TRALAC - Trade Law Centre

AGOA eligibility reviews 2019: Selected extracts from submissions

Wednesday, 24 July 2019

Source: USITC hearings / Trade Law Centre (tralac)

The public hearing, US Trade and Investment in Sub-Saharan Africa: recent trends and new developments, takes place today, 24 July, in Washington. The witness list can be accessed here .

For background on the Hearing, see the USITC Federal Register Notice.

Background report:   U.S. trade and investment with Sub Saharan Africa: Recent developments.

Extracts from selected advance submissions:

Ambassador Sankatana Gabriel Maja. The Government of Lesotho, through the Lesotho National Development Corporation, actively supports efforts to attract foreign investment to take full advantage of AGOA. These efforts include the creation of an investor-friendly business environment with minimal bureaucratic red tape.

All of the investments that have been made in Lesotho in response to AGOA have been predicted on the stability and predictability of the AGOA regime. With less than six years left in the current authorization of AGOA, it is critical that serious progress must be made as quickly as possible in defining the future of the rubric that will govern US­-Africa trade and investment relations after 2025. Otherwise, there will certainly be a serious contraction of exports and employment as investors look for more stable environments elsewhere. Last but not least, AGOA has created the US-Africa Trade and Economic Cooperation Forum, commonly known as the AGOA Forum, which has provided an invaluable venue for exploring trade and investment issues between the United States and Sub-Saharan Africa. These annual dialogues are essential in mapping the future of the trade and investment relationship.

Microsoft. As the United States engages with African leaders on deepening bilateral trade and investment, we therefore encourage US policymakers to focus on the following points (selected extracts):No customs duties on electronic commerce. The WTO moratorium on customs duties on electronic commerce, first adopted in 1998, has been critical to the growth of the digital economy, and to economic growth more broadly. It has prevented WTO Members from imposing tariffs (essentially, taxes) on all forms of e-commerce, including downloads of digital content and the provision of cloud and other online services. This has helped these industries to flourish and made digital goods and services available to millions of consumers on a cross-border basis, promoting a more truly integrated global digital economy. Recent efforts to renew the moratorium, however, have stalled, in part based on opposition from South Africa. If the moratorium expires and countries begin imposing customs duties on e-commerce, this could impose tremendous administrative and compliance costs on industry that far exceed the nominal value of the duties themselves. The real “cost” of such duties, however, will fall on consumers and businesses in developing economies like Africa, because they will force customers in these countries to pay more for access to digital content and services than users elsewhere pay, placing them at a competitive disadvantage. Consistent with established US policy, we urge the United State to encourage African governments to support an extension (ideally permanent) to the WTO moratorium, and also to commit not to impose customs duties or other charges on e-commerce under national law. [Submitted by Mike Yeh, Assistant General Counsel]

Freedom to transfer data across borders. Most innovative cloud services today are powered by the analysis of vast amounts of data, often from millions of devices located in many different countries. Firms across all sectors of the economy transfer data across borders every day, not just to support cutting-edge innovation but also for routine business functions. Firms in Africa likewise need the freedom to transfer and analyze data across borders. Unfortunately, certain African governments are proposing data localization mandates that would require firms to store certain types of data in-country or prohibit its transfer across borders. For instance, Nigeria, which is the second largest economy in Africa, still has certain data residency requirements in the public sector that threaten to cross over to other sectors. It requires local storage of data, prohibits the cross-border processing of data, and restricts transfers of data outside Nigeria. Measures such as these would deprive African consumers and businesses of access to valuable technologies and imperil Africa’s ability to achieve its developmental and economic goals. We therefore urge the United States to encourage African governments, consistent with established US trade policy, to commit not to prohibit or restrict the cross-border transfer of digital data.

Aubrey Hruby (Senior Fellow with the Africa Center at the Atlantic Council). In terms of competitiveness, the US economy is services-based, accounting for 80% of annual gross domestic product. The United States’ greater depth and tenure in the services sector are considerable advantages over players like China, for whom services have still not reached potential. Specifically, the United States has global leadership or advantage in financial and information services, agribusiness, entertainment, and niche fields of infrastructure. These must be the fields of emphasis when either expanding or enhancing the US commercial toolkit.Create a US Honorary Commercial Consul Network in African markets. While countries across Africa have made significant progress in simplifying processes for potential foreign investors and businesses, the local complexities of expanding to African markets can still be significant. In its effort to facilitate more investment into African markets, Prosper Africa could work with the Department of Commerce to establish an honorary commercial consul program that would give new US investors access to an invaluable network of American businessmen and women in the market. By engaging people who have established networks and have achieved business success, the United States could quickly establish an invaluable platform to which US companies could turn for commercial guidance.

