Cooperating, not competing, in Africa: a case for Transatlantic rapprochement

Cooperating, not competing, in Africa: a case for Transatlantic rapprochement
Published date:
Friday, 07 October 2016
Author:
Frank Samolis and Stacy Swanson

With the African Growth & Opportunity Act (AGOA) Forum ending in Washington this week and the European Parliament approving further trade agreements with six African states earlier this month, the apparent race for African trade continues to intensify.

This is no great surprise given the GDP of Sub-Saharan Africa (SSA) is expected to grow 30 percent faster than the rest of the world over the next five years.

By 2030, the region will have a quarter of both the world’s workforce and consumers. However, if we are serious about wanting better market access to SSA while also supporting international development goals, the U.S. must move beyond the foundations of AGOA and work with allies in Europe to think globally and work towards more cohesive trade approaches.

President Barack Obama held the first-ever U.S.-Africa Leaders Summit in 2014. At that Summit, the opportunity was missed to think big on trade with SSA countries – harmonizing transatlantic trade preferential programs and further cementing a lasting legacy with the African continent. The Obama Administration reiterated this week its desire to adjust and pivot in its approach towards SSA. This pivot should be around greater cooperative trade policies between the U.S., United Kingdom and European Union towards SSA.

AGOA has been a major step in the right direction in promoting U.S.-African trade relations. AGOA provides duty-free market access to the U.S. for qualifying SSA countries by extending preferences a wide range of products, while promoting greater diversity of exports from such countries. The Act is not without its limits.

One of the main issues is that it fails to provide long-term assurance to SSA economies. Congress waited until the last minute to renew AGOA in 2015 and, in doing so, strengthened critics’ arguments that the deal did not facilitate certainty in African products for global supply chains. In addition, SSA countries must also defend their eligibility each year under AGOA, when the U.S. Trade Representative (USTR) seeks public comments on SSA countries’ practices on issues like good governance.

On the other side of the Atlantic, the EU encourages trade and investment in Africa through as Economic Partnership Agreements (EPAs). The EU enters into these agreements with individual African countries. With EPAs, the EU grants full duty-free and quota-free access to its market. Depending on the capacity of the African country signing a specific agreement, EPAs call for the liberalization of between 75-98 percent of its market to EU products over a period of up to 25 years (over double that of AGOA). This approach also has its problems. Some worry that the agreements do not address the central challenges facing African economies, namely that it focuses too much on primary products and exacerbates tensions between African countries at a time when regional economic integration is on the continent key for growth.

Over the last decade, with increasing levels of private investment in SSA, the strengths and weaknesses of AGOA and EPAs have become clearer, with the main differences being simplicity and certainty. Under AGOA, Congress sets out eligibility requirements that countries must adhere to, with the government then conducts an annual review and determines if countries are meeting the eligibility criteria. With EPAs, the EU negotiates individual agreements with countries, which are not necessarily uniform. EPAs grant permanent benefits to a country, whereas those same countries are faced with a degree of uncertainty when their access to AGOA benefits is reviewed every twelve months.

Given that both have major weaknesses and the fragmentation it creates between SSA trade with the U.S. and EU, we must begin to think radically. After meetings of EU trade ministers in Bratislava last week, it was suggested that negotiations are likely to stall until the next U.S. President assembles their trade negotiations team. This pause in Transatlantic Trade and Investment Partnership (TTIP) negotiations, as well as a new Administration and Congress in Washington, could provide all parties with more time to consider a broader transatlantic dialogue on trade with SSA countries. In addition, the looming Brexit could provide a useful period in which to begin to develop more cooperative trade policies. The UK could seek to advocate for SSA harmonization discussions alongside the TTIP deal. A SSA-specific side agreement could allow the UK to be a party to the broader transatlantic market. 

Ultimately, any efforts by the U.S., UK and EU take to harmonize their trade policies, such as the preferential treatment of goods, could further assist with increasing value-add commodities from Africa and in turn translate into sustainable development for the continent. If there is any silver lining in the dark cloud hanging over TTIP, perhaps it is the opportunity for all parties to step back from the negotiations and consider a harmonized Africa trade program.  

 

  • Frank Samolis is co-chair of the International Trade Practice at Squire Patton Boggs and sits on the Board of Directors of the U.S.-Africa Chamber of Commerce. Stacy Swanson is a Public Policy Advisor at Squire Patton Boggs .

View related news articles

Biden Administration signalling possible resumption of trade talks with Kenya?

