Washington, DC — "Rigged rules and double standards lock poor people out of the benefits of trade, closing the door to an escape route from poverty," Oxfam charged in a recently released report, arguing that if Africa could achieve just a one per cent increase in exports, this would generate US$70bn - approximately five times what the continent receives in aid. Trade and development issues are at the heart of U.S. Treasury Secretary Paul H. O'Neill's agenda as he departs for Africa today with rock star Bono for a 10-day visit to Ghana, South Africa, Uganda and Ethiopia to find out what policies do and don't work.
One effort that is working, says the Assistant U.S. Trade Representative for Africa, Rosa M. Whitaker, is the African Growth and Opportunity Act signed into law by former President Bill Clinton in 2000. Whitaker says AGOA provides great opportunity for Africa to expand its exports if the capacity required to compete in international markets can be developed and so long as the restrictions that hamper African trade can be reduced within the framework of the World Trade Organisation. AllAfrica's Charles Cobb Jr. spoke with Ms. Whitaker about these issues and others that affect African trade. Excerpts:
You've been speaking a lot about "capacity building" within the framework of the African Growth and Opportunity Act (AGOA). What do you mean by that?
Well, this process of bringing Africans from the margins to the mainstream of the global economy includes various elements. We've done some of the most important steps in that process by opening up the largest market in the world - duty free, quota free for essentially all African products. But trade capacity-building is very important, because unless we can build the capacity of African countries to take advantage of this opportunity, we're not going to see a lot of progress. So we have coupled our market access with trade capacity building. And indeed over the past three years we've devoted $192m to building trade capacity in Africa.
Trade capacity means helping African countries to develop commercial laws. Intellectual property protection. To develop harmonized tariff schedules. To understand how to market, how to develop a business. And also helping them to develop the kind of economic reforms that are necessary in order to track trade and investment. And even some of the fundamental private sector development activities - helping them to improve their customs and trade facilitation organizations. And building the intellectual capacities for trade issues in the trade ministries. And helping them with the WTO issues. This is part of our broad trade capacity building effort.
I suppose if I was a businessman I might ask, 'What kind of capacity exists, in fact in Africa today, excluding South Africa?'
I find that in all of Africa there is a need to build this kind of trade capacity and it's really a direct result of African countries not being fully integrated into the trading system. When you have a region of the world like that, one that has been isolated from he system for so long, you can't expect them to have the capacity, because the capacity comes by doing. And we have a situation where, for example, during colonialism - and President Museveni says this a lot - you had Africans as the auxiliaries and then the colonial masters as the intelligentsia running everything. And when the colonial masters left they left these auxiliaries, many of whom were not really prepared to run things. And so, the intellectual capacity exists in Africa. What we want to do is to empower those people who have the capacity and strengthen the institutional capacity. We're basically building the fundamental building blocks for running a trade regime in many of these countries; we're helping them develop it. In some countries it does exist but it's very mixed.
Africa is 54 nations so I suppose you have to prioritize your work in this area. The range of capacity varies from country to country. Do you in fact have a priority list of countries?
We are constructing our priorities in consultation with African countries. And those priorities are based on the needs of the country. And some of those priorities are based our where we see the existence of a significant opportunity. For example, AGOA provides a significant opportunity but in order to take advantage of that opportunity you have to have a functioning customs system. And so developing the customs procedure becomes an important priority. We can have a company that wants to come into a country that has weak intellectual property regimes. If that is the company's issue, we help countries with that.
But let me clarify something here. A lot of our capacity is targeted toward institutional capacity. Because the intellectual capacity and the entrepreneurial spirit really does exist in Africa. There is a tradition of trading in Africa that predates colonialism, that predates slavery, that predates all of those things. African people come from a long tradition of being traders. What we're primarily trying to do is strengthen institutional capacity and reach those people who are on the front lines of the government ministries and the private sector in helping them play a more meaningful role.
Give me an example of a country you've been dealing with which had little or no capacity and has developed the kind of capacity you're talking about.
We just finished a project in Nigeria where we have U.S. industry that wants gum arabic. Gum arabic is used a lot in the United States in our food and in our pharmaceuticals. Nigeria had the gum arabic growing wild but they weren't exporting in bulk to the United States. So this was a significant opportunity. Our industries wanted to come in. But they didn't come in because, one, you had to train the farmers in how to harvest the trees. They had to know more and learn more about the U.S. market. We then brought in trainers. We brought in a laboratory that would take the product and prepare it for export and for providing training to the farmers. We also provided training in how to get the product from the village to the market.
As a result of that our industry came in and made the first bulk purchases ever. If we had just given them the market opportunity, that wouldn't have been enough, without the lab, without the training, without knowing how to harvest the trees.
Also in Nigeria and other countries we are training their ministries to negotiate and understand better the intricacies of the World Trade Organization, how to prepare the notification and all the documents. We've done a series of WTO workshops there; we're done a series of AGOA trade capacity building workshops. We just finished two workshops in Cameroon and Uganda respectively that I had the opportunity to lead with inter-agency officials from various departments of government and also private sector officials. We actually trained regional officials in what is AGOA, how do you take advantage of it - all the various provisions, what they need to do. We gave them information about the U.S. market and also talked about how they can purchase more products from us as well.
Of course, to have capacity you have to have trade, the reason for capacity building. You must be aware of the rather blistering report that Oxfam came out with last month called "Rigged Rules and Double Standards". A lot of it was directed at Europe but the basic point, which echoed what I was hearing from African finance ministers and bankers at the spring meetings of the World Bank and IMF, was that the barriers are such that they stifle the development of African export trade: subsidies, tariffs and a range of non-tariff barriers. What's your comment?
I think there are a lot of people speaking for the poor now, and Africa is the poorest region of the world. So I think they should talk to the African countries and they should find out how they feel about trade. What I hear when I'm there is that Africans are asking for more trade not less trade. And we're helping them expand that trade. For people who have an issue with trade, they should go to some of these countries. They should go to Lesotho where AGOA is working, where as a result of AGOA, employment in the manufacturing sector for the first time outpace employment in the public sector. They should talk to those women who have been working and supporting a whole village on their salaries and having opportunities including educating girls as well as boys now. Those people don't have a problem with trade; they're asking for more of it. So when we talk about what's good for the poor, I think the poor know what's good for the poor and that we should have more dialogue with them.
And I think we're seeing some fundamental results from AGOA because AGOA was an historic U.S. step to eliminate some of those barriers to African products in the U.S. market. Currently more than 92 percent of African products enter the United States on a duty-free basis. AGOA has resulted in over $8bn in Africa's imports into the United States and another billion dollars in investment. That was a result of the United States just removing the tariffs and quantitative restrictions.
We are working to do that in the WTO - to do it globally. Our position in the WTO is that we will eliminate our agricultural subsidies which are much lower than Europe's and Japan's. EU agricultural export subsidies are 26 times higher than the United States. And we said we would lower them if others do so. We came to the World Trade Organization in Doha with a common agenda and indeed the Africans agreed with us and that's what we'll be working to do. Because I think the $300bn plus in subsidies is a handicap for African countries.
Agricultural subsidies have gone up here in the U.S.
Yes. But a lot of the subsidies you see in the farm bill are not the trade distorting subsidies. And those are the subsidies we really want to address - those export subsidies that really impede development and really hamper efforts to level the playing field.
Many African observers say that subsidies in Europe are the real problem. The question is, what is the United States prepared to do with regard to Europe and this issue?
Well, what we're doing is working with the African countries and others in the WTO to address the subsidies issues and other issues related to market access. The average U.S. agricultural tariff is 12 percent compared with 30 percent for the EU and over 50 percent for Japan. So we're going to have to address this multilaterally. Most of Africa's agricultural products are covered by AGOA. So under AGOA, the Generalized System of Preferences Program, as well as the Most Favored Nation initiative, most of African agricultural products are coming in duty free.
But I think you run into a political problem here don't you? Stated generally, there's a point at which the expansion of African exports threatens existing capacities and markets and incomes in the United States and Europe.
Well I often tell people, that if people look at Africa and they look at a continent that is the poorest region in the world; that is the only region in the world where the number of people living on less than one dollar a day is actually growing. Now that number is at 290 million people - more than the entire population of the United States. If they feel that these poor people are going to threaten this ten trillion dollar economy, I think they ought to look again. Since AGOA, U.S. exports to Africa have increased by seventeen and one half percent.
And also, if we want to expand our exports - and 25 percent of our GDP is dependent on exports - we have to have people who are healthy and capable of buying. So, Africa represents a very important potential market of over 600 million people. We stand to gain through expanded trade.
Does Europe see it that way too? Is AGOA a model for them? Can you foresee France, Germany going the same route?
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You'd have to ask them. But I think there's broad recognition about the importance of trade as a vehicle for economic growth and development in Africa and elsewhere. I think we're in agreement with our European partners and others on that point. And as for how we do it, that's why we're sorting it out at WTO and other places on some of these challenging issues. I think we'll have to continue our work with African countries to get more progress.
You're optimistic?
I stay optimistic because if you back to a few years ago, our biggest challenge was this big ideological debate about the benefits of trade. We had that debate with African countries; we were at odds with them. We're not there anymore. The African countries now are in agreement with us. They want more trade, not less of it. So now that we have that agreement and we have that common mandate, we have a common vision. We came to the WTO for the first time with a common agenda. We have a very successful trade policy. So there is a lot of reason for optimism. But that should not cloud all the work that remains to be done.
The African ministers were not so optimistic during the spring meetings. A Ghanaian minister wondered aloud when his country would be selling chocolate bars as well as cocoa bean to Europe.
Well you can look at it as the glass is half full or half empty. Now, as a result of AGOA Ghana is now negotiating with a major retailer to start making those chocolate bars - that this retailer was previously purchasing in Italy - with Ghanaian cocoa. Under AGOA Ghana is now trying to add value to its own cocoa. I think the sense of pessimism that you might find in Africa clearly has to do with the burden of the challenges there. It's really hard to be optimistic when despite your best efforts - and you can see the progress - you're still faced, every day, with so much suffering and pain. And as you address some challenges, new ones start to come up. One thing that's different, however, is that Africa is not alone in this process. The U.S. is a very powerful ally of these countries. And this support has been sustained now through two administrations. That is going to bolster the African effort. These are challenges that no region of the world, no country should face alone.
How does Treasury Secretary O'Neill's trip connect to your work?
I'm very excited about the Secretary's trip. I think it will give him an opportunity to highlight the effectiveness of our trade policy. He's going to be meeting with the people who are on the frontline working with this policy and benefiting. And he's also going to be listening and learning.
And he'll have the opportunity to talk to his counterparts about the Millennium Challenge Account that will provide increased assistance to countries that exhibit stronger governance and implement policies that promote greater productivity. This policy initiated by President Bush will increase significantly our development assistance to Africa which will also include assistance to build trade capacity.
