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US/Africa: Trade Meeting, 2
Africa Policy E-Journal
January 14, 2003 (030114)
US/Africa: Trade Meeting, 2
(Reposted from sources cited below)
US/African meetings in Mauritius this week focusing on the African
Growth and Opportunity Act (AGOA) are proceeding without U.S.
President George W. Bush, whose promised Africa trip was postponed
suddenly in a brief announcement just before Christmas, Then
Secretary of State Colin Powell also backed out, leaving the U.S.
delegation to be headed by trade representative Robert Zoellick. On
Sunday, Mauritian Minister of International Trade Jayen Cuttaree
said Mauritius would still make the best of the opportunity, and in
the opening session of the NGO forum, Minister of Women's Affairs
Arianne Navarre-Marie said, "African Women would like to know how
AGOA is going to provide the necesary support for making cheap anti
retrovirals available to their brothers, sisters and children who
are dying of aids because thay cannot afford the price of such
Unfortunately, both the reduced level of the U.S. presence in
Mauritius this week and the exclusive focus on trade accurately
reflect the current realities of U.S. Africa policy. Strikingly,
Bush's balance sheet is deeply in the red even in the realm for
which the U.S. seeks to claim credit: trade policy. The damage done
by other U.S. trade policies far outweighs the impact of increased
AGOA imports from Africa, and an IMF study shows that even those
benefits are far less than they might be.
Today's series of two postings contains (1) excerpts from articles
by allAfrica.com on the Mauritius meetings, a press release on the
latest report on US/African trade, and links to other sources on
related issues (see below), and, in a separate posting, (2)
excerpts from an IMF working paper showing that the benefits in
increased textile exports from AGOA are only a fifth of what they
could be without the highly restrictive "rules of origin" imposed
by the law,
Some Progress, Some Uncertainties Ahead of AGOA Forum in Mauritius
January 10, 2003
By Charles Cobb Jr., Washington, DC
The United States will be pointing to positive numbers showing
rising bilateral trade with African countries at next week's "AGOA"
forum in Mauritius, arguing that AGOA - the trade and cooperation
act intended to boost economic ties between Africa and the U.S. -
is proving very effective.
But critics say the small print tells a less positive story;
African trade and finance ministers from 38 countries are likely to
seek concrete improvements in AGOA's terms at the forum, as well as
clarification on political "conditionality" that might be imposed
It is also clear that many aspects of the AGOA relationship are
being determined elsewhere. Issues of democracy and governance as
well as of capacity-building, agricultural subsidies, the
continuing debt crisis and unresolved trade issues are still being
wrestled with by the World Trade Organization (WTO). And those
deliberations will determine the handling of such issues under
The U.S.Sub-Saharan African Trade and Cooperation Forum is mandated
by the African Growth and Opportunities Act (AGOA) signed into U.S.
law in May 2000. Next week's forum is the second such meeting. The
first was held in Washington, DC in October, 2001, when President
Bush called AGOA, "a roadmap for how the United States and Africa
can tap the power of markets to improve the lives of our citizens."
There is disappointment that President Bush, who last month had
announced his intention to open the forum, has since cancelled
those plans. And Secretary of State Colin Powell will not be in
attendance because of "other issues that are pending," said a
senior administration official speaking on background.
United States Trade Representative Robert Zoellick will lead the US
delegation to Mauritius that includes USAID administrator Andrew
Natsios as well as U.S. Under Secretary Of State For Economic
Business And Agricultural Affairs, Alan Larson.
Declaring himself "very excited" by the upcoming meeting, Larson,
says "AGOA is a centerpiece of our relationship with Sub-Saharan
Africa" and stresses the themes of investment, trade and "investing
According to President Bush's May 2002 report to Congress (also
mandated by the Act), AGOA has resulted in accelerating trade with
Africa. With "substantially all products from sub-Saharan
Africa...now eligible to enter the United States duty free," U.S.
imports from Africa have increased 61.5 percent over the last two
years," according to the White House.
But a closer look at the numbers reveals a thin line between
progress and pitfall. While apparel exports to the United States
from certain countries - notably Kenya, Madagascar, Lesotho and
Mauritius - have dramatically increased in the past two years, by
far the greatest gains came in the oil and mining sectors of
sub-Saharan Africa, with crude oil representing 64 percent of the
total value of African exports to the United States, followed by
the platinum group metals at 7 per cent. Apparels represent only
4.5 percent of sub-Saharan exports to the U.S.
