Politico | 15 June 2017
Ross: African countries face ‘critical question’
By DOUG PALMER
Commerce Secretary Wilbur Ross delivered a tough message to African countries on Wednesday, urging them to strike bilateral trade deals with the United States and warning that the Trump administration would closely monitor their compliance with eligibility rules under the African Growth and Opportunity Act, which allows them to export thousands of goods to the United States without paying duties.
“This administration takes these congressional requirements very seriously, and in applying our laws we will vigorously protect the rights of U.S. companies and workers in the global arena,” Ross said in speech at the U.S.-Africa Business Summit. Those rules require AGOA countries to work toward eliminating barriers to U.S. trade and investment, as well as protect intellectual property, fight corruption and promote good governance and business ethics.
“As Commerce secretary, I work to ensure that U.S. companies face favorable environments in the countries in which they operate. This is key to ensuring that the U.S.-Africa commercial relationship has a good foundation for future growth based on mutual interests,” Ross continued. “So I want to take a moment to speak directly to my colleagues from African governments. It is important to make sure that U.S. companies are in the best position possible to enter new markets in Africa and that those companies already there are successful.”
Ross noted that Africa is home to some of the fastest-growing economies on the planet, and that’s generating new demand for goods and services. “The critical question that you and other decision-makers in Africa must ask is this: As these upward trends continue, with whom do you want to collaborate? I believe that the more African nations partner with U.S. businesses, the better off both Africa and the United States will be.”
U.S. Chamber: U.S. falling behind in Africa
Ross said he believes U.S.-Africa trade is moving in the right direction, praising the fact that the U.S. trade deficit with African countries dropped to $4.7 billion in 2016, from $16.7 billion in 2000, when AGOA was put in place. But his emphasis on bilateral trade agreements mirrors concerns in the U.S. business community that the United States is falling behind in Africa to China and the European Union.
“Chinese exports to Africa in 2015 totaled $102 billion, while the U.S. exported only $17.8 billion in goods to the continent,” the U.S. Chamber of Commerce said in a set of new policy recommendations for the Trump administration. “The European Union has signed a reciprocal trade agreement with the Southern African Development Community” and is negotiating with around 20 countries within the Economic Community of West African States and the East African Community.
“In contrast, the United States has only one free trade agreement in Africa, with Morocco, and nine bilateral investment treaties (BITs). Moreover, we have not concluded any BIT negotiations in Africa since 2005. Africa therefore presents a unique strategic and economic opportunity that the Trump administration should seize early ― before our competitors shut the door on the U.S.,” the business group said.
The Chamber’s top recommendations include enhancing U.S.-Africa bilateral and regional engagements; improving the ease of doing business for U.S. companies; focusing on infrastructure; boosting Africa’s digital transformation; adding value to Africa’s agricultural sector; and advancing trade facilitation and customs modernization.
Ross touched on many of those points, urging African countries to aggressively implement the WTO’s Trade Facilitation Agreement and to resist the urge to accept the lowest “upfront” bid for government procurement projects since they often contain hidden costs. “As a former global investor, I appreciate how important an open and transparent business climate is,” he added.
Former USTR official Liser assesses Ross’ speech
“It sounded a bit tough in some spots, but in a way it doesn’t surprise me because we do have an administration that is talking about ‘America first,’” Florie Liser, a former USTR official who now heads the Corporate Council on Africa, told Morning Trade. “I think it’s a message that we’ll probably hear more of from this administration ― which is, that it’s got to be about a partnership, that it’s got to be about mutually beneficial arrangements for both U.S. companies and African companies.”
Liser, who has worked on African trade issues since the George W. Bush administration, agreed that many African countries would benefit from striking bilateral deals with the United States. But unfortunately they do not see that as an immediate priority since Congress recently renewed the AGOA program through 2025, Liser said.
At the same time, American companies need the support of U.S. government agencies like the Export-Import Bank and the Overseas Private Investment Corp. to compete successfully for many projects in Africa, Liser said. However, the Ex-Im Bank is currently unable to approve deals worth more than $10 million because it lacks a quorum on its 5-person board, and the Trump administration has proposed eliminating OPIC.
The United States also needs to resist the temptation to lecture Africa, since the continent has “evolved” quite a bit in recent years, Liser said. “They’re not little kids seated at the table with someone telling them what they need to do. They’re grown-ups and they are, I think, now more than ever in a position to really open up the opportunities in Africa.”