libya, Chad, and Sudan. Also we should not ignore the wide spaces of fertilized soil in Sudan, which accompanied be suitable weather for different and essential agricultural products. In1995 Sudan applied for WTO membership and submitted its memorandum on the Foreign Trade Regime in 1999. The Sudanese Commission has also conducted several informal bilateral trade agreements with several member states of the WTO, including the USA, EU, Australia, Canada and Brazil (NY report, 2008). In addition, in order for the government of Sudan to improve the status of Sudans trade, it has created several trade reforms, including the establishment of state subsidizes to control influence the prices of trade commodities. The government

Bloc In sub-Saharan Africa

also introduced a new currency in 2007, the Sudanese Pound, with an initial exchange rate of US$1 equals 2 Sudanese Pounds. Sudan has achieved a fragile stability, the 2005 Comprehensive Peace Agreement between North and South has withstood the test of four years, and since January 2011 the South becomes an independent country. A brand new agreement between the national government and Darfur has been signed by the representatives of an overwhelming number of the Darfuri challenging the government militarily, most critically by the Justice and Equality Movement. Oil revenues have made the government financially stable and provided a platform for growth. But each of these elements of stability contains an element of substantial risk. Recent massive increases in the price of oil and natural gas have given both the government and investors a huge revenues and surplus. The Darfur agreement is by no means secure. And the indictment of President Al Bashir by the International Criminal Court has introduced an element of hostility and threat not only from his partisans but from other Sudanese, indeed from other Africans, as well. The United States, Canada, Mexico and Europe can play a critical role in all of these matters if they act quickly and in a sense of partnership with progressive elements of Sudanese society, and its neighboring countries. Especially the existence of oil is always associated with cash, which is essential to the US and Europe. Meanwhile the suggested bloc does not have technology, which the US and Europe have. Not only that, but across the Read Sea there is a huge market for every possible goods that is

Bloc In sub-Saharan Africa

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going to be produced in the suggested bloc such as vegetables, fruits, meets, chicken, cotton, sugar, wheat, rice, vegetable oil, natural gas, oil, silver, Arabic Gum, gold, phosphate, talc powder, and uranium (Gulf State, beside huge consumption market in the north Egypt, and Europe just across the Mediterranean Sea). Nevertheless With increasing pressure from the western countries over the Darfur issue, Sudan is moving closer eastward by establishing strong relations with Asian giants such as China, India and Indonesia. Sudans trade surplus almost tripled to $2.5 billion in the first quarter as oil and gold exports rose and imports tumbled Finance Minister Ali Mahmoud Abdel Rasoul said. Exports grew to $5.1 billion from $3.5 billion over the same period, with oil shipments gaining to $4.3 billion from $3.7 billion and gold sales increasing to $500.9 million from $269.7 million. The countrys imports fell to $3.1 billion from $3.7 billion. In my mind, if the government of Sudan gave some attention to the agricultural sector, instead of focusing 100 % on oil sector would be better for over all economy and the individual income since more than 60% from population are farming their lands, and only 13% from population works in industry sector.

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Reference
Emerging-Markets. (2010, 07). Emerging-Markets Oil and Gas Opportunities http://news.bbc.co.uk http://www.americans-world.org

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