TRALAC - Trade Law Centre

Sub-Saharan Africa benefits from expanded international trade

Friday, 20 July 2007

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

The United States will continue pursuing a growing economic partnership dedicated to promoting prosperity through expanded trade with some of Africa's poorest countries, according to America's top trade official.

"We will not stop until every sub-Saharan African country and the continent's 700 million citizens are part of and benefiting" from expanded international trade, U.S. Trade Representative (USTR) Susan Schwab told the Sixth Annual African Growth and Opportunity (AGOA) Forum in Accra July 18.

Schwab, who led the U.S. delegation of 139 government officials and trade experts from 16 federal agencies to the two-day Accra forum, said trade is "the most effective weapon in the fight against poverty . . . [and] we are committed to continuing access for African products into the United States - a $13 trillion market - under AGOA."

Passed by Congress in 2000 as a way of alleviating poverty in sub-Saharan Africa by boosting exports, AGOA now offers duty-free, quota-free entry of approximately 6,400 African products into the U.S. market.

The seven-year-old trade law boosted overall African-U.S. trade to a record $71 billion in 2006. Part of that total includes $44 billion in African exports to the United States made under AGOA, an increase of 16 percent from 2005.

In 2002, Ghana became eligible for AGOA trade benefits after instituting economic and political reforms to enhance protection of intellectual property rights, combat corruption, alleviate poverty, expand health and education, eliminate child labor exploitation and protect human and worker rights.

In the period from 2003 to 2005, 37 percent of Ghana's exports to the United States entered duty-free as a result of AGOA.

Ghana's president, John Kufuor, who also attended the AGOA opening, affirmed the support for Africa voiced by Schwab and President Bush, who appeared in a brief digital video recording. "This law [AGOA] is producing results," Kufuor said.

He said AGOA and other U.S. development programs "have assured us of America's goodwill toward Africa and Africa greatly appreciates the gesture."

Schwab later told journalists that the U.S. commitment has wide bipartisan support and will endure changing administrations in Washington when President Bush's second term ends in January 2009.

One of the main themes addressed during the forum was how to diversify products away from the oil and gas sectors, which now account for more than 80 percent of African exports under AGOA.

The trend toward diversification is reflected in 2006 data showing that non-oil exports increased by 7 percent over 2005 levels, to $3.2 billion.

Schwab said it is vitally important that sub-Saharan African countries become better equipped to export more agricultural products.

At the same time, she said, the United States "recognizes that opening our markets is not enough" to spur African exports. More needs to be done to train Africans to make themselves and their products more competitive in the global marketplace, according to Schwab.

Regional Successes

In the past few years, Schwab said, the United States invested $1 billion in capacity-building programs in sub-Saharan Africa. In 2006 alone, the United States devoted $394 million to such programs on the continent, she added.

The programs have been designed and implemented in the agriculture sector to boost African farming and food processing sectors.

The U.S. Agency for International Development (USAID) in Ghana is administering the Trade and Investment Program for a Competitive Export Economy (TIPCEE), an innovative program that provides $30 million for agriculture and business promotion.

The program works with small-scale farmers, food processors and marketing agents to handle more profitably a range of 11 fruits and vegetables. In 2007, some 100,000 farmers were trained, and they subsequently generated sales of $75 million. The program became so successful that four international importers now have deals pending with the Ghanaians.

There are also programs like the regional trade information centers, called Global Competitive Hubs, operated by USAID on the continent. They are geared toward helping Africans gain more knowledge about doing business in the United States. A West African Hub is located in Accra.

The hubs have helped spur investments in areas such as the textile industry. Successes included:

Lesotho's opening of 12 textile factories, its expansion of eight existing plants and the creation of 25,000 new jobs;

Malawi's creation of more than 4,000 jobs in the textile sector; and

South Africa's generation of 19,000 jobs in textile operations.

In South Africa, USAID funded a training effort for small and medium-sized businesses in conjunction with the Washington-based Corporate Council on Africa (CCA).

The South African International Business Linkages (SAIBL) program created more than 5,700 jobs from 2003 to 2006, with nearly half of those positions filled by women. During that period, competitive businesses transacted trade sales of $650 million.