Money from oil output buffered sub-Saharan Africa from the global
economic turndown in 2001, the latest year for which figures are
available. And though global growth dropped to 1.3 percent from 3.8
percent, Africa experienced a 2.7 percent growth rate, down from
3 percent in 2000. According to the IMF it was the first time in
five years that sub-Saharan Africa recorded faster growth than the
world in general.
But this still doesn't make for an economically healthy Africa.
Even with AGOA, foreign investment still seems in flight from the
continent. According to the third annual "U.S.-Trade and Investment
with Sub-Saharan Africa" report of the U.S. International Trade
Commission, sub-Saharan Africa received only $14.3 billion in
investments in 2001, or 7.7 percent of global foreign investment
flows to developing countries. But almost one-half of those 2001
investment inflows came from the sale of a South African company
to a British firm. Without this transaction, investment flows would
have totaled an estimated $6.9 billion. nearly 10 percent less than
"AGOA has been a real mixed bag, but overall it's a sham," says
Bill Fletcher, president of the Washington, D.C.-based TransAfrica
Forum. "Exports continue to be largely oil. While in a number of
countries there has been an increase in jobs - and that's good -
AGOA doesn't carry with it human, environmental and labor rights to
protect people in areas where production is supposed to be taking
In Lesotho, one of the AGOA success stories with 15,000 new jobs in
the country because of the Act, factories produce Wrangler blue
jeans and clothing for Wal-Mart discount chain of stores. Workers
there have begun complaining of long hours and low pay. But that's
better than no work and no pay, say AGOA supporters.
"What I hear when I'm there [in Africa] is that Africans are asking
for more trade, not less trade," former U.S. Trade representative
for Africa, Rosa M. Whitaker, told allAfrica in a recent interview.
"Those people don't have a problem with trade; they're asking for
more of it. [You] should talk to those women who have been working
and supporting a whole village on their salaries and now having
opportunities including educating girls as well as boys."
Nonetheless, says the NGO Bread for the World, in a presentation
prepared for the Mauritius meeting, AGOA "is still a hot button
issue for some advocacy organizations in the U.S. who say that it
does not truly provide a broad range of opportunities for African
businesses to trade and grow."
Africans are also asking for better terms of trade, both within the
AGOA framework and outside of it. One important concern African
ministers have is with the scheduled ending of textile quotas for
U.S imports next year. Their still-fragile industries trying to
export to the U.S. will face stiff competition from Asian nations
like China and Thailand. Even now, many of Lesotho's new apparel
factories are owned by Taiwanese and Chinese.
"It's precisely because we recognize the concerns that African
producers and some other smaller producers have that we have
created a program that will give special preferential benefits to
them after the end of quotas," said Under Secretary Larson. AGOA,
he explained, promises "tariff-free entry" so even if textile
quotas are lifted, as scheduled, across the board, African
producers will still continue to benefit from preferential access
to the U.S. market.
Larson sees quota-allocation as an issue for the World Trade
Organisation, and no proposal to extend import quotas has been
proposed in the WTO. "If it were broached in any explicit way, we
would have to take a look at it and come to a conclusion. But it
isn't that we're for or against; it's simply that the issue hasn't
been raised. ...
Meanwhile, the U.S. Embassy in Swaziland issued a statement last
month warning that "abuses of...basic principles of justice and
human rights on the rise in Swaziland," is putting that countries
eligibility for AGOA at risk. A "warning" letter from the State
Department - a little known option under the AGOA legislation - is
now being sent to Swaziland."It tells them that 'you are on
probation' and unless you do something to correct labor, human
rights and economic policies, next January you will be out [of
AGOA]," said a senior administration official speaking on
background and on condition of anonymity.
Eritrea will also get such a warning letter "for its total
crackdown on civil society."
But Swaziland has become the lightening rod for the relationship of
AGOA to democratization. A New Year's manifesto by the "illegal"
opposition People's United Democratic Movement (Pudemo) called for
repeal of a 1973 royal degree that did away with the constitution
and banned political parties and opposition to the then King,
Sobhuza; and a new coalition of business groups, fearful of losing
AGOA eligibility, has given the government until January 20 to
commit to democratization.
