Bridges Weekly Trade News Digest • Volume 7 • Number 2 • 22nd January 2003
Africa-US Trade Summit Discusses Future Of African Trade
Ministers and trade negotiators from sub-Saharan Africa and the US met in Port Louis, Mauritius, from 13-17 January to discuss developments under the US’ African Growth and Opportunity Act (AGOA). During the meeting — the second US-Sub-Saharan African Trade and Economic Cooperation Forum, or AGOA Summit — US President Bush stated that he would extend the AGOA beyond the current deadline of 2008. The meeting was held in accordance with a mandate under the AGOA for a ministerial- level Forum and a parallel private sector session every year. A trade exhibition and an NGO forum were also held, and over 900 African businesses participated. The AGOA, signed by former US President Bill Clinton in May 2000, provides duty and quota-free access for nearly 2000 products from 38 (of 48) sub-Saharan African countries deemed to be promoting good governance and market economies.
AGOA Summit Outcomes
US President Bush, who opted to stay in the US during the 13-17 January AGOA Summit, sent a message to the conference, stating that he would seek for the extension in the US Congress of the AGOA beyond its current 2008 expiration. Mauritian Prime Minister Anerood Juganauth welcomed the announcement, saying it would allow for longer-term planning. US business representatives also said they were pleased, as the move would "give Africa the time it needs to become competitive." Bush also reiterated his intention to increase development aid by 50 percent over the next three years, to US$15 billion from US$10 billion - - much of which would target Africa — and said the US would "continue to lead the world" in funding for HIV/AIDS.
Speaking in Mauritius, US Trade Representative Robert Zoellick emphasised trade as the surest path to peace and prosperity in Africa. He reiterated an earlier US call for a global reduction in agricultural tariffs, saying that "Africa would benefit greatly from reducing or even eliminating subsidies and other barriers to trade," and that the US was willing to lead the way. He said African farmers would benefit from being able to sell agricultural products in developed countries currently heavily subsidising their farmers.
However, some African officials commented that African farmers cannot afford to comply with developed country sanitary rules, and said African farmers themselves are in need of government support. Magnus Kpakol, chief economic advisor to Nigeria’s President Olusegun Obasanjo, commented that "I am not so sure that we are in a position that our farmers can be competitive around the world without some support." The US itself last year raised domestic agricultural support, providing subsidies to the US farm sector estimated at some USD 82 billion over the next decade (see BRIDGES Weekly, 15 May 2002).
On a related issue, Summit participants discussed genetically modified organisms (GMOs), with the US pressing African countries at risk of starvation to accept genetically modified food aid from the US. Some countries, such as Zambia, have rejected such food aid. A US spokesman said that accepting the food aid would "help the people of Africa to eat the same food that the American people eat, and…relieve the famine. Unfortunately this type of food is being prevented from being received by the people of Africa."
Uncertain future
Many Summit participants welcomed the promise by Bush to seek the extension of the AGOA. However, some raised concerns about the sustainability of the initiative and its future impacts. They questioned whether the economic growth spurred by the AGOA could be maintained when the African privileges are cancelled out by wider global deals under the WTO, forcing African countries to compete in an increasingly open market. A recent World Bank study points to just such a challenge (see "The Perversity of Preferences: GSP and Developing Country Trade Policies" in the Resources section, this issue). The study shows that textile import quotas will be discontinued in 2005, meaning African exporters will be expected to compete on the same terms as others on the US market. According to the AGOA, all textiles from Africa must also be made from African fabrics by 2004, a deadline African trade officials at the AGOA Summit lobbied to be moved forward into the future.
A Civil Society Forum held in parallel to the Summit ended its meeting with the establishment of an AGOA Civil Society Network. The Forum made recommendations geared toward making the benefits of AGOA more accessible to all members of society, including to making the AGOA a package that caters also to human development concerns, and the recognition that trade alone is no solution for Africa.
AGOA background: mixed results from trade
Since the AGOA entered into force, exports from Africa to the US, excluding oil, have increased by 50 percent. Textile exports have accounted for a large share of exports, though much of the growth from AGOA has been uneven. The US is now the biggest importer of African goods and an additional US$1 billion has been invested in Africa as a result of the AGOA — partly by Asian investors, coming to Africa for inexpensive labour costs and to escape textiles quotas in Asia. Kenyan textile exports have quadrupled under the AGOA, and 21 percent of South African exports are related to the AGOA.
However, the impacts of the AGOA have been uneven, and Africa’s share of global trade as a whole has fallen from about five percent in the 1960s to less than two percent. Many countries have difficulties making use of the AGOA, due to poor infrastructure, obsolete technology, and lack of capital and resources. For example, Senegal’s textile industries are closing rather than flourishing, and Nigeria has problems attracting investment due to problems with corruption. Some African civil society groups also disapprove of the US’ "eligibility requirements" for the AGOA nations, which include economic liberalisation, privatisation of public assets, minimisation of government control over private business and US-style legal systems, and critics claim that US interests do not go beyond oil and fostering of closer African links to advance its war on terror.
"Africa-US Trade Conference Closes But Questions Remain," ASSOCIATED PRESS, 17 January 2003; "Foundation for Democracy in Africa," PRESS RELASE, 17 January 2003;"African Officials Applaud Bush Plan For Trade Extension," ASSOCIATED PRESS, 16 January 2003; "US Trade Deal Brings Mixed Success To African Nations," ASSOCIATED PRESS, 6 January 2003; "US renews farm tariff cut idea at Africa meeting," REUTERS, 15 January 2003; "Bush Offers Africa $5B In Aid, Eased Trading Rules," ASSOCIATED PRESS, 15 January 2003; "African Groups Set to Protest U.S. Forum in Mauritius," IPS, 10 January 2003.