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African nations wary of closer embrace with US

IPS | 8 June 2006

African Nations Wary of Closer Embrace with U.S.

Emad Mekay

WASHINGTON, Jun 8 (IPS) - A chorus of U.S. officials is signaling that Washington wants to turn a controversial programme giving poor African nations partial access to U.S. markets into a full-fledged free trade agreement that would open Africa’s economy to U.S. corporations.

But African officials gave a lukewarm reception to the idea, while independent analysts say a free trade deal with the United States — before Africa manages to protect and strengthen its agricultural, services and industrial sectors — would be a mistake.

The fifth African Growth and Opportunity Act (AGOA) forum held in Washington wrapped up Wednesday amid U.S. calls on the 37 African nations taking part to remove barriers to U.S. trade and allow more goods and services into their markets.

In a keynote speech, U.S. Secretary of State Condoleezza Rice said progress against rampant African poverty is only likely through business-led growth, and argued that in most African countries, governments still stifle private business with bureaucratic red tape and high fees.

She prodded African leaders to eliminate barriers by reminding them of a U.S. proposal in September to remove most of its own barriers that prohibit the free flow of goods and services as long as other nations do the same.

U.S. officials said they would prepare African nations for a potential free trade agreement through watered-down programmes like bilateral investment treaties, and trade and investment framework agreements (TIFAs) that traditionally have preceded free trade pacts.

"To preserve and build on the momentum created by AGOA, we must find other ways to strengthen and deepen our trade and investment relations with African countries," Karan Bhatia, deputy United States Trade Representative (USTR), said in a speech.

"We have several tools to accomplish this, including free trade agreements," he added.

On Wednesday, the U.S. signed a TIFA with Rwanda that covers issues important to Washington, like intellectual property and investment.

The same day, Agriculture Secretary Mike Johanns invited U.S. agribusiness firms to join in a trade and investment mission to the East Africa region in late fall 2006 on the sidelines of the AGOA forum.

"I’m confident this mission will help advance our goals to reduce trade barriers and increase trade between the United States and East Africa, creating new job opportunities for all our citizens," said Johanns.

U.S. business groups also convened as part of the forum, and say they are now focused on new opportunities, such as "untapped and diverse portfolio investment prospects", in sub-Saharan Africa.

Joining the nascent lobbying for an African free trade agreement, the conservative Heritage Foundation in Washington issued a report calling on the U.S. to turn AGOA into a free trade agreement in 10 years.

"The U.S. should begin work now transforming AGOA into a free trade agreement by its expiration in 2015," said the two authors of the paper, Brett D. Schaefer and Daniella Markheim.

The U.S. should require that eligible nations incrementally lower tariffs on U.S. imports beginning in 2010, with the target of eliminating tariffs on 95 percent of goods by 2015, and demand that eligible countries eliminate tariffs on essential medicines and medical equipment by 2007, they said.

They urged U.S. policymakers to exploit AGOA "as a lever to lower trade barriers on essential medicines and supplies from abroad" and spur a new region-wide customs arrangement in Africa.

AGOA was passed by Congress in 2000. It eliminates U.S. import barriers on most of sub-Saharan Africa’s main exports to the United States, particularly textiles and clothing.

But for African countries to qualify, U.S. officials must first 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.

Currently 37 of the 48 countries in Sub-Saharan Africa have been designated as eligible for AGOA membership.

The rising calls at this week’s forum for a wider free trade agreement dismayed critics of the original deal, who have long voiced concerns that Washington would eventually turn it around to serve its own international corporations.

"Across-the-board liberalisation and elimination of all tariffs makes no sense to Africa," said Jessica Walker Beaumont of the American Friends Service Committee.

The U.S. free trade push in other parts of the world has been counterproductive to the poor masses and benefited only the local elites, activists say. This is because the U.S. has refused to take patents on life-saving medicines, provision of essential services, and food crops of special importance — all pivotal issues for the poor — off the trade liberalisation table.

In fact, AGOA itself many not be boosting Africa’s economic growth as advertised. A report from the USTR office submitted to Congress on AGOA in mid-May showed that U.S. imports from sub-Saharan African countries under AGOA, which totaled 38.1 billion dollars in 2005, were mostly up because of rising U.S. oil imports.

Total non-oil AGOA trade declined by 16 percent, to 2.9 billion dollars in 2005, it found.

Further, critics charge that despite of the feel-good statements around AGOA, the U.S. continues to undermine the competitiveness of African entrepreneurs and farmers with massive domestic farm subsidies that benefit agri-businesses, along with other tariff and non-tariff barriers.

At the forum, African officials, while excited at the prospect of accessing the vast U.S. market, made it clear they are wary that they will end up losing in a free trade deal with the world’s largest economy.

In a speech to the forum, the Senegalese minister of foreign affairs, Cheikh Tidiane Gaudio, quoted President Abdoulaye Wade as saying, "Africa is ready for free trade, but we prefer fair trade above all."

 source: IPS