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Michael Froman sets stage for Africa summit, AGOA debate

Monday, 04 August 2014 Published: | Doug Palmer

Source: Politico.com

US Trade Representative Michael Froman on Tuesday called for a new “compact” to boost trade and investment with sub-Saharan African nations, as President Barack Obama prepares to meet with 50 African leaders next week and Congress looks at renewing a 14-year-old program for the region.

 

"It’s an important moment — for Africa, for the United States and for our continuing efforts to further development through trade and investment," Froman said in a speech at the National Press Club hosted by the Brookings Institution.

Congress passed the African Growth and Opportunity Act in 2000 to help growth in sub-Saharan African countries by waiving duties on a long list of goods. Since then, the program has had mixed results, with oil from countries like Nigeria and Angola accounting for the lion’s share of exports under the program, rather than value-added goods that create more jobs.

The future of the program, which expires in September 2015, is on the mind of many African leaders as they get ready for next week’s meeting with Obama. Over the past year, Froman’s office has led an administration effort to review AGOA’s past operation and come up with ideas for how it could be improved.

“Perhaps the clearest lesson learned from AGOA over the past 14 years is that market access — while important for spurring trade and development — simply isn’t enough,” Froman said, arguing the United States should do more to help the region overcome infrastructure and other problems that “infringe on Africa’s ability to compete and integrate successfully in the global trading system.”

“For the United States, this requires a comprehensive, whole-of-government trade and investment strategy with a renewed AGOA at its core and the support of both the public and private sectors on both continents — an AGOA ‘compact’ that brings together our collective resources and puts us on a common course to trade-led growth and development,” he said.

In addition to helping the sub-Saharan region with roads, ports, electricity and other infrastructure projects, the United States should provide more training to help African companies meet the demanding technical standards of exporting products to developed countries, Froman said.

 

US aid for trade facilitation projects to make it easier to move goods across borders by reducing red tape and improving customs operations would also help sub-Saharan countries compete in world markets, he said.

 

At the same time, there are things the United States could do on the market access front to improve AGOA, Froman added. Congress should, for example, also look at the 316 textile, agricultural and other “sensitive” products not currently eligible for duty-free treatment under the program and see which could be added without threatening U.S. producers.

Froman also suggested simplifying AGOA “rules of origins” to make it easier for African companies to export to the United States, and extending, at least for a while longer, a third-country fabric provision that allows AGOA countries to sell clothing made with fabric imported from another country, like China or Vietnam, and still receive duty-free treatment.

Over the longer term, the United States needs to figure out how to move from a unilateral trade preference program to a “reciprocal” arrangement that would help U.S. firms export more to Africa, he said.

Froman said he also expected Congress to wrestle with the idea of when a country has developed enough to be”graduated” from the AGOA program. That is an issue of concern to South Africa, one of the most advanced countries on the continent.

 

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