In financial services, US commercial institutions are primely positioned to help solve asset financing and working capital constraints across Africa. And the United States can better support investors and smaller American companies that could be interested in African markets by creating and sharing an African markets data portal and by supporting additional investor trips. In terms of the creative industries, the United States is a leader in entertainment and media and is thus well placed to capitalize on Africa’s $4.2bn in annual creatives revenue, which is rising rapidly. Even within infrastructure, where the storyline often focuses on China’s dominance, US firms are competitive in renewables, oil exploration and engineering, energy management services, and smart city technologies. Data centers and cybersecurity services could be related areas of focus.

Laird Treiber (Corporate Council on Africa): I would like to turn now to my third point, suggesting that the level of US and African trade and investment is well below its potential. While I expect other speakers will present much more complete data, total trade between the U.S. and Africa in 2018 was $61.8bn, an 11% increase over the 2017 level of $55bn. While this is welcome, this only represented 1.1% of U.S. exports and imports for 2018. Also discouraging, 27.5% of the total trade came in oil and gas imports. The leading area of US exports in 2018 to Africa was transportation equipment, accounting for 19%, followed by machinery, agricultural products and chemicals, each around 10%. Worldwide, the largest U.S. export categories are in capital goods, industrial goods, consumer goods, transportation and food, in rank order. This suggests that current US exports to Africa are not yet focused in the sectors of greatest competitive advantage for US companies.

The App Association. We appreciate USITC’s efforts to evaluate United States’ trade and investment with SSA and related challenges and opportunities. From the perspective of American small businesses in the software development and high-tech industries, the SSA, despite lower-than-expected gross domestic product growth over the last few years, according to the World Bank, presents new opportunities for customer base growth. Increasingly, App Association members are turning to SSA markets as they seek to sustain growth and create more American jobs. Consider the following: (a) In 2017, mobile technologies and services generated 7.1% of GDP across SSA, amounting to $110bn of economic value added. By 2022, the SSA mobile economy will generate more than $150bn (or 7.9% of GDP) of economic value; (b) 300 million more people in SSA are expected to come online via 44 million cellular internet of things connections by 2025; (c) SSA jobs supported by the app economy are expected to increase from 3 million in 2017, to 3.45 million in 2022. This job creation will in turn spur greater growth in SSA, creating further opportunities for American digital economy small businesses.

Timothy Trainer (Global IP Strategy Center). The high levels of counterfeit and infringing goods in these markets signal the need for massive amounts of assistance. From the perspective of the US government and IPR stakeholders, undertaking an in-depth and detailed assessment would seem to be necessary to safeguard valuable IPR assets exposed in these markets. It is well known that the US and its IP stakeholders already have a list of countries that appear in USTR’s annual Special 301 Report issued identifying IP deficiencies abroad. In some cases, countries have failed to address their IP deficiencies for many years and have appeared in the Special 301 Report year upon year. In an effort to avoid the type of ongoing and repeated identification of a country for many years due to IP deficiencies, I would recommend that the US and the IP stakeholder community undertake a comprehensive assessment of any country that the US might consider as a trade agreement partner. The IP chapters of our free trade agreements obligate our trading partners to a high level of IP protection and enforcement.

International Intellectual Property Alliance. IIPA highlights below serious concerns with South Africa’s copyright law amendments, as well as some positive indications of improvements in copyright protection and enforcement in Nigeria, Burundi, Kenya, Rwanda, Tanzania, and Uganda. South Africa’s current legal regime fails to provide adequate and effective protection of copyrighted materials, and two impending laws that are on the verge of final enactment would further weaken that legal regime. If enacted, the two new laws would violate South Africa’s international obligations (including the Berne Convention for the Protection of Literary and Artistic Works (“Berne Convention”) and the TRIPS Agreement) and would result in a clear lack of adequate and effective intellectual property rights protection. The bills are also inconsistent with obligations of the WIPO Internet Treaties. South Africa’s Cabinet recently approved the country’s accession to these treaties, but at present, South Africa remains just a signatory to the treaties, and not yet a member of either the WCT or WPPT. The South Africa country report from the IIPA 2019 Special 301 submission (7 February 2019) to USTR is appended to this filing and includes a full description of the deficiencies in these two bills, as well as other deficiencies in South Africa’s legal and enforcement regimes. Significant reforms are needed to South Africa’s Copyright Law and Performers’ Protection Act in order to bring the country’s laws into compliance with international treaties and agreements, including TRIPS, and the WIPO Internet Treaties.

 

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