Saturday, May 15, 2010

"Trade Is Key to Africa’s Economic Growth"

Ambassador Ron Kirk (USTR)

As United States Trade Representative (USTR), Ambassador Kirk is a member of President Obama's Cabinet and serves as the President's principal trade advisor, negotiator and spokesperson on trade issues.
Ambassador Kirk was nominated to be United States Trade Representative by President Barack Obama and was confirmed by the United States Senate on March 18, 2009. During his tenure at USTR, Ambassador Kirk has led the office in developing trade policies that are proactive, responsible, and more responsive to American families' interests - recognizing that trade can be a job-creating pillar of economic recovery in the United States and around the world. Highlights have included a new focus on trade policy that assists America's small- and medium-sized businesses, increased enforcement efforts to bring home the benefits of existing trade agreements, and changes to move forward the Doha Round of world trade negotiations.
Ambassador Kirk draws upon more than 25 years of diverse legislative and economic experience on local, state and federal levels. As the first African American mayor of Dallas from 1995 - 2001, Ambassador Kirk expanded Dallas' reach to the world through a range of trade programs, including numerous trade missions. Previously, he served as Texas Secretary of State under Governor Ann Richards; as a legislative aide to U.S. Senator Lloyd Bentsen (D-Tex.) and as chair of Texas' General Service Commission. Ambassador Kirk also served as a City of Dallas assistant city attorney.
Prior to joining USTR, Ambassador Kirk was a partner at Vinson & Elkins LLP. He was named one of "The 50 Most Influential Minority Lawyers in America" by The National Law Journal in 2008, and one of the nation's top government relations lawyers by The Best Lawyers in America from 2007-2009.
Ambassador Kirk was born and raised in Austin, Texas. He received his Bachelor of Arts degree in political science and sociology from Austin College in Sherman, Texas. He received his law degree from the University of Texas School of Law in 1979. He is married to Matrice Ellis-Kirk. He and his wife have two daughters, Elizabeth Alexandra and Catherine Victoria.

USTR's Office of African Affairs develops and coordinates U.S. trade and investment policy for the 48 countries of sub-Saharan Africa. It leads the negotiation and implementation of U.S. trade agreements and initiatives that further the Administration's economic and development policies in the region.
The Africa Office seeks to open sub-Saharan African markets to U.S. goods, services, and investment, while at the same time helping African countries to use trade to advance their economic development. It oversees implementation of the African Growth and Opportunity Act (AGOA) trade preference program and works closely with other U.S. agencies, such as USAID, to help eligible African countries make the most of AGOA's trade benefits.
The Africa Office leads U.S. Government interagency engagement with sub-Saharan African partners on trade and investment issues, including under our eleven trade and investment framework agreements (TIFAs) with sub-Saharan African countries and regional economic organizations. The United States also has a Trade, Investment, and Development Cooperative Agreement with the five countries of the Southern African Customs Union and bilateral investment treaties with six sub-Saharan African partners.
The Africa Office maintains an ongoing dialogue with sub-Saharan African countries on issues related to the WTO Doha negotiations. It also works closely with other Africa trade policy stakeholders, including Members of Congress (testimony on U.S.-Africa Relations), the African and American private sectors, and civil society in the United States and sub-Saharan Africa.

Recently, Assistant U.S. Trade Representative for African Affairs Florie Liser sat down with writer Charles Corey to talk about how trade is helping countries in sub-Saharan Africa. Read the article below.

Trade is the key to long-term, sustainable economic growth and development in sub-Saharan Africa, says Florizelle Liser, assistant U.S. trade representative for Africa.

Because trade is vital to sub-Saharan Africa's economic future and to improving lives and livelihoods, the 8th Annual African Growth and Opportunity Act (AGOA) Forum, to be held in Nairobi, Kenya, August 4-6, is an important venue for cultivation of trade opportunities, Liser said in a July 21 interview with

"Trade is critically important to economic development. Right now, Africa has about 2 percent of all world trade, which is hard to believe when you think about all of the tremendous resources that they have - oil, diamonds, gold ... not to mention all the agricultural products such as coffee, tea, cocoa - and to think that Africa still only has 2 percent of world trade is really incredible. But the power of trade is that if the Africans were able to increase their share of world trade from 2 to 3 percent, that 1 percentage increase would actually generate about $70 billion of additional income annually for Africa," or about three times the total development assistance Africa gets from the entire world, Liser said.

Many countries in Asia and Latin America, she said, "don't have even one smidgen of Africa's natural resources - a country like South Korea, for example - yet they are huge players in the global trading system. This is why having AGOA as one initiative aimed at expanding the U.S. aspect of our economic relationship with the Africans" is so important.

Liser said the United States needs to work with the countries of sub-Saharan Africa in many areas so they can take full advantage of both AGOA and worldwide trading opportunities and send exports to emerging markets such as China, India and Brazil.