The Biden administration has given an indication of a possible resumption of trade talks between the US and Kenya. The two nations commenced negotiations for a free trade agreement (FTA) in July 2020, with a view of drafting a comprehensive agreement that would act as a model for similar pacts between the US and other African countries. But discussions around the agreement died down after Biden took over from his predecessor Donald Trump in...

08 March 2022

US-Africa trade policy faces future uncertainties

US trade policy toward Africa is facing a conundrum. Much has changed in the two decades since the African Growth and Opportunity Act (AGOA) set the framework for trade between the world's largest economy and its poorest continent. Many observers advocate new policies to increase U.S.-Africa trade and investment, especially with Agoa expiring in 2025. Yet the policy path is less clear than when Agoa became law, and the prospects for a...

21 September 2021

Biden eyes up Africa as new trade market, reboots Trump-era initiative

The Joe Biden administration has announced plans to revamp the Trump-era Prosper Africa initiative, as it works to “substantially increase” two-way trade and investment between the US and Africa. With a focus on infrastructure, clean energy and healthcare, the White House said in recent weeks that it would kickstart a new Prosper Africa Build Together Campaign, having also requested US$80m from Congress in additional funding...

01 September 2021

'Rich countries want to strike trade deals in Africa'

“We will be the guinea pig,” said Uhuru Kenyatta, Kenya’s president, before trade talks with America opened last year. A deal would make Kenya only the second African country after Morocco to sign a free-trade agreement with the United States. Officials in the Trump administration called the proposed deal “a model” for future ones. But such bilateral talks jar with Africa’s push for regional integration and with President Joe...

21 August 2021

US trade chief plans summit to discuss Africa duty-free access

The U.S.’s trade chief plans to convene a meeting with African ministers before the end of the year to strengthen partnerships and discuss a law that provides duty-free access to the U.S. for thousands of goods from sub-Saharan nations. “It is important that we meet despite the pandemic to discuss how we can build on the successes of the African Growth and Opportunity Act,” U.S. Trade Representative Katherine Tai said in remarks...

27 July 2021

Biden’s fast-track Trade Authority (TPA) is set to expire this week

President Joe Biden is about to lose one of his main tools for getting trade agreements passed in Congress, dimming the outlook for deals already in the works with the U.K. and Kenya [See trade data below this article]. Trade Promotion Authority, or TPA, fast-track negotiating ability delegated to the U.S. president by Congress, is set to expire on Thursday. [See a FAQ guide here] That power, which was granted under the Trade Act of 1974,...

29 June 2021

Former US negotiator: US-Kenya deal could spur regional value chains

A trade deal with the U.S. could help both Kenya and its neighbors in the East African Community by fostering the development of regional value chains, a former U.S. trade official tells Inside U.S. Trade. “I think it’d be really fascinating as we go forward with this U.S.-Kenya FTA to see what’s going to be possible not just for Kenya but for other African countries in various sectors,” Florie Liser, a former assistant U.S. Trade...

10 February 2020

President Trump announces intent to negotiate trade agreement with Kenya

President Donald J. Trump today announced the United States intends to initiate trade agreement negotiations with the Republic of Kenya following a meeting at the White House with Kenyan President Uhuru Kenyatta.  “Kenya is a recognized leader across the continent, an important strategic partner of the United States, and there is enormous potential for us to deepen our economic and commercial ties,” said United States Trade...

06 February 2020

US, Kenya reportedly to start trade talks seen as template for Africa

The U.S. and Kenya are expected to announce negotiations on a free-trade agreement next week, America’s first such deal with a sub-Saharan country, a person familiar with the plans said. The Trump administration wants the accord to be a model for future pacts with other nations in the region, one of the people said, declining to be identified because the talks are private. An announcement on the discussion will coincide with Kenyan...

29 January 2020

Looking forward: US-Africa relations [incl. Video]

Editor's Note: On March 26, 2019, Brahima Coulibaly testified before the U.S. House of Representatives Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations. His written testimony on Africa's rapid transformation and U.S.-Africa relations follows. Thank you, Chairwoman Bass and Ranking Member Smith, for your leadership with respect to U.S. engagement with Africa. Your active role in fostering the...

26 March 2019

US should shift focus in Africa from aid to trade, analysts and officials say

The U.S. needs a new approach to Africa that is focused more on developing commercial ties and less on providing aid, analysts and government officials said Friday. Speaking at a Center for Strategic and International Studies event, Erin Walsh, assistant secretary of Commerce for global markets, said it was critical for the U.S. to pivot from a focus on aid to Africa to one of commercial engagement with African countries. To that end, she...

23 February 2018