Clinton Highlights U.S. Efforts to Overcome AGOA Challenges

(See ITT's Online Archives or 06/10/11 news, 11061026, for BP summary of U.S. Trade Representative Kirk stating at the Forum that the Administration would work with Congress over the coming months to renew AGOA beyond 2015 and to renew AGOA's third-country fabric provision to 2015, as it is scheduled to expire on September 30, 2012.)

Obstacles to AGOA Include Lack of Capacity, Poor Infrastructure, Etc.

Secretary Clinton stated that since AGOA was signed into law in 2000, Africa’s exports to the U.S. have quadrupled, from $1 to $4 billion, not including oil. However, African countries still export only a few of the 6,500 products that are eligible for AGOA duty-free treatment, and the most common export is still oil.

When Congress considers renewing AGOA, Clinton said members will question how the following problems, which impede AGOA's success, will be addressed:

• Lack of awareness and capacity -- Business in the U.S. and other countries don't often look for potential partners in Africa and many African firms also have no way of knowing which foreign businesses might buy their products or services. However, even if African companies can make connections with American businesses, they may not yet have the capacity to make and ship products that are competitive in the U.S. market.
• Poor infrastructure -- Africa lacks in infrastructure and in connections between countries. Roads, ports, and electric grids can drive up the cost of doing business in Africa by creating bottlenecks for trade.
• Lack of economic integration -- Low levels economic cooperation, integration, and trade among African nations also hinders growth. In Sub-Saharan Africa, there is less trade between and among the countries than in any other region in the world. Trade officials are under pressure to protect their own home-grown industries and Government leaders of smaller countries are concerned that larger countries will gain too much influence.

U.S. Focus Is on Providing Funding, Supporting Trade, Stemming Corruption, Etc.

Clinton also highlighted the following actions the U.S. is taking with respect to Africa’s development:

• New initiative to fund trade hubs - USTR Kirk has announced a new trade capacity building initiative to provide up to $120 million over four years to intensify and focus the work of the U.S.' African trade hubs through the African Competitiveness and Trade Expansion Initiative (ACTE). Through ACTE, USAID will broaden and deepen the African Trade Hubs' ability to facilitate agricultural trade and develop successful value chains, as well as assist African firms in meeting plant health and food safety standards for their exports. USAID previously channeled its work in this area through the African Global Competitiveness Initiative (AGCI), a five-year program launched in 2006.
• Tripartite FTA, East Africa common market -- Discussion of a tripartite free trade agreement that would cover 34 countries is an important step toward deeper integration, as well as the East Africa Community’s common market protocol, which is making it easier for goods and workers to move among the five member nations. The U.S. will support the Community and will look to replicate it in every regional economic community in Africa that is committed to integration.
• Stemming corruption -- Corruption is being elevated as a major focus of the State Department's diplomatic efforts. The State Department is also establishing an innovation fund to create incentives and boost political support for anti-corruption efforts. The U.S. now requires oil, gas, and mining companies that raise capital in its markets to disclose the royalties they pay to foreign governments, to help avoid benefits to corrupt officials.
• Trade shows, delegations, etc. -- The U.S. supports a number of efforts to forge connections between these businesses, including international trade shows and bringing delegations of private sector investors to the AGOA forum. Clinton and USTR Kirk will also help launch the Zambian-American Chamber of Commerce.

Assistant Secretary Says China is a Strong Competitor in Africa

In response to questions about China's trade relations with Africa at a press brief on the AGOA Forum, Assistant Secretary Carson of the State Department's Bureau of African Affairs stated that China is a strong and aggressive economic competitor in Africa that is trying to acquire oil, mineral, and natural resources to help feed its own industrial growth.

He stated that Africans should hold China to the same high standards they apply to U.S., German, French, Spanish, Japanese, and other developed economies, with respect to investments and doing business in Africa.

Assistant Secretary Carson's remarks are available here.

USTR press release on the ACTE is available here.