TRALAC - Trade Law Centre

U.S. Needs New Trade Policy Like AGOA III

Tuesday, 09 December 2003

Source: United States Department of State (Washington, DC)

U.S. Secretary of State Colin Powell and Mauritian Minister of Industry and International Trade Jayen Cuttaree praised the effectiveness of the African Growth and Opportunity Act (AGOA) and called for its enhancement in the form of AGOA III.

They made their remarks December 9 as they jointly opened the third meeting of the United States-Sub-Saharan Africa Trade and Economic Cooperation Forum at the State Department's Loy Henderson Auditorium.

In his remarks, Powell reiterated President's Bush's strong commitment to Africa and the AGOA process, telling the audience of African ministers, ambassadors and diplomats that the president sees the African Growth and Opportunity Act (AGOA) as "central to our efforts to meet the challenges of the sub-Saharan African market."

For that reason, he said, President Bush has requested that Congress extend AGOA beyond 2008 because "the extension of AGOA -- 'AGOA III' -- will give business the confidence to make long-term investments in African countries," Powell said.

By breaking down barriers to U.S. markets, AGOA can have a major impact on the lives of millions of men, women and children across the African continent, Powell told his audience.

Indeed, in the three years since AGOA went into effect, Powell estimated that AGOA-related trade and investment has created more than 190,000 jobs and attracted more than $340 million in new investment.

Behind these overall numbers lie hundreds of individual success stories, he said.

In Ghana, Powell said, two American companies have invested in plants that now employ 400 Ghanaians who produce socks for export to the United States.

In Tanzania, business for a small handicraft company has boomed as a result of AGOA. Before AGOA, the company employed 25 people and exported $20,000 a year in arts and crafts to the United States. Since AGOA, the company has hired 100 new employees, mostly women, and its exports to the United States have increased tenfold, Powell said.

While export trade is important, Powell reminded his audience, "Not all AGOA-related successes involve direct export to the United States." AGOA is stimulating intraregional trade as well, he noted.

-- Namibian plants now produce parts that are included in South African cars, which are then exported to the United States.

-- Zambian cotton exports to South Africa more than doubled in 2002, thanks to the increased demand generated by AGOA.

AGOA has also produced increased intra-African investment, Powell said. A firm from Mauritius has been especially active in Mali, he said, building a plant that will produce quality yarn from Malian cotton and will employ the citizens of Mali, thus boosting incomes from their cotton products.

In his opening remarks, Minister Cuttaree, whose country hosted the second AGOA Forum in January 2003, said the benefits from AGOA are "clear for all to see."

"Increased job creation in Lesotho, Swaziland, Senegal, Uganda and Mozambique has allowed families to raise their standard of living and to look to a more hopeful and secure future," Cuttaree said. "Increased trade has brought with it improved infrastructure in seaports, airports and highways. This improvement has not only brought employment but has opened up our African countries to travel, movement and development."

The possibilities of increased market access to the United States have attracted foreign direct investment into countries where poverty and debt were the norm, Cuttaree said. "Increased exports have brought in much needed foreign exchange flows, allowing sub-Saharan African countries to plan more concretely for sustainable development," he noted.

"Most importantly," he said, "AGOA has brought hope. The traditional doom and despair associated with Africa is being replaced by an atmosphere of positive and creative thinking. Whether it is Mercedes and BMWs being made in South Africa, apparel being created in Lesotho and Swaziland or handicrafts from Ghana, Kenya and Madagascar, the outward approach of African countries, both in the public and private sectors, is heralding a new wind of change in our continent."

Besides focusing on AGOA, Secretary of State Powell also touched on other U.S. programs in his remarks, such as the Millennium Challenge Account (MCA), the New Partnership for Economic Development (NEPAD) and President Bush's $15 billion Emergency Plan for AIDS Relief, which are all helping Africans deal with the many challenges they face every day.

President Bush's Millennium Challenge Account (MCA) initiative, Powell said, "reflects the new international consensus on how best to approach development aid for Africa"... and is a powerful way to "draw whole nations into an expanding circle of opportunity and enterprise."

MCA assistance, he said, "will only be available to developing nations that demonstrate a strong commitment to the principles of just government, nations that invest in the education and health of their citizens, and nations that have adopted wise trade, economic and environmental policies."

He called the MCA program a "powerful tool" for spurring reform and bringing real improvements to the daily lives of people who want to believe in democracy but have yet to reap its benefits.

Powell saluted African countries that have already taken steps toward political and economic freedoms and urged the African ministers to "work through" African regional and subregional organizations to support greater democracy throughout the continent.

Using its peer review mechanism, the New Partnership for Africa's Development (NEPAD), he said, can help ensure that the principles of accountability and good governance are adopted and applied as universal standards across Africa.

Powell noted that all the hard-won progress toward democracy and development in African countries is challenged by the HIV/AIDS pandemic, by unresolved conflict and by terrorism.

President Bush, he told the delegates, has "greatly empowered" the United States government to address this crisis through his $15 billion Emergency Plan for AIDS Relief, "which enjoys the overwhelming bipartisan support of the United States Congress."

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)