USTR Report Highlights Trade Facilitation as Way to Smooth Trade With Africa
Reducing African freight costs, averaging 11.4 percent of cargo value, would facilitate U.S. trade in the region and save African about $11 billion per year, according to a report on U.S. trade with Africa released by the Office of the U.S. Trade Representative (here). The USTR recommended a number of trade facilitation and other measures to bolster U.S. trade with Africa, as the African Growth and Opportunity Act (AGOA) by itself will not likely achieve “transformative changes” in trade and investment on the continent, the report says.
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The World Bank’s Logistics Performance Index only pegs one African country -- South Africa -- within the top 50 countries for trade logistics performance, but puts eight African nations in the 10 worst-performing trade logistics countries worldwide. “Differences in costs and the time gap between using Africa’s ports and those of competitors in South Asia, [the Association of Southeast Asian Nations, or] ASEAN, and Latin America would nullify most tariff advantages provided by tariff preference programs for the types of consumer goods typically carried by maritime container ships,” the report says.
Corruption, poor infrastructure, and inefficient customs and border procedures drive up trade costs in Africa, the report notes. But seizing trade opportunities with Africa is crucial now, at a time when Canada and the EU are drifting away from trade preference programs with all except for the poorest countries and toward more free trade agreements, the report says. The U.S. should work toward a more “regional footing” regarding trade over time, building upon relationships with individual leaders in Africa, and move toward more reciprocal agreements, in contrast with AGOA, the report says.