US President Barack Obama is mounting an early push to extend a trade pact with sub-Saharan African countries that is set to expire in 2015 and is seen as a cornerstone of US-African economic relations.
Ahead of a trip to Ethiopia next week, Mike Froman, the US trade representative, called for a “seamless renewal” of the African Growth and Opportunity Act, originally crafted under then-president Bill Clinton in 2000 and extended by George W Bush, his successor.
Froman said: “We know how important that is to people making investment decisions to know in advance whether they will still benefit from those preferences.”
Agoa – as it is known – allows for many African products to be exported to the US free of duties and quotas, and is becoming increasingly important as the US tries to step up its trade ties with the continent in the face of competition from large emerging markets such as China, the Financial Times reports.
Froman’s comments yesterday at the Brookings Institution, a Washington think-tank, follow Obama’s trip to sub-Saharan Africa in June, when he visited Senegal, South Africa and Tanzania, with the aim of bolstering trade and economic relations.
The ambassadors to the US of several African countries last week called for Agoa to be renewed for at least 15 years, though it is unclear whether the Obama administration is prepared to grant such a long extension. They are also asking for the key “third-party fabric” provisions, which cover textile and clothing exports and have in the past been renewed on a separate time schedule, to also be extended for 15 years. Last year, political gridlock in Congress prevented the third-party fabric provisions of Agoa from being renewed until the 11th-hour, seriously damaging some African producers.
Jas Bedi, chairman of the African Cotton and Textile Federation, said he asked Obama to offer a substantial extension during a meeting in Tanzania last month.
“In Dar es Salaam he said yes he wants to use Agoa as a way to grow trade between the US and Africa, but what we are asking for is we need a long-term relationship,” said Bedi. “You can’t do a $200m investment if you don’t know what is going to happen in three years’ time.”
Froman said conversations with members of Congress were beginning on Agoa renewal “so we can build support for when it is time to submit it”.
He noted that two lawmakers, Johnny Isakson, a Republican senator from Georgia, and Karen Bass, a Democratic representative from California, would be joining the annual Agoa forum in Ethiopia next week, where the US will also have talks on how to update the deal, including which products to cover. Products such as cotton and peanuts may be sensitive, given powerful agricultural interests in the US.
But the geopolitical rationale for Agoa may be stronger than it has been in the past, given the rising economic power of China.
China has already overtaken the US as the continent’s leading trading partner.
According to a report by the US Congressional Research Service, Chinese-African trade surpassed US-African trade in 2009.
In 2011, the latest year with final figures available, the US traded goods andservices worth $94.3bn with sub-Saharan Africa, while China traded $127.3bn, up 15-fold from $8.9bn in 2000.
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