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US, Africa consult on reviewing AGOA for increased benefits

Published date:
Thursday, 10 November 2011

IN 2010, Zambia took over the chair of the African Growth Opportunity Act (AGOA) and the Zambian Ambassador to the United States Sheila Siwela was appointed co-chairperson of the Economic Development Committee of the African Diplomatic Corps in Washington DC, teaming up with the Ambassador of the Kingdom of Lesotho Ambassador David Rantekoa.

The major responsibilities of the co-chairs were to engage the US government and congress on the improvement and review of AGOA trade preferences on behalf of and for the benefit of all AGOA eligible countries. Initially, AGOA was set to expire in 2008.

In 2004, the United States Congress passed the AGOA Acceleration Act which extended AGOA to 2015.

There are currently ongoing consultations in the US Congress and among the African Diplomatic Corps in Washington regarding reforms to trade preferences and as to what happens to AGOA after 2015.

In June 2011, Zambia successfully hosted the fifth AGOA conference after Kenya, Ghana, Senegal and Mauritius.

The recommendations that emerged from that meeting and specifically during the African Ministerial Consultative Group were:

1 - The need for AGOA eligible countries to speak with one voice in urging the US to extend AGOA beyond 2015.

2 - To urge the US for the Third Country Fabric provision to run concurrently with AGOA after it expires in 2012.

3 - A call to the US to priotise capacity building especially in infrastructure development, sanitary and physio-sanitary laboratories and private sector support to enable African countries take advantage of the market access AGOA offers.

4 - To urge the US to consider relaxing its restrictive rules of origin in order to promote diversification of exports into the US, especially for agricultural products and lastly request US support towards Africa’s regional integration efforts through development of value chains.

To push this agenda forward, the African Partnership For Economic Growth Caucus (APEG) co-chaired by Bobby L. Rush, the ranking member of the Energy and Power House sub-committee of the Energy and Commerce committee and Donald M. Payne, the ranking member of house sub-committee on Africa, Global Health and Human Rights, held the first ever quarterly meeting with the African diplomatic corps to launch a working group on Trade and Investment In Africa.

The theme was “Making the US-Africa Partnership a Reality.”

APEG was created by congressmen Bobby Rush and Donald Payne to foster stronger commercial and economic ties between the US private sector and Africa.

The primary objective of APEG is to promote bilateral private sector development that will increase export, investment and economic growth for large and small US and African firms.

It is dedicated to educating members of congress on issues affecting the commercial and economic relations between the US and African countries.

This particular meeting was chaired by director of the Wilson Centre’s Africa Programme and Project Steve McDonald while former Ambassador, former Assistant US Trade Representative for Africa who is also co-chair of the AGOA Action Coalition, Rosa Whitaker of the Whitaker Group served as moderator.

Others who participated included South African Ambassador to the US Ebrahim Rassol, the Ambassador of the Republic of Mauritius Somduth Soborum, Cote D’Ivoire Ambassador Daouda Diabate.

From the American Private Sector was Ms Karen Tandy from Motorola Solutions (MS), Del Renigar from General Electric (GE) and Wanda Felton from Export-Import Bank (EIB) of America.

During the discussion overview, most participants agreed that AGOA had produced impressive results in 2010.

However, as AGOA comes up for renewal in 2012, the discussion had shifted towards an analysis of how a “languishing” American business community can better leverage the engines of trade and investment in Africa to create jobs at home and benefit American economic interests.

It was also observed that AGOA eligible countries needed to speak in a uniform voice to urge the US to expand the legislation, to prioritise infrastructure and to focus on regional integration.

Ambassador Siwela in her remarks stated that “the meeting signaled the beginning of a historical true partnership between Africa and the USA.”

She paid gratitude to the US for the favourable responses and commitment from secretary of State Hillary Clinton and the US Trade Representative Ron Kirk during the AGOA Forum where they pledged support towards the extension of AGOA preferences and the Third Country Fabric provision beyond their current lifespans.

She emphasised the urgent need for the extensions in order to sustain investor confidence which she said “is prone to falter as the expiration date nears.”

More importantly, she concluded by noting “the need to ensure that thousands of jobs that directly or indirectly depend on these provisions were not lost.”

