The 10th annual United States–Sub-Saharan Africa Trade and Economic Cooperation Forum, known as the AGOA Forum, convenes its ministerial meeting in Washington August 2, offering an excellent opportunity to look at U.S.-Africa trade today and agree on new strategies for tomorrow.
Florizelle Liser, the assistant U.S. trade representative for Africa, made that point in a July 23 interview with America.gov.
“Ten years ago when we put AGOA in place, I think we were clear that we wanted to provide more market access for Africa’s valued-added products into America’s market. We understood that was important and that there were some key sectors … that would really stimulate growth in Africa. We have seen some of that growth,” she said.
The level of U.S.-Africa trade under AGOA, the African Growth and Opportunity Act, has skyrocketed, she said, but she acknowledged that most of that trade is in oil and minerals. But even when oil is not considered, there has still been a diversification of trade between the United States and Africa, she said.
[Total two-way trade between the United States and sub-Saharan Africa increased 57 percent over the first five months of 2010, compared with the same period last year, reaching $33.1 billion. U.S. exports to sub-Saharan Africa rose by 7 percent to $6.4 billion during the first five months of 2010.
U.S. imports from sub-Saharan Africa increased by 78 percent to $26.6 billion in the first five months of 2010. AGOA imports increased 74 percent to $18.8 billion during this period. AGOA non-oil products included vehicles and parts, apparel, jewelry, fruits, wines, nuts, spices, nuts, spices, vegetables, baskets, cocoa powder, cocoa paste and seafood.]
“When we first started AGOA, we largely did not have apparel coming in from African countries. We did not have footwear coming in. We did not have value-added agricultural products coming into the United States or automobiles coming in from Africa,” she said. This has been changing, and Liser sees that as good progress. But, she said, “we also have to be frank about something that we started to realize along the way — that Africans, even with the market access — did not really have the capacity that would allow them to take full advantage of AGOA.”
Liser observed that some of the 38 eligible countries under AGOA still do not export to the United States.
“We have to be frank about that, so this is a good time to assess and a good time to talk about what we need to do, what the Africans need to do to help them to take advantage of AGOA. That is why the title is ’AGOA at 10: New Strategies for a Changing World.’”
To move the U.S.-Africa trade agenda forward, she said, Africans must be able to build more productive trade capacity — or become more internationally competitive — in manufacturing and other areas such as food products, footwear and apparel. Increased investment and an improvement in African business environments, as has happened in Rwanda, must also take place, she said.
“It is also about the Africans being more savvy about who they are competing against,” she added.
“The global market for apparel is very competitive. The Africans are going up against countries like China, Vietnam, Bangladesh, and for them to be competitive or more competitive in the apparel sector, they have to know how to deliver the products faster, be more responsive to U.S. buyers and cut their costs of producing those items, which also includes working to lower energy and transportation costs.
“Those are key things that we think have to happen,” she said, along with a higher level of good governance and greater transparency across Africa.
On the U.S. side, she said, the United States “needs to be committed — and I think we are — to trade capacity building in Africa, particularly through programs operated by the United States Agency for International Development [USAID], their four trading hubs across Africa and through targeted bilateral assistance as well.”
Touching on the heavily weighted oil trade, which makes up much of the trade under AGOA, Liser acknowledged that “Africa has a lot of petroleum and a lot of raw commodities and natural resources,” and so that level of trade is to be expected. “The big challenge for them will be to change their typical pattern” by adding value to their products before exporting them, she said.
“The Africans need to add more value to their own resources in their own countries. Apparel is one field that qualifies for that category. They have a lot of cotton. They ship a lot of raw cotton to lots of countries in the world.
“However, their economic growth will depend more on making the cotton into yarn, then into fabric and apparel, than simply sending raw cotton to others who are going to do the same thing” and thus letting others gain from the added value.
Liser said the Africans export oil to many countries worldwide. What is unique in the U.S.-Africa trade relationship, she said, is that the United States imports a broad array of African value-added products along with its large oil imports.
“A lot of other countries will allow African countries to ship them their oil and raw commodities, but when the Africans add value themselves, then those other countries either don’t want them or there are suddenly higher duties” charged.
Overall, Liser sees things improving under AGOA. “Many African governments, thanks to AGOA, have now reduced the time it takes to set up businesses in their country and are working to streamline their regulatory environments to better support business.”
“We have seen a definite improvement in that,” she said. “Also, intra-African trade is increasing and that is good. It’s pretty hard to say you are going to make it easier for American businesses to operate in Africa while you still have barriers to doing business with your neighbors right next door.”