This week the news out of Africa is focusing on the 8th annual AGOA conference, just coming to an end in Nairobi.This story captures the main messages of Secretary of State Hillary Clinton: the need to improve and expand intra-regional trade; the need to improve the climate for doing business in Africa (which includes strengthening governance and the rule of law); the desirability of more bilateral trade agreements with African countries, as well as a focus on improving opportunities for Africans to export agricultural products.
AGOA is the African Growth and Opportunity Act. It was passed under the Clinton Administration and designed to create positive incentives for Africans to export more to the US. To date, the Act has been a disappointment. Although African exports to the US have tripled, just over 90% AGOA imports are oil and petroleum products. The idea was that expanded trade would help develop a more vibrant and competitive private sector in Africa. But because African governments ultimately control sub-surface minerals such as oil, and because oil production often generates substantial conflict (as in Nigeria), the boost in African exports helps oil-producing governments most -- not local entrepreneurs -- and helping these governments is, by no means, the same thing as helping citizens on the ground.
How might this problem be addressed? As this story from the Kenyan paper Business Daily makes clear, African countries and their industries need to become more competitive. But, in addition, the US could make it easier and less costly for Africans to export agricultural products that compete with protected US-produced commodities such as sugar. Or, allow more value-added/processed ag products into the US duty free. Currently, US peanut growers, sugar farmers, dairy and beef farmers face less competition than they otherwise would if AGOA's duty-free provisions were extended to these products; same with canned fruits or cocoa that has been processed with sugar.
Secretary of State Clinton is absolutely correct that more expansive intra-regional trade is essential for economic growth in Africa. But there's still also a good deal the US government can do to make it easier for Africa's farmers to compete in our markets.
- Karol
5 comments:
While it's true that the majority of exports under AGOA have been in oil-related sectors, what people never mention is that non-oil exports under AGOA amount to over $5 billion annually. $5 billion in Africa is huge-- if any other initiative generated $5 billion in non-oil exports out of Africa we'd consider it an unmitigated success. Not to mention the fact that AGOA has created over 300,000 jobs on the continent, most of which support family members in addition to the workers.
Paul Fakes at the Whitaker Group has a blog post here explaining how much good AGOA has done for non-oil sectors throughout Africa, especially in places like the apparel manufacturing sector of tiny Lesotho.
There are still things to be done to improve AGOA - expanding it to include more agricultural products, adding investment incentives, making it longer, getting rid of US farm subsidies - but let's not ignore all the good it's done already.
Meg's point is well taken. $5 billion in additional trade is important, though not quite what proponents of the bill were hoping for when it passed, nor what others have hoped for since then. In terms of the textile industry in Africa, a question in response might be this: how competitive are African producers/manufacturers vis-a-vis low-cost Asian manufacturers? And, if they are less competitive, how can they best diversify into niche products that consumers may value more highly?
African textile industries certainly have the potential to be competitive, but at the moment they're infant industries trying to compete with well-established, hypercompetitive industrial giants in Asia. That's why it's so important that AGOA not be extended to cover countries like Bangladesh and Cambodia-- they definitely don't need trade preferences to cover it. The former Assistant US Trade Representative for Africa wrote an op-ed about this recently too here.
As for becoming more competitive, I think African industries need to put more effort into branding their products. It makes a world of different in how much people want to buy what you're selling-- for exporters, having people associate a certain product with a certain origin will boost demand a lot. Florida oranges, Belgian chocolate, Argentinian beef, Vermont maple syrup, etc. A "Made in Africa" brand could be very powerful if industries made an investment-- for example, these two companies have done a pretty good job associating their quality with their location.
I think as First Lady of the United States, Clinton published a weekly syndicated newspaper column titled "Talking It Over" from 1995 to 2000, distributed by Creators Syndicate. It focused on her experiences and those of women, children and families she met during her travels around the world
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