By Rosa M. Whitaker, Assistant U.S. Trade Representative for Africa
While 38 African countries have joined the WTO, these nations have made fewer commitments to WTO agreements than any other region. And few have joined the crucial agreements on telecommunications, financial services, and information technology. Countries outside these agreements are likely to enter the 21st century with fewer computers, inadequate phone and Internet links, underdeveloped banking systems, and, overall, will be less prepared to compete with other nations, says Whitaker.
African economies can benefit significantly from the next round of multilateral trade negotiations, to be launched in December at the World Trade Organization (WTO) ministerial meeting in Seattle, says Rosa M. Whitaker, Assistant U.S. Trade Representative for Africa. More open world agricultural trade, for example, could greatly benefit African farmers, she says.
Under President Clinton's leadership, U.S. engagement with Africa has increased to levels unparalleled in history. Support for sub-Saharan Africa's integration into the multilateral trading system is a cornerstone of the president's Partnership for Economic Growth and Opportunity in Africa. This policy objective reflects broad recognition that Africa will need billions of dollars in new private sector investment every year, beyond what traditional development assistance can provide, in order to address poverty and to raise living standards. While the economies in many other regions of the world are growing as a result of increased trade and investment, the 48 countries in sub-Saharan Africa maintain a little more than 1 percent of global trade and less than 2 percent of world investment.
U.S. trade policy toward Africa is rooted in the same fundamental principles as our policy toward Europe, Latin America, and Asia. It is based on the principle that we have profound interests in prosperity and peace worldwide, and that open trade helps to achieve both.
If Africa is to develop and prosper, its countries must be open to trade and investment with the world, with the United States, and with its regional neighbors. In other parts of the world, such openness has generally led to growth, competition, and broadly based prosperity.
African countries must overcome significant challenges, including instability in various regions, overreliance on primary goods and raw materials, and the relative vulnerability and small size of Africa's economies. However, the United States firmly believes that these obstacles can be surmounted if we and the global economic community work with Africa to ensure that it becomes an active and energetic member of the international economy.
THE OUTLOOK FOR AFRICA
Prospects for Africa, including its two economic giants, South Africa and Nigeria, are good. Since 1994, inflation has dropped, growth rates have doubled, and U.S. exports to Africa have risen by nearly 50 percent. African trade with the United States is also rising. Many African countries are now pursuing trade policies that we support -- regional economic integration, liberalization of trade and investment regimes, privatization of state-owned enterprises, private sector development, and trade and investment promotion. Throughout Africa, governments are making the difficult decisions and implementing the often controversial reforms necessary to make African economies more competitive. U.S. support can help ensure that Africa continues to implement reform and that its efforts produce positive results.
The Clinton administration, working with the U.S. Congress and with many African nations, has crafted a multifaceted approach to generate significant new opportunities for African economic growth and increased integration into the world economy. The U.S. approach was developed after comprehensive consultations with African countries. It is a policy with, not for or about, Africa. We are working with African governments in support of regional economic integration, freer trade in services, better agricultural standards, intellectual property protection, and enhanced market access in areas of comparative advantage for Africa like textiles and agriculture. Among the measures we have proposed or are already implementing are the African Growth and Opportunity Act, bilateral agreements, and technical assistance. The United States plans to coordinate with Africa in the World Trade Organization (WTO) and in other areas through a newly established U.S.-African Economic Community Consultative Mechanism. U.S. Trade Representative Ambassador Charlene Barshefsky chaired the first-ever comprehensive roundtable with African trade ministers on the WTO during the U.S.-Africa ministerial meeting in Washington in March 1999. The roundtable was co-chaired by the Organization of African Unity/African Economic Community.
Thirty-eight African nations are now members of the WTO, and two more are seeking accession. This is critical to expand exports, attract investment, and raise economic growth, but it is only a beginning. African nations made fewer commitments in the Uruguay Round than the countries of any other region. Few African nations have joined the WTO's 21st-century agreements on telecommunications, financial services, and information technology. This slows the growth of trade with Africa and slows Africa's economic development. High tariffs reduce the ability of African firms and farmers to buy essential inputs at lower costs.
If they participate actively, African economies could benefit significantly from the next round of multilateral trade negotiations, to be launched November 30-December 3 at the WTO ministerial conference in Seattle. For example, open trade in agriculture can relieve African farmers of the burden imposed by protectionism and export subsidies, which both block potential markets and depress world commodity prices. Export subsidies, in particular, place an immense and unfair burden on farmers in other countries, especially developing countries in Africa, Asia, and elsewhere.
More open markets in services will help African countries to acquire legal and financial expertise, as well as transportation, information, and telecommunications infrastructure that will spur more rapid and stable development. Unfettered development of global electronic commerce is especially important to poorer African nations and microenterprises, since Internet access requires little capital, helps entrepreneurs find customers and suppliers quickly, and eases technical and paperwork burdens. Countries outside the telecommunications, information technology, and financial services agreements are likely to enter the 21st century with fewer computers, inadequate phone and Internet links, underdeveloped banking systems, and, consequently, will be less prepared to compete with other nations.
AN ERA OF OPPORTUNITIES
The United States has developed a series of comprehensive technical assistance programs to help increase the capacity of African countries to become active and informed participants in the WTO and other trade negotiations. Three U.S.-sponsored WTO-related workshops have been held in Zimbabwe, Uganda, and South Africa. USTR and the U.S. Agency for International Development (USAID) are planning to hold a regional WTO workshop, in conjunction with the Organization of African Unity and other regional organizations, in Cote d'Ivoire and another workshop in Senegal. USAID has also launched the Africa Trade and Investment Policy program (ATRIP), which promotes training and technical support for African countries undertaking economic liberalization.
The African Growth and Opportunity Act (AGOA), currently under consideration in Congress, would establish for the first time a comprehensive framework aimed at encouraging greater economic growth and self-reliance through enhanced international trade and investment. AGOA would extend the Generalized System of Preferences (GSP) program, which provides duty-free access for specific goods from qualifying countries, for 10 years in Africa, ensuring greater certainty for prospective traders and investors. AGOA would also expand U.S. market access for many goods from Africa's strongest reforming countries, goods now excluded under the GSP program. AGOA calls for the United States to work with other donors to address the debt problems of Africa and establishes new Overseas Private Investment Corporation equity and investment funds to generate new investment and American and African jobs.
With the creation of my position as the Assistant United States Trade Representative for Africa a little more than a year ago, the United States strengthened its ability to negotiate formal agreements with Africa that create stronger legal and institutional foundations in our relationships. USTR has signed three significant agreements since the creation of the office. In February 1999, the United States signed Trade and Investment Framework Agreements (TIFAs) with South Africa, our largest African trade partner, and with Ghana. These TIFAs have created an official dialogue on trade and investment issues and are focusing efforts on removing impediments and developing mechanisms to increase trade and investment flows with these two important countries. The United States also signed a Bilateral Investment Treaty with Mozambique in December 1998, which will help Mozambique attract investors and generate jobs while providing U.S. investors with greater levels of certainty and guarantees and creating markets for America.
USTR Barshefsky recently expanded the GSP program by 1,783 tariff items for products from 33 of the world's least developed countries, 29 of which are in Africa. USTR also added special provisions for eligible members of three African regional trade associations: the Southern African Development Community (SADC), the West African Economic and Monetary Union (WAEMU), and the Tripartite Commission for East African Cooperation (EAC). Members of these associations will be able to combine their value-added contributions to exports to qualify for GSP benefits.
The United States views the next few years as a tremendous opportunity and critical juncture for U.S.-Africa economic relations. Trade policy can help create a 21st-century economy in which people are more prosperous, economies more efficient, the environment cleaner, and nations less threatened by hunger and disease. The United States intends to work aggressively both bilaterally and multilaterally to increase trade, expand economic growth, and improve the quality of life of Americans and Africans.
Economic Perspectives
USIA Electronic Journal, Vol. 4, No. 3 August 1999