Tag Archives: African Growth and Opportunity Act

Africa Trade News: Bills to amend the AGOA to extend the “third country fabric” benefit introduced in Congress

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Representative Camp (R-MI) and Senator Baucus (D-MT) have introduced bills in the House and Senate respectively to provide for this extension under the African Growth and Opportunity Act of great interest in East Africa.  With strong bipartisan support in Congress and from the Administration this would seem to be a timely step before the preference expires in August to show that we are serious about stepping up American trade with Africa to support private sector economic growth.   The bills would also add South Sudan as an eligible country.

AGOA, AFRICOM and the “Three Ds”

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Just as the big annual African Growth and Opportunity Act (AGOA) Conference is kicking off in Washington, and USAIDs Frontiers in Development conference has ended, the Washington Post has run a large story, “U.S. expands secret intelligence in Africa” which will continue to draw attention, discussing military operations as opposed to anything involving the traditional intelligence agencies.

Briefly, my “macro” level observation is that this is an example of the choices confronting Americans in simply deciding who we want to be in Africa.

There is perhaps a certain irony that in 2012, all these years after the Cold War, the Chinese Communist Party government leads an expansive, rapidly growing commercial presence across Africa, while the U.S. does seem to be specializing more in the military/security area. “Comparative advantage”? Bureaucratic momentum and politics in Washington? Sound policy making reflecting that the U.S. sees itself as quite rich already and has a main priority of preventing future tragic “embassy bombings” and “9-11s”; whereas the Chinese government is relatively speaking “young and hungry”, and needs to build its economic power to hold power at home against any possible future “regime change” from democratization or other domestic pressures?

AFRICOM is an experiment of sorts and it is evolving. The Post story points out that AFRICOM is still doing “aid” projects–by which I assume they mean things like the traditional humanitarian and medical missions carried out by troops, and things like the fish farming program for the DRC military in Eastern Congo I noted some time back along with the military-focused democracy and governance and rule of law training, aside from the more usual military and security training assistance. At the same time, the budgetary pressure in Washington is hugely increased from anything that people would have had in mind back during the finance bubble when the decision to roll out AFRICOM as a “new kind” of combatant command was made. Spending on “development” and “diplomacy” are lowercase priorities when the budget axe swings, verses “the big D” on the traditional military side of a “three Ds” national security strategy.

On one hand, AFRICOM could provide a bureaucratic umbrella of sorts to help shelter some “development and diplomacy” efforts from the budget storm. On the other, it could suck up dollars to pay for programs that are neither efficient nor well coordinated, nor carried out by people who have development or diplomacy as their primary mission.   Regardless, I think it is fair and appropriate to say that at least some people on both the civilian and military side of the effort, who believe in the concept of a “new kind” of command, are concerned about the staying power of the model as conceived and approved against the bureaucratic pressure for military homogenization in the context of the global war on terrorism formerly known as “the Global War on Terrorism”.

Yesterday at the Frontiers in Development program Jim Kolbe, former Republican Congressman and longtime IRI board member, emphasized the importance of development for U.S. national security. I agree.  Having worked in the defense industry myself for 12.5 years, including the time of the USS Cole bombing (the ship was repaired at my workplace), 9-11 (I was in Washington), 7-7 (got the news of the London bombings as an election observer in Osh, Kyrgyzstan) I do not downplay terrorism or undervalue U.S. security–I just want very much for all of us as citizens to take responsibility for making good and deliberative decisions about our long term interests and ultimately the broader role we want to play in the world.

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Africa Bureau announces vision to revitalize AGOA

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Assistant Secretary of State Johnnie Carson at CSIS from African Press Organization (APO):

While AGOA has achieved a certain amount of success, it has not solved Africa’s challenges and the region has not experienced a genuine economic revolution. Africa also continues to struggle to compete in an increasingly competitive global economy. For these reasons I am fully committed to revitalizing AGOA.

AGOA remains the centerpiece of our trade and investment policy with Africa. In 2012 the third country multi-fiber provision which allows textile producers to source their raw materials from other countries is set to expire and in 2015 the AGOA legislation itself will end. I would like to outline the State Department Africa Bureau’s vision for the next steps on AGOA:

1. Renew AGOA through 2025. The uncertainty about renewing the legislation creates a disincentive for potential investors to source production in AGOA eligible countries.

2. Renew the Third Country Multi-Fiber provision through 2022. The rules of origin for fabric under AGOA are one of the most important incentives to invest in textile production in AGOA eligible countries. This component of AGOA allows textile producers in AGOA countries to source their raw materials from other countries and still maintain their preferred access to the U.S. market.

3. Add South Africa to the Third Country Multi-Fiber provision. South Africa is the only AGOA eligible country not eligible for this provision and also the country best suited to take advantage of it.

4. Continue USAID’s Trade Hub and capacity building programs. Without this type of strong trade capacity building program AGOA cannot succeed.

5. Ensure that the Department of Commerce’s Foreign Commercial Service maintains their presence in Dakar and Accra. This is crucial not only for AGOA but for all of our economic initiatives in Africa.

6. Increase USDA’s capacity to provide phytosanitary certification. Agriculture exports remain an important and underutilized component of AGOA.

7. Tax incentives for earnings from AGOA investment. AGOA already provides substantial tariff savings for U.S. companies importing eligible products from Africa, but there are no other types of tax incentives provided under the legislation. Recommend that the U.S. government support an effort to eliminate the U.S. tax on repatriated revenues from American companies that invest in factories in Africa that produce AGOA exports to the US.

There has been a great deal of impressive economic news coming out of Africa recently. I am very encouraged by these positive developments. However, it is not the time for us to become complacent. Africa still faces huge challenges and we need to continue and revitalize our economic partnership. This is not only in the interest of our African partners, but in our interest as well. We need to maintain and improve upon AGOA today in order to continue to play a role in the growing dynamism in Africa tomorrow.

In the meantime, Russia is also seeking to “up its game” in African trade and investment.  Here is a link to “Buziness Africa”, a Russian magazine covering the subject, including AGOA.