TRALAC - Trade Law Centre

Regional blocs to help states boost exports to the US

Sunday, 09 August 2009

Source: The East African

African nations doing business with the United States under the African Growth and Opportunity Act have resolved to take a new approach based on regional trading blocs in their quest for a bigger share of the American market.


This has come even as passionate calls are being made for African countries to increase trade among themselves.

At the 8th Agoa Forum in Nairobi last week, Kenya’s Prime Minister Raila Odinga said Africa must “focus strongly on building regional trade”, which he said remains so pitifully small.

“We must re-orient our export strategies to focus strongly on inter-African trade; that is where there is immediate growth,” he said, adding: “Before we even think of Agoa, it is possible to trade with ourselves.”

And at a roundtable during the forum, trade ministers from the 38 African countries mandated their regional economic communities to coordinate Agoa-related activities to boost exports to the US.

This is aimed at helping the countries deal with issues that have prevented them from taking full advantage of the trade arrangement.

The East African Community is expected to help its five member states Kenya, Uganda, Tanzania, Rwanda and Burundi all of which are beneficiaries under Agoa, like other regional economic bodies such as Comesa, SADC (Southern Africa) and Ecowas (West Africa) have done.

“Many countries that qualify for Agoa have not been able to fully exploit the opportunities the preferential trade arrangement offers,” Peter Kiguta, EAC Customs and Trade Director-General, told The EastAfrican last week. “Regional economic organisations are therefore going to be increasingly involved to help deal with this challenge.”

According to Mr Kiguta, the economic blocs will co-ordinate various Agoa-related activities by member countries as well as monitor and evaluate their export performance under the programme. They will also help member states mobilise financial resources required to “break new ground” under Agoa.

In the EAC, such financial mobilisation will be done under the Trade Investment Framework Agreement, a platform for the region to engage with the US on trade- and investment-related matters.

They will also help member states meet the stringent US market requirements as well as help them build enough capacity to meet the “huge American demand under Agoa.”

“We will ask the states to give us the targets that they want to achieve under Agoa, then help them work out plans to realise the goals,” Mr Kiguta said.

If implemented, this will be the first time regional economic organisations are directly involved in Agoa.

Since Agoa’s launch in 2000, eligible African countries have been doing business with the US in their individual capacity.

And although Agoa offers the countries duty free and quota free access to the US market for 6,400 products, statistics show that a vast majority of product lines have not been exploited.

The products cover items such as textiles/apparel, footwear, leather and leather products, wine, certain motor vehicle components, and a variety of agriculture products, chemicals and steel, but petroleum products still account for the largest portion of Agoa imports.

The most commonly cited constraints to Africa’s export trade to the US are lack of direct flights and limitations in sea transport, increasingly stringent standards requirements, inadequate financing for exporters, minimal representation in the US and lack of value addition.