TRALAC - Trade Law Centre

Zambia gearing up for African-US trade talks

Saturday, 02 April 2011

Source: Times Live (South Africa)

It is more commonly known as the AGOA Forum - named after the African Growth and Opportunity Act, the US law that allows tariff-free entry into the American market for up to 6500 products from 39 Sub-Saharan African countries.

The forum periodically brings together African business people, government leaders and civil society groups and their American counterparts for discussions on trade, investment and the enhancement of free markets. The focus is always on further measures the US and sub-Saharan African nations can jointly take to stimulate economic growth and trade, enhance democracy and good governance, and combat HIV/Aids.

More than 2000 delegates from the US and African countries are expected to attend the forum, the fifth to be held in Africa. Zambia is keen to showcase its investment, tourism and trade potential to US businesses that will be represented.

But AGOA is about much more. Enacted in 2000 during president Bill Clinton's administration, it is the centrepiece of American efforts to stimulate trade with sub-Saharan Africa. It is Africa's "highway" into the world's largest market. In practice, however, it has not turned out quite that way.

The performance of most eligible African countries has mainly ranged from indifferent to erratic. There are of course some bright spots. Oil-exporting countries such as Nigeria, Gabon and Angola have led the way. Oil is still a large part of what Africa exports to the US under AGOA. Overall, however, the picture remains largely one of low volumes and continuing inability by African enterprises to meet US quality standards.

Zambia's own experience is instructive. Exports to the US grew from $7.9-million in 2001 to $25-million in 2008. In 2009 they dipped to $221 000, which was blamed on the global economic slowdown. But exports are reported to have rebounded again to $1.4-million since last year.

Still, total exports under AGOA have only amounted to $116-million, while imports from the US have been about $386-million.

The story is pretty much the same for most of the smaller economies of Africa and, while the global economic slowdown of 2008-2009 can be blamed for some of this, the key issue remains the inability of most African goods to meet US entry requirements in quality and capacity standards.

A Kenyan diplomat put it this way: "The offer is there, but Africa has not had, overall, the capacity to take advantage of the US market ... there is always the problem of capacity.

"The other challenge is standardisation. AGOA requires African countries to produce competitive products which meet international standards. There is a challenge there, but there is also an opportunity in value addition," he said.

That sums up AGOA - it is both a challenge and an opportunity for Africa.

Thus, the focus of discussion at the Lusaka forum, as it has been at all previous ones, will be on that - the challenges and opportunities - and specifically how to build capacity for Africa to be able to exploit the world's biggest market.

There will also be emphasis on Africa's small businesses to develop joint ventures with US businesses and to help Africans add value to their products.

The African products that enjoy preference from AGOA are largely value-added, nontraditional products for which there is no duty-free access into the huge US market or for many other countries.

AGOA aims to spur growth of those kinds of industries and products to be developed in Africa, competitively.

Time, however, may be running out. The AGOA agreement is due to expire in 2015.

"AGOA is not a permanent act," warned a US embassy official during a discussion in Lusaka recently.

That promises to be another area of focus. There have already been calls for an extension of the act.

Zambia Commerce Minister Felix Mutati has appealed to the US to consider extending the AGOA preferences beyond 2015, to allow eligible countries to fully exploit the US market.

He urged African countries which have not effectively used it to take advantage of the Lusaka Forum in June to address the bottlenecks and ensure greater utilisation of the provisions.

US ambassador to Zambia, Mark Storella, has said the forum would provide an opportunity to forge stronger partnerships between sub-Saharan Africa and the US.

Zambia is stepping up preparations for the conference - a major event on its business calendar this year.

It is putting up logistical, technical and financial resources for a successful meeting.

Zambia's private sector, civil society, and the African Women Entrepreneurship Programme are actively engaged in the preparations for the forum that will be held from June 6 to 8.

Its normal format is: a ministerial meeting, a session for civil society and continuous engagement between entrepreneurs in attendance.

The forum normally also attracts high-level US government participation.

The theme for the 2011 forum is: "Enhanced Trade through Increased Competitiveness, Value Addition and Deeper Regional Integration".

There certainly will be plenty to talk about. The question, however, is whether after it is over, African countries will have found the formula to "push the open door" that is AGOA - and enter the US market in force.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Zambia's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.