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AGOA: A mutually advantageous trade between Africa and the US

Published date:
Thursday, 05 August 2010

The annual U.S.–Sub-Saharan Africa Trade and Economic Cooperation Forum — better known as the AGOA Forum — opened August 2 in Washington with U.S. and African officials pledging on the 10th anniversary of the African Growth and Opportunity Act (AGOA) to make the U.S. trade preference program work even better to stimulate economic growth and development on both sides of the Atlantic.

U.S. Trade Representative Ron Kirk and Amos Muhinga Kimunya, Kenya’s minister of trade, both addressed the opening session. Also on the dais were Assistant Secretary of State for African Affairs Johnnie Carson and Deputy Assistant Secretary of State for African Affairs William Fitzgerald.

Speaking to officials representing 35 of the 38 AGOA-eligible countries along with a host of other African regional trade groups, Kirk first saluted a delegation of 34 African women entrepreneurs who traveled to Washington as part of a U.S. Department of State program to attend AGOA, which this year convenes in both Washington and Kansas City, Missouri. The United States trade representative also mentioned President Obama’s Forum with Young African Leaders, which is taking place in Washington August 3–5, and praised 50 years of independence in some African countries. “This is a great week between the United States and Africa,” Kirk told his audience.

With AGOA celebrating its 10th anniversary, Kirk said the forum takes on a special significance as the past 10 years of AGOA are examined and the next decade of the trade act is contemplated.

“President Obama and all of us in his administration are committed to a robust partnership with Africa that is commensurate with Africa’s vital and growing role in the global economy and community and that reflects on the past, present and future ties between African nations and the United States of America,” Kirk said. “Our commitment is reflected in many ways, including our participation in this forum.” Kirk said the AGOA Forum represents the highest level of dialogue between the United States and sub-Saharan Africa.

Rising Star

Citing the forum’s theme for this year, “AGOA at 10: New Strategies for a Changing World,” Kirk said, “We believe that these strategies encompass much of the dynamic change that is occurring in Africa.”

“There is much evidence today of Africa’s rising star and excitement about its promising future. Many of your countries are experiencing improved governments and democratic leadership. Many deadly conflicts have been resolved in several countries, and through economic reforms and improving business environments, the continent is experiencing a surge in economic growth. The progress and potential of African economies are reflected in reduced inflation, lower trade barriers, growing intra-African trade, rising capital flows and the creation of substantial new business opportunities. These have led to lower levels of poverty, higher standards of living for all citizens and more urban consumers with more discretionary income.”

Kirk said that “extraordinary challenges” must be overcome if all of Africa is to experience this type of growth and all of its citizens are to thrive in today’s global economy. “The United States remains committed to partnering with Africa,” he said, “to address the challenges of poverty, health, education, conflict, governance and economic development.”

Kirk paraphrased President Obama’s remarks during his visit to Ghana last year that the United States wants to engage in more mutually advantageous trade with sub-Saharan Africa. “This is what AGOA is all about,” Kirk said.

“As we look back over the last 10 years, two-way trade between the United States and Africa has more than doubled. African exports to the United States have doubled, reaching … almost $47 billion in 2009. In the first part of 2010, we are seeing a rapid recovery of Africa’s exports to the United States following the economic tsunami over the past 24 months.” Despite the fact that some 90 percent of AGOA’s trade is in oil and related mineral wealth, he said, AGOA has brought about a greater diversity of African products exported to the U.S. market.

After leaving the AGOA Forum in Nairobi last year, Kirk said, he traveled to Ethiopia to visit footwear and apparel factories and met with Senegalese seafood producers who are exporting their products to the United States under AGOA. There are many other examples of the diversification of U.S.-Africa trade under AGOA, he said, from factories in Swaziland that are making jams and hot sauce, to cut-flower exporters in Tanzania, to a factory in Mauritius making sunglasses and apparel factories in Lesotho. All of these businesses combined, he said, employ tens of thousands of workers.

While this represents “a good start,” to AGOA, he said, “We all know this is insufficient.” Kirk called for a redoubling of efforts to expand the diversity of AGOA trade and utilize all of the product lines that are available to African exporters under AGOA.

Kirk said the United States has invested substantial amounts in helping African countries build the capacity for increased trade to make the most of AGOA. Since 2001, U.S. trade capacity-building assistance to the region has exceeded $3 billion, which includes the African Global Competitiveness Initiative and a range of other programs. Additionally, he said, President Obama has pledged through the G8 group of industrialized nations more than $3.5 billion over three years for investment in sustainable agriculture development under the Feed the Future food security initiative.

Red Tape

In closing, Kirk said to prosper further from increased trade, African governments must reduce bureaucratic interference and red tape that is hampering both African and American business. He also called for respect for the rule of law, work to eliminate corruption, continued priority attention to cross-border trade and the development of regional markets. “Trade must be a central part of African nations’ development and economic strategies,” he said.

In his remarks, Minister Kimunya said the AGOA Forum represents a decade-long partnership that has “matured and transformed our relationship beyond trade and economic relations.”

Kimunya, whose nation hosted the 2009 AGOA Forum in Nairobi, said AOGA has resulted in a significant increase of exports from sub-Saharan Africa into the United States. Like Kirk, he acknowledged that AGOA trade is still too heavily weighted in oil and minerals. Kimunya told the forum that Africans are exporting fewer than 200 products to the United States of the more than 6,000 products that are eligible under AGOA. AGOA has yet to reach its full potential, he said.

AGOA was enacted in its original form in May 2000 to expand U.S.-sub-Saharan trade and investment, stimulate economic growth and help integrate sub-Saharan Africa into the greater global economy.

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