TRALAC - Trade Law Centre

Nigeria, US walk diplomatic straining path

Tuesday, 12 January 2010

Source: Nigerian Compass

Until recently when a Nigerian, Umar Farouk AbdulMutallab, attempted to blow up a United States of America North West aircraft, relations between Nigeria and the US was on a good footing. The ensuing diplomatic strain between the two countries followed the decision by the American government to

include Nigeria in the list of terrorism-prone countries. The Nigerian government and various interest groups in the country have criticised the action of the United States of America, with the Federal Government threatening to severe relations with the US. The US, too, has insisted that it would not expunge Nigeria from the watch-list.

If the brewing diplomatic row between the two counties blow to full course, it might see Nigeria losing million of US Dollar in form of humanitarian assistance; and the US too, losing export transactions to Nigeria, which is one of the biggest source of its crude oil. Relations between the two countries had over the years been defined in terms of humanitarian assistance and foreign trade.

Humanitarian assistance from the United States to Nigeria covers public health concerns, military assistance, capacity building and development of institutions, especially democratic institutions. On the other hand, trade relations between the two countries reflects more in crude oil transaction, with the United States of America consuming about 46 per cent of Nigeria’s crude oil.

Statistics available on the website of the United States Census Bureau reveals that balance of trade between Nigeria and the US in 2009 closed at a deficit of $ 11,232.3. Records of previous years showed the US closing in the deficit on the balance sheet.

Ironically, Nigeria was a major partner in the US anti-terror campaign after the September 11, 2001 attack. The Nigerian government, in its official statements, condemned the terrorist attacks and supported military action against the Taliban and Al Qaeda. Nigeria also played a leading role in forging an anti-terrorism consensus among states in Sub-sahara Africa. An estimated one million Nigerians and Nigerian-Americans live, study and work in the United States, while over 25,000 Americans live and work in Nigeria. The policy thrust of America’s foreign policy in Nigeria is: Investing in People.

The major factor at stake in the potential straining of ties between Nigeria and the US is the trade relations and humanitarian assistance. The ability of the US to help Nigeria combat public health shortcomings contributes directly to good governance, societal stability, economic growth, and confidence in US concern for the wellbeing of the Nigerian people.

Efforts of the United States to eradicate malaria focuses on the sale of insecticide-treated nets and treatments kits and provide therapies and intermittent preventive treatment of pregnant women. To reduce death and disability as a result of tuberculosis, especially in the vulnerable co-infected HIV/AIDS population, the United States has been strengthening the Nigerian health system and referral systems between diagnosis and treatment programmes for TB and AIDS.

Beyond fostering maritime cooperation with security services in the Niger Delta, the United States also supports the European Union’s leading role in helping Nigeria fight corruption, organised criminal elements, document fraud, drug trafficking and terrorism.

On the economic front, the United States is working with the Central Bank of Nigeria (CBN), the Federal Ministry of Finance, the National Planning Commission and others to improve the environment for investment in agriculture through policy reform at the national and state level. The US intervention programmes have helped develop a policy climate in which micro, small and medium enterprises have access to credit, encourage investment, stimulate job growth and build capacity in both the public and private sectors. Trade initiatives include capacity building in customs regulation and operations, policy reform to encourage internal and external trade, taking advantage of AGOA incentives for bilateral trade and development of the private sector capacity to meet international trade and export standards.

Other US initiatives with Nigeria include the African Growth and Competitiveness Initiative, fighting avian flu, the Initiative to End Hunger in Africa and the Trans-Sahel Counter-Terrorism Programmes. Nigeria’s eligibility for other US regional activities include the Famine Early Warning System, Anti-Corruption Initiative; trafficking in persons; and the Ambassador’s Girls Scholarship Fund.

In order to improve inflow of investment, Nigeria’s Ministry of Commerce and Industry announced that the two countries have agreed to hold a business forum in three cities of the US – Atlanta, Houston and Chicago – in February 2010. This forum is expected to cover small and medium enterprises (SME), energy, agriculture, tourism, environment, marine, infrastructural and construction development in Nigeria, in collaboration with the US Trade Department. According to an official of the ministry, “The US embassy in Nigeria is also working together with the Federal Government to make a success of the business forum.”

AGOA is a United States Trade Act that significantly enhances US market access for 39 Sub-Saharan African (SSA) countries. The Act originally covered the eight-year period from October 2000 to September 2008. But amendments signed into law by the former US President, George Bush, in July 2004 further extended AGOA to 2015. AGOA builds on existing U.S. trade programmes by expanding duty-free benefits previously available only under the Generalised System of Preferences (GSP) programme. Duty-free access to the US market under the combined AGOA/GSP programme stands at approximately 7,000 product tariff lines.

Bilateral relations between Nigeria and the United States could however be at risk if Washington keeps its requirement for tighter security for Nigerian travelers. The procedures, which took effect from Monday, come in the wake of a botched Christmas Day bombing attempt on a US airliner blamed on Abdulmutallab.

“Nigeria expresses its disappointment and concern of the undeserved placement of Nigeria on the countries of interest list and views this action as having the potential of undermining longstanding and established US-Nigeria bilateral ties,” said the Minister of Information and Communications, Prof. Dora Akunyili. She did not elaborate on what could be at risk.

The United States is by far Nigeria’s largest trade partner, accounting for nearly 45 per cent of the Organisation of Petroleum Exporting Countries (OPEC) member’s exports, mainly crude oil, according to the International Monetary Fund (IMF). Nigeria’s light crude grades are especially popular in the United States and Europe because they are easily refined into fuel products.

Minister of Foreign Affairs, Chief Ojo Maduekwe, met with US Ambassador to Nigeria, Robin Sanders, on Tuesday to formally request that Washington reconsiders its decision to include Africa’s most populous country in its air security watch list. The US list includes passengers travelling from or through nations listed as “state sponsors of terrorism.” These are Cuba, Iran, Sudan, Syria, Afghanistan, Algeria, Iraq, Lebanon, Libya, Pakistan, Saudi Arabia, Somalia and Yemen.

The two nations traded about $30.1 billion in products that the Census Bureau could track. According to Census Bureau statistics, petroleum products accounted for over 99 per cent of Nigeria’s $27.9 billion worth of exports to the US. Nigeria bought $2.2 billion worth of imports from the US in 2006, an annual increase of 37.6 per cent from that of 2005. Nigeria’s top import from the US in 2006 was $458.5 million in wheat.

Perhaps more revealing are statistics showing that last year, Nigeria imported $128.6 million in telecommunications equipment (up 71.4 per cent), $17.8 million in computers (up 49.4 per cent) and $19 million in computer accessories (up 32 per cent).