US trade agreements with Sub-Saharan African countries

Excerpt from 2007 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act, Office of the United StatesTrade Representative, May 2007

Trade Agreements with Sub-Saharan African Countries

A. Overview

Section 116 of AGOA calls for the negotiation of FTAs with countries in sub-Saharan
Africa. An FTA with a sub-Saharan African trading partner would provide guaranteed
access to the U.S. market and support sub-Saharan Africa’s long-term investment,
economic growth, and development. An FTA would also help to support sub-Saharan
African countries’ economic reform efforts, further Africa’s integration into the global
economy, and lower the perceived risk of investing in Africa.

The United States currently has no FTAs with countries in sub-Saharan Africa. Given
sub-Saharan Africa’s specific circumstances, including its generally low levels of
economic, administrative, and regulatory development, many countries in the region are
not currently in a position to enact the types of policies and reforms that would be
required for a comprehensive FTA with the United States. In view of the near-term
challenges of completing an FTA with a sub-Saharan African partner, the Administration
is pursuing alternative means of strengthening our trade and investment relationships
with key African partners, including trade and investment framework agreements
(TIFAs), bilateral investment treaties (BITs), and a proposed trade and investment
cooperation agreement (TICA).

The Administration is using TIFAs, BITs, and the proposed TICA to expand market
access; strengthen the links between trade and economic development strategies;
encourage greater foreign investment; and promote regional economic integration and
growth. The objective is to use these mechanisms to transition from U.S.-Africa trade
and investment relationships based on one-way trade preferences to deeper, more
reciprocal partnerships, such as that established by an FTA.
The Administration will continue to explore the potential for FTAs with sub-Saharan
African countries, particularly if Congress extends Trade Promotion Authority. In further
exploring FTAs and other agreements with sub-Saharan African countries, the
Administration will consult closely with Congress and with other constituencies,
including the business community.

B. U.S.-SACU FTA/U.S.-SACU TICA

The United States and the Southern African Customs Union (SACU) - comprising
Botswana, Lesotho, Namibia, Swaziland, and South Africa - launched FTA negotiations
in June 2003. SACU countries are key AGOA beneficiaries, with U.S. imports from
these countries under AGOA valued at $2.4 billion in 2006. They also comprise the
largest U.S. export market in sub-Saharan Africa, with $4.6 billion in U.S. exports in
2006, and have a strong record on economic reforms. Concluding an FTA with the
United States requires critical, yet fundamental, reforms and disciplines that are inherent
to the obligations contained in U.S. FTAs. Active FTA negotiations with SACU were
suspended in April 2006, largely due to divergent views on the scope and level of
ambition for the FTA. SACU is not yet ready to undertake many of the comprehensive
commitments inherent to a U.S. FTA. However, an FTA remains a longer-term objective
for both the United States and SACU. In November 2006, the United States and SACU
agreed to pursue a trade and investment cooperation agreement (TICA), that could help
lead the United States and SACU to negotiation of an FTA in the longer term. The TICA
would 1) establish a forum for consultative discussions on a wide range of trade issues,
including but not limited to FTA issues; 2) develop sector-specific work plans that should
lead to increased U.S.-SACU trade and investment in the near term; and 3) put in place
the “building blocks” for an FTA in the longer term.

C. Trade and Investment Framework Agreements

TIFAs are important tools for strengthening economic relations with key countries and
regional organizations. They provide a formal mechanism to address bilateral trade
issues and to help enhance trade and investment relations between the United States and
key sub-Saharan African trade and investment partners. The Administration is using its
TIFAs with sub-Saharan Africa countries to encourage new trade and investment by
implementing country- and region-specific strategies that promote trade and investment.
Over the last year, the Administration signed new TIFAs with three African partners:
Rwanda, Mauritius, and Liberia. At the same time, it intensified its dialogue and
cooperative work with existing TIFA partners in Ghana, Nigeria, South Africa,
Mozambique, COMESA, and UEMOA.

D. Bilateral Investment Treaties

U.S. Bilateral Investment Treaties (BITs) help protect U.S. investment and promote
market-oriented policies overseas. BITs establish rules that reduce or eliminate
investment barriers, provide greater transparency, and increase investor confidence.
Investment is critical for Africa’s development, and BITs help promote economic growth
by advancing important reforms and encouraging the adoption of liberal policies that
facilitate and support foreign investment. The United States has five BIT partners in sub-
Saharan Africa - Cameroon, the Democratic Republic of the Congo, Senegal, the
Republic of the Congo, and Mozambique. The Administration expects to launch BIT
negotiations with Rwanda in mid-2007. It is exploring the possibility of launching BIT
negotiations with Gabon.

keywords:
source: USTR