TRALAC - Trade Law Centre

Obama and Africa

Friday, 07 December 2012 Published: | Engineering News (SA)

Source: Engineering News (SA)

US President Barack Obama has been criticised for having had too little engagement with Africa during his first term. Arguably because of his African heritage, there was much excitement when he was first elected in 2008. However, many Africans have felt let down and left out and the celebrations were, therefore, far more subdued after Obama’s 2012 re-election.

There are some signs, though, that Africa could possibly feature more prominently during Obama’s second term. One of these is the fact that his administration has followed up on the June release of its ‘US Strategy Toward Sub-Saharan Africa’ with a new Department of Commerce-led campaign, dubbed ‘Doing Business in Africa’ (DBIA).

The campaign was officially launched in Johannesburg last week by acting Commerce Secretary Dr Rebecca Blank, who hosted a continentwide briefing on DBIA after having first unveiled it to South African business leaders. Blank also promoted the initiative during meetings with East African leaders in Kenya.

In a letter published on November 26 to outline his support for the initiative, Obama said the goal was to deepen trade and investment between the US and a region that is home to six of the world’s ten fastest-growing economies. “Many American entrepreneurs and business leaders are unaware of the tremendous trade and investment prospects in sub-Saharan Africa,” Obama lamented, while promising that the campaign would seek to increase awareness of these opportunities.

Currently, US trade with sub-Saharan Africa accounts for only 2.6% of the country’s total trade with the world. In 2011, two-way trade climbed 16% to $95-billion when compared with 2010, with African exports benefiting directly from the Africa Growth and Opportunity Act (Agoa), which offers duty-free access to the world’s largest economy on 6 400 tariff lines.

Another reason to expected heightened US-Africa engagement is that Obama’s second term will coincide with deliberations on whether or not the US will renew Agoa beyond 2015.

Blank used her visit to reaffirmed the administration’s commitment to working with the US Congress to extend Agoa. She was less unequivocal, however, on whether the extension would be applied equally across large and small African economies.

There is some concern in South Africa that the US Congress might seek to exclude the country from Agoa, or reduce its benefits, partly owing to the fact that the country is now a member of the Brics bloc of Brazil, Russia, India and China. “There is no question that Congress will look to see whether American businesses appear to be operating on a level playing field, whether they have access to procurement and investment opportunities the same as other businesses. If they feel the answer to that is ‘no’, there might well be hesitations in Congress,” Blank cautioned.

For South Africa, which remains Africa’s largest economy (although Nigeria is now snapping at its heels) Obama’s legacy will arguably hinge on whether he fully backs the argument that the goodwill flowing to US firms as a result of the Agoa outweighs the downsides to firms that compete with South African enterprises. At this stage, it is far from certain as to the direction the debate will take.

 

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