TRALAC - Trade Law Centre

U.S. Sec. Powell And Mauritian Minister Cuttaree Open Third Agoa Forum

Tuesday, 09 December 2003

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

The runaway success of the African Growth and Opportunity Act (AGOA) has affirmed its place as the "cornerstone" of the U.S.-Africa trade relationship, says Stephen Hayes, president of the Corporate Council on Africa (CCA).

In the first three quarters of 2003, trade under AGOA amounted to more than $10.2 billion -- a 59 percent increase over the same period last year -- Hayes said December 8 at the opening of the 2003 Private Sector Session of the Third U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum.

"The significant capital investments in Africa underpin and foster this growth and are essential to the long-term growth of African economies," Hayes told the audience of ministers, ambassadors, and corporate executives who had gathered at Washington's J.W. Marriott Hotel. "Export-led growth has been the engine for economic development for whole regions of this planet," he added.

To illustrate his point, Hayes cited the record economic growth rates achieved in Southeast Asia in the post-World War II era -- where open markets, free trade and entrepreneurship resulted in dramatically improved living standards.

"AGOA now provides Africa with diverse opportunities to grow and integrate into the global economy in ways both similar to the Asian experience as well as ways that are uniquely African," he said.

The successes of AGOA's first three years demonstrate the program's potential, Hayes said. He cited as an example Lesotho, which is exporting more than $300 million worth of apparel and other goods under AGOA this year alone.

In Kenya, he said, more than 21,000 new jobs have been created. In Ghana, he added, new textile factories have been built under AGOA and pineapples are now being exported to the United States under the terms of the trade legislation.

In South Africa, the government has reported the creation of 90,000 new jobs through AGOA, Hayes said, while sales of Mercedes-Benz automobiles, many of which are manufactured for export in South Africa, have increased in the United States in the last three years.

While it is clear that both Americans and Africans are benefiting from AGOA, he said, just as clearly, more people on each continent could be reaping the benefits of the historic legislation.

"In my view," Hayes said," the full benefits of AGOA have yet to be harvested by most African nations and the people of those nations."

Thus, he explained, the Corporate Council on Africa (CCA) strongly supports calls by President Bush and many in Congress to extend and expand AGOA. Legislation recently announced in both the U.S. House of Representatives and Senate "give us reason to cheer," he said.

If AGOA is to fully succeed, Hayes told his audience, much more must be done to build a strong, binding economic partnership. "AGOA is not enough. ... We must do more -- not only for the sake of Africa but for the sake of our own economic development as well."

In the United States, all Americans, according to Hayes, must come to realize that "vibrant African economies do truly mean a far more healthy and vibrant American economy. When we come to understand how closely we can be linked, then we will be true partners. That is yet to come."

The U.S.-Africa trade relationship must be built one step at a time and the additions to AGOA -- like AGOA III, he said, are meant to do exactly that.

The latest proposed legislation for AGOA III seeks to extend the term of the original Act and specifically addresses the need to allow more African fruits and vegetables into the United States. This is important, Hayes said, because not all countries in Africa can benefit from textile and apparel production.

"But every nation in Africa and most of its people can benefit from the opening of our doors in a transparent manner to African agricultural produce," he quickly added. "Eighty-five percent of Africans work in agriculture. If Europe can import African produce with no harmful effects, ... why can't America open its doors in the same way or in even fairer ways than Europe? I believe we can."

U.S.-Africa trade under AGOA must be enhanced even further, Hayes asserted, especially in sectors that are addressed by AGOA III, such as agribusiness, handicrafts, and small business. "Compared to textiles and apparel, these sectors have seen far less spectacular results from AGOA," he said.

"We are convinced, however, that these sectors have the potential to revolutionize ... U.S.-Africa trade... and in the long-run will provide more stable economic benefit to all involved," he said.

Again citing the Asia example, Hayes said that just as that continent's growth was spurred by foreign investment and financing, more in this area must be done for Africa. Increased capital flows must complement AGOA, he said, adding that to promote those flows, CCA will hold its first major "Increasing Capital Flows to Africa" conference in February 2004.

Hayes called on African leaders to enact "bold steps" to attract the U.S. capital that is essential to stimulating their economies. He warned, however, that "problems such as inadequate judicial systems, poor and inconsistent macro-economic policy and conflict too often deter investors," thus limiting all forms of development.

Concluding, Hayes said sustainable development cannot be achieved until African governments graduate once and for all from an era of poor governance and ill-advised economic policies.

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