TRALAC - Trade Law Centre

US 'concerned' about China business practices in Africa

Sunday, 12 June 2011

Source: The Economic Times (India)

US Secretary of State Hillary Clinton urged African countries to lift trade barriers with the United States here Friday and voiced concern about China's aid and investment practices in Africa.

The first US chief diplomat to visit Zambia since 1976, Clinton attended annual talks over a US preferential trade deal at a time when China has overtaken the United States as Africa's top trading partner.

"China's presence in Africa reflects the reality that it has important and growing interests here on the continent," Clinton said during a press conference with Zambian President Rupiah Banda.

"The United States does not see these interests inherently incompatible with our own interests. We do not see China's rise as a zero-sum game. We hope that it will become succesful in its economic efforts," she said.

"We are, however concerned that China's foreign assistance and investment practicies in Africa have not always been consistent with generally accepted international norms of transparency and good governance," she added.

She said the United States has begun a dialogue with China on its activities in Africa.

Some African nations have leaned toward China because Beijing makes no demands on human rights or democracy.

"Generally speaking, I think the Chinese have been more aggressive in terms of trade into the region," said Mupelwa Sichilima, of Trade and Industrial Policy Strategies, a South African think-tank.

But Sichilima said that in practice, other restrictions hinder African trade with both the United States and China -- mainly practical considerations like safety standards for food products.

"China is just an alternative market that has come on board, but it doesn't mean it will swallow everything from Africa."

China-African trade soared more than 40 per cent last year to $126.9 billion.

During his press conference with Clinton, Banda said Zambia has been dealing with China since even before independence in 1964 and was "fortunate" that China continued to buy Zambian copper during the global financial crisis.

But he said Zambia makes sure that foreign countries doing business here treat Zambians well and follow the nation's laws.

Clinton and Zambia spoke after attending the ministerial forum of the African Growth and Opportunity Act (AGOA), an 11-year-old deal that gives African exports duty-free status on the US market.

Despite a significant increase in trade, "we cannot ignore the signs that not all countries have made the most of AGOA," Clinton told the forum, which drew 1,600 delegates from 31 countries.

"African countries export only a handful of the 6,500 products that are eligible for duty-free shipping. The most common export is still a barrel of oil," she said.

"So we have the potential to do more. The question is: Will we?"

She said an answer to the question is important as the AGOA comes up for renewal in Congress in 2015.

The secretary also sought to promote closer US-African business links so each side knows what the other wants, called for more African women entrepreneurs and stressed US help for Africans wanting to launch or build businesses.

Clinton also encouraged ministers to lift trade barriers between their countries, cut red tape, fight corruption as well as invest more in roads, ports and electricity grids.

"Ultimately, it is up to the leaders of this region to decide if you want economic integration," she said.

"It does mean you will have to take on entrenched interests and respond to concerns about new competition" while demonstrating how their peoples will benefit from expanded regional trade, she said.

"Expanding trade within Africa is one of the best ways to promote growth," she said.

That issue will come under the spotlight Sunday, when 26 African nations will launch negotiations in Johannesburg to pull down barriers in countries stretching from the Cape to Cairo.

Clinton's visit here is another sign of growing interest in African economies, which the International Monetary Fund expects to grow faster than the global average in the coming years.

Six of the world's 10 fastest-growing economies were in Africa last year, and the African Development Bank has signalled the rise of a middle class of more than 300 million people on the continent.

The AGOA law grants 37 African nations duty-free access to the US market, with a handful of countries like Somalia, Sudan and Zimbabwe excluded because of conflicts, coups or political turmoil.

Last year, AGOA-eligible countries sent $44 billion worth of exports to the US market, but only $4 billion dollars of that was in non-oil products.

One provision of the law, which allows many countries to export clothing made from imported fabrics, has ironically helped the growth of Chinese-owned factories in countries like Swaziland.