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Africa: Trade transforms economies, reduces poverty

Published date:
Tuesday, 25 September 2007

Trade is especially important to developing nations because it has the power to transform economies and reduce poverty, Assistant U.S. Trade Representative for Africa Florizelle Liser told an African audience September 19.

Speaking on a U.S. Department of State webcast, Liser said that Africa currently makes up about 2 percent of world trade. Increasing that share by just 1 percent would generate about $70 billion annually for the continent -- three times the amount of development assistance it currently receives. "So you can see ... the power of trade," she said.

Trade is the way the "Asian Tigers" (the economies of Taiwan, Singapore, Hong Kong and South Korea), countries in Latin America and nations worldwide have actually "evolved" to achieve greater levels of economic growth and development, according to the trade official.

The African Growth and Opportunity Act (AGOA), which lies at the center of U.S.-Africa trade policy, allows the 39 AGOA-eligible countries to export more than 6,000 products to the United States duty-free, Liser explained.

"We have been pleased with the progress we are making under AGOA," she said. "The countries that are eligible have certain criteria that they have to meet [to maintain their AGOA status]. Every year we have an annual eligibility review to make sure they are meeting those criteria," she added.

Those criteria include the following: the ability to put forward and implement market-based rules to improve the ways their economies function; eliminating barriers that hinder or block trade and investment; implementing the rule of law; and eliminating bribery and corruption.

Liser said the United States is constantly encouraging non-eligible AGOA countries to make changes in their economies so that they too will be eligible to become beneficiaries of AGOA.

The original African Growth and Opportunity Act (AGOA I) was enacted on May 18, 2000, as Title I of the Trade and Development Act of 2000. On August 6, 2000, President Bush signed into law amendments to AGOA known as AGOA II, which substantially expanded preferential access for imports from beneficiary sub-Saharan African countries. AGOA was substantially enhanced and modified by a law signed on July 12, 2004, which became known as AGOA III, or the AGOA Acceleration Act of 2004. That act offered tangible incentives for African countries to continue their efforts to open their economies and build free markets.

"We have seen a great deal of success in AGOA over the last six years. ... Imports have increased five times under AGOA in terms of our imports from African countries, and non-oil imports ... have doubled. ... We are seeing considerable increases in our imports from Africa in products like apparel, footwear, eyeglass-wear, toys, electronics, cut flowers, cashews. So we are very pleased with the progress we have been making under AGOA," Liser said.

Although such progress is admirable, she said, the United States realizes that providing market access is not enough.

"Many of these countries face a great deal of barriers and supply-side constraints -- things like infrastructure, transportation and energy systems that are not working as effectively as we would like," Liser said.

To help deal with that, she said, the United States devoted about $394 million to trade capacity-building assistance in 2006 -- a 94 percent increase over what the United States provided in 2005. "We are continuing to work with the Africans to help them to take advantage of AGOA and to address the supply-side constraints," she added.

The United States clearly recognizes that investment is important and is focused on increasing U.S. foreign direct investment in Africa, Liser said.

Currently, Africa receives only about 1 percent of U.S. foreign investment worldwide, she said, but she noted that that figure is increasing rapidly.

"So we are working with the Africans," she said, "making sure that they are successfully implementing the economic and political reforms that would encourage greater investment from the United States and from other countries around the world."

The United States knows that Africa has "great potential," Liser said. Likewise, she said, the International Monetary Fund has predicted that Africa's AGOA-eligible countries will see some of the world's highest economic growth rates for 2007.

She also cited the World Bank's praise of those on the African continent for implementing economic reforms that are making it easier for private sector companies to invest and conduct business.

With that in mind, she said, the United States is "anxious to work with African governments, the private sector and civil society and all of those who have a stake in Africa's economic growth and development. ...

"We want to support the African governments that are taking the right steps, implementing the right policies in ... human rights, labor rights, the rule of law and governance, anti-corruption ... market-based policies and policies that alleviate poverty. All of these come into play.

"We see our political views," she said, to be in line with what the best leadership in Africa and the African people want as well.

(USINFO is produced by the Bureau of International Information Programs, U.S. Department of State. Web site:

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