Meanwhile most participants praised AGOA for providing the platform for high-level consultations and increased trade competitiveness.

The benefits of AGOA, they said, could not be over emphasised with respect to its effect on the textile industry in Africa.

Ambassador Somduth Soborum of the Republic of Mauritius charged that AGOA should be used for “the development of value chains which will culminate in regional integration.”

He said it is clear that the priority going forward would be the Bill’s extension as well as the extension of the Third Country Fabric provision.

Ambassador Daouda Diabate of Cote D’Ivoire highlighted his country’s desire to join the ranks of AGOA.

Congressman Charlie Rangel in response said that Cote D’Ivoire’s return to AGOA eligibility is an initiative that had the support of various members of Congress.

South African Ambassador in the US Ebrahim Rasool said the responsibility on the part of the diplomatic corps is to equip proponents of AGOA in Congress with proper information in order to deliver a message that is well understood and to avoid misunderstandings.

Congressman Payne stated that fostering robust trade between African countries is an essential step for the continent.

He noted that beyond trade, Foreign Direct Investment (FDI) in Africa should be fostered.

“In the last few years, many African countries have seen a surge in FDI with a great deal of that money coming from India and China,” he added.

Congressman Payne stated that the US had been slow to react to changes in Africa and that many private sector companies in the US remained hesitant to invest in the continent because of political instability and violence in some regions.

He concluded that, “The United States must continue to be a partner in Africa’s progress and build a relationship based on mutual respect and interests.

Africa is ready to transition from an afterthought to a major figure in the world economy and the US should make necessary policy changes to ensure that our financial instruments are revamped to fully support this transition.”

In his remarks, co-chair congressman Bobby L. Rush asserted that he strongly believed,

“Africa holds the key to its own development.”

He said the continent is experiencing economic take off and that, “At the same time, we are facing serious competition in our economic relations with African countries.

“I have not met a single public official or private sector representative from either the African or North American continent who has said they do not want more trading activity between them.

“What is clear to me is that stronger partnerships will forge the link that is currently missing.”

From the Private Sector, Senior Vice President for Public Affairs at Motorolla Solutions Karen Tandy told the meeting that her organisation has been active in African countries for 40 years and has taken a slew of development initiatives to the continent.

She stated, however, that the company had been severely thwarted in its efforts to extend its business footprint owing mainly to the unfavourable financing and uneven playing field, which many Chinese companies seize advantage in Africa.

She noted that the Export-Import Bank (EIB) of America is essential in terms of financing but that there are many EIB rules that are antiquated and irrelevant.

In response, vice chair of EIB of America said the bank business is growing rapidly in Africa as was seen in 2010 when the company registered 177 transactions in 20 different countries.

She said even though the Bank has a congressional mandate to do business with African countries, its commitment to the continent is much broader than just a mandate.

And Senior Counsel, International Policy and Trade from General Electric (GE) Del Renigar maintained that his firm considered African countries to be partners.

He said General Electric had opened an office in Nairobi, Kenya and was extending its operations southwards to neighbouring countries such as South Africa and Angola.

The company is taking deliberate steps to position itself as the one-stop shop for countries seeking to increase their GDPs and to improve the quality of life and access to healthcare for their people.

At the end of the meeting, key points evolved around a number of pertinent issues pertaining to AGOA vis-a-vis the United States of America.

Of significance were the following:

Commitment to strengthen and extend AGOA and the Third Country Fabric provision beyond 2015

Provide Members of Congress who are champions of AGOA with the information and support necessary to make compelling cases of linkage to US national interests that build a constituency for AGOA renewal and extension

Promote Cote D’Ivoire’s eligibility to resume participation in AGOA and move that initiative forward post-haste

Advance efforts to improve US competitiveness with regard to China through strengthening EIB

To increase exports to Africa via EIB financing and more favourable investment conditions for US companies in Africa

The American Private Sector were unanimous in their call for leveling the playing field as far as American businesses are concerned and equipping those businesses with the tools to access and to compete in African markets

That the first Quarterly Meeting with the African Diplomatic Corps would serve as an ongoing forum for the promotion of ideas and the cultivation of relationships between Members of Congress, African Diplomatic Corps and the Private Sector.

>The author is Press Secretary at the Embassy of the Republic of Zambia in Washington DC.

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