WASHINGTON — The Bush administration reaffirmed its commitment to expand the Africa Growth & Opportunity Act Thursday, but warned sub-Saharan African nations that the extended trade breaks could be compromised if they fail to cooperate in the...
WASHINGTON — The Bush administration reaffirmed its commitment to expand the Africa Growth & Opportunity Act Thursday, but warned sub-Saharan African nations that the extended trade breaks could be compromised if they fail to cooperate in the current round of global trade talks.
From the beginning, the administration has said it will use bilateral and regional trade pacts as leverage in the World Trade Organization talks among 146 nations, and U.S. Trade Representative Robert Zoellick’s volley to the African nations served as one of the starkest examples.
The leaders of 15 African nations are seeking investment opportunities and agitating for an expansion of trade breaks as the expiration nears for a crucial AGOA provision that allows the poorest nations of sub-Saharan Africa to use fabrics from Asia and elsewhere in the world.
Zoellick, addressing a group of about 400 African heads of state; prime ministers; trade and commerce ministers, and African and U.S. businessmen at the U.S.-Africa Business Summit held at the Washington Hilton Hotel, said: “Some African countries have been saying they don’t want other countries to reduce their tariffs. That’s going to be a problem. If that position prevents U.S. businesses from reducing barriers in other markets around the world, I have to tell you it will undermine support for preferences.”
The U.S. has submitted a proposal in the WTO round of global talks calling for the elimination of tariffs on all industrial goods, including apparel and textiles, by 2015.
“You want to get an AGOA III?” asked Zoellick rhetorically. “Well it’s going to be a lot harder to get an AGOA III if some African countries are seen as trying to undermine U.S. companies to open markets in other countries around the world.”
Conversely, Sir Anerood Jugnauth, prime minister of Mauritius, said, “Africa is seriously concerned about [the push] to open up all markets irrespective of size and capacity to compete in the global market.” He noted that U.S. and European companies have had business relationships for a long time and claimed they benefit from their own high tariffs and “strong protectionist provisions.” However, the most imminent threat is the elimination of apparel and textile quotas in 2005, he said.“The hope of sustained employment for hundreds of thousands of Africans will be [lost] on Jan. 1, 2005,” Jugnauth said. “My concern is that all benefits of AGOA will be [tossed] on the rocks.”
Jugnauth acknowledged that AGOA has provided access to the U.S. market and employment for thousands of Africans, but he claimed those gains have been compromised by the trade pacts, special treatment and preferences the U.S. extends to other countries.
“We discovered preferences for everyone are preferences for no one,” he said.
President Bush addressed the summit, reaffirming his commitment to extend the entire AGOA package beyond the 2008 expiration date and touched on a broad policy of support for Africa, including aid to combat terrorism and a proposed $15 billion program to fight HIV/AIDS.
“We must extend AGOA beyond 2008 to give businesses the confidence to make long-term investments in Africa,” he said, urging African nations to lower trade barriers against each others’ products. “Just as America can do more to open its markets, so can the nations of Africa.”
Overall imports to the U.S. under AGOA in 2002 rose 10 percent to $9 billion. Textile and apparel imports from the sub-Saharan African region rose 29 percent to 333 million square meters equivalent — with a value of $1.21 billion — for the year ended April 30, according to the U.S. Department of Commerce.
Zoellick also urged the African countries to move away from a dependence on textile and apparel production.
“We need to focus on diversification as we are seeing increases in imports like cars and ice cream from South Africa, fresh-cut flowers from Kenya and Tanzania, and processed lumber and auto parts from Ghana,” he said.
Kenya stands to gain a lot if Congress introduces and passes an extension of AGOA and its textile provision, said Mukhisa Kituyi, minister of trade and industry. The country dramatically increased its apparel exports under AGOA from $45 million in 2000 to $130 million in 2002, while apparel employment rose from 8,000 to 17,000. This year, Kituyi projected apparel exports of $250 million and employment of 42,000 workers.
“But the economic and social benefits of AGOA will be compromised if future investors relocate to Southeast Asia,” Kituyi added.
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