US-Africa trade up more than 500% since 2001 but many African countries losing out
Africa’s trade with the United States grew by more than 500 per cent between 2001 and 2011, but many African countries missed out on that five-fold growth, a leading Washington expert told African Development Bank (AfDB) staff recently.
Sherman E. Katz, a senior advisor at the Centre for the Study of Presidency and Congress in Washington DC, gave a talk entitled “US Trade Policy under the New Administration: What Does it Mean for Africa?” at a Bank Staff Seminar in Tunis, organized by the AfDB’s African Development Institute in collaboration with the Regional Integration (ONRI) and Human Resources (CHRM) Departments, on February 21, 2013.
The context of the seminar was the upcoming renewal of the African Growth Opportunity Act (AGOA), a measure designed to provide incentives for US-Africa trade and originally signed in May 2000.
Since the act came into operation in 2001, AGOA-related non-oil exports from Africa have grown five-fold to US $53.8 billion from US $8.1 billion over 10 years.
However, many African countries are not benefitting from the opportunities created by AGOA. Research shows that, despite AGOA, the US-Africa trade remains dominated by a small group of Sub-Saharan countries. All exports from sub-Saharan Africa to the US in 2011 totalled US $79 billion, of which almost 80 per cent came from just three countries – Nigeria (47 per cent), Angola (19 per cent) and South Africa (13 per cent).
US exports were similarly concentrated, with those same three countries receiving 68 per cent of the 2011 total of US $20.3 billion – South Africa (34 per cent), Nigeria (22 per cent) and Angola (12 per cent).
To improve the situation, Katz emphasized the need for African countries’ active involvement in making their requirements and trade positions known to Congress at this negotiation stage ahead of the 2015 renewal. His presentation suggested that African countries need to focus on meeting AGOA export requirements to increase their utilization of the AGOA quota.
He presented the evidence of his work on the growth achieved by Vietnam in the last decade on the back of a similar unilateral trade preference agreement with the US. Katz pointed to the coherency and structured approach of the Vietnamese in tailoring their trade offerings for the US market as well as how they met the preference and standard requirements in developing their products for the US market. Vietnam, he said, rigorously adhered to the requirements of the agreement and through collaboration with NGOs, offering training and making business process development capacity building efforts.
Katz pointed out the low involvement of African countries in contributing to the debate on AGOA renewal and making their preferences known to Congress.
Katz said that while many in Congress thought of Asia first in terms of economic potential, there was a train of thought that connected security concerns in Africa with the need for more economic growth.
For better AGOA utilization, Katz said Africa needed more skilled personnel, better infrastructure, capital, transparency, rule of law, and country-wide AGOA strategies, among other things.
He added that that the US wanted to consider Africa a “commercial destination,” not a “food security problem.”
For its part, the AfDB noted several key questions for US and African beneficiaries to address with respect to AGOA renewal. Researchers had identified certain weaknesses that needed to be dealt with, if a renewed AGOA was to mutually benefit both African countries and the US.
Chief among them were: poor utilization of preferences; the high level of concentration in AGOA exports, and a high concentration among a few groups of exporters; the issue of the de-listing and eligibility of countries such as Guinea, Madagascar, Niger and Zimbabwe; whether to seek a reciprocal trade agreement similar to Africa’s Economic Partnership Agreements with the European Union, and expanding the range of AGOA preferences.
All the participating AfDB departments agreed on the need to focus on skills and technology and infrastructure needs for non-oil exports, particularly in agri-business. They also noted the need for training in business processes and to explore ways to attract US investment and capital to Africa.
More than 40 AfDB staff from six departments attended the seminar.
The director of the African Development Institute, Prof. Victor Murinde, and the Chief Infrastructural Economist in ONRI, Shem Shimuyemba, chaired the seminar early in the day. ONRI’s Chief Trade and Regional Integration Officer, Christian Kingombe, chaired the caucus session in the afternoon.
21 AGOA FORUM 2013: Ethiopia will host the 2013 US-Africa AGOA Forum. AGOA.info has been informed that the Forum will not take place as envisaged on 28 June - 1 July, but at a later date yet to be determined. The theme for this year’s Forum is “Trade and Technology for sustained change”“
21 December 2012: Guinea-Bissau and Mali lose AGOA eligibility
APRIL 2013: Monthly data has been updated to include February 2013 data, quarterly includes full year 2012 data.
New US strategy towards Africa: White House Factsheet on new strategy towards Africa, plus overview of past US engagement with Africa. Click here for the file and this link for a summary article.
02 August 2012: Bill to extend third country fabric provision passes Congress Download the House of Reps. Bill at this link
South Sudan declared AGOA-eligible on 26 March 2012. Earlier, Cote d'Ivoire, Niger and Gambia declared AGOA eligible on 25 October 2011. See news item, presidential declaration and trade overview at this link (S Sudan) and here (others).
US GSP extended and GSP benefits to be applied retrospectively for the year 2011 since expiry of previous GSP. See AGOA.info legal documents section at the following link.
AGOA at 10: Reflections on US-Africa trade with a focus on SACU: Tralac Working Paper that can be downloaded at this
December 2010: The Democratic Republic of Congo loses its AGOA eligibility status. See proclamation here (pdf download available at this link
ITC investigation of textiles and apparel: Further details at this link
AGOA IV – Changes to AGOA explained
For disaggregated trade data covering each AGOA country, follow the relevant link in the Country Sections (left column) or click here.
For detailed AGOA maps click here