TRALAC - Trade Law Centre

East African States Earn just $419m from Exports to the US

Tuesday, 06 March 2007

Source: The East African

The three East African states of Kenya, Uganda and Tanzania, along with Rwanda and Burundi — the two latest entrants to the East African Community (EAC) — failed once again to pass the $0.5 billion in combined total annual exports to the US last year.

These figures were released by the United States International Trade Commission (USITC) in February this year. This performance comes seven years after the United States Congress enacted the Africa Growth and Opportunity Act (Agoa) in 2001.

According to the statistics, which also provide an insight into the performance of each of the 37 Agoa eligible countries in Sub-Saharan Africa, the five countries in the East African region managed only $419.5 million in total exports to the US. Kenya was the best performer with total annual exports of $352.8 million with Tanzania a distant second having exported goods worth only $34.6 million.

Uganda came third with total annual exports of $21.7 million, while Rwanda and Burundi exported goods and services worth $8.9 million and $1.9 million respectively.

The region’s combined performance was bettered by half a dozen of the eligible countries led by Nigeria whose oil exports under Agoa enabled Africa’s most populous country to earn $27.9 billion — more than half of all exports shipped under this programme, which offers the 37 Sub-Saharan African countries duty free and quota free access to the American market.

The other countries that performed better than the whole East African economy are Angola with total annual exports of $11.5 million, South Africa with $7.5 million, as well as Chad, Gabon and Congo-Brazzaville. [Follow this link to the disaggregated bilateral trade profiles on AGOA.info.]

The 37 Agoa eligible Sub-Saharan African countries exported goods worth $56 billion in total to the US in 2006 — up from the $47 billion recorded in 2005. However, only six of the eligible countries — Nigeria, Angola, South Africa, Chad, Gabon, and Congo-Brazzaville — managed to pass the $1 billion mark in exports to the US market in 2006.

Without the non-Agoa exports, the export figures to the US for the 37 Sub-Saharan African countries in 2006 dwindled to $44.2 billion — but represent a $6 million increase from the $38.1 billion earned solely from Agoa exports in 2006.

An analysis of the bilateral country trade statistics between the US and each of the eligible countries by the US International Trade Commission however reveals that the Agoa benefits to the continent’s highest earners like Nigeria, Angola and Gabon currently accrue almost exclusively through the export of energy related products, which include oil and gas products.

East African countries have on the other hand been exporting mainly agricultural products while imports into the region from the US consist of a wide range of manufactured goods, including transportation equipment, textiles, chemical and related products, as well as electronic products, which often leave the region in a trade deficit.

But on the whole, apart from Burundi, the other four East African countries performed relatively well in a year that saw some Agoa eligible countries like Benin, Cape Verde, Guinea-Bissau and Gambia record less than $1 million in total exports to the US market, while others like Burkina Faso only just made it past the $1 million mark.

Statistics excluding non-Agoa exports however relegate Rwanda and Burundi, along with Zambia and eight others, to the list of countries that failed to hit the $1 million mark in 2006. Burundi was one of four countries that did not make a single cent from exports under Agoa.

Generally, last year saw the East African economies — save for Uganda — record improved total export returns. Kenya’s $353 million was $5 million higher than the $348 million of 2005. It also indicated a consistent, but gradual improvement from East Africa’s largest economy, which had recorded total exports worth $249 million in 2003.

Tanzania recorded a slight improvement from $34 million in 2005 to $35 million in 2006. The figures, however indicate a slower export growth rate in the past two years for a country that had recorded an increase in total exports of $10 million between 2004 and 2005.

Rwanda recorded a $3 million rise in total exports to the US from $6.3 million in 2005 to $8.8 million in 2006. This represents a large increase in total export earnings for Rwanda, which had only managed a $1 million increase between 2004 and 2005.

Burundi’s export statistics for 2004 and 2005 are not available since it was added onto the list of beneficiary countries on January 1, 2006 to replace Mauritania following an annual Agoa-eligibility review. But the 2006 figures indicate that it recorded exports to the US worth $1.9 million.

In a continuation of a downward spiral that started two years ago, Uganda’s $21.7 million in 2006 represented a $4 million reduction in total export earnings from the US market — down from $25.8 million in 2005. This trend also saw Uganda’s total export earnings decline by close to $10 million between 2003 and 2005 from $34.8 to $25.8 respectively.

Uganda’s exports to the US last year declined in part due to the closure of garment maker Apparel Tri-star, which had been shipping one-fifth of Uganda’s exports to the US under Agoa to earn the country an average of $4 million per year.

Agoa has since its inception helped increase US trade with sub-Saharan Africa by 115 per cent, according to a report prepared by the Office of the United States Trade Representative titled, “2006 Comprehensive Report on US Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the Africa Growth and Opportunity Act .”

The report, however, adds that although US imports from sub-Saharan African countries under Agoa increased in 2005 by 44 per cent largely due to oil exports, total non-oil Agoa exports from the eligible countries declined by 16 per cent in 2005.

The decline in non-oil Agoa trade exports from sub-Saharan Africa to the US market has been attributed in the report to increased global competition in the apparel sector, resulting in part from the end of global apparel quotas and the anticipated end in September 2007 of Agoa third-country fabric exceptions; an appreciation of key currencies such as the South African rand; production shifts in the South African automotive sector and decreased demand for key minerals and metals such as manganese.