TRALAC - Trade Law Centre

Development of African Transportation Systems Crucial to AGOA Success

Friday, 17 January 2003

Source: US Policy Website

Dept. of Transportation official McDermott addresses 2nd AGOA Forum in Mauritius

Flic en Flac, Mauritius - African nations will never be able to take full advantage of the favorable export provisions extended them under the African Growth and Opportunity Act (AGOA) until they develop their transportation systems, a top U.S. transportation official told the second U.S.-Sub-Saharan Trade and Economic Cooperation [AGOA] Forum January 17.

In an interview with the Washington File at the close of the January 13-17 conference, Deputy Assistant Secretary of Transportation for Aviation and International Affairs Susan McDermott said her department had conducted a well-attended workshop called 'Transportation: The Catalyst for Trade" that was co-chaired by Secretary General Erastus Mwencha of the Common Market for East and Southern Africa (COMESA).

McDermott was part of a 25-member U.S. delegation to the Forum that was led by U.S. Trade Representative Robert Zoellick. The Forum that is an outgrowth of the AGOA legislation passed by Congress in May 2000. President Bush signed an amended Act, called AGOA II, last August, which widened the range of duty-free and quota-free provisions available to reforming African nations.

At the workshop, attended by many of the finance, trade and economics ministers from the 38 African nations that participated in the Forum, McDermott said "our essential message was that transportation is critical if you're ever going to see the potential of AGOA flourish."

She emphasized that "perishable agricultural commodities and manufactured products are able to access vastly expanded markets through distant and speedy reach of air cargo services. When nations provide the facilities to develop their tourism industry, planes bring in travelers while rail and waterway systems provide access to hotels and restaurants, injecting significant income into local economies."

However, "if you have high transport costs, the value of the trade preferences that come in under AGOA are squandered away," the U.S. official said. "If you pay more than 25 percent of the value of your goods for transport, you're not going to be competitive worldwide. By comparison, in the United States the average cost of transportation is between six and seven percent of the value of an item."

According to McDermott, COMESA Secretary General Mwencha confirmed her point, saying, "the inefficiencies in the African transport sector account for 40 percent of a product's retail value. This in itself erases the advantages of the AGOA program and, in many cases, makes African products non-competitive." He also pointed to a need for greater cooperation between U.S. agencies and Africa's regional organizations to overcome problems in transport.

As the secretary general pointed out, "the transport costs from Africa to the United States are enormous," said McDermott. "So, our message was that we need much better transport links between the AGOA countries and the United States. And the only way to do that is for major transportation reform to take place in many of the countries. They have got to satisfy the international standards for safety and security of flight operations."

The problem is that "many African countries are not in a position to satisfy those criteria yet, so the United States has a 'Safe Skies for Africa' initiative in which we are giving technical assistance to many of the countries to bring them up to standard," she said.

McDermott pointed out, "our work is usually with transport ministers but our message here -- to trade and foreign ministers -- is that they have to get their shoulders behind the necessary government reforms to create a structure inside each of their governments that allows them to satisfy the international safety and security standards before flights are permitted."

In an innovative approach to the transport problem, the U.S. Transportation Department and the U.S. Trade and Development Agency (TDA) held discussions with officials of the East African Community during the Forum about an initiative called the Global Navigation Satellite System Project (GNSS).

According to a transportation department document, GNSS is "a blueprint to allow African nations to leapfrog current air navigation technology and have state of the art technology at a fraction of the cost of older ground systems." TDA announced it will help fund the project and the Federal Aviation Administration (FAA) has already indicated that "once all of the funding documents are in place, the project will be done -- start to finish -- in 12 weeks."