And Africans must begin trading more with each other. "Africans trade the least with each other than all the other continents. It is improving. We are seeing a greater increase in intra-African trade, but," she emphasized, "the reason that that is important is that you are unlikely to be competitive globally if you are not competitive regionally. So until they open their borders with each other and trade with each other, you are not going to get the level of competition that will allow them to be major providers of any product globally."

For that reason, the United States strongly encourages all African countries to develop an "AGOA strategy" based on export promotion and competiveness, she said.

"You look at the products you have, and you determine the three or four particular products or sectors [where] you have a comparative advantage,"
she explained. "Then you look carefully at what are the challenges that face those three or four products or sectors and what would the country have to do to make them more competitive." Some countries are employing this strategy and bringing together their trade, finance, transport and energy ministers and investment promotion experts. "You sit all of these people around the table and you have them ... determine, step by step, what they have to do to advance the competitiveness of those three or four products or sectors."

Recently, Liser talked to the Tanzanians about the AGOA strategy they are developing. Tanzania produces the cotton for the Venus Williams line of tennis shirts, which also is manufactured at a plant in Tanzania. "I challenged them. I said you only have one plant. You have all this cotton. You have cotton farmers who would benefit if you could create more of these factories," which in turn could employ many more people. "The problem is that, as is true with most of the AGOA countries, you have huge potential but you don't have the investment and the focus on how to take that and duplicate and multiply that." The apparel industry, she added, is a "gateway to industrialization."

Africa's share of the U.S. import apparel market is less than 2 percent. By comparison, she said, depending on the product, Bangladesh exports to the United States three to five times the amount of apparel that is exported to the United States by all sub-Saharan African countries combined. "That shows you that they [the Africans] have huge potential but somehow that is not being advanced." U.S. imports under AGOA in 2008 totaled $66.3 billion, with $5.1 billion in nonoil trade, a sector that Liser says the United States wants to further expand.

Another issue, she said, is the need for much more domestic and foreign investment on the continent: "Without that investment, these factories that we are talking about building simply will not be built." She added that "it is not just about foreign direct investment, but also about domestic investment and government investment in the infrastructure that supports trade."

Acknowledging that there is confusion, Liser said it is important to understand what AGOA really is.

"AGOA is essentially a trade preference program which adds about 1,800 products to the list of about 4,600 products that are already eligible to enter the United States duty free under the Generalized System of Preferences. The purpose of AGOA in adding those 1,800 products was to give the Africans a competitive advantage in the U.S. market for additional value-added products. ... So AGOA is important because it is one of the major ways that we have to help encourage greater value addition to Africa's production of agricultural and manufactured products."

Often, she added, people think AGOA is just about textiles and apparel. It is not. "So ... the first thing we need to understand is what it does, and that it is working. We are getting a greater number of value-added nontraditional products entering the U.S. under AGOA. But again," she acknowledged, Africa is "starting from a very small base. So even though we have seen growth, we have not gotten anywhere near the potential."

Ask the Ambassador: African Growth and Opportunity Act

03/29/2010 - 12:19pm

We recently received a question about the African Growth and Opportunity Act (AGOA). Frank from Texas asks:

"Ambassador Kirk, I just found out the AGOA benefits will be over starting January 1, 2010. Why? This has been a great benefit for countries such as Madagascar. Are there any plans in the future to reverse this? Has this been implemented already?"

Ambassador Kirk responds:

"Thank you for the question, Frank. The African Growth and Opportunity Act (AGOA) will not expire until 2015. However, AGOA requires the President to annually designate countries as eligible to receive the benefits of the Act, if they meet the Act's eligibility criteria. These criteria include, among other things, progress on rule of law and political pluralism. The March 2009 undemocratic transfer of power in Madagascar, and the subsequent failure to establish concrete steps toward re-establishing a constitutional democratic government and rule of law led to the termination of Madagascar's AGOA benefits in January 2010. The United States joined the international community, including the African Union and the southern African Development Community in condemning the March 2009 coup. According to the AGOA legislation, all nations will once again be up for review at the end of 2010.

