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U.S. Looking at Ways to Expand Trade Ties with Africa, Froman Says

Monday, February 01, 2016
Sandler, Travis & Rosenberg Trade Report

U.S. Trade Representative Mike Froman reiterated at a Jan. 28 hearing that the U.S. is interested in expanding its trade relations with Africa beyond unilateral preferences. A USTR report examining the options for doing so is expected this summer.

Froman pointed out that the U.S. and Africa will be increasingly important to each other in years to come. For the U.S., sub-Saharan Africa is a growing market, one that will see its GDP grow 30 percent faster than the rest of the world over the next five years and will be home to nearly a quarter of the world’s workforce and consumers by 2030. For Africa, the U.S. can be a source of investment and demand that fills a growing void left by China, which saw its imports from Africa fall by more than 50 percent from 2014 to 2015.

Closer ties will mean going beyond AGOA, Froman continued. Over 15 years this program has helped SSA countries sharply increase their exports, including a nearly fourfold increase in non-oil exports to the U.S., and U.S. direct investment in SSA countries has nearly quadrupled. Last summer AGOA was extended through 2025 to create greater certainty and predictability for businesses. However, preference programs are not a long-term solution, Froman indicated, pointing to a year-long review of AGOA that showed that tariff preferences alone are not sufficient to generate significant new trade and investment and the fact that trading partners like Canada and the European Union are increasingly refocusing the scope of their preference programs on the poorest countries.

The U.S. is now assessing what a more permanent, reciprocal trade arrangement with Africa may look like, with the understanding that there are “potentially many paths” toward this goal. As an initial step the U.S. has launched the Trade Africa initiative with the East African Community and signed a cooperation agreement focused on compliance with World Trade Organization standards on trade facilitation, sanitary and phytosanitary measures, and technical barriers to trade. The U.S. is currently working to expand this initiative to involve new partners, including Cote d’Ivoire, Ghana, Mozambique, Senegal and Zambia. African countries also recognize the need for change and are taking steps such as establishing regional economic communities and free trade areas and signing reciprocal economic partnership agreements with the EU.

Froman said USTR expects to deliver to Congress this June a report that “that will lay out a set of options and roadmaps for advancing the U.S.-Africa trade and investment agenda.” He added that any new policy must take into account factors such as prohibitive duties or policies affecting product inputs; protections for intellectual property rights, workers’ rights and the environment; open services markets; standards consistent with international norms; and capacity constraints such as poor infrastructure.

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