In Mauritius, African ministers will want to know where the line is
drawn between their sovereignty and U.S. authority to impose
conditions for participation in AGOA.
"One of the things that trade is supposed to do is help society
develop to a place where it can be more liberal politically," says
Africa Society president Leonard Robinson who is hoping that some
"synergy" between civil society, government and the private
business sector will emerge at the end of the Forum.
As well as the two-day ministerial meeting starting on Wednesday
January 13, businesses and civil society groups will also have an
opportunity to meet beforehand.
The private sector forum organized by the America-Mauritius Chamber
of Commerce (AMCham), the Corporate Council on Africa (CCA) and the
African Coalition for Trade (ACT) will gather on January 14 to
focus on finance, doing business in the United States, trade
barriers and biotechnology.
The low level of civil society participation has been one of the
criticisms of AGOA and, unlike the private sector forum, the NGO or
"shadow Forum" was not held during the 2001 meeting in Washington.
"Many African NGOs remain uninformed about what AGOA offers their
countries in terms of economic benefits," said the Washington,
DC-based Foundation for Democracy in Africa, one of the
coordinators of the NGO gathering.
But President Bush's decision not to go to Africa and Mauritius has
given some U.S. NGOs second thoughts about attending. "It's 8,000
miles and a lot of money," said the Africa Society's Robinson,
explaining his organization's decision not to participate. The
Constituency for Africa and TransAfrica have also decided not to
Mauritius Court Declares Anti-AGOA, Anti-War Protest Legal
January 12, 2003
By Jim Cason, Washington, DC
Mauritian Supreme Court Justice Eddy Balancy declared on Friday
that the police had acted outside the law in banning a
demonstration against the free trade policies of the United States.
The protest is timed to coincide with the opening of the AGOA
Ministerial Forum in Mauritius. The judge ordered the police to
authorise the demonstration, planned for January 15.
The Platform Against Bush Politics, a coalition of local trade
union federations, women's organizations, small agricultural
producers and civil society groups, are organizing the
demonstration to protest what they believe are the negative impact
of AGOA trade law.
The groups also oppose the US plans for a war against Iraq and a
number of other US policies, including the refusal of the Bush
administration to sign the Kyoto Agreement on global warming.
When the demonstration was announced two weeks ago, the
Commissioner of Police in Mauritius banned the gathering, arguing
that his officers did not have the capacity to both provide
security for the AGOA meetings and a demonstration. But the
demonstrators took the police to court and on Friday, the Supreme
Court Justice ruled that police could not violate the demonstrators
"fundamental right to assemble and express opinions." ...
"It is a big victory for democratic organizations and democracy in
Mauritius," said Rajni Lallah, a spokesperson for the Platform
Against Bush Politics. In a telephone interview from Port-Louis,
she added: "the march is going to go ahead on Wednesday at 14h30."
She said the member groups were concerned, however, that they now
only had four days to organize the protests.
The Platform, which includes the General Workers' Federation, the
Féderation des Syndicats de Corps Constuées, and Planteurs du Nord,
among others organizations, also plan a "Peoples' Forum" on Monday,
January 13, and Wednesday, January 15.
Lallah said participants in the meetings are opposed to the
conditions included with the US' AGOA legislation which, they
believe, push the government of Mauritius to privatize state-owned
companies and to adopt policies that benefit private companies but
not the people. "What these overt and other covert conditionalities
in AGOA amount to is a recolonization of Africa," she said.
Beyond the AGOA-related issues, the groups are also protesting
against U.S. plans for a war against Iraq and the continuing U.S.
use of a military base on the Indian Ocean island of Diego Garcia.
The protesters, and many others in Mauritius, consider Diego Garcia
and the other islands in that area to be a part of their country
that were illegally stolen by the British.
Lallah also blasted a parallel Forum for non-governmental
organizations (NGOs) that is part of the official AGOA activities,
which she charged was organized primarily by US-based NGOs and
involved mainly government "front groups" from Mauritius.
One U.S. participant in the official NGO Forum, while refusing to
get involved publicly in a debate about this forum, told allAfrica
that the Mauritian groups could make a more positive contribution
by attending the official NGO meeting rather than protesting.