For the 38 countries that meet the eligibility criteria, the combination of most favored nation rates (MFN), Generalized System of Preferences (GSP), and AGOA means that almost all their goods enter the United States duty-free. Africa accounts for only two percent of global trade and it is an initiative like AGOA that can bolster Africa's capacity to trade internationally, while also opening new business opportunities for American workers and firms. Two-way trade between the United States and AGOA nations has more than doubled since the AGOA legislation was signed in 2000. AGOA increases trade opportunities on both sides of the Atlantic, like the molded fiber-glass home manufacturer from Mississippi shipping their low-maintenance and energy-efficient structures to Nigeria and other AGOA members. AGOA has also played an important part in generating dialogue and brokering partnerships between American and African entrepreneurs- expanding opportunities for both trade and investment. We look forward to a year of growth and recovery with our African trading partners, as American businesses expand into new markets, and bring the benefits of trade back home to our workers and families."
United States Trade Representative Ron Kirk Celebrates 10th Anniversary of AGOA with Members of Congress
Trade Preference Program for African Countries Continues to Boost U.S.-African Trade

Washington, D.C. –
United States Trade Representative Ron Kirk presided at a ceremony on Capitol Hill today heralding the 10th Anniversary of the enactment of the African Growth and Opportunity Act (AGOA) trade preference program. Ambassador Kirk was joined by several past and present Members of Congress – both Democrats and Republicans – who played key roles in the drafting, passage and implementation of AGOA, including Congressman Sander Levin, Chairman of the House Ways and Means Committee, Congressman Charles Rangel, Congressman Dave Camp, Ranking Member of the Ways and Means Committee, Congressman Kevin Brady, Congressman Jim McDermott, Congressman Al Green, Congresswoman Eddie Bernice Johnson, Congresswoman Carolyn Kilpatrick, Congresswoman Gwen Moore Congressman Donald Payne, Congressman Ed Royce, Congresswoman Linda Sanchez and Former Chairman Bill Thomas, Ways and Means Committee. Others participating in the event included members of the African Diplomatic Corps and representatives of the private sector and civil society organizations.
“By opening the American market to almost all goods from beneficiary sub-Saharan African countries, AGOA has helped Africans use trade to fight poverty and grow their economies – and AGOA is also good for U.S. business,” said Ambassador Kirk. “By promoting an improved business environment in many African countries, AGOA has opened up new opportunities for U.S. exports. The result is a substantial increase in two-way U.S.-Africa trade since 2000, with African countries now exporting to the United States a more diverse range of value-added products. The success of AGOA is a powerful demonstration of the linkage between trade and economic development – and more can be done to help African countries make the most of the opportunities AGOA provides.”
Background on AGOA:
Congress passed the AGOA legislation in early 2000 with strong bipartisan support. President Clinton signed the AGOA bill into law on May 18, 2000. Since then, three successive administrations, including the Obama Administration, have actively implemented AGOA, working closely with African partners and other stakeholders to help them make the most of the program.
AGOA builds on the existing Generalized System of Preferences program to allow eligible sub-Saharan African countries to export almost any product to the United States duty-free (nearly 6,500 tariff lines), with a special focus on value-added and non-traditional products such as apparel, footwear, and processed agricultural goods. Since AGOA’s enactment, U.S. non-oil imports from sub-Saharan Africa under AGOA have more than doubled, reaching $3.4 billion in 2009. Among the sectors that have experienced sizable increases under AGOA are apparel, footwear, vehicles, fruits and nuts, prepared vegetables, leather products, cut flowers, prepared seafood, and essential oils.
Several countries have witnessed noteworthy increases in exports under AGOA:
-- South Africa exports the widest range of AGOA products, including vehicles, citrus, wine, and footwear;
-- Lesotho has become the leading sub-Saharan African exporter of apparel to the United States;
-- Kenya’s AGOA exports include fresh cut roses, sport fishing supplies, nuts, plastic products, jewelry, and essential oils, as well as apparel;
-- Ghana’s value-added exports under AGOA include chocolates, jewelry, baskets, and preserved pineapple.
AGOA requires the President to determine annually whether sub-Saharan African countries are eligible for benefits under AGOA based on their progress in meeting certain criteria set out in the Act, including progress toward implementing economic reforms, establishing the rule of law, reducing poverty, and strengthening labor and human rights. There are currently 38 sub-Saharan African countries eligible for AGOA.[1]
The United States has provided substantial trade capacity building assistance to African governments and firms to help them utilize AGOA trade preferences. Much of this assistance is carried out by experts at four regional competitiveness hubs, managed by USAID, that work with African governments and businesses to identify and develop AGOA trade opportunities. The United States provided over
$1 billion dollars for trade capacity building activities in sub-Saharan Africa in 2008, including trade-related assistance provided under Millennium Challenge Corporation compacts with African countries.
AGOA also established an annual, high-level dialogue between officials of the United States and AGOA beneficiary countries: the AGOA Forum. The next AGOA Forum, to be held in Washington, DC on August 2-3, 2010, will bring together Cabinet-level officials from the United States and AGOA beneficiary countries, along with representatives of the African and American private sector and non-governmental organizations, to discuss issues related to U.S.-sub-Saharan African trade and economic cooperation.
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[1] Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Comoros, Democratic Republic of Congo, Republic of Congo, Djibouti, Ethiopia, Gabon, The Gambia, Ghana, Guinea-Bissau, Kenya, Lesotho, Liberia, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Togo, Uganda, and Zambia.

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