U.S. Trade Representative Michael Froman, speaking Wednesday in Libreville, Gabon, touted the accomplishments of the 15-year-old African Growth & Opportunity Act and said it has the potential to substantially expand trade between sub-Saharan African countries and the U.S.
Speaking at the AGOA Forum, Froman noted the recent bipartisan passing of a 10-year AGOA extension, the longest extension in the program’s history.
“We need to make sure AGOA’s potential is fully explored and its benefits fully utilized,” Froman said. “That will require work on both sides of the AGOA equation. Our African partners will need to design strategies to take full advantage of AGOA’s tariff preferences, and the United States will need to work to make sure we are providing the trade capacity building and other assistance necessary to support those strategies.”
The USTR said 10 years ago, many thought sub-Saharan Africa would become less important to the global economy, but today it is among the fastest-growing regions in the world.
“Over the next five years, sub-Saharan Africa’s GDP is forecasted to grow 30 percent faster than the rest of the world,” Froman said. “By the World Bank’s estimate, sub-Saharan Africa is home to 413 million children under the age of 15 — nearly as many as the 431 million children in the developed world and China combined. A generation from now, the region will be home to almost a quarter of the world’s workforce. According to the United Nations, sub-Saharan Africa’s urban population is expected to grow from 360 million to 1.18 billion by 2050, surpassing the urban population of the entire developed world. These demographic trends could be accompanied by greater productivity, demand and investment, underscoring how important Africa will be to the entire world economy. But they also present new challenges for meeting rising needs.”
During the next decade, Froman noted, technology will continue to expand in many ways, including the complexities of trade.
“By 2025, Africa’s internet penetration is expected to climb from 26 percent to over 50 percent, and there will be 360 million smartphones on the continent — roughly twice as many as there are in the United States today,” he said. “Greater connectivity could mean greater access to essential services, from education, to medicine, to credit and savings accounts. While much of the developed world is locked into investments in older infrastructure, these and other technological trends, especially in energy, provide an opportunity for African countries to leap ahead and adopt more efficient and sustainable solutions. To do so, however, will require strategic investments, strong public-private cooperation, and an abundance of political will.”
Froman said Africa is already “actively deepening and expanding its trade and investment relationships,” taking steps to establish the Tri Partite and African Continental Free Trade Area and shifting to more permanent and reciprocal trade arrangements with some of its developed country trading partners.
“Looking forward, it’s possible to imagine Africa as one large market, from Cape Town to Cairo and Libreville to Port Louis, (Mauritius),” he said.
The USTR noted that as Africa advances in global commerce, so will the rest of the world.
“The United States is already moving forward with next-generation trade agreements that will raise standards across both the Asia-Pacific and the Atlantic and could have positive spillovers here in Africa,” he said. “For example, the Trans-Pacific Partnership will help combat illegal wildlife trafficking, including the illegal trade of ivory from Africa.”
In addition, he said the U.S. is working to set higher standards in areas such as transparency, good governance, anticorruption, regulatory practices and basic worker rights, “all of which are critical, long-term drivers of sustainable, inclusive development.”
“History shows that it’s a mistake to bet against Africa, and the progress we’ve made together through AGOA encourages us to aim even higher,” Froman said. “Doing so will surely require a more comprehensive approach, one which recognizes that tariff preferences alone are not sufficient and addresses the supply-side constraints facing Africa today. To be productive, Africa needs affordable, reliable electricity. To successfully integrate into global supply chains, Africa needs the capacity to meet international standards. To be competitive, Africa needs to match the efficiencies of Asian and Latin American ports with effective trade facilitation policies.”
Froman said that’s why the U.S. approach is to situate AGOA in the context of a broader development strategy that includes programs such as Trade Africa, Power Africa, Feed the Future, the Global Health Initiative, MCC compacts, USAID assistance, World Bank and African Development Bank investments that can support Africa’s priorities and help build the continent’s capacity to trade competitively.
The U.S. development strategy also recognizes the importance of poverty alleviation in economic growth based on the concept “that to achieve sustainable growth, we need trade, not just aid; investment, not just assistance,” Froman added.