In addition to groups from Mauritius, Lallah said that Jubilee
South (South Africa), the African Trade Network, the pan-African
women's network, Women in Law and Development and the Southern
African Peoples' Solidarity Network would be participating in the
People's Forum events.
U.S. International Trade Commission (Washington, DC)
PRESS RELEASE [excerpts]
January 6, 2003, Washington, DC
The U.S. International Trade Commission (ITC) January 6 released
"U.S.-Trade and Investment with Sub-Saharan Africa," the third in
a series of reports intended to assist the President in developing
a comprehensive trade and development policy for the countries of
sub-Saharan Africa. [The full ITC report - USITC Publication 3552,
December 2002 - is available on the ITC website.]
Following are highlights of the report:
- In 2001, a decrease in U.S. imports from, and an increase in
exports to, sub-Saharan Africa resulted in a 13.9 percent decrease
in the long-standing U.S. trade deficit with the region. The 2001
deficit measured $14.3 billion, with much of its decrease due to a
58.8 percent increase in U.S. exports of transportation equipment
and a 20 percent rise in machinery products.
- Excluding trade in petroleum, the U.S. trade deficit with the
region decreased by 73.7 percent from $3.8 billion in 2000 to $1
billion in 2001. U.S. merchandise exports to sub-Saharan Africa
increased from $5.6 billion in 2000 to $6.8 billion in 2001.
- The largest U.S. exports to sub-Saharan Africa were
transportation equipment (42.4 percent share), chemicals and
related products (11.6 percent), electronic products (10.4
percent), and machinery (9.9 percent). ...
- U.S. exports of agricultural products to the region decreased by
$111.7 million in 2001. Total U.S. merchandise imports from the
region decreased slightly from $22.2 billion in 2000 to $21.1
billion in 2001. ...
- Major U.S. import sectors from the region included
energy-related products (67.8 percent share), minerals and metals
(14.6 percent), and textiles and apparel (4.7 percent). ...
- The first U.S. imports under the African Growth and Opportunity
Act (AGOA) were in January 2001. U.S. imports covered under AGOA
(including its GSP provisions) totaled $8.2 billion in 2001. The
principal suppliers under AGOA (including GSP) were Nigeria ($5.7
billion or 70 percent), Gabon ($938.8 million or 12 percent), and
South Africa ($923.2 million or 11 percent).
- AGOA (including GSP) imports were dominated by U.S. purchases of
energy-related products in 2001. The remaining AGOA (including GSP)
imports comprised smaller quantities of textiles and apparel,
minerals and metals, and transportation equipment.
- U.S. direct investment flows to the region totaled $798 million
in 2001, or less than 0.1 percent of total U.S. direct investment
abroad. In 2001, despite large net inflows to Nigeria, U.S. direct
investment flows to sub-Saharan Africa decreased by 30.7 percent,
compared with a decline of 30.9 percent in total U.S. direct
- The decline was mainly due to a reversal of capital flows
between the United States and South Africa. A drop in the Rand and
uncertainty in the region, compounded by events in Zimbabwe, could
have contributed to the flight of investment capital from South
Africa. Nevertheless, U.S. direct investment position in Africa
increased by 10.1 percent in 2001, to $15.9 billion.
- South Africa hosted $3 billion or 18.6 percent of U.S. assets in
Africa, Angola $1.5 billion or 9.4 percent, and Nigeria $1.3
billion or 8.1 percent. U.S. holdings were principally in the
petroleum sector in Angola and Nigeria, and in the mining and
manufacturing sectors in South Africa.
- During FY 1999 through FY 2001, U.S. government agencies'
funding for trade capacity-building initiatives in sub-Saharan
Africa totaled $192 million. ...
Selected Recent Links
Africa Growth and Opportunity Act
(1) U.S. government site http://www.agoa.gov
(2) Mauritius government conference site http://www.agoa.mu/
(3) allAfrica.com features http://allafrica.com/agoa
(4) U.S. Trade Representative
U.S. International Trade Commission announces January hearings
on proposed U.S.-Southern African Customs Union FTA
Africa Trade Policy Working Group, Dec. 17 letter on negotiations
on Southern Africa Free Trade Agreement
Backsliding on Trade and Health
Crops and Trade, cashews, coffee, and cotton
Date distributed (ymd): 030114
Issue Areas: +economy/development+ +US policy focus+
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