Manchester Trade Limited (Washington, DC)

15 July 2013

Africa: The Real Value of Obama's Trip to Africa

analysis

Washington, DC — On his three -nation, five -day visit to Africa, U.S. President Barack Obama, undoubtedly, re-energized the U.S. - Africa commercial relationship.

Unlike past visits by American leaders, Obama neither dwelled on HIV/AIDS, political instability nor the inadequacy of governance. Instead, trade and investment were front and center; economic challenges were addressed through Power Africa, an initiative that is expected to increase access to low cost energy, and via Trade Africa, an upbeat approach to regional integration. But on the African Growth and Opportunity Act, AGOA, President Obama could not have been clearer:

He affirmed his zeal at making the 12-year old program more effective at generating jobs and trade in the U.S. and on the continent, placing onus on his closest international economic issues confidant, Michael Froman, the new United States Trade Representative to ensure AGOA efficacy.

This is not only momentous but opportune: Dr. Froman is largely responsible for the much lauded 2012 Presidential Directive on Sub Saharan Africa, has a firm grasp on the region, and with his good connections in Congress, the Obama Administration and the 113th Congress may even pass a more comprehensive AGOA than the one Bill Clinton signed into law in 2000.

This new AGOA could include currently excluded agricultural products like sweetened cocoa, groundnuts, tobacco and sugar; perhaps even provide for a perpetual duty-free program in the context where a more integrated Africa assumes more responsibilities in the global trading system. Ideally, an enhanced AGOA would go beyond current trade provisions, promote U.S. investment in Africa, support regional integration and be the conduit for a U.S. – Africa relationship that’s as significant as that one between U.S. and the European Union under the Trans-Atlantic Trade and Investment Partnership (T-TIP). Simply, the U.S. has allies not just in the North but the South Atlantic as well – the basis for a new Transatlantic South Partnership, so to speak.

But of course, AGOA aficionados have a great many fears: They see a U.S. Congress increasingly calcified into partisan rancor and wonder if any changes to AGOA will pass the deeply divided bicameral body. However, John Dickerson of Slate captures the heart of the matter by suggesting that Africa-centric legislation is always treated with a semi-reverence in the U.S. especially because it represents one of the last genuine venues for bipartisanship.

Secondly, as of June 27, 2013 – even at a time of intense debate between Republicans and Democrats, a bipartisan bill H.R. 2548 to establish a comprehensive policy to assist African countries
develop an appropriate mix of power solutions was introduced in the House.

Besides, entities like the Corporate Council on Africa, the U.S. Chamber of Commerce, Heritage Foundation, Wilson Center and the Brookings Institution all agree with this premise, making a case for a large U.S. – Africa initiative that would, simply, surmount what China is doing to endear itself to Africa. All parties also hope that Obama’s unique presidency will build on the history of American support to the region and especially unleash the entrepreneurial force of the American private sector.

Conversely, like Obama specifically pointed out, AGOA cannot be a one-way street: African countries have to market and brand themselves and their products not just to policy makers but to the world’s largest markets in North America. Today, U.S. exports to an entire continent of Africa are almost as valuable as the total amount of money Americans spend on teeth whitening products. This could all change if the Obama Administration effectively leveraged agencies like Ex-Im Bank, US Trade Development Agency (USTDA), OPIC, and the Small Business Administration and the Minority Business Development Authority to facilitate corporations, SMEs and the Africa Diaspora investment in Africa.

In the same vein, if U.S. companies are to optimally participate in Africa’s commercial renaissance, Africa itself must ensure the seamless flow of goods and services through borders and allow investors to operate global supply chains and distribution networks with bigger markets. Obama’s Trade Africa was supportive of the East African Community, and, ostensibly, endorsed regional agreements that would culminate in a continental free trade area (FTA).

To his credit, President Obama seems to appreciate his position in history. While he has to grapple with internal U.S. politics, he’s also fully aware that the over 1 billion people in Africa are looking to him, alongside their own leaders, for a small piece of the American dream.

Also, the fortunes of America in Africa may, coincidentally, rest on a joint strategy between the U.S. and the EU.

Illustratively, while AGOA is about exports from Africa to the U.S., the EU’s economic partnership agreements (EPAs) place beneficiaries like South Africa in a pickle since one cannot expect American exporters to sit on the sidelines while European goods receive more preferences in Southern Africa. This, and other actions in the world trade organization (WTO) make Obama’s hopes for Africa’s regional integration even more arduous a task than it already is.

Nonetheless, the first African American president seems to have taken all these aspects into consideration. He has put Froman to the task – and Ambassador Froman is known to deliver. If this comes in the form of more market access and a truly unified Africa, then an Obama legacy in Africa will be sealed.

Lande, Matanda and Demissie work at Manchester Trade, a Washington, DC based trade and investment advisory firm

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