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Note: This document is from the archive of the Africa Policy E-Journal, published by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived document may not work.

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 drugs".

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 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,

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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 by Washington.

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 AGOA..

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 in people".

Mixed record

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 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 in 2000.

"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 place."

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. ...

Political conditionality

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 go.

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 investment abroad.
  • 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
(2) Mauritius government conference site
(3) features
(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> and>

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Date distributed (ymd): 030114
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+

The Africa Action E-Journal is a free information service provided by Africa Action, including both original commentary and reposted documents. Africa Action provides this information and analysis in order to promote U.S. and international policies toward Africa that advance economic, political and social justice and the full spectrum of human rights.

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