Business
Energy, Enery; Energy!
THN: What tenets should guide the U.S. – Africa commercial partnership going forward?
VS: I think Tenet 1 should be that because bilateral negotiations are both premature and not the ideal between an economy of the U.S.’ size and any African country, the U.S. ought to engage in trade discussions with Africa from a regional perspective. In the event that this is challenging at entry, the creation of active sub-regional economic zones could provide a second best alternative. The Trans-Atlantic Trade and Investment Partnership (T-TIP) between the U.S. and Europeo are models to be emulated in Africa. The advantage here is that businesses coming to sub Saharan Africa will have a level playing field across the region.
It is essential to ensure coherence between the multiplicities of bilateral trade relations African countries sign. For example, economic partnership
agreements are due for completion in 2014; AGOA is coming up for renewal in 2015, while the continent has, since 2012, engaged in a process of negotiating a continental Free Trade Agreement (CFTA), a key element for consolidated rules of origin that would not discriminate against any trading partners. Harmonization will be a catalyst for deeper regional integration and making the region more competitive.
Secondly, the U.S. should broaden the coverage of AGOA eligible goods to help spur the development of a sub Saharan manufacturing sector. For this to
be even more beneficial, the skills gap must be filled via education and technology. These two things are clear ways of increasing productivity and
accelerating inclusive growth. Basically, for high quality goods to be exported to the U.S., we need to increase the supply of quality labor.
THN: Some of these might be addressed by Froman’s request for a U.S. – Africa trade review.
VS: So, while I cannot make any substantive comments about Dr. Froman’s request for a review, perhaps I am better placed to make a more general observation. More than anything else, it is important that there must be a discussion around agricultural products in the U.S. itself. The U.S. and G-8 countries’ push to support African agriculture is a welcome initiative, however to credibly export products like peanuts to the U.S. market, for example, the market entry conditions must be reviewed to avoid what sometimes appears to be contradictory polices. If agriculture subsidies to U.S. farmers are maintained, the benefits of AGOA for Africa could remain compromised, as those excluded products could be what undermines Africa’s competitiveness. In this regard, US could take the lead and fully engage in multilateral negotiations within the WTO negotiations framework to help countries review and amend agriculture policies. In addition for some goods like cotton, more technical assistance would be needed to improve the overall performance of the sector.
THN: What about South Africa?
VS: It is true that South Africa is a special case on the continent: It is, in the first place, a dual economy, that is a middle-income country but also grappling with high levels of unemployment and poverty. And if the purpose of AGOA is to increase the amount of trade between U.S. and Africa, South Africa still needs access to the U.S. market. Because unemployment is still high, we need to ensure that the economy there is still developing, able to export and also building a stronger manufacturing base that contributes to Africa’s economic integration. And here, the reality is that South Africa continues to produce competitively and export to the U.S. Hence, the minute you start taking one African country out of AGOA, you start down a slippery slope – and people will ask: Why not graduate Nigeria, Kenya or Ghana, Angola or Equatorial Guinea? They are, after all, considered non-LDCs. And here, we, perhaps, return to the question of treating each country as an individual – which will weaken the regional integration agenda.
