TRALAC - Trade Law Centre

African Leaders Complain of AGOA Red Tape

Monday, 13 June 2005

Source: Inter Press Service (Johannesburg)

Five African presidents have criticised the economic criteria they must meet before their nations can qualify for a preferential trade deal that gives Africa greater access to the U.S. market.

Speaking to reporters after meeting with U.S. President George W. Bush at the White House Monday, the leaders of Botswana, Ghana, Mozambique, Namibia and Niger told reporters that they have to be "poor enough" to export to the United States under the controversial African Growth and Opportunity Act (AGOA).

AGOA was passed by Congress in 2000 after several years of debate. It eliminates U.S. import barriers on virtually all of sub-Saharan Africa's main exports to the United States, particularly textiles and clothing.

Under the deal, African countries can only export tariff-free to the U.S. market if they meet certain criteria and U.S. officials certify that they have liberalised their economies, privatised their public assets, minimised government interference in private business and created a U.S.-style legal system.

President Festus Mogae of Botswana said that slow progress in certifying African countries for the deal was hurting their economies. He said the leaders raised the issue with Bush and that they "complained bitterly about bureaucracy on that side".

Mogae said that Pres. Bush assured them that Secretary of State Condoleezza Rice was going to look into the issue and work to resolve it.

"We tend to qualify when it comes to good governance, a democracy, respect for human rights, the rule of law, the open economies ...policies and so on, but then, when it comes to per capita income, we're struck out because it says that we are not poor enough. And yet we are poor," said Pres. Mogae.

"Some countries, like mine, always suffer from the so-called per capita income criteria," he said.

The Act originally covered the eight-year period from October 2000 to September 2008, but amendments signed into law by Bush in July 2004 extended AGOA to 2015

Despite the complaints, the leaders said the plan was producing some positive results for their impoverished nations.

"Yes, we said we are very much satisfied with AGOA," Mogae said. "We think that it has done a great deal. We are happy that it's been extended to 2015. And, yes, it's capable of improvement. All the programs are capable of improvement, but in the forms of refinement and including all the countries."

The United States says that examples of AGOA's success include textiles and clothing, especially in countries like Lesotho, where the industries have flourished.

"The major increases up to this point have been in apparel," with thousands of Africans employed because of AGOA, said Constance Berry Newman, U.S. assistant secretary of state for African affairs. "Everybody is being realistic, that the major successes -- except in extractive industries -- have been in apparel and textiles."

The United States says that because of AGOA, Ghana has seen the creation of 1,000 jobs, and Malawi has seen some 70,000 new jobs created.

But development groups say that the plan offers only slightly improved access to U.S. markets to select countries and for select products. The latest U.S.-Africa trade figures indicate that a very small number of African countries account for the major share of imports and exports.

Key U.S. trade partners and the largest recipients of investment in Africa are the major oil producers on the continent, including Nigeria, Angola and Gabon.

According to the latest figures from the U.S. International Trade Commission, U.S. imports from countries eligible for AGOA totaled almost14.1 billion dollars in 2003, an increase of 36.3 percent from 9.0 billion dollars in 2002.

The largest share of U.S. imports under AGOA came from oil exporter Nigeria (66.3 percent), followed by South Africa (11.8 percent) and Gabon (8.3 percent). Other major suppliers included Lesotho, Republic of Congo, Madagascar, and Kenya.

The White House says that last year, U.S. exports to sub-Saharan Africa increased 25 percent -- and U.S. imports from AGOA countries rose 88 percent.

The meeting at the White House comes in the run-up to the 2005 U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum in Dakar, Senegal from Jul. 18-20. The meetings will cover three separate areas: ministerial, private sector business and civil society.

The United States has been setting the scene for the meetings, which draw numerous multinational companies seeking new deals and contracts.

On Jun. 10, Bush sent a message to the "African people" broadcast over the U.S.-government funded Voice of America. He praised African countries that met the AGOA conditions, especially those who passed laws protecting foreign companies, lowering trade barriers and combating corruption.

Over the weekend, while the new World Bank President Paul Wolfowitz tours Africa, industrialised nations announced a deal on debt cancellation for 18 impoverished countries, 14 of which are found on the continent.

African development will also be a major theme during next month's summit of the Group of Seven (G7) most industrialised nations plus Russia in Scotland next month.