It's Time to Push for Reciprocal US-Africa Trade and Investments Agreements
By Ben Leo | MAY 19, 2015
After months of delays, Congress is finally moving on the Africa Growth and Opportunity Act (AGOA). Last week, the Senate quietly (and overwhelmingly) passed an unprecedented 10-year reauthorization for this trade preference program. Insiders believe that a similar bill could pass the House soon, perhaps even this week. This is very positive news. At the same time, it’s a missed opportunity to simultaneously outline a clear path towards more mature, reciprocal trade and investment agreements with a range of African countries. However, there is a bipartisan Senate effort afoot, led by Senators Inhofe (R-OK) and Coons (D-DE), which could change this. Their proposed amendment would direct the executive branch to develop a plan for concluding free trade agreements (FTAs) and bilateral investment treaties (BITs) over the next decade, and assessing African countries in terms of readiness. USTR needs just this kind of congressional pressure and political license to move beyond the status quo.
For more than 15 years, the US government has granted duty-free access to America’s multi trillion-dollar economy as a means of creating economic opportunities and incentivizing reforms in Sub-Saharan African countries. Nearly 40 nations are currently eligible for AGOA benefits. Congress has extended and broadened this preference program multiple times with strong, bipartisan support. While AGOA’s overall impact has been modest, it has helped to catalyze private sector-based opportunities in several countries and sectors. It clearly should be extended.
At the same time, there has been much less progress in modernizing broader US-Africa economic relations. The United States does not have a single FTA in Sub-Saharan Africa. Existing BITs cover a mere 7 percent of regional GDP, including only one of the ten largest economies. And while Washington has pursued ineffectual, non-binding trade and investment framework agreements (TIFAs), Beijing, Ottawa, New Delhi, and others have been inking deals all across the continent.
This may have been palatable when AGOA was launched in 1999. Regional GDP was only $370 billion then. Today, it totals nearly $2 trillion. Nigeria’s roughly $600 billion economy alone is larger than Malaysia and Vietnam combined – both prospective new FTA partners.
It’s sorely time to move more strategically toward mature economic relationships with several African countries. Many will not be in a position to do this for some time. But, others – like South Africa, Nigeria, Kenya, and Ghana – are prospective candidates now. If crafted well, trade and investment agreements with these kinds of countries could provide a big boost for America’s development, foreign policy, and commercial objectives in the region.
This is why the Inhofe-Coons amendment could be so helpful. It would apply pressure on the White House and USTR to develop a clear plan of action and to assess individual countries’ readiness. Yet, it also would provide the executive branch with sufficient flexibility to pursue sensible negotiating strategies. It gets the balance about right. This is one reason why organizations like the ONE Campaign and the US Chamber, who have championed AGOA’s extension, also support this general push.
Congress is about to lock down US-Africa trade relations for the next decade. Simply maintaining the status quo would be a missed opportunity for modernizing US-Africa economic relations. As such, Congress should ensure that strategic pressure is brought to bear on the White House and USTR to negotiate more African FTAs and BITs. And, I strongly suspect that the current US Trade Representative, Michael Froman, would welcome the challenge.