TRALAC - Trade Law Centre

"Trade Liberalisation Not an End in Itself" - Zambian Industry Minister

Thursday, 04 December 2003

Source: Engineering News (South Africa)

The US government confirmed yesterday that ministers from 38 African countries will gather in Washington DC next week, for trade meeting.

Imports to the US from African countries, excluding oil, jumped 50% last year, and in South Africa, sub-Sahara's most important economy, exports of automobiles have increased sixteenfold in the past two years.

In Lesotho, new export-oriented garment factories have created 25 000 jobs - and for the first time in its history, private sector manufacturing employment, thanks to trade, exceeds government employment.

The US claimed that these performances are the direct result of the African Growth and Opportunity Act, Agoa, which lets African countries export some 1 800 products duty-free, without quotas, to the US.

It is a direct response to developing countries' long-time plea: trade, not aid, is the real key to ending poverty and bringing about sustainable, long-term economic growth.

To aid Agoa, a new US-African Partnership Act has been recently introduced, which would guarantee Agoa benefits until to 2015 (otherwise, they will expire in 2008), and delay for four years a provision that will require garment manufacturers in eligible countries to use US- or African-made fabric.

If this provision takes effect next year as planned, it might drive out many fledgling textile operations that still rely on Asian inputs.

US Congress have also pledged to contribute $15-billion over the next five years to battle the HIV/Aids epidemic, which threatens the future of the entire continent.

Despite these signs of progress, Africa remains in bad shape.

Per capita output of goods and services actually dropped during the 1990s, according to the World Bank, and with only 1,4% of world trade in 2001, sub-Saharan Africa has been falling behind the rest of the world.

During the 1990s, global gross domestic product grew a robust 44%: the figure for Africa was only 81/2%.

In addition, Agoa's benefits are uneven, with southern Africa taking far better advantage than West Africa, and little to show outside textiles and apparel.

The win-win solution would be to reduce farm subsidies worldwide, but the recent collapse of global trade talks in Cancun over this issue proves there's no quick solution.

The Bush administration should revive the bold agriculture trade plan it unveiled last year to slash global subsidies by $100-billion.

In Africa, the US said, with the new Act, it would have a chance to demonstrate that trade and investment, underpinned by good government and sound economics, can bring prosperity on the continent.