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US programs help Sub-Saharan Africa cut poverty through trade

WASHINGTON, DC - 05/23/06 - Two-way trade between the US and sub-Saharan Africa is the subject of a new report submitted to Congress by the Office of the US Trade Representative (USTR).

The report - the 2006 Comprehensive Report on US Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act (AGOA) - notes that two-way trade between the US and sub-Saharan Africa has increased 115% since the AGOA's launch in 2000.

In 2005, US total exports to sub-Saharan Africa rose 22% from 2004, to $10.3 billion.  Total US imports from sub-Saharan Africa increased by 40% to $50.3 billion, while last year, over 98% of US imports from AGOA-eligible countries entered the country duty-free. 

Exports to the US from sub-Saharan African countries under AGOA (including its GSP provisions) totaled $38.1 billion in 2005, up 44% over 2004, largely due to oil. 

Several non-oil sectors experienced increases, including footwear, toys, sportswear, fruits, nuts, and cut flowers. 

However, the report said, total non-oil AGOA trade declined by 16%, to $2.9 billion in 2005, mainly due to increased global competition in the apparel sector, resulting in part from the end of global apparel quotas and the anticipated end of AGOA third country fabric provisions; an appreciation of key currencies such as the South African rand; the decreased demand for key minerals and metals such as manganese; and production shifts in the South African automotive sector.

"The United States recognizes how aid for trade helps developing countries participate more fully in the global trading system," said USTR Rob Portman. "That's why we committed $199 million to trade capacity building activities in sub-Saharan Africa last year."

According to the report, 37 of the 48 sub-Saharan African countries are eligible for benefits under the African Growth and Opportunity Act (AGOA), which provides them duty-free access to the US market for virtually all products. 

On January 1, Burundi was added to the list of eligible countries, while Mauritania was removed from the list.  As of last month, 25 sub-Saharan African countries are eligible to receive AGOA's apparel benefits. Fourteen of these countries also qualify for AGOA's provisions for handloomed and handmade articles. 

One country, Nigeria, qualifies for AGOA's "ethnic printed" fabric benefits.
 
According to the USTR, the Bush Administration "is intensifying its work with US stakeholders, including Congress, private sector and non-governmental organizations, as well as with African governments, international financial institutions, and others to identify and address barriers inhibiting country and product utilization of AGOA."

The US devoted $199 million to trade capacity building (TCB) activities in sub-Saharan Africa in fiscal year 2005, up more than 10% from fiscal year 2004, and up about 50% from the preceding FY.  
In addition to ongoing TCB work conducted by "Regional Trade Competitiveness (RTC) hubs in Ghana, Botswana, and Kenya, a fourth hub was opened in Dakar, Senegal in October 2005 to help eligible African countries increase their exports under AGOA.

The US was also a leading provider of foreign direct investment to Africa. At year-end 2004, the US direct investment position rose 23.4% from 2003, to $13.5 billion. 

Last July, President Bush announced a new Presidential Initiative - the African Global Competitiveness Initiative (AGCI) - at the fourth annual meeting of the US-Sub-Saharan Africa Trade and Economic Cooperation Forum in Senegal.

The AGCI provides $200 million in funding over five years to support expanded African trade and improved African export competitiveness. 

More recently, Washington and the Southern African Customs Union (SACU) are continuing to discuss the details of a comprehensive free trade agreement (FTA). 

In April, the US and SACU agreed to establish a framework that would form the basis for pursuing the FTA over the longer term, develop a joint work program to address a broad range of FTA and other related issues, and seek to conclude concrete trade- and investment-enhancing agreements.

The full report can be found on the USTR web site at www.ustr.gov.

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