-By Kemi Osukoya
As the United States prepares for the first U.S.-Africa Leaders Summit in August, it plans to strengthen its economic ties with Africa through better trade policy and negotiation and trade initiatives, including through trade agreements such as AGOA, U.S. Trade Representative Michael Froman said Monday in New York.
“We look forward to proposing mechanisms to further strengthen our economic ties with this important region, including through the seamless renewal of AGOA (African Growth and Opportunity Act), and to do so in a manner that reflects the changes in Africa and its relations with other trading partners,” said Froman during a meeting at Council on Foreign Relations.
Even though current trade and investment between the U.S. and Africa is fairly low compared to those of other regions of the world, Froman emphasized that both the U.S. and sub-Saharan African countries have benefited a lot from trade agreements such as AGOA and other initiatives that President Obama laid out last year during his visit to Africa.
Talking briefly on AGOA renewal, he said the AGOA program has been in many ways successful, with a doubled to a tripled trade in non-mineral and non-oil industries since its was launched. Trade has gone up fivefold.
“When I say it’s gone up fivefold, it’s gone from $1 billion to $5 billion,” said Froman. “There’s much, much more that we could be doing and that’s exactly why we launched a review last year of AGOA, to learn the lessons from it, to see what could be fixed, what could be — how we could take it forward. It’s one reason why the president also launched Power Africa and Trade Africa when he was there [in Africa] last year.”
On the Power Africa initiative, he said the U.S. has been working very closely with the multilateral development banks, as well as the private sector, to double access to electricity in Africa. The results have been terrific so far, with new plants being rolled out, new distribution and investments in transmission while working with more and more countries in Sub-Saharan Africa.
“There’s a great deal of excitement about what this means,” said Froman.
Since the Power Africa initiative was launched last July, the USAID said $14.7 billion in deals have been signed by U.S. energy companies and energy-focused private equity and asset management firms, including domestic and international companies.
Admitting that security issues [terrorism] and economic issues on the continent pose significant threats to trade, he said the U.S. will continue to work with African countries to map out strategic plans to eliminate trade barriers through promotion of good governance, fueling economic growth, and offering trade opportunities.
“Trade is a stabilizing force that prevents state failure,” said Froman. “By fueling economic growth, trade offers opportunities to those who might not otherwise have hope.”
In terms of dealing with security issues, and other non traditional trade agreements barriers like labor and environmental issues, Froman said having a strong, and binding, enforceable labor and environmental laws in place will prevent some disputes or prevent one side from getting an advantage during a contentious trade negotiation.
Froman added that one way to help address the growing terrorism in Africa is for U.S. and other Africa’s trading partners to work together on trade agreements.
“In Sub-Saharan Africa, we’ve got terrorist groups, organized crime, high degree of corruption being supported by illegal wildlife trafficking. And it’s very much on the rise; 30,000 elephants killed last year, 1,000 rhinos killed last year,” said Froman. “If the TPP (Trans-Pacific Partnership) countries can take that on as part of the trade agreement, and agree to take action to address that, that will help advance that agenda. And I could say the same thing about fishing, about illegal logging.”
Aside from security and economic issues, he said tariff remains a sore side to trade. He said trade policy such as Trade Africa has provided the U.S. with a platform to work with East African community on regional trade facilitation, to focus on how to eliminate barriers and improve standards at the borders.
“We started working with the East African community, as one of the regional economic communities, to focus on how [to] move towards single-customs crossing,” he said. “Work on the trade facilitation, which we did at WTO (World Trade Organization) in Bali in December, called it the “Trade Facilitation Agreement,” that will help reduce barriers across — across borders.”
He said, for example, in a situation where a truck carrying goods gets to a border, spends four days waiting to pass, and crosses through Customs, then waits for another four days to cross the Customs into the next country. How do you eliminate those barriers at the borders and move towards single-customs crossing? “Introduce computer systems that talk to each other from one Customs service to another,” he explained.
Although he did not say when the AGOA will be renewed, Froman said the U.S. is not only taking steps to build capacity to facilitate trade, it is also making sure the tariff preferences that AGOA suggests are in place, “to make sure that Africa could take full advantage of the benefits that it has in both our and other preference programs.”
African leaders, private and public sectors executives, and U.S. officials will meet in Washington D.C. in early August to discuss how to improve trade relationships between U.S. and African countries.
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