Opinion
AGOA Equals National Security
“This trade and investment deal or partnership between these United States and an African country like Malawi where I am from really comes down to women and youth; their employment, and ultimately, our national security,” Ambassador Matenje declared as we sat in his comfortable Embassy Row office in Washington, DC.
“In fact,” he added, “if a country’s women or youth are unemployed, or cannot occupy their time productively, that is trouble for that respective nation. That is why the African Growth and Opportunity Act (AGOA) cannot be looked at as just a preference program. These market access provisions go to the heart of the economic development of countries like Malawi.”
“And in the end,” he said, finally, “the key benefit of having economic development is peace and security. If we do not find jobs for women and youth, in agriculture, manufacturing and other things, Africa will not be secure.”
Since September 2010, His Stephen Matenje has been Malawi’s Ambassador to the United States. Before that, he served as Permanent Representative to the United Nations. It is, therefore, not surprising that his overall premise around national security and economy is, perhaps, the perfect blend of his UN and diplomatic experience, juxtaposed with the reality of Malawi.
As per Heritage Foundation’s 2015 Index of Economic Freedom, Malawi is one of Africa’s most densely populated countries, with more than half of the country’s 17.1 million people living below the poverty line, and over 85 percent – mostly female-led households dependent on subsistence agriculture. Leaf tobacco, tea, and sugar are the country’s most important exports – and of these three commodities, Reuters reports that Malawi earned US$361 million from tobacco sales in 2013 – more than double its revenues in 2012.
Today, although Brazil delivers 26 percent of the world’s tobacco, Malawi is not too far behind the United States, India and China as the world’s top 5 tobacco leaf producers. To Matenje’s point, the strong sales of 2013 boosted earnings of the 2 million Malawians who rely on tobacco related industries for their livelihood; sales helped ease normally tight foreign exchange reserves.
Importantly, unlike sugar and tea, tobacco accounts for more than 70 percent of Malawi’s exports and 15 percent of gross domestic product (GDP). But earlier, in September 1995, the United States terminated the so called Ford Amendment, imposing a tariff rate quota on leaf tobacco imports and granting Malawi a scant quota allocation of less than 12,000 metric tons. As this represents less than 8 percent of the global quota – with additional shipments taxed at a prohibitive 350 percent – Malawi had no choice but to divert tobacco exports away from the United States to other markets.
Ironically, Brazil where leaf tobacco may not be as important pays a duty of 6 percent under the same circumstances, and does not even fill its tariff rate quota. Thus, what may be even more important about designating tobacco leaf under AGOA benefits is that it would not increase shipments or consumption; it simply allows for a level playing field for product from Malawi and other African countries to quarterback leaf from Brazil and other quota holders.
To this, Matenje makes an excellent point: While Malawi has access for its leaf tobacco to the United States, the tariff rate quota in fact, has a negative impact on exports. Experts back this point by arguing that AGOA would have a much bigger impact in Africa if there was increased access to the United States for Malawi’s tariff rate quota crops like sugar and tobacco. Although both crops – more so, sugar – are politically sensitive, providing guaranteed access for these products under a program like AGOA could increase incentives for U.S. businesses to invest in developing African competitiveness and capacity to meet U.S. standards.
At this juncture, I challenge Matenje on the health concerns of tobacco. “Malawi,” he says “is neither in the business of promoting tobacco consumption nor a specific lifestyle.” Instead, leaf tobacco is a commodity that Malawi households grow and grade. Just like Brazil, Malawi “is simply an agricultural country with capacity to produce a commodity for the global market.” Seminally, if Brazil can develop because it has guaranteed markets for its commodities, Malawi should have the same thing.
Matenje takes us back to the essence of AGOA. The program was meant to benefit as many Africans as possible. If more women and youth can help export their hard-earned
agricultural products to the United States, perhaps, they will not sit about and be idle – fertile ground for the kind of disruptive behavior that could affect a country’s national security.
Malawi’s national security rests on the laurels of a commodity that is within the tough confines of a tariff rate quota. In this case, Ambassador Matenje suggests, partners such as the United States and Africa must quickly find a middle ground. It seems as though AGOA could be it.
Stephen Matenje is Malawi’s Ambassador to the United States, with additional accreditation to Canada, Mexico, Argentina